Memorandum 15-137 Harbor Rate Increase and Northern Economics Contract

Memorandum 15-137

TO:                       MAYOR BETH WYTHE & HOMER CITY COUNCIL

FROM:                  BRYAN HAWKINS, PORT DIRECTOR/HARBORMASTER

DATE:                   AUGUST 5, 2015

SUBJECT:           HOMER HARBOR RATE INCREASE & CONTRACT FOR NORTHERN ECONOMICS

As you know, the Port and Harbor Advisory Commission has been hard at work the past year on the subject of harbor moorage rates and fee structure, with a goal of sustainable and equitable rates for Homer Harbor’s operations and maintenance.

Resolution 15-072 responds to Northern Economics’ 2013 harbor rate study recommending the moorage fees in the harbor be increased by 32% in one year.  The commission decided that this increase needed to be implemented over a longer period; it is recommended the increase be implemented over ten years at a rate of 3.2% per year, plus the annual CPI increase for inflation-proofing.

Further, the commission’s secondary goal regarding rates has to do with equitability and the application of the fee structure to harbor users.  Our current fee structure is a per linear foot model.  The commission first studied and discussed a square foot model, but after much input from large vessel owners that a square foot model was unfair, they ultimately decided against it.  The commission then began looking into a graduated linear method for applying the rates to harbor users.  After much discussion over the past several meetings, the commission agreed by vote to contract with Northern Economics to assist the Port and Harbor Advisory Commission and staff in developing a graduated moorage rate structure, accompanied by a linear method version for comparison.

Resolution 15-072 recommends changes to the terminal tariff in support of the work being accomplished by the Port and Harbor Advisory Commission.  Original implementation dates suggested by the commission had rate increases and a new rate structure taking place within this year.  Harbor staff recommended adjusted implementation dates so changes could be transitioned into our normal budget cycle.  Staff also discovered that the current Marina billing software would not support a different billing method (graduated linear).  As this software is out of date and falling further and further behind in supplying our needs, Harbor Staff has been working on a replacement software program and hope to have new billing software in place sometime in 2016; because of this software issue staff recommends a new rate model being implemented after January 1, 2017.

Recommendation

Approve Resolution 15-073 which approves a short-term contract with Northern Economics, not to exceed $20,000, for the purpose of developing a graduated rate model for moorage rates, as well as a comparison in the linear rate method; approve the recommendation by the Port and Harbor Advisory Commission to increase moorage rates in the harbor by 3.2% per year plus the annual CPI adjustment for the next ten years; and approve Resolution 15-072 which amends the Homer Terminal Tariff to reflect the  moorage rate increases per the outlined implementation schedule.