How Many Geoduck Are Being Grown on My Tidelands? (An old post - but still popular)

Trust - but verify.

[Originally posted in 2013 this still generates

a large number of views. For those who have

leased out tidelands to geoduck growers

consider spending some time on your tidelands

during the current and upcoming

minus tides of June. It's your money.]

Why you should have remembered your math.

(well, maybe not this one)

A large percentage of intertidal geoduck farms are on tidelands leased by private tideland owners to  a few shellfish companies. These owners are approached by company representatives with promises of a large check at harvest time. The amount ranges from 10% to 15% of the gross revenues, determined by the pounds of geoduck harvested and the current "market" price. With planting densities of three per square foot, a 60' X 100' tideland parcel could result in a check of up to $50,000 every 4 to 5 years. (After expenses the shellfish grower could easily net over $200,000 in profit.)

However, some tideland owners are finding that the check received is far less than what they had expected. There are a number of variables which weren't made quite clear enough at the signing of the contract, in some cases lasting for over 15 years. One of the most important is that you should be aware of what you have.

How many geoduck are there?

 

For example, as in timber harvesting there are a variety of log types and densities, some worth more than others. Not all geoduck harvested are considered "#1" grade which receive the higher prices which have ranged up to $14/pound, sometimes far higher (the Seattle Times reported last year prices up to $24/pound) . A short dark "neck" or a discolored shell will quickly drop the price Chinese are willing to pay. But an important variable is how many pounds of geoduck are harvested.

Not all geoduck are created equally.

Variables impacting density range from the survival of the seed planted to poaching. Whatever the case, a prudent tideland owner should be aware of what is planted and growing on their tideland parcel. This coming weekend presents a prime opportunity for those tideland owners who have leased their tidelands to a grower to inspect their "crop" and set their expectations.

(it's not rocket science)

[total square feet planted]*[average/square foot]*[1.5 pounds]*[$/pound]*[15%]

 

While digging a geoduck for sampling would most likely not be allowed by the grower (they'll claim ownership), sampling the area to determine the density of geoduck currently growing is a wise step all tideland lessors should take and an easy process.

1. Determine the total area in square feet where geoduck have been planted. This area should be easy to find from permit applications submitted by the grower. If you don't have it you may ask the grower for it or simply measure the area. A 60' X 100' area would equal 6,000 square feet.
2. Using a yard stick, lay out a number of 3' X 3' squares (each being 9 square feet) in different areas for sampling and count the number of "show"(siphons) which are within each square. If survival is high, you may have up to 27 geoduck within that square. If survival is low, or poaching is occurring, it may be much less.
3. When you have determined what the average number of geoduck per square foot is, then it is simply a matter of multiplying that number times the number of square feet the grower has planted on your tidelands.
4. After you had determined the number of geoduck growing, multiply that number times 1.5 or 2.0 (the latter if your harvest time is longer than 5 years) to determine the number of pounds.
5. Call your grower or Taylor Shellfish and ask them what the landed price for geoduck is then multiply that times the number of pounds growing, then that number times your lease %.

Using the 60' X 100' example above:
[60*100=6,000 square feet]
3X3 areas showed an average of 27 geoduck growing in each area, or 3 geoduck per square foot.
[27/9=3]
Total number growing is 18,000.
[6,000*3=18,000 geoduck]
Harvest time at 4th year should result in a 1.5 pound geoduck, or 27,000 pounds.
[1.5*18,000=27,000 pounds]
Landed price is $14*, or a gross amount of $378,000, of which the owner gets 15%, or $56,700.
[27,000*14=$378,000*15%=$56,700]

*6/2/2018: Best to assume the price received now is far higher than it was in 2013. Using a more realistic $20 per pound - 27,000*$20=$540,000*.15=$81,000.

DNR Tideland Leasing - Who is managing who? Part 2: DNR negotiates geoduck tideland leases with an inactive/administratively dissolved LLC.

Kent Kingman, owner of Minterbrook Oyster

and the administratively dissolved (2012)

Case Cove LLC

Case Cove LLC, "inactive" since October 1, 2012 

"Administratively dissolved

for failure to file an annual report."

Secretary of State

Kent Kingman's 'Case Cove LLC' - "Inactive" since October 1, 2012, and administratively dissolved. But good enough for DNR to negotiate terms and new contracts with for geoduck tideland leases beginning in 2013.

