Based on the current rate structure, Wrangell’s Marine Service Center could operate at a loss over the next five, 15 and 30 years. That’s according to a newly finished Marine Service Center business plan the port and harbors department will present to the port commission.
Port Director Steve Miller will present the plan to the port commission at its Thursday night meeting.
Any rate hikes — which would maintain future revenues in line with potential expenses — would require port commission and borough assembly approval.
There are no operating losses at present, Miller said Tuesday, though any future gaps would depend on new spending and revenues.
The 30-year cost-benefit analysis, prepared by Rain Coast Data, “is a very good tool for us to use to be able to set rates that will ensure our viability into the future,” wrote Miller in his harbormaster’s report.
The borough will earn 78 cents for each dollar invested in The Marine Service Center in the next five years, and by year 30, it will fall to 66 cents for each dollar invested if the rate structure does not change.
The business plan is to assist the borough in understanding the long-term costs and revenues associated with the seven-acre Marine Service Center. It has 150-ton and 300-ton haul-out lifts and a 40-ton hydraulic trailer operated and managed by the borough. It includes a wash-down area and upland storage for more than 85 boats.
Private businesses that lease space provide repair, maintenance, fabrication and marine industry services to meet vessel owner needs. The Marine Service Center primarily caters to commercial fishing boats but also accommodates recreation and other commercial vessels.
A couple of years ago, the assembly asked the department to prepare a business plan, Miller said Jan. 12. The assembly wanted to know if, when setting rates at The Marine Service Center, that the port and harbors department wasn’t “pricing people out of business,” Miller said.
The Marine Service Center’s short-term rate for leasing shipyard space is 59 cents per square foot per month. According to the study, that should average to $637 per month for a 60-foot vessel, 47% below the study average of $1,208 compared to 14 rate structures at nine Alaska and Washington communities, according to the business plan.
Conceptually, there is 34,290 square feet of billable short-term work space in Wrangell, but the maximum functional space is 21,000 square feet.
Its long-term shipyard space rent is 37 cents per square foot per month, which according to the study averages $400 per month per vessel, 52% below the comparison study average of $829 per month for a vessel of the same size.
After looking at comparable marine lifts at shipyards in Alaska and Washington state (Hoonah, Juneau, Seward, Sitka, Bellingham, Seattle, and two in Port Townsend), Wrangell’s marine lift fee is 41% below the average rate, at $9.43 per foot of vessel length versus an average $13.28, according to the report prepared by Rain Coast Data.
The study showed if Wrangell’s short- and long-term storage fees increased to 50% from the comparison average of 47% during the low season, if the borough instituted a rate increase of 5% for all vessel storage and increased the short-term storage rate fee to $1 per square foot from 59 cents per square foot, the Marine Service Center’s return on investment would just exceed a break-even point over the next five years at about $2.8 million per year in expenses and the same in revenues.
“I’m going to be looking at rates for all of the harbors and the Marine Service Center,” Miller said. “In the past, it went up 2% every July 1. When COVID hit, they did away with that. So we just have to look at it again. We can't keep going backwards and pay the bills with inflation.”
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