Port panel mulls request for wharfage fee discount by commission chair

Tensions flared during Thursday’s Port Commission meeting as commissioners discussed exploring changes to the current wharfarge tariff charges for rock, sand and gravel cargo entering and exiting at the Port of Nome.

Commissioners at the August 19 meeting learned of a request for a volume discount on wharfage rates from Nome’s Board of Trade, Inc., the gravel-shipping arm of Jim West Jr.’s business. West currently chairs the Port Commission, also owns a bar by the same name located on Front Street in Nome.

Currently, the Port of Nome has three charge tiers for rock, sand and gravel shipments. Vessels must pay $2.86 per ton on any rock, sand and gravel load under 2,000 tons, $2.19 per ton for any shipment between 2,000 and 40,000 tons, and $1.85 per ton for any project over 40,000 tons.

In April of this year, West submitted a request with the city and the Port of Nome for a volume discount: a project his company took on would require more than 250,000 tons of gravel shipment, significantly more than the 40,000 tier in the current tariff at the Port of Nome.

“According to the tariff, if a project goes over 40,000 tons, a contractor can request a negotiated rate for a single project,” West explained to his fellow commissioners before recusing himself from discussions. “This is a new territory that is out there, and we’ve never had one single project this big, so our tariffs, it’s only a negotiated rate.”

Two other commissioners, Scot Henderson and Shane Smithhisler, participated in discussions but did not vote due to concerns regarding conflicts of interest in the project. Commissioner Charlie Lean chaired the commission during the tariff discussions.

Commissioners and city staff discussed who was responsible for negotiating and approving the discount rate request, particularly because the request came from a commissioner.

“When I first heard this, I was like, why are we even involved here?” asked Commissioner Scot Henderson. “Isn’t this a city staff issue? The city manager already has the authority to negotiate on behalf of the city to provide discounted rates [in some circumstances], so what makes this different?”

Acting Chairperson Charlie Lean explained that special circumstances around this request made the negotiation more complicated. “More than one member here has a conflict [of interest] so it puts the port staff at a real disadvantage,” he explained. “Same goes for the city manager. So that kind of dumps it in the lap of the port commission, and that advises the council, but we, too, run that risk of conflict on a bigger scale.”

City Manager Glenn Steckman encouraged commissioners to explore changing tariff rates on large gravel shipments like this project. “One thing that I have discovered in the last couple months is that, if this port is going to develop, we need to have more competitive rates on larger quantities going through the port,” he said. “What we’re trying to do is to put the port in a better financial shape so that there was going to be money there to address the longterm needs and capital improvements to the port.”

The request, initially submitted in April, didn’t make it in front of the commissioners until August for several reasons, including no commission meetings in June due to no quorum and July due to the port’s open house event.

Following over an hour of discussion, Commissioner Russell Rowe, who attended the meeting via zoom, made a motion for the commission to support negotiations taking place between the Board of Trade and the City of Nome. Of the four commissioners able to vote on the motion, three voted in favor of it, and one against. Commissioners Gay Sheffield, Lean, and Row opted to support the motion, while Commissioner Derek McLarty did not. Commissioners West, Smithhisler and Henderson abstained.

In addition to tariff discussions, commissioners heard updates from Harbormaster Lucas Stotts and Port Director Joy Baker. Stotts shared details about ongoing construction updates and said the port has heard received information about 27 possible cruise ship stops in Nome next season.

Baker offered details and updates regarding design phase of the Arctic Deep Draft Port and is participating in several technical design meetings.

“After teams were defined, a technical meeting was held on July 29, 2021, to make introductions, review the design components with the Corps and ask technical questions to ensure each of the project scopes reflect the exact layer expected by the other design teams,” she wrote in her commission memo to Steckman.

At this point in time, the Army Corps of Engineers has not scheduled a design charrette for the project, although one has been in the works throughout the summer.

Commissioners planned a work session regarding port and land infrastructure for Wednesday, August 25, at 5:30 p.m. The goal, they said, was to discuss landside development, including changes to road layouts, traffic flow, warehouses, storage space, and more.

The next regular port commission meeting is slated to occur at Old St. Joes from 5-8 p.m. on September 16.