DNR documents released (files are large) reveal how convenient the various players in the geoduck industry make it for each other, and how convenient the state's Department of Natural Resources makes things, including negotiations with Kent Kingman's non-existent LLC. In the requests for proposals, rights to a DNR parcel in front of Kent Kingman's unpermitted shellfish operation were won by Brian Allen in 2006. Mr Allen's offered 12% and a price per acre  of $1,250/acre/year. Mr Allen agreed to give up his winning proposal ("for a piece") and DNR, beginning in December 2013, started re-negotiating with Mr Kingman's non-existent LLC, ending up agreeing to terms lower than originally offered by Mr Allen. (See the Washington State's Secretary of State website  showing Mr Kingman's Case Cove LLC being inactive since October of 2012).

Brian Allen's 2006 winning proposal -

12% and $1,250/acre.

Terms from DNR offered 12/5/2013 

to Mr Kingman's "inactive" Case Cove LLC

"...and the base rent is offered at $1,000/acre/year..."

(20% lower - and Mr Kingman still complains  - 

see the end of this post)

Mr Kingman's "Inactive" Case Cove LLC,

represented as still active.

(received at DNR 12/20/2013)

Secretary of State? It's inactive and dissolved.

Mr Kingman's Inactive on Resolving

Shoreline Violations As Well 

Kent Kingman's unpermitted shellfish farm, 

bulkhead, deck, remodeled cabin, retaining wall, etc.

\

Inactive on violations

December 2013: Settlement agreement signed.

June 2015: Not resolved.

Perhaps too busy working on a permit 

for his "oyster bar" in Purdy to get around to it?

I'll hold the lease but Taylor Shellfish will do the permitting

In notes released to the public from DNR, in a conversation with Mr Kingman about what the relationship of his "inactive" Case Cove LLC is with Taylor Shellfish, it was written:

1-14-15 BHL- I spoke to Kent today and found out that he will be the leaseholder, and Taylor will do the permitting at this point but he is paying for that service. (DNR Notes related to the now inactive Case Cove LLC)

 - or not.
But in a letter to Pierce County dated June 10, 2015, Taylor Shellfish states it is now withdrawing its permitting efforts for geoduck farming on the Kingman parcels, adjacent to those those the "inactive" Case Cove LLC is in negotiations with DNR about. The letter from Taylor Shellfish states it would be best to get his unpermitted farm "...in good order." Good idea in 2013 and still a good idea in 2015.

Subtidal Management by DNR?

Seattle Shellfish Tidelands

Leased from Mason County

(outlined in red)

(from DNR)

Current geoduck "seed" being planted

by Seattle Shellfish

Meanwhile, subtidally, wild populations are stripped from DNR "managed" tidelands and not replanted
While DNR negotiates with non-existent LLC's whose "permitting partners" are no longer permitting geoduck farming on the "owner's" tidelands, it has been reported Chelsea Sea Farms and the Detiennes are appealing their permit denial, affirmed by the courts, for their subtidal farm. In addition, Seattle Shellfish reports to the Corps they will be planting with divers. DNR? Well, that's something they apparently can't do. Instead, the few public tidelands still available are being leased to geoduck farmers. And LLC's who do not exist and whose owner complains about their previously offered terms now being too high.

Kent Kingman: "Expressed the % wholesale state royalty

should be re-evaluated..." How about thrown out?

(click to enlarge)

Get involved - Commissioner Goldmark's email: CPL@dnr.wa.gov

Tell Peter Goldmark he was not elected - twice - as the Commissioner for Public Lands to allow the aquatics division to continue as it was before he was elected. It's time for DNR to first manage their subtidal tidelands like their forest lands and require replanting, then open more intertidal tidleands to the public.

DNR Tideland Leases: Who is managing who?

Arcadia Point Seafood: 2006 - Our offer is equal to 20%.
Arcadia Point Seafood: 2013 -We'll offer you 15% for a
far more convenient parcel, near home and existing farms.

DNR: 2015 - How about 10.25%?
Okay.

~1 acre of state owned tidelands

planted with geoduck and no lease.

Settlement in 2010: $192,000

Harvest value in 2014: ~$1,300,000

(click to enlarge)

I never promised you a shellfish garden, but thanks for the roses.
A recent document request has provided Arcadia Point Seafood's lease proposal from DNR for tidelands in Mason County it and Seattle Shellfish were found to have been trespassing on in 2009. According to statements in applications, it may have been going on since 1988 but because of how statutes in Washington are written, all the state could collect on was activity which had occurred in the prior three years. Growers kept revenues from perhaps as many 3 harvest cycles. For encroachment on 1.2 acres, Arcadia Point Seafood and Seattle Shellfish settled with the state for $192,000 (be patient - DNR's servers are slow). They were allowed to retain possession of their geoduck planted on a bit more than 1 acre, which with geoduck at or above $14/pound, resulted in an estimated $1,300,000 at harvest (see below for how APS estimates their harvest amounts from tidelands). A complete survey of the area having been trespassed on may be found here.

