Port Tariff 2018 heads to Council without rate increase
The Nome Port Commission has approved this season’s port tariff schedule with no across-the-board rate increase.
However, during the meeting, after a brisk debate on whether there should be a three-percent, four-percent, or five-percent-raise in rates or no increase at all, the panel voted 3 to 2 for a three-percent rate hike, then settled back, seeming relieved that the question had been decided.
“Three to two, it passes,” Commissioner Charles Lean announced. Lean led the meeting in Chairman Jim West Jr.’s absence.
Not so fast. According to City of Nome law, a question has to have four yes votes to pass. Three votes were not enough, Joy Baker, port director, confirmed Monday. There is no across-the-board rate increase in this year’s revised port tariff unless the Nome Common Council adds an increase when the tariff goes before that body for its required approval.
Five port commissioners attended the meeting—Lean, Derek McLarty, Scot Henderson, Shane Smithheisler and Denise Michels, who attended by telephone from Anchorage. Baker also attended by phone. Apparently the commissioners did not hear Baker say, “It fails,” following the vote on the three-percent rate increase. Henderson and McLarty cast the “no” votes.
Commissioners Jim West Jr. and Russel Rowe did not attend.
Four members did constitute a quorum, according to the Nome Code of Ordinances. However, according to the Code, Section 12-10-060, concerning port meetings:
“The affirmative vote of a majority of the Commission shall be sufficient to pass upon all matters coming before it.”
“Over the past five years, the use of port facilities has been on the decline,” Seth Brumenschenkel, port user, said during comment period. For many users, a raise in tariff would cause them to procure other storage and other options for lay-down areas and work yards, he continued.
He hoped the Commission wouldn’t raise rates to make up for dwindling port use and resultant decrease in revenue, Brumenschenkel said.
Lean responded that he thought five years’ decline in revenue was not accurate.
Lean said he did not want to go without a rate increase as a cushion against unexpected need for repair issues on aging port infrastructure. “I sit here and scratch my head and think about the maintenance we’d like to do, and develop the moorage on the Snake River. We are seeing a downturn in the miners, the gold may be mined out, the fishers aren’t having a good season or the crabbers aren’t having a great season.
“I want to make sure we are in the positive,” he said. “I will vote in favor of the three-percent rate increase.”
“I agree with the staff recommendation,” Michels said. “We’re trying to expand and get things done. I’m in favor of three percent.”
However, Henderson said he did not think current economy justified rate increases.
Additionally, “for us to increase by any percent is a big ask, considering we have $600,000, “Henderson said. “To increase tariffs when other businesses are cutting costs. I’m going to vote ‘no.’”
Baker informed the port that the money that seemed to be a $600,000 surplus set to go into the fund balance already had earmarks on it.
In other business, commissioners discussed once again whether to allow Vitus Fuel or any other vendor to transfer retail fuel over-the-side in the harbor to vessels for retail sale. An offshore company does not have to sustain infrastructure onshore year around, thus allowing them to undercut onshore prices.
The Commission harkened back to a recent discussion in Nome Common Council where the consensus was to ban retail sales side-to-side in the harbor, or to require prices to equal or exceed those charged by onshore vendors as a disincentive for retail sales in the port harbor.
Port Commissioner Scot Henderson discussed the issue of side-to-side vending of fuel to vessels in the harbor by competitor Vitus Fuel. Henderson is the manager of Sitnasuak Native Corp.’s business, Bonanza Fuel, Inc. Figuratively wearing his port hat, Henderson urged the Commission to forbid fuel transfer in the harbor for reasons of safety.
“My position, and again I represent a shore based operator, is that it adds significant risk to the port, risk that doesn’t need to be there in an already crowded port,” Henderson said.
Commissioners vocalized a reluctance to allow “offshore” companies to sell and deliver fuel alongside vessels in the harbor as it would chill the development and viability of infrastructure provided by local businesses, such as Bonanza.
“I was thinking about safety and the fact operators who have onshore infrastructure participate in our oil spill response team,” Lean said.
“I represent [oil spill response]. You report it and we clean it up,” said local mariner Howard Farley from the audience.
“Nevertheless, local people are responsible in part for the cleanup. Chadux comes in and does the initial cleanup.”
Henderson had canvassed three other ports in Alaska—Kodiak, Seward and Valdez, he said. They didn’t allow retail side to side transfers.
“The overall consensus was that it doesn’t make sense when there is already onshore infrastructure,” Henderson said. “Mobile fueling presents a greater risk of spills than using shore-based operators.”
If the Commission were to “pull the safety card,” Harbormaster Lucas Stotts said, there should be no barge-to-barge over-the-side transfers.
Over-the-side bulk transfers probably need to continue but just getting rid of retail over the side sales would take care of the issue entirely, McLarty offered.
Bulk transfers also occur between barges, but not for retail.
“Bulk transfer is sometimes necessary, regardless of shore-based infrastructure,” Baker said. “I think because they have done an exemplary job of doing it safely over the last 30 years, there is no reason to penalize them because of the retail sales issue.
“I think the answer would be to preclude the ability for offshore carriers to deliver fuel inside the harbor over the side,” she said. “It addresses the issue and goes to the heart of the problem identified by Council members and assures that we are looking out for the local companies that have invested in the community.”
The Commission agreed, voting unanimously to ban retail fuel sales over the side to vessels inside the harbor.
The Commission voted to put suggested language provided by the City’s attorney into the 2018 Port Tariff.