HARBOR SYSTEM MASTER PLAN - City and Borough of Sitka

The City and Borough of Sitka (CBS) is undergoing a process to develop a Harbor System Master Plan
to help prioritize and budget for maintaining and replacing its harbor infrastructure. This rate study
report provides guidance on the moorage rates required to fund the full life cycle costs of the harbor
system’s operations, maintenance, and replacement needs. In addition to rate recommendations, the
report also discusses the Harbor Fund’s working capital requirements and presents a preliminary plan
for debt issuance to support cash flow needs.
The life cycle cost analysis suggests that, in order to account for inflation, support the cost of debt, and
increase the working capital balance to a more appropriate level, a rate increase of approximately 150
percent is required (resulting in rates that are 2.5 times the current rates, for both permanent and
transient moorage), followed by annual rate increases of 5 percent. CBS staff developed a five-year
implementation plan as an alternative to a single-year increase. This plan would spread the required
rate increase over a five-year period, with the trade-off of requiring additional debt issuance to cover
short-term cash needs. The Port and Harbors Commission supports a five-year implementation for
increasing permanent moorage rates. The recommended moorage rate plan developed by CBS staff is
shown in Table ES-1.
Moorage Type
Moorage Rate ($ per Foot)
Year 1 Year 2 Year 3 Year 4 Year 5
Flat Rate
Permanent Annual 31.68 40.44 49.20 57.96 66.72
Transient Daily, 0-80 Feet 0.87 0.91 0.96 1.01 1.06
Transient Daily, 81-150 Feet 1.49 1.56 1.64 1.72 1.81
Transient Daily, 151 Feet or Longer 2.24 2.35 2.47 2.59 2.72
The recommended annual rate increase of 5 percent is based on assumptions of 3.5 percent inflation
and 5 percent interest on debt. The rate increase appears to be most sensitive to the inflation rate,
particularly the inflation rate for capital costs. If inflation rates are lower in the future than they have
been over the past two decades, the annual rate increases could be lowered. Increasing the amount
of grant funding is also beneficial, though due to the short-term nature of grants it is most prudent to
use grants to offset debt rather than to reduce rates. It is recommended CBS revisit the Harbor Fund’s
situation every 5 to 10 years, and especially before undertaking major capital improvement projects,
to evaluate its rate situation and determine if further adjustments are necessary.