Homer Alaska - News

Story last updated at 4:12 PM on Wednesday, April 25, 2012

Increases in harbor fees proposed

Money would be used to pay for bond to finance improvements

By Michael Armstrong
Staff Writer

If comments from mariners are any indication, the Port and Harbor Commission's proposed rate schedule that would increase fees on everything from stall rentals to fuel and ice will be as contentious as the city's new water and sewer rates.

The commission held a public hearing on the proposal Wednesday night. Other hearings are scheduled for May 14 and May 29 when the plan goes to the Homer City Council. The council will act on the fees on May 29.

At issue is a plan to partially fund $12.4 million in port and harbor improvements with an $8 million revenue bond. By July 1, the city plans to submit an application to the state's Municipal Harbors grant program. To qualify for a proposed $4.1 million grant, the city must identify $4.1 million in matching funds.

Because some harbor projects like a port and harbor building and harbor entrance erosion control can't be funded with the state grant, another $3.8 million would come from local funding on top of the $4.1 million match. The city would pay for its share with a proposed $8.1 million revenue bond. Proposed projects include:

• Port and harbor building, $1.6 million;

• Harbor entrance erosion control, $2.2 million;

• Ramp 3 gangway and approach, $795,000;

• Harbor float replacement, $6.7 million; and

• An upgrade to System 5, the large vessel dock, that would add more power stations, $971,000.

The big debate for harbor users is how to pay for an annual $572,000 bond payment.

The city's proposal? Increase harbor fees, established in a list called a tariff. Those increases would be phased in over two years. Fees were last increased 3 percent in 2011, zero in 2010, 10 percent in 2009 and zero in 2008. The proposed increases include:

• A fuel wharfage increase of 2 cents a gallon by 2013;

• A moorage increase of 15 percent;

• An ice fee increase of 10 percent;

• A fee of $2 a person for all commercial passenger vessels taking people out for hire, including water taxis, tour boats and charter boats.

That passenger fee is already on the books, but has only been implemented for boats bringing cruise ship passengers from ships anchored in the bay, said Harbormaster Bryan Hawkins. Imposing a fee on boat passengers has met stiff protest from water taxi and tour boat operators.

"That's a really bad thing," said Mako Haggerty, owner of Mako's Water Taxi. "It's picking on one sector of harbor users. It's not across the board."

"An absolute nightmare," Dave Lyon, owner of Ashore Water Taxi, called the proposal. "Trying to get me to keep track of their two bucks, I'm not very happy with that. If they want two bucks, they can figure a way to keep track of it themselves."

Haggerty and Lyon both noted water taxis dropping off passengers in Kachemak Bay State Park pay a $4 a person user fee. Because water taxis take frequent trips daily around the bay, often coordinating with other operators to pick up and drop off, accounting would be more difficult than a straight $12 a six-pack charge for a charter boat.

Hawkins said the need to raise fees to pay for a bond speaks to a problem with the Port and Harbor reserve fund: an inadequate depreciation reserve. Some might wonder why the city hasn't put sufficient payments in a depreciation account to fund anticipated harbor maintenance.

"They're singing my song," Hawkins said.

Auditors have said the harbor reserves balance should be $10 million, not its current $1.2 million. The annual transfer to the reserves balance should be $1.4 million and not an actual $440,000.

"We're just not putting enough money into them," Hawkins said of the reserves. "Our fees are not supporting them."

Like a used car with bad tires and a leaky radiator, the city also got ownership from the state in 2000 of a harbor in less-than-perfect condition.

"We said, 'Thank you very much for the harbor, but we can't help but notice most of the stuff is worn out,'" Hawkins said.

That's part of the reason for the Municipal Harbors grant program — a way for the state to pay for maintenance it had neglected.

In the long view, the port and harbor has to be managed and paid for so it can sustain itself, Hawkins said. In a discussion of increased fees, he said he hopes the conversation will lead to hiring a firm that can help the city review the fee structure with a goal of setting a sustainable rate. That's a problem harbors across the state face, he said.

"Alaska in general has not had the harbor fees that we could sustain them with," Hawkins said.

The city faces a deadline of July 1 to submit its Municipal Harbors grant application.

Michael Armstrong can be reached at michael.armstrong@homernews.com