PORT ANGELES — Citing a need to save 115 jobs and create a few more, the City Council on Tuesday approved a grant application on behalf of the struggling Peninsula Plywood mill.

The mill would use the $500,000 state Department of Commerce grant to stay afloat by purchasing raw material needed to meet orders, add 15 to 20 jobs and start paying back some of its delinquent bills.

“My feeling is we need to support the mill,” said Deputy Mayor Don Perry. “There’s no question about it.”

Council action came after impassioned pleas were made during a public hearing from those for and against the allocation and after frank statements from owners who said the mill may close without those funds.

The owners also could not promise the mill would succeed with the money.

“Without this grant, PenPly may not make it,” said investor Grant Munro, who is a former Port Angeles City Council member.

“With this grant, PenPly will make it for another three to four months at least.”

Commerce plans to approve the grant and get the funds to the mill within a few days, Nathan West, city economic and community development director, told the council.

PenPly owes the city $315,331 for electricity and $70,633 to the Port of Port Angeles for rent.

The grant agreement approved by the council requires the mill to pay $50,000 back to the city for its delinquent bills.

It doesn’t require the mill to use the money to pay back rent to the port, which has asked for a repayment plan.

West told the Peninsula Daily News that the agreement doesn’t require the mill to pay back more of the money it owes because it needs the funds to meet orders.

“These funds are too essential,” he said.

West said the funds are passed through the state Department of Commerce from the federal government.

The grant agreement also requires the mill to enact recommendations from two people — Dean Reed and Mark Hannah — who were assigned by the city to review their books.

The council made two 5-1 decisions, one to approve the application and another to stipulate terms of the grant.

City Councilman Max Mania voted no both times, saying he couldn’t support the motions without seeing a copy of the grant terms. Councilwoman Brooke Nelson was absent.

West read them aloud to the council, but no documents had been drafted by the time the council met.

Two former PenPly employees, expressing frustration over management, urged the council to use caution before seeking the grant.

“So what we’re looking at is taking money from a broke state and giving it to a mill that has been run into the ground,” said former employee Robert Casey.

“It’s nothing but a joke.”

A current employee, Nicole Simpson, acknowledged during the public hearing being frustrated at times with the mill’s management.

But she said they are improving and urged the council to seek the grant in order to maintain the mill’s 115 jobs.

“I truly believe we will be able to pull out of the hole,” Simpson said.

The mill recently cut employee pay by 10 percent. Managers said they took the same cut in November.

City Councilman Pat Downie acknowledged there is no guarantee the funds will keep the mill operating.

“I can think with some degree of certainty that without it, we can also assure their failure” by rejecting the grant application, he added.

Peninsula Plywood Group LLC reopened the mill, previously owned by bankrupt Klukwan Inc., in March 2010.

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Reporter Tom Callis can be reached at 360-417-3532 or at tom.callis@peninsuladailynews.com.