Homer's Harbor Expansion Fantasy
Falling asleep to the fairy tail of infinite growth
As he waves at the Homer bluff from the conference room in the City of Homer Harbor Office, Harbormaster Brian Hawkins says that this is the best place in Alaska for a big large-vessel port because it is road-connected, has an airstrip, is protected from the sedimentation issues of Cook Inlet, and has unlimited room for growth. He says Homer’s port expansion is the Corps of Engineers Colonel’s #1 project for the State of Alaska, and that Senator Murkowski has been working on it personally.
Back in 2008, the Army Corps of Engineers did an analysis of the costs and benefit of a harbor expansion, with resoundingly negative results: yes, there are a lot of small boats who want slips in the harbor, and yes our harbor wasn’t built for large vessels, but expansion would cost far more than the benefits it would bring. In the Corps' cost-benefit scoring system, you need to score a minimum of 1 to move ahead with a project, and we scored .5 - .7.
But now we are moving ahead. We could begin a harbor expansion starting in 3 years, and the Corps of Engineers “General Investigation” into the feasibility of the project —$3 million and 3 years of feasibility, and environmental impact analysis—officially started March 30, 2023. The Corps of Engineers will be holding a scoping meeting on May 18.
What changed? In 2019, the City worked with the Corps of Engineers to do a second cost-benefit analysis of a port expansion, seeking to drive down the valuation of costs and drive up benefits. They wanted to get to that magic number “1” in the Corps scoring, so that they could go ahead. Sadly, the document used to weigh benefits against costs – the document that is the reason we are having a real conversation about harbor expansion now—the “Homer Planning Assistance to States (PAS) Section 22 Navigation Improvements Technical Report” is full of hot air, fantasy, and in some important instances, willful misrepresentation. It is because of this fanciful document that the City is spending $1.3 million, the State is spending $750,000, and the federal government is spending $1.5 million to move into the next phase of planning.
What follows are some take-aways from the Corps of Engineers' preliminary cost-benefit assessment and recent conversations with Harbormaster Brian Hawkins and people on the City Port and Harbor Commission.
The fabulous nature of the Corps’ technical report shows that due diligence has not been done by the City of Homer staff, City Council, the Port and Harbor Commission, the media, or by the public. But here we are. The process going forward cannot look the way it has looked up to this point. If we continue to talk about this expansion with inflated and unfounded “calculations” of benefits and empty cost estimates, we may saddle ourselves with the significant expense of constructing and maintaining a huge harbor built on a nice stable mix of thin air and hubris.
The 2019 Corps of Engineers analysis looked at a ballpark cost of $72.5 million to $81 million for the expansion. But now, the Harbormaster says we are looking at a minimum of $300 million to build the project. I had him repeat that number twice, because it was so unbelievably large. Why did the price tag more than triple between 2019 and 2023? Perhaps the original analysis used an unrealistically low cost estimate; perhaps some are hoping to ride a gravy train of Federal Infrastructure dollars to transform this town. Either way, keep in mind that the City will be expected to provide a match, or percentage, of the cost, and we will to maintain and build related infrastructure for whatever we build. Generally the expectation is a 25% local contribution, so we are talking about a $75 million City bond just to build the thing--not including the cost of floats, parking, road, etc (more on that later).
You may be asking yourself what would $300 million build? Folks are talking about moorage for about 200 large vessels (up from the current 40) with accommodations for cruise ships and container ships (often framed as disaster preparedness in the event of earthquake in ANC), additional moorage for about 250 small vessels that can go where the large vessels are now, large man-made islands or "causeways" to haul vessels out, provide parking etc. These grand visions seem to be a direct result of two things (1) in order to secure federal dollars for a project you need to speak to federal interests like “Polar Security” and (2) building a breakwater and dredging out a basin are really expensive and to justify/pay for that expense you need to put in a lot of big boats.
Construction of a new large-vessel harbor would mean dredging lots of material, and the cost of moving dredgeate is high. The cost-benefit analysis won’t work if you have to move the dredgeate any distance, like out of the Kachemak Bay Critical Habitat Area. The analysts seem to hope to eliminate that issue by making “islands” next to the harbor, which was recently removed from the Critical Habitat Area. They are also considering using the dredgeate for “beach nourishment,” which means dumping the dredgeate onto the beach, or integrating it into new “causeways” —read “roads” or “breakwaters," that would also need to be mixed with very expensive granite, around the Harbor.
The Mayor has also proposed using it to build a whole new road through Mud Bay, which folks say is a non-starter, but the proposal rightly raises the question of how would you accommodate more people out on the spit without expanding the road? On the subject of building roads and islands, note that federal dollars do not cover costs of any associated infrastructure--from floats, to parking, to boat haul-out facilities. All that is on the City and State.
The cost of rock to build the breakwater is another significant factor. Hawkins has said that they are thinking to source rock from Diamond Point, near the Iliamna Haul Road or from a quarry near Port Lyons that was used to build Seward’s Harbor. While Hawkins claims that the rock across the Inlet is cheaper than any rock priced in 2017--and in fact, he says this is the one of the biggest reasons the project is now going forward--he would not say what that rock would cost. Since the price of nearly every material on the planet has gone up astronomically since 2017 it is very hard to believe that rock will be cheaper now than it was then.
While the cost assessment in the report could be called vague, or perhaps a gross underestimate, many of the “benefits” could be called wishful thinking or misrepresentation. This matters, because this is the whole basis for why we are even considering a harbor expansion in Homer at all.
