Port needs revenue, seeks rate increases

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There’s no better way to say it – the Port of Port Townsend needs more operating cash to stay afloat.

Raising user fees, attracting new streams of business revenue, potentially raising property taxes and operating more efficiently are all part of the solution, port officials told about 30 people who attended a moorage rate workshop Feb. 1.

Port commissioners are poised to vote Feb. 8 on proposed 10-16 percent rate increases for moorage, launch ramps and recreational vehicle categories. Soon to follow are proposals for Jefferson County International Airport, and the boatyard/shipyard rates.

“The port has been on a trajectory toward insolvency for quite sometime,” said Brad Clinefelter, port commissioner, last Wednesday. The lack of planning means a “day of reckoning” is coming, which the current elected commissioners and staff are doing their best to confront.

Capital project needs are paramount, said Sam Gibboney, port executive director.

“We need $12 million in the next five years,” Gibboney said, to address capital projects, such as replacing the Point Hudson jetty, upgrading the wastewater treatment system to comply with state environmental regulations, repairing the Port Townsend Boat Haven breakwater, C/D Dock renovation and net float, and dredging the Quilcene marina entrance dredging, plus dock repair.

These are “mission critical” projects,” Gibboney said. “If we don’t do them, the business stops.”

Several audience members – moorage patrons – expressed concern that the port’s quest for cash could sink the ship by forcing people of modest means to remove their wooden boats, which undercuts the local maritime culture. Wooden boats are not “hobbies,” as some have suggested, but a reflection of community heritage. Another moorage patron, also a marine trades business owner, suggested rate increases mean businesses likely have to raise prices, which could deter customers and cut again into port profits.

There were also public comments that higher user fees are more appropriate than additional property taxes, and the port commission was remiss for not incrementally raising rates over the years. Gibboney has floated the idea of creating an industrial development district, which the commission could use to raise property taxes specifically for capital projects. The public discussion on that topic has not been set.

Gibboney said the port understands that any rate increase, be it $47 a year for some boat owners or $450 for others, is no trivial amount depending on an individual’s circumstance. However, the port needs to be “realistic” and that means generating more income.

The port used most of its bonding capacity on a pair of administrative buildings, and has been drawing down cash reserves: $5.3 million in 2010 became $2.8 million at last year’s end.

Gibboney said that port staff is also working to modernize business practices, establish a comprehensive program for grants and other support funding, seek cost-saving efficiencies wherever possible and eliminate bad debt associated with derelict vessels.

As Gibboney had said at a Jan. 25 meeting, port staff recognizes that “no one line of business in this organization can bear the cost,” hence the need for “across the board” rate increases. She has not yet considered what rate increases may be sought for 2018.

OLD INFRASTRUCTURE

Nationally, infrastructure spending peaked from 1956 to 1961 and has gone downward ever since. Gibboney said the port cannot rely on the state or federal governments to help.

“That burden of repairing and maintaining” infrastructure has shifted to local users, Gibboney said.

The tip of Boat Haven breakwater’s oldest section, about a quarter of the entire breakwater, was repaired last month and should last from five to 10 years. But the entire breakwater is deteriorating, putting hundreds of boats – and the 400-450 marine trades jobs on port property – at risk. Gibboney said the U.S. Army Corps of Engineers, which built the breakwater, recently told her there is no federal money for a marina of this size, and if the breakwater were to fail, the port would be responsible for immediately clearing debris from the channel.

Gibboney spent Jan. 31 in Olympia meeting with legislators, and encouraged people to contact 24th District legislators in Olympia – Sen. Kevin Van de Wege, Rep. Mike Chapmen and Rep. Steve Tharinger (who chairs the House Capital Projects Committee) – and let them know the port’s infrastructure needs.

NEW REVENUE

Greg Englin, director of operations and business development, presented a list of his revenue target areas, which include developing an RV park at Herb Beck Marina in Quilcene, and increasing the RV revenue at Point Hudson, which already is at $310,000. Infrastructure cost is low to develop or enhance RV offerings, Englin said, compared to revenue opportunities.

“Total return on investment” is key, he said. “We’re trying to get the biggest bang for our buck.”

Going after the tug and barge business, for example, could be more lucrative in the long run for marine trades businesses, and the port, than making an effort to fill empty slips with small sailboats, he noted.

As the port generates more revenue, perhaps from commercial boats, it “eases pressure on rates,” Englin said.

Some things are out of the port’s control. For example, 2016 was a “horrific year” for most commercial salmon fisheries, so those boat owners are likely spending less money this year on repairs and maintenance. The port needs to be ready and engaged to recruit that business when the fishermen do have more money to spend, Englin noted.

Englin even said the port would lease the new administration building if there were a tenant, and move into trailers if it creates new revenue. “Nothing is off the table for us,” he said.

NEXT MEETING

The port commission conducts a public workshop at 9:30 a.m., Feb. 8 to discuss the stormwater engineering report, a project the state Department of Ecology wants completed in September. The commission meets at 1 p.m. in regular session, with an agenda that includes a possible decision on the proposed rate schedule for marina, RV and ramps. The meetings take place at the port commission building, 333 Benedict St. in Port Townsend.