Memorandum 03-101

TO: Mayor Cushing and Homer City Council

THROUGH: Walt Wrede, City Manager

FROM: Bill Abbott, Port Director/Harbormaster

RE: Rate Change for Ice Sales

We started this year with a rate of $102.00 per ton for ice sales from the City Ice Plant at Fish Dock. This increase of $3.00 over last year’s rate of $99/ton was intended to cover two years accumulated inflation as the ice rate had not been adjusted for two years. We are now faced with a situation where it is necessary to offer a lower rate to all our customers to retain our ice sales volume. Icicle Seafoods Inc. is, under its lease agreement with the City, allowed to provide ice to its own fleet but they are now selling to fish buyers and boats that until now have been considered City customers. This has reduced our year-to-date sales volume by more than 330 tons as compared to this point in prior years. To deal with this, we propose to:

(1) Require all firms that produce and deliver ice to the Fish Dock into totes or into the holds of boats moored at Fish Dock, to report and pay the applicable wharfage fee, which under the current Tariff is $12.40 per ton on “freight NOS.” (NOS means Not Otherwise Specified).

(2) Lower our ice rate from $102/ton (before tax) to $96/ton provided this decrease is approved by City Council.

This combined approach will result in a favorable comparison of rates: City rate of $96/ton, versus our competitor’s rate of $92.40 per ton (after wharfage is included). We think this will enable the City to regain lost market share and come close to reaching revenue projections contained in this year’s budget for the Fish Dock/Ice Plant. We sell higher quality “flake ice” that is auger delivered. Auger delivered ice holds its temperature longer than “air blown ice” like our competitor produces which due to friction tends to “cake up” much quicker and melt quicker in the fish holds.

RECOMMENDATION: Approve this proposed new rate of $96.00 per ton for ice at Fish Dock.