Tidelands Arcadia Point Seafood

was responsive to. 

Will you respond to my offer?

In 2006, prior to the discovery of trespassing on state tidelands, Arcadia Point Seafood participated in "requests for offers to lease" tidelands for growing geoduck from DNR. Responses to those requests included Taylor Shellfish with Kent Kingman, Discovery Bay Shellfish, Seattle Shellfish, and Arcadia Point Seafood, among others. In 2007 a second request was made by DNR. (The 2006 maps may be found here and the 2007 maps here.) Arcadia Point Seafood was the successful "responder" to the proposal on Dickenson Point. 

Thurston County: You almost made it. Mason County: Don't worry about it.

In 2008 APS began seeking out other leases in the Dickenson Point area, being successful with the Thiesens and McClures, the former being adjacent to the north line of the state tidelands. It was a long process with many objecting to the industrial operations, some believing they did not fit in with the residential character of the area. But APS and Taylor Shellfish had money, motivation, and knew how to spend it in the right places. Those permits, while granted, resulted in the Shorelines Hearings Board noting "...it was a very close call.." on requiring a cumulative impacts analysis and Thurston County's  commissioners noting: "The Board shares many of the Coalition's concerns...about the impacts of geoduck aquaculture on the shorelines of Thurston County". It is far different than in Mason County where geoduck farming needs no permit at all. In fact, they have recently leased almost 20 acres of tidelands to Seattle Shellfish, being told they will receive an estimated $3 million from the lease. Maybe.

DNR - "You've won."

Arcadia - "Never mind. I have a better idea."
(and guess which county it's in)

Remind me of what I said in 2006 again?

In the successful response of APS they were seemingly more than generous, and made a point to show how much so. In their "Cost Proposal" they estimated the state would be receiving an estimated 20% of the "gross wholesale revenue" (see above image for their calculations). APS estimated from 40,000 square feet they would be harvesting 90,000 pounds (1.5 geoduck per square foot *40,000 * 1.5 pounds each). (The full response from APS may be found here.)

Seasons change and so did I, you need not wonder why. 
In 2013, seven  years later, after their harvest under the lucrative settlement with the state was complete, APS was contacted by DNR. Along with the other successful "responders" they were asked how they felt about executing on their proposal. APS, realizing the opportunity presented by locking up the contiguous state tidelands with those they already had under lease from private tideland owners, less than 300' from the owner's home, in Mason County where no permit would be needed, had a different response than the others. From notes taken by DNR their change in heart is explained, as well as their offer:

Arcadia Seafood requests the Dickenson Point site be put on hold due to local controversy, and ongoing work of the County Shoreline Hearings Board.  Arcadia point does want to lease this site "in a year or so," but feel "now is not the time."   They would consider to lease an alternate site at Arcadia Point.  The Arcadia site is part of an ownership dispute between Arcadia Point Seafood and DNR that was resolved by settlement agreement.  The site is located at Arcadia Point and fronts the proponents upland property.  Arcadia has indicated, if DNR decides it will only lease one site or the other Arcadia Point Seafood would prefer to farm the Dickenson Point site.  Regarding the lease term, Arcadia is concerned the 10 year lease will only supports a single crop cycle.  For the Dickenson Point site, the proponent proposes rent be amended from 12% of gross and $1,200 per/ac/yr. base rent to 10% and $1,000/ac/yr.  For their private leases, Arcadia pays 15% for multi cycle leases and 10% for single cycle leases; cost of managing single cycle leases is more and there for the royalty to the landowner is less.  Also, in Thurston County, cost and scope of permitting is more difficult than Mason County.  Arcadia proposes a 15% rate at the Arcadia Point site.  Also, Arcadia Point Seafood wishes to review DNR's current BMP's before agreeing to a lease.

DNR: We know you offered 15% but will you take 10.25%?

APS: You drive a hard bargain, and my wife won't be happy, but okay.

In 2015, DNR has suggested a different rate. A lower rate. On May 15 they sent their proposal to APS which included the new, lower rate. (The complete proposal sent to APS may be found here.)

