Council blocks rate increase at Port of Nome

The Nome Common Council had three action items on its meeting agenda March 28 that the panel hashed over at length with benefit of a vocal public audience.
Council members voted to approve language in a revised tariff at Port of Nome for the upcoming season, but deleted its 10-percent across-the-board rate increase.
The Nome Port Commission revised the tariff and advocated the price increase to restore a contingency fund for maintenance and unexpected expenses. The advisory group approved the document Feb. 18 and passed it on to the council for its approval.
Nothing doing, said community business people, fishers and miners, who took the podium to urge the council not to approve the price increase that they said would cause consumer prices to go up and put a burden on businesses.

Port Commissioner Charles Lean spoke to the need for a price increase. Lack of a reserve fund would curtain the possibility to get grants and meet the expenses of maintenance revisions and repairs, he said. The 10 percent increase was proposed to create a rainy day fund for up coming needs

“It is important to have that,” Lean said, going down a list of repairs starting with rip-rap. If the port did not have a rainy day fund for unexpected expenses, the city would have to raise money by sales tax, property tax or some emergency tax, Lean said.  The port would want to raise funds over time or be faced with unexpected and uncovered costs, “get clobbered between the eyes by a two-by-four,” Lean observed.

Joy Baker, port director, also pushed for the increase to produce a reserve fund as a safety net. A fuel line valve had to be replaced at a cost of $80,000. If another valve failed, $70,000 to $80,000 would have to come out of operations money.

Julie Liew, City of Nome finance director, also underlined the need, saying that a previous reserve account had been tapped for high mast lights, LED lights in 2013. Savings had been drawn down over the past five years, she said, for improvements.

And, how would the port fund upcoming repairs on the seawall, and what if five years down the road, erosion had to be fixed? she asked.

Members of the public said raising prices had met a limit, that the port should cut expenses or find another way to balance the budget, not raise prices. Some said they recognized a need for a rainy day fund, but it ought to be realized through cutting costs.

Adem Boeckmann, fisherman, suggested that the city use the NSEDC Community Development Share coming along annually, a use that would benefit everyone, including kids, instead of using it for special groups and special projects as usually assigned. Mining and fishing industries were strapped, he said, and “fuel and freight are going to go up.”

“Where little fishing boats tie up, we are all paying,” Councilman Lew Tobin commented.

Fishermen paid because Norton Sound Economic Development paid for it, Boeckmann replied. NSEDC is a Community Development Quota organization established to turn fishing profits back to communities.

Passing a rate increase at the port would make prices go higher for local businesses across the board, Robert Hafner, executive director of Nome Chamber of Commerce said.  “We are having a tough time in this town. If we keep jacking up prices, nobody will live here.”

.“We don’t feel we can afford to raise costs any longer,” Mark Johnson said. “We need to budget to meet the revenue coming in.”

Barge fees to the remote town are not far away from airfreight costs, unless one ships full containers, Bill Howell of Airport Pizza observed. “Not much savings there.”

“We’ve gone through four years’ hydrocarbon poverty,” Howell said. “The city has benefited [through sales tax.] “It’s been rape and pillage, rape and pillage.”

A raise in port rates was “like throwing another brick on the wagon,” Howell concluded. “It’s not like you are Dillinger and I am the bank. Stop it.”

He agreed with Lean on the need for a port rainy day fund, but not through a raise in port rates, but by finding ways to save money.

The city can raise rates only so long. We have to cut costs, he said.

The port had grown exponentially, Tom Moran, city manager, said. There was a need for a reserve fund to meet periodic maintenance costs.

The seawall, erected around 1949 was years past its 50-year life the city was just scheduling repairs, Lean said. The causeway was half way through its life expectancy. The valves that failed were years past their prime.

The Port Commission should have had future needs prioritized when they were spending the reserves down to zero, Councilman Matt Culley told Lean. The council was also responsible because they allowed this to happen, Culley said.

“You spent our reserves down knowing we could have a terrible catastrophe,” Culley said. “We knew we had things coming up and we spent the reserve fund to zero.