The report analyzes "benefits" from two points of view, from the point of view of “Damages and Inefficiencies Without Project Conditions” and “Preliminary Benefits: Large Vessel Harbor”. These two perspectives are used to make a range for the calculation of "benefit" over a 50 year timeframe. For example, "Damages to the Commercial Fleet" if we don’t expand the harbor are estimated between $3.3 million and $4.7 million over 50 years. So, they then say we stand to gain that range of money if we expand the harbor.
One of the biggest “benefits” identified by the report is that those in the Commercial Fishing Fleet who on paper “homeport” in Homer, but in reality keep their boats elsewhere, like Seattle, would keep their boats in Homer if the Harbor were bigger. That is a big if. There are any number of reasons why people don’t keep their boats in Homer, not least of which is the lower costs of goods, services, and labor in the lower 48, or that commercial vessel owners are incentivized to say that their boat homeports in AK, so they don't have to pay income tax. So, to get a better handle on this important statistic, the Harbor sent out a survey to about 1,000 large vessel owners to see if they would actually keep their boats in Homer if there was room for them. The result?
“Two survey respondents homeporting in Kodiak revealed they were seeking permanent moorage at Homer.”
I don’t think that was the resounding support they were hoping for.
Two boats out of about 1,000 said they would move their boats to Homer. This result didn’t deter the authors of the analysis: despite the fact that large-vessel owners said they would not move their boats to Homer if they had the chance, the report goes ahead and assumes that they would, that they all would.
And the benefit of all these boats “Avoided Travel” is valued between $7.4 - $14 million; tack on $2.5 - $3.5 million for “Opportunity Cost of Time” and you’ve got yourself a big benefit number! This valuation is a significant chunk of the supposed benefit of the harbor expansion, and it is just a wish, a wish that goes against the only available evidence. Not a good foundation to build on.
The question of what kind and how many large vessels would want to keep their boats in Homer is pivotal to the design of a large-vessel expansion. Yet, the technical report does not include an assessment of the “primary purpose” of the large vessels currently in the harbor or the “primary purpose” of the vessels who would theoretically use the expanded harbor. Big hole. They do mention:
“the increasing number of large vessels that seek moorage in Homer include oil exploration and research vessels that would prefer to winter in Homer rather than at ports further south.”
How many new oil exploration and research vessels currently want to keep their boats in Homer is not mentioned; how many of these vessels we can reasonably expect to come to Homer, when the cost of extracting natural gas from Cook Inlet is becoming prohibitive, and when there were almost no bidders in the recent Lower Cook Inlet Lease Sale, is a question that goes ignored here. A short walk through the harbor tells anyone that most large vessels there are tenders and crabbers in the commercial fishing fleet. A rational person expects declines in both AK fisheries (warming oceans) and oil and gas (running out) over the next 50 years. The report ignores all this.
Another benefit mentioned in the Corp’s report is that Homer may be considered as an arctic deep draft harbor with benefits potentially associated with national security. When asked recently if this was realistic, Corps of Engineers Director of Public Works, Bruce Sexauer said dryly, “that is not happening in Homer.” After a long process, Nome was selected as the “Nation’s Arctic Port” with construction a deep-draft port for that purpose under construction there now.
One of the biggest sources of “benefit” padding comes from an unlikely source. The Corps calculates a 15% increase of “subsistence” catch if we expand the harbor. Subsistence means that the fish isn’t sold, so the Corps assigns a number value to “subsistence harvest,” based on a grocery store price. They then assert that if we expand the harbor, we will increase the value of our subsistence catch and will make between $12.5- $28 million, between 18%-31% of the total “benefit” of the harbor expansion. Read that again.
Yes, they are saying that one of the most significant reasons to build expand the harbor is that we will have increased subsistence harvest. The reason this justification isn't repeated at Council meetings, etc. is because it is absurd. Sad to say, more people trying to harvest the same fish and game will not lead to more total harvest, and it certainly won't lead to us all gaining $28 million dollar value.
Another big “benefit”—assessed between $7.2 and $12 million—is increased “recreation experience.” They don’t go into that with any specificity, but these numbers account for over 10% of the supposed benefit. I don’t think the thing tourists coming to Homer want is more tourists in Kachemak Bay.
There are a lot more issues with the report—such as the fact that there is no mention of parking, traffic, increased need for boat storage and haul-out facilities in Homer, and impacts to wetlands of expanding those capacities; the report does not mention increased need for housing that working people already can't afford, need for dollars for marine trades education, harm to our Critical Habitat and the ecological values of Kachemak Bay—so these are just some highlights. But just looking at this report and knowing that this fluff is the reason we are actually considering a harbor expansion is deeply disturbing.
People defiantly need to show up to the Army Corps of Engineers scoping meeting on May 18 to raise these important issues.
Folks should be asking their City Council Members to get to the bottom of this nonsense before they go off to Juneau to advocate for it. We need our feet on the ground. Isn’t there some better use of our money to support the marine industry and harbor users? Like repairing our existing harbor ($74 million in deferred maintenance there), improving our roads (tried pulling a boat on Kachemak Drive recently?), investing in boat stacking capabilities so we don’t keep filling our wetlands to store boats over the winter, investing in marine trades education so folks can hire locally (what happened to the highschool welding class), improving housing options for workers and families in the trades…
There are few who would argue that Homer's Harbor isn’t crowded—with long waiting lists for slips, boats tied up to each other, sometimes five or so deep. But from where I sit, there is not much evidence that it is worth the cost to expand the harbor. If people want to go ahead with it anyway, because they think Uncle Sam is giving away money, they should have the guts to say so, and they should be thinking small. Anything we build will take significant local funds that could be used elsewhere, it will cost a lot to keep up, and there is no indication that many large vessels will want to use it in the future. Not all of us are lulled to sleep by the dream of infinite growth in Homer.