SECTION 4 RENT

4.1 Annual Minimum Base Rent. Tenant shall pay to State the annual minimum base rent in the amount of One Thousand Two Hundred and Twenty Three Dollars ($1,223.00). The annual minimum base rent shall be due and payable in full on or before the Commencement Date and on or before the same date of each year thereafter. In addition to the annual minimum base rent, Tenant shall also pay a production based rent as detailed in Section 4.2, below.

4.2 Geoduck Rent Adjustment.(a) Production Based Rent. When the Tenant commences harvest of cultured geoduck, Tenant shall pay to State, in addition to the annual minimum base rent, a quarterly Production Based Rent. The Production Based Rent shall be computed as follows: the total quarterly volume of geoduck harvested in pounds multiplied by the current average wholesale price per pound, multiplied by the royalty rate of Ten point twenty five percent (10.25%) percent.(b) Quarterly Reports and payment of Production Based Rent. At the same time Tenant submits its quarterly aquaculture production report to the Washington State Department of Fish and Wildlife, Tenant shall submit a copy of the same report to State along with the Production Based Rent as calculated in Section 4.2(a). The quarterly aquaculture production report must include the poundage or other unit of measure and price received for geoduck harvested and sold. If Tenant makes no sales in any quarter, Tenant shall so report.

Commissioner Goldmark did not promise the shellfish industry a shellfish garden. 

Peter Goldmark was elected as the Commissioner of Public Lands in 2008 due, in part, to perceived pressures from the shellfish industry to turn over the few remaining public tidelands there are for them to grow geoduck on. In 2015, as election time ramps up, once again the shellfish industry is pressing the Commissioner directly, and indirectly through politicians, to do what people did not want in 2008 - turn those tidelands into geoduck farms, locking the public out. Commissioner Goldmark never promised the shellfish industry a shellfish garden. Especially one the state only receives 10.25% from.

Mason County Signs 16 Year Lease with Seattle Shellfish for Geoduck Cultivation

"You never know what tomorrow's going to bring."

Past Commissioner Bloomfield, w/Seattle Shellfish

 

Tidelands Leased by Mason County

to Seattle Shellfish for Geoduck Farming

 McMikken Island State Park on the right
Washington State Parks and Recreation on the left
 

19 acres leased for 16 years, with an option for another 16 years - acres useable unknown
Mason WebTV has reported the Mason County commissioners have signed a 16 year lease with Seattle Shellfish for a 19 acre tideland parcel between McMikken Island State Park and Harstine Island to grow geoduck on. The lease terms contain an option for an extension of an additional 16 years. The tideland area had been previously used by the public visiting McMikken Island State Park or the adjacent land on Harstine Island owned by the State of Washington Parks and Recreation. It is expected that once Seattle Shellfish begins planting geoduck access to the tidelands will be restricted.

Geoduck Planting with PVC Pipes

Tidelands useable are unknown
At the public hearing, past commissioner Steve Bloomfield with Seattle Shellfish described the tidelands as not all being suitable for geoduck cultivation. He notes some of it as being "hard pan, like this floor," some it as "very good," with the remainder being described as "we don't know yet." He went on to assure the county that whatever was done would be transparent.

 

Just an estimate - based on?

(for video click here)

 

Commissioner Jeffreys: $3 million plus $1,000/acre planted - based on an unknown

Despite the unknown number of acres which will actually be available for cultivation, and of those what actually gets planted and when, Commissioner Jeffreys announced at the meeting that the county would be receiving an estimated $3 million dollars every 6 years. This figure is based on her describing the lease terms as being $1,000 per acre planted and 15% of the gross proceeds. Given Mr. Bloomfield's being unable to say how many acres actually useable puts in question how she was able to obtain the $3 million "estimate."

 

Taylor Shellfish's ~15 acre geoduck farm in Hammersley Inlet.

Appraised at $2,035, taxes collected = $21/year

 

 

Taxation of tidelands when they are converted to geoduck or shellfish production

As Commissioner Sheldon noted at the meeting, perhaps some tidelands held by Mason County could be leased in order to generate revenue for the county. Perhaps what the commissioners should consider instead is having their assessor value those tidelands put into production of geoduck or shellfish at what their real value is. So doing would most likely generate sums far greater than the currently unknown the county has committed to. Higher property taxes may also bring pause to current tideland owners who believe they will become as wealthy as the current owners of shellfish companies are becoming, at the expense of Puget Sound's tidelands.