Council approves port tariff without rate increase
A three-percent across the board rate increase again failed to make it into the 2018 Port of Nome Tariff. The Nome Port Commission approved the increase with a vote of 3-2 some weeks ago, but did not have the required four yes votes for the increase to become official.
The tariff went on to the Council without the increase that some port commissioners thought should be included to allow for infrastructure maintenance and unforeseen repairs. When the measure came up for first reading on the Council agenda, council members opted to consider bringing forth an amendment during second reading that would add an increase. That did not happen when the Council considered the tariff package Monday evening before the final vote. The panel adopted the tariff 6-0 in the original version handed up from the Nome Port Commission, in spite of a rationale for the increase provided by Joy Baker, port director.
She had spent time with Julie Liew, Nome’s finance director and City Manager Tom Moran concerning the FY 19 budget, Baker said. With maintenance issues coming up—$300,000 to $350,000 on the barge ramp, $20,000 to $25,000 for hydro tests, $50,000 for hangars and rollers to carry lines under the causeway, $30,000 for ladders, “the FY 19 draft budget is upside down,” Baker said. “We owe the City’s general fund $2.9 million. We have $1.7 million in reserves. We would owe $1.2 million if we paid the City today,” Baker explained. “We have to rely on the City and reimburse as we make revenue.”
The tariff, as passed, does have some specific price increases, for example, the fee for line handling, gone from $400 to $700.
The tariff language does include language to prevent the current practice followed by Vitus Energy—“over-the-side” delivery of retail petroleum products for marine fuel retail sales. This limits retail sales to petroleum products entering the port through the fuel headers and reserves the business for those who have invested in shore side infrastructure. The language which Vitus Energy wanted to see gone was this: “Over-side transfer of petroleum products is allowed only for the purpose of moving cargo between barge carriers for inbound delivery to shore or outbound delivery to coastal communities. Over-side transfer of petroleum products for the purposes of marine fuel retail sales is not allowed.”
The Nome Port Commission approved the language ruling out Vitus Energy deliveries during meetings for updating the tariff for the coming shipping season. Commissioner Scot Henderson, Bonanza Fuel manager, declared a conflict of interest while advocating for the language, citing Vitus Energy’s unfair advantage and over-the-side safety concerns, then voted on the question, which passed unanimously.
In a letter Feb. 28, Justin Charon, president of Vitus Energy, said the company did not hear a prohibition on marine bunker service in any of the ports they frequented in the Lower 48, Alaska ports or international ports. Not allowing barges to fuel ships was extremely rare. Vitus handles transient vessels requesting fuel by giving them an option of taking service offshore or in the Port of Nome.
“The only difference in price is local sales tax and port fees,” Charon wrote. Considering the conveniences and shelter afforded, Vitus prefers the Port. If the customer will pay sales tax and fees, it works well for all parties. If the proposed tariff were passed, Vitus would be providing only services offshore. A single customer who opted not to go to Nome would cost the City more in lost sales tax than a whole year of Vitus wharfage fees, Charon continued.
According to a memo from Baker on Feb. 2, Vitus paid $5,743.79 less in wharfage than an on-shore operator would have.
But please let’s consider that Vitus paid $32,787.33 in sales tax in 2017,” Charon wrote.
In a letter to the Council, Roberta “Bobbi” Quintavell, president and CEO at Sitnasuak Native Corp. addressed the issue. In reference to the tariff language, “for SNC and Bonanza to continue to be successful at the Port, the tariffs must provide equity to shore based companies to be competitive in the marine fueling business,” she said. “Currently, ‘over the side’ marine retail fuel operators at the Port are given an unfair advantage in operating costs.
“In our opinion, this serves as a disincentive for current and future onshore investment as ‘over the side’ operators can avoid paying tariffs for using the port fuel header infrastructure, which is safer,” Quintavell wrote.
The Nome Port Commission declared a desire to encourage investment in onshore infrastructure in voting to prohibit “over-the-side” deliveries. Monday evening, the Council followed their lead.
Money is getting tighter, Baker said. A project to increase moorage in the Snake River was not funded by the U. S. Dept. of Transportation TIGER Awards (Transportation Investment Generating Economic Recovery). Nome can apply again in 2018 if the feds fund the program, Baker said.
“Opportunities are fewer and farther apart,” she told the Council, adding that funding agencies want more local funding matches, meaning to leverage private money. Nome could leverage more large barges into the port, Councilman Mark Johnson suggested—a source of private money the panel agreed.
The port has moved on to address user concerns regarding USCG gold dredge regulations applying to dredges longer than 80 feet. The Port administration has scheduled a work session on March 29 with the USCG to discuss the issue further in seeking exemptions for three larger operations headed for Nome.
In other business, the Council:
• Approved the 10-year lease of City-owned land to the Federal Aviation Administration at a rate of $125 per year.
• Set the dates for the 2018 Board of Equalization session for May 2, 3 and 4, when property tax payers can bring grievances and requests for adjustment concerning the City of Nome’s 2018 tax roll.
• Voted the Nome Joint Utility System’s 2018 operations and maintenance budget into first reading as follows—estimated revenues, $12,217,115; operations and maintenance expense, $11,258,708 (prior to non-cash depreciation); net operating margin, $958, 408. The cash margins will go for funding the 2018 required extraordinary control system upgrades, annual bond and debt service principal payments and fuel inventory, which are not a part of, or included as operating and maintenance expenses in the operating and maintenance budget.
• Approved Mayor Richard Beneville’s appointment of Gay Sheffield to a vacancy on the Nome Port Commission left by the resignation of Denise Michels. Sheffield works in Nome for the University of Alaska Fairbanks Alaska Sea Grant Program. She currently participates in the Alaska Marine Mammal Stranding Network, the USCG Coastal Carcass Surveys and the Local Emergency Planning Committee. Additionally, Sheffield worked on the 2012 Review Panel: U.S. Army Corps of Engineers and State of Alaska—DOT Alaska Deep Draft Arctic Port System Study.