Councilors have been briefed by the Chief Financial Officer on several proposed changes for Northern Port
Powell River City Councilors heard a number of port recommendations, including aligning berth rates in northern ports with coastal averages.
At the Finance Committee meeting on June 23, Chief Financial Officer Mallory Denniston outlined the proposed new tariffs for Northern Port and the Articles of Rules. The present statutes were adopted on December 16, 2021.
“The Council has currently adopted these articles of association, but further information has been requested and further reforms are proposed in 2022, which will come into effect on 1 January 2023,” Denniston said. “Finance and Operations have worked together to propose Clause 2702, which incorporates the changes.”
Denniston said that under a proposed January 1, 2023 bylaw, mooring contract holders would be required to maintain $1 million in marine liability insurance. Another change brings clarity to the ancillary rule on transfer of rights to prevent the contracts involving the ship’s owner from being transferred with the ship in the event of a sale.
Denniston said the third amendment to the bylaws is a four-year rate plan, backed by thorough research and analysis, and a potential rate system for residents of the city, Catheet Regional District (up 10 percent) and everyone else. regions (15 percent higher).
The analysis supported a 15 percent increase in annual berth rates in 2023, 2024 and 2025, and a two percent increase thereafter, Denniston said.
“It would stand up to average and be within easy reach of Discovery Harbor on the Campbell River, which was identified as our key comparative,” she said.
Regarding marine liability insurance, Denniston said the current sub-rule does not require berth contract holders to have marine liability insurance, which could have consequences for the city and contract holders. She said it protects the city from paying for damage to port infrastructure that shipowners can’t afford.
Denniston said the insurance also covers the cost of debris removal and contamination if a ship sinks. She said it protects the city in the scenario where the owner cannot pay, resulting in the city having to cover the cost of completing the work.
Denniston said of the 20 other BC ports surveyed, 17 require marine liability insurance and three are unidentified.
“This is a good sign that the port industry is supporting ships with marine liability insurance,” Denniston said.
He then explained the non-allocation component of the proposed sub-rule, noting that a berth contract is personal to the owner and not between the city and the ship. When a ship is sold, the contract does not pass to the new owner.
Then Denniston outlined the mooring rate analysis.
“After assessing a series of questions, she was instructed to conduct a thorough review of berth rates in ports,” she said. “Are today’s rates sufficient to cover annual costs and future major capital replacement costs?”
She said $12 million is expected to be needed to replace the floats in North Harbor in 2041.
“Other questions are: are the city’s berth prices competitive and how do the city’s prices compare to other ports?” asked Denison. “The employees have carried out many analyzes and surveys in ports and also created cash flow models. It is helpful to compare current and proposed berth prices for other BC ports to ensure the city is competitive and comparable.
Looking at rates, Denniston said the Powell River’s annual berth rate ranked 18th out of 21 ports surveyed, 27 percent below the average and 47 percent below Discovery Harbor.
“With the proposed rate increase, the Powell River will increase to 16 out of 21 in 2023,” Denniston said. “By 2024, the Powell River will be 10 out of 21, one percent below average and 14 percent below Discovery Harbor.
“In 2025, after the last 15 percent surge, the Powell River will sink 11 percent above average and 0.5 percent above Discovery Harbor if this proposed charter is adopted.”
In terms of dollar impact, Denniston statistics showed that a 25-foot boat will cost $2,004 annually in 2023, up from $1,743 in 2022 to $261, or $22 per month. For the same boat, the mooring fee is $2,305 in 2024 and $2,651 in 2025.
Another recommended change is the abolition of the senior citizen allowance, which is currently 11 percent. According to Denniston, 47 percent of contract holders in Nordhafen are senior citizens.
Denniston said the city currently remits North Harbor profits to the North Harbor Reserve, which accrues interest annually. It says all capital costs for the port come from the reserve, so property taxpayers are not subsidizing the northern port.
The city is also not compensated for the business property tax that would otherwise be incurred in the privately owned port and for the risk involved in operating the port.
“Put another way, the benefit to property taxpayers of operating a port in the city is that the city can collect not only the commercial property tax, but also the profit that would otherwise be held by a private entity,” Deniston said. “This return on investment in the city can be used, at the direction of the council, including to offset property tax increases.”
In Denniston’s financial model, cash keeps growing until the floats need to be rebuilt in 2041. The reserve is formed to fund half of the new floats and is also funded by loans.
Denniston said the city could make a profit of $250,000 a year, which would put the city, which operates the port at risk, skipping the tax revenue for private reasons.
“At these prices, I think it’s very strong financial asset management,” Denniston said.
After extensive discussion, the committee voted to send the proposed by-laws to the city council for the first three readings.