By Commissioner Steve Tucker
We have been moving through the budget process for several meetings and we have had some proposed rate changes posted on the website for a while now. As can be expected, the rumor mill has been very busy.
There have been rumors and discussions of 11% moorage rate increases among other things. I want to be clear – there is no factual scenario that I can determine that could raise rates 11%.
If you look at the chart “Port of Port Townsend Boat Haven Rates 1 Cent Increase 2015,” (also located at https://portofpt.com/wp-content/uploads/2015ProposedRates-AnalysisWEB.pdf) you will notice that the proposed increase is one cent. That is one penny, from .39 to .40 cents, per square foot.
This is a formula rate structure that the moorage tenants and the Port worked out over five years ago. The square footage rate more accurately reflects the larger area (length and width) that is required to house bigger boats than just a linear rate can.
The other component in the square footage rate is the base amount. There are infrastructure costs that are common to all moored boats regardless of their size that need to be borne by the entire moorage community. Examples of these costs are restrooms, lighting, parking, security, etc. These base fees are exactly like their counterpart base fees that the PUD charges for electrical infrastructure and the City charges for its water, sewer and stormwater etc.
There are two areas that have changes in the proposed rates. The per-square-foot rate is proposed to go up one cent per square foot. The other change is in the base amount. We could have been a little more clear in explaining the change in the base amount.
Looking at the rectangle with the CURRENT data, you will see a base rate of $40. That $40 is what is currently being charged along with the square foot charge. In addition, under the current model, tenants also pay a $10 environmental charge and an $8.25 base electric fee on top of that. Over 350 slip holders currently pay a base electric fee. In other words
- Now: $40 + $10 + $8.25 = $58.25
- Proposed: $58
Based on input that we received from folks wanting a simpler bill without a list of additional fees to decipher, like their phone bill, what we are proposing is to include these fees in the new base amount. This would raise the base fee to $58 which will more fully address our current infrastructure costs.
Understand that the new base rate of $58 is the same as current base rate of $40 plus $10 environmental and $8.25 electric. Except for the 51 folks that do not have base electrical right now, the base fees are exactly the same!
For only those folks currently without base electric the new base fee would raise their total moorage fees 6.2%. This is the worst case scenario using a 25 foot boat (larger boats have a less percentage increase). We are looking at options for small boats without electric systems to be able to apply for an exemption from the base electric fee, and will be presenting this in a Commission meeting in the coming weeks. The moorage tenants have asked that the environmental fee be removed and not paid, but this is a decision that the Port Commission has not weighed in on yet.
As you can see from the chart this results in a percentage change (with the above exception) from 1.71% to 2.15%, depending on the size of your boat. There is no factual scenario that I can determine that could raise rates 11%. All in all, the moorage increase proposed is a minimal one that barely keeps pace with inflation. When looking at rates of other marinas, the Port of Port Townsend rates, including these fees, are the lowest in Jefferson County.
The Port strives to strike a balance between expenses and affordable moorage rates. This will continue to be your Port Commission’s priority.
Commissioner Tucker should have consulted his own Port web site for the correct moorage rates before launching into an evaluation of this years rate increase. The Port’s real 25 foot rate is $161.88, not $180.13 as he reports, the 30 foot rate is $198.23 not $216.96 and so on down the line. If you use the actual moorage rates listed on the Port’s web site, the new rate proposal shows an 11.3% increase for a 25 foot boat, a 10.3% increase for a 27 foot boat, and a 9.1% increase for a 30 foot boat. Even a 50 foot boat has a 4.7% increase.
Commissioner Tucker claims that the basic moorage rate also includes the $10.00 environmental fee and the $8.25 electric fee. If one accepts his premise, then he is right that the rate increase is only 2%. However the environmental fee is a surcharge and not part of the basic moorage rate. Also the electric charge is an optional service. Neither one is subject to leasehold tax. Neither is supposed to go in the general fund. Unfortunately that is not the case. For the last 13 years the environmental fee has been deposited into the general fund.
An investigation earlier this year revealed that the environmental fee on the moorage was unrelated to environmental costs in the marina and was being used by the Port to increase moorage revenue outside the agreed formula worked out between tenants and the Commission. After considerable discussion with Commissioner Tucker, there was a general agreement to rescind the environmental fee but it is removed in name only. The environmental charge remains.
The Port, having enjoyed the extra revenue for years, resists giving it up no matter whether it is unjustified. This year they proposes to convert the surcharge into a permanent fee and add the electric charge plus a 1.7% increase. With the 12.84% leasehold tax, this is a $20.59 monthly increase for everyone or $247.12 annually. For the smaller boats that is a whole month’s rent.
The reference in the president’s note to Port Townsend being the lowest rate in the area is incorrect. Looking at the two adjacent counties, Port Angeles has the lowest rates and both it and the John Wayne Marina saw a significant reduction last year and no increase this year. In fact the John Wayne Marina that has been traditionally the highest in the region will now be surpassed with the proposed 2015 Port Townsend rates. Also Port Townsend rates are basically the same as Port Ludlow, and are consistently higher than the rates in Kitsap County.
A final word about the so called “base rate”. The interpretation of the nature of the base rate in the presidents note is incorrect. Five years ago, the Port was unable to find a formula to charge by square foot rather than by linear foot. I was part of the team with the late Don Haviland and Commissioner John Collins that created the area formula. Using John Collins’ calculation, the rate structure would only be proportional to size if a factor of $40.00 was added. Though called the “base rate” it was only a statistical manipulation and had nothing to do with services offered. Even then, an additional charge had to be added to the 30 foot rate to meet the expectation of the Port. Tampering with the “base rate” by the Port to sustain the environmental fee under a different name destroys the whole logic of the system. and creates an unfair size bias as reported in the opening of this rebuttal.
Mr. Levy, thank you for your comment.
First of all, we’d like to clarify why and how is a budget but together. Each year, we look at revenues and expenses across the whole organization and use our best judgement to balance facility and service needs with our fiduciary responsibility to the taxpayer. Every Port is different, and our budget reflects the unique situation our community faces.
Secondly, we’d like to talk a bit about moorage rates. What is a moorage rate? The Port defines moorage rate as the total cost of putting your boat in the water. Since this is what we bill, we feel like this “bottom line” approach is clearer to most customers. Environmental and electric costs are part of that total cost. These costs are included in the CURRENT column below to enable making an accurate comparison. The base electric fee covers the power infrastructure that allows customers to use electricity. Actual usage, is a pass-through to the PUD. When we talk about increases in moorage rate, we’re talking about the total increase a customer can expect. As we indicated above, we project that for most customers, the total increase in cost in 2015 will be under 3%. The only exception to that would have been the customers who currently do not pay for electric service.
Here are the actual and proposed moorage costs:
You are correct, that leasehold tax will increase with this new simplified rate structure. We should have included those leasehold tax rates in the original draft table. The leasehold tax difference is $2.34. However, we want to be clear that if particular customers are certain they will not use electric services, we are working on a mechanism to remove power from the affected slips, which will exempt that customer from the electric charge.
Here is an example of 2 invoices, one from November 2014 vs. what a proposed invoice would appear like in January. On this 40-foot slip, you will see a 2.7% increase.
If this image displays too small, you can view the bill comparison by clicking here.
As always, we invite you, or any member of the public to come in and talk about your concerns/questions.