Port commissioners continued to wrangle over potential rate increases last week, holding a workshop ahead of its regular meeting on April 7.
In particular, they looked at raising rates for boatyard haulout fees, one of the Harbor Department’s five sources of revenue along with moorage, lease lots, utilities and storage.
Harbormaster Greg Meissner explained there were limited opportunities for revenue growth with utilities and lease lots, the latter largely being settled last month with the extension of five-year leases by the Borough Assembly.
Workshops have already been held regarding moorage in March and overall fee increases in January, after the Port Commission decided to resume discussions that were shelved last spring.
“We’ve spent a lot of time over the past few months,” commented commissioner Dave Silva. “We need to have some discussion on what can we raise some rates on.”
The majority of harbor rates have remained unchanged since the yard’s construction a decade ago, and Meissner has been pushing to have them increased in part to save more for long-term facility maintenance.
“The problem is we wait too long,” he told commissioners. The department’s rates and fees are not designed to increase annually to keep up with inflation, while Meissner pointed out labor and material costs continue to increase. Left unchanged for so long, he argued, adjustments start to seem deceptively large as the rate schedule falls behind.
For instance, a proposed increase of storage and work fees in February 2015 from $0.50 to $0.75 per square foot was abandoned after boatyard vendors expressed dismay at a 50-percent rise. The rise Meissner is recommending would be more in line with an across-the-board increase of 10 or 15 percent.
Several fishermen, boat owners and contractors participated in the meeting, cautioning the commission against raising rates.
Mark Mitchell – who crabs and is also a member of the Assembly – was concerned “we will lose our competitive edge, and people will stop coming here.” Mitchell said he would rather see any increase in fees matched by cuts to the department’s budget.
Otto Florschutz pointed out that Wrangell’s yard was not just competing with Hoonah or Sitka, but with larger yards like at Port Townsend, Wash. He felt that low fuel prices gave boat owners a greater reach, meaning they had more options to choose from. If Wrangell raised its rates too high, he said, it could price itself out of the market.
“You have a great business plan that can be screwed up,” Florschutz warned.
Meissner disagreed, saying Wrangell’s rates had room for readjustment.
“Our rates are about right in the middle of everyone else,” he said. “In the middle at best, if not a hair under average.”
Meissner said the cost to replace facilities at Shoemaker Bay Harbor – around $10.7 million – ought to be a wake-up call, demonstrating the need to set money aside for deferred maintenance. His department has around $3.2 million of that in reserve, with another $2.5 million approved for bonding for the Shoemaker project. Beyond that project, he pointed to other facilities and big-ticket items that will someday need replacement, including floats at Reliance Harbor and the Marine Travelift.
“In my opinion to do nothing is irresponsible,” Meissner said.
Fixing Shoemaker is currently contingent on a match from state funds, for which it is ranked second in line for assistance by the Department of Transportation. Though the governor’s budget proposed funding of $5,000,000 for DOT’s harbor program this next year, Wrangell could get skipped over unless another $1.4 million is added to it.
With that possibility looking remote and the future availability of the program uncertain, Mitchell recommended taking what money the Harbor Department currently has and using that to patch up Shoemaker.
Meissner responded that would be untenable.
“The thing’s sinking,” he said of Shoemaker’s floats. The north finger of the harbor currently is unusable, while several of Shoemaker’s stalls are too small to accommodate modern boat models.
Commissioners were undecided on how to proceed. John Yeager acknowledged the shared concern seemed to be staying competitive. In his opinion, the commission could avoid a lot of anxiety by not tackling rates this year, and he wanted to see a budget draft that focused on some increases to transient rates and long-term storage, which would largely not affect locals. Commission chair Clay Hammer likewise wanted to see a budget draft with transient rates bumped up.
Currently, the commission has until June 14 at the very latest to have a budget in to the Assembly for review. Finance director Lee Burgess pointed out though that a draft budget will be going to the Assembly for review on April 26, followed by a public workshop on May 10.
In order to meet the deadline, Meissner said the commission would have to put in a few extra workshops in addition to its next two scheduled meetings.
The next has been set for April 21 at 6 p.m., to be spent on the different incarnations of a budget based on various rate increases.
“I think we’re far from a product that we can send to the Assembly,” Yeager said.
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