The Port of Tacoma’s plan to develop the east side of the Blair Waterway for new shipping terminals is over – for now.

The port commission and Tokyo-based NYK Line on Thursday officially terminated the lease they signed in 2007 that had the port constructing a 168-acre terminal on the Blair-Hylebos Peninsula for the shipping giant.

So far, the port has spent $190 million on the project – much of that on buying property that could be used in the future.

NYK Line still plans to come to Tacoma by July 2012, but will instead call at one of the port’s existing terminals – APM Terminal on the Sitcum Waterway. The terminal served Maersk until May, when the company’s ships left Tacoma for the Port of Seattle.

Tim Farrell, the port’s executive director, said there are “many wins that go with this action.” NYK Line brings business and jobs to the port, but the port won’t have to invest in building a new terminal in a down economy.

“We’re taking advantage of the current capacity, instead of building something new,” Farrell said.

The port commission unanimously approved three agreements that scrapped the old plan and sealed the new deal.

Each of the five commissioners provided a brief comment and no one asked questions. Port staff briefed the commission earlier this week in an executive session.

“This is a demonstration of how companies can get together and fill the needs we always thought were important – that’s (taking care of) our current customer base,” said Commissioner Dick Marzano. “It’s great for Pierce County and it’s great for the port.”

The project was in part another casualty of the recession.

It was the most complex development plan the port has ever pitched – building a new terminal for NYK Line, relocating the Totem Ocean Trailer Express terminal and constructing all the roads and rail tracks needed to move cargo off the peninsula.

The timing seemed right. Container volumes had only begun to soften after years of a trade boom. Shipping lines and terminal operators were looking for places to expand and land on the West Coast was in short supply.

“When we agreed on the (NYK) move, the economy was robust, trade was strong and the projections were for growth,” Commission President Clare Petrich said this week.

But as the design work began, the project’s estimated cost ballooned from an original projection of $800 million to develop the peninsula to more than $1.2 billion.

Meanwhile container volumes continued to drop – and then tank. The Port of Tacoma’s container volume is down 15 percent for the year when compared to last year. And last year wasn’t great.

The port and NYK began to look for other alternatives and the departure of Maersk to Seattle provided a space that made sense.

“This is an effort to make a sensible move in light of the current economic environment,” said Patrick Burgoyne, executive vice president and chief operating office of Yusen Terminals Inc – the entity representing NYK Line in Tacoma.

“It really had mostly to do with scaling our own growth in accordance with the levels that are out there now and not getting head of ourselves in terms of infrastructure,” he said.

The shipping line’s contract to call at the Port of Seattle runs out in June 2012 and NYK ships will call in Tacoma the following month, “subject to competitive market rates and efficient operating conditions,” according to the new agreement between the port and NYK Line.

The clause provides for some wiggle room in light of the unpredictable economy, but Burgoyne said that it’s NYK’s intent to be in Tacoma.

“We made that commitment in 2007 and we are reaffirming that commitment for the next 25 years,” he said.

Their choice of location is certainly a boost for APM Terminals. Maersk took about 50 percent of the terminal’s business when it moved. Horizon Lines ships still call there.

The question of where NYK will land may be resolved, but the port and the shipping line are still figuring out who will pay for the $11 million spent by the Port of Tacoma in designing the proposed terminal.

The agreement approved by the commission Thursday says that the parties have 90 days to work this out before going to a third-party mediator.

The port has spent $35 million in total designing the NYK Terminal, a relocated terminal for TOTE and the related infrastructure. It also spent an additional $155 million on the peninsula project including:

• $146 million to acquire property and demolish vacant buildings.

• $6 million on environmental projects and permitting.

• $3 million in staff resources to support all aspects of the development.

The agency is in the process of deciphering what of all that work could still be of use to the port in future projects.

Commissioners and port executives have said they don’t regret buying the land and that having such waterfront property is important to the port and will be of use someday.

Same for any environmental clean-up work or property surveys, Farrell said. The biggest question is around the value of designs for a terminal that no one is planning to build.

The original announcement by the port that NYK was coming to Tacoma included projections that the construction of the new terminal would generate 3,000 jobs and the terminal itself would create 3,200 jobs including longshore workers, truck drivers and jobs in other related industries.

Now two years and one painful recession later, the port isn’t venturing to guess how many jobs NYK’s move to APM Terminals will create.

“We don’t have any numbers,” said Tara Mattina, the port’s spokeswoman. “Estimates will be tied to cargo volumes – we know there will be jobs, but we don’t know how many.”

Kelly Kearsley: 253-597-8573

Kelly.kearsley@thenewstribune.com