Sitka is about a year away from opening a publicly-owned marine haulout and shipyard. And while many of the construction finances have been hammered out, some big questions remain: Who will run it? And should it be expected to make money, break even, or be subsidized by other city revenue?
The board of Sitka’s industrial park considered all the options at its December 14 meeting.
The most obvious way to run Sitka’s new public boatyard would be to incorporate it into the harbor system. But that would not be the easy way.
Municipal administrator John Leach told the board of the Gary Paxton Industrial Park, where the boatyard and haulout will be located, that city government is understaffed, and likely to remain that way.
Turning the haulout over to the Harbor Department was a non-starter.
“I can’t ask the people that I have now to take on more and not get any more,” Leach said. “I think we’re at the point where we’re tapped out.”
But Leach did think it was reasonable to restore the park manager position to the city payroll, add an administrative assistant, and contract out the rest of the shipyard’s services, including the operation of the marine haulout.
Park director Garry White wanted his board involved at the top level of management – not to set rates – but to annually approve the rates proposed by the contract operators of the haulout. Based on what Sitka’s last private haulout operator charged, and the current rate of $25 per foot in Juneau, he felt Sitka’s sweet spot to be around $18 per foot. Board oversight would be a check on this rate going too high.
“The public oversight allows the community to be able to adjust the rates based off whether we’re making money or losing money,” White said. “Because if there’s no public oversight, and the guy is charging $68 bucks a foot, he’s making money and his organization’s making money, but he’s leveraging this city asset and city investment to do so.”
Board member Chad Goeden thought it was premature to discuss a haulout rate for Sitka’s yet-to-be-built boat yard. If anything, he preferred starting high, and lowering the rate as the yard penciled out.
“Who’s our customer?” he asked. “Who are we doing this for? For the benefit of the fleet or for the benefit of the community? In my mind, we’re stewards of the resources for the benefit of the community, which is why I’m very leery about this $18 per foot.”
The model of a privately-run business operating a public asset already exists in Sitka. The city’s cold storage facility is leased by local seafood processors, and available to everyone. Leach said the assembly reviews the deal every year.
“With the Marine Services Center, the cold storage there, we lease that to the operators, and they have a requirement to provide a certain percentage of public storage, and the public storage rate is set in their contracts,” Leach explained. “So (the operators) recommend the rates to the assembly once a year, and those rates have to be within a certain percentage of the Puget Sound rates. So they can’t just run them up through the roof.”
Board member Casey Campbell is a boat owner. He thought local customers would pay a small premium in order to haul out in Sitka.
“There are going to be some differences,” he said. “You might not want to run and burn the fuel to go to Wrangell. So maybe we could charge a little bit more because the boats are already here.”
Board members eventually settled on a hybrid boat yard, operated along the lines of the Marine Services Center, with rates approved by the board, a couple of city staff to manage and maintain the facility, and a contractor to haul and block boats. Administrator Leach said the plan could be refined even further.
“You could put a revenue sharing model together,” he said. “For every boat you pull, the city keeps X amount of the fee, and the contractor keeps X amount of fee. And they’re responsible for bringing in their own employees to do that.”
The board of Sitka’s Industrial Park took no formal action on the plan, but agreed to forward it to the assembly as a recommendation for discussion.