“What concerns me is if we increase 10 percent in revenue and decreases 10 percent in expenses, we still don’t have a contingency fund”, Culley said. “We got too big too fast. With growth we increased revenue, but we also spent down the reserves. We got big eyes and big britches. It’s an easy solution to come back and say ‘can we get a 10 percent increase.’”

Culley was correct, Councilman Jerald Brown said. “The responsibility belongs to the council.”

A consultant retained by the Port Commission in 2013 had said the Port of Nome needed a 50 percent increase, but the city backed off with 10 percent here, five percent there, Brown said. “Hopefully sometime in the future we’d get caught up. The future is now.” The port was going to need belt tightening, he said.

The consultant said the port needed a 50-percent increase in fees to cover what the port was doing, but “do we need all we are doing?” Johnson asked.

 He knew the Port of Nome was important in Nome’s part of the world, Mayor Richard Beneville said. He appreciated the public’s comments and conceded, “We are not going to solve the problems of the world on the backs of ‘Nomans.’”

Beneville and several others suggested that the tariff go back to the Nome Port Commission to have the increase cut to 5 percent.

No good, Moran said. The Port of Nome was an advisory group; the council needed to set the increase and then vote on it. There were changes in the language on rules and operations, besides the rate increase figures, and the document needed to get to users ASAP, he said. Joy Baker, port director, agreed, reminding the council that the tariff was already a month behind schedule in getting into port users’ hands for the season’s planning.

The council attempted to approve the tariff with only a five-percent increase. Tobin voted yes; Brown, Culley and Green voted no. Then the council succeeded in unanimously approving the tariff language with a zero increase in rates.

 

In other business

The Council voted to table an ordinance authorizing a property exchange deal that would make City of Nome the owner of the White Alice communication towers site at the top of Anvil Mountain by trading two lots in town to Sitnasuak Native Corp. The city would lease back the two lots west of Airport Pizza.

Securing the historic site would benefit the community as a whole, Moran said.

“There were 31 sites. We are the last,” he said. Contamination at the site had been cleaned and the state Dept. of Environmental Conservation reports no further action is necessary.

The city has a perpetual easement on the road up to the tower site as well as the road behind the towers. Under these circumstances, the city would not have to take on maintenance, John Handeland said. Handeland, utility manager, has for years advocated preservation of the towers.

He loves what the towers stand for historically, Culley said, but he felt Sitnasuak shareholders ought to stand up and save the towers, not the city, he said.

The U.S.Air Force was willing to demolish the towers for Sitnasuak at no cost. Sitnasuak needed a letter of intent from the City so the Native Corporation wouldn’t be stuck with demolition of the towers if it turns down the Air Force offer, Moran explained.

Beneville pushed for the city to go forward with the land exchange for the historical value of the site and as a safety landmark for travelers including pilots.

The site fascinated him, said Bob Hafner from the audience.

“I can look down from White Alice and see the T-hangar from the Lendlease Program when we were friends with Russia; a short time later there were the [early warning system] towers when things changed and we were enemies.”

As there were only four members of the council present March 28, those four decided to table the debate on the White Alice land swap until all were present at the next meeting.

The question could wait until the April 11 council meeting, Moran said, but then the decision had to be made so Sitnasuak could meet a deadline with the Air Force.

The council approved a resolution setting the dates for the 2016 Board of Equalization as Wednesday, May 6 at 5:30 p.m. in Council Chambers and will continue through Friday, May 6, if necessary. The council sits as the BOE and hears grievances and requests for adjustments concerning the City of Nome’s 2016 tax roll.
Richard Beneville nominated Mark Johnson, C.P.A. to fill a seat on the Nome Port Commission left vacant when Rolland Trowbridge resigned. The council approved Johnson’s appointment. Scot Henderson had also submitted an application.

Council members Jerald Brown, Matt Culley, Louis Green Sr. and Lew Tobin attended the meeting. Councilmen Stanley Andersen and Thomas Sparks were excused, according to Nome City Clerk Bryant Hammond.

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