In the midst of rate increase talks and utility concerns, Wrangell’s Port Commission approved the renewal of three leases at The Marine Service Center during its Feb. 18 meeting.
The lease lots of welder Chuck Jenkins, shipwright Tyler Thompson and contractor Steve Keller were up for their five-year renewal. Commissioners had previously approved Jenkins’ renewal in December at its $0.08 per square foot monthly rate.
On Jan. 12 the Assembly decided to return Jenkins’ request for renewal to the
commission, reasoning it might want to update lease rates along with the rates of other
services. Ports had previously decided to reopen conversation about increasing moorage, workspace and storage
rates after abandoning such plans last spring. While a contentious rate workshop on Feb. 16 indicated finding an acceptable level will be a difficult process, commission chair Clay Hammer expressed his opinion that the lease lots were a
different issue altogether.
“In my mind, those
two issues are entirely different issues,” he said. Explaining his reasoning, Hammer felt it
took a business seven or more years to establish itself, and that the relatively low lease rates helped encourage capital investment on the part of the leaseholders. And while costs in managing the boatyard
continued to increase each year, he felt the cost of maintaining the leased sections of yard
fell on the individual contractors.
“That piece of square footage in my mind doesn’t cost us anything,” Hammer said. He felt comfortable giving the contractors a total of 10 years – or 11 for Jenkins, due to a clerical error – at their initial bid-for rates before increasing those prices. Among the first to begin operations at the yard, Superior Marine Services already had its second five-year lease renewed last year.
Commissioner John Martin disagreed, and thought the $0.08 per-square-foot rate is “artificially low.” He was in favor of having leases renewed on a month-to-month basis until the commission has time to examine and possibly modify its rates.
“I don’t think we’re ready for this decision,” Martin said.
The underlying push behind raising rates is in maintaining facilities. Harbormaster Greg Meissner explained the boatyard brings in revenue for itself in only five areas: utilities, short- and long-term storage, lift fees and leases. In order to keep in line with costs, he felt it was necessary to incrementally adjust revenue and across all areas, in the interest of fairness.
“The yard has to support itself, for the future,” said Martin.
“At some point there has to be an increase,” Commissioner David Silva acquiesced. However, he did not feel seven leases would make much of a difference, and Silva added the money the contractors bring in to the community is ultimately worth more than what they bring in to the Harbor Department.
Ultimately, after discussing their options at length, commissioners unanimously rejected having leases updated on the monthly basis, approving instead that the leases for Thompson, Keller and Jenkins be renewed at the current rate for five years.
The commission will still look into adjusting lease rates in the meantime, but in the nearer future it plans to examine the duration of the lot leases. Last month Superior Marine contractor Don Sorric approached commissioners with a suggestion for longer leases.
“We would like to have a 50-year lease,” he said. He figured such a duration would allow him to make a return on his initial investment, which he estimates is by now over $2 million. It would also make it easier to get a loan from a bank to finance future improvements than having the current five-year lease agreements.
“I can’t really take that worth with me,” Sorric continued. “Nobody’s gonna buy it on a five-year lease.”
Commissioners were amenable to the suggestion, and will be taking the issue up in a future workshop.
Last Thursday’s meeting was prefaced by another workshop, putting together a steering committee for a future Mariners Memorial at Heritage Harbor. Final plans for the project were approved by the commission at last month’s meeting.
Discussing who ought to sit on the committee, Martin wanted to see former commission chair Brennon on it, as he had been actively involved in the memorial’s early planning stages during his tenure.
“Boy. We’d be very fortunate to have him on there. The same goes for John Yeager,” Hammer added of his fellow commissioner, who was absent from the meeting.
Commissioners agreed that other steering committee members would also have some connection to the memorial wall, feeling they would be more motivated to see the project through. The committee would devise and establish a nonprofit board which would handle funds, oversee construction and report to the Port Commission on a quarterly basis. A memorandum of understanding would need to be signed between a board and the city as well, as the memorial will be on harbor-managed land.
In other commission business, a report on the status of water utility extension to several lots in the boatyard was received from Borough Manager Jeff Jabusch and Public Works director Amber Al-Haddad. In November 2014, Sorric had come forward with a request for water service at his lease lot, as required by the Occupational Safety and Health Administration. More than a year later, he had informed commissioners his request had still not been met.
In a memo Jabusch explained the project had been dropped from the top of the city’s priority list for a variety of reasons. Deadlines for several grant-funded projects took precedence for staff, including Wood Street repairs and federal grant funding for water treatment plant upgrades.
Al-Haddad was on hand to answer any questions and put forward a tentative schedule. PND Engineers have been contracted to design the manifold needed for the pipe connection, and Rock-n-Road Construction would be sending a specialist at the beginning of April to show Public Works staff how to run the fusion machines needed to weld the polyethylene piping. Al-Haddad said her department should be able to make the installation within a week’s time after that.
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