Negotiations Close-but Not Close Enough

John Stark posted this update on today’s ferry negotiation session on the Bellingham Herald’s politics blog.  Unfortunately the negotiations were inconclusive.  The next session is scheduled for May 9th.

Go to:  http://blogs.bellinghamherald.com/politics/politics/lummi-island-ferry-talks-show-some-progress/#ixzz1K6yFma7f

On the same subject, PLIC posted the following message:

Characterized as, basically, close but no cigar by a blog in The Bellingham Herald this afternoon, the negotiation session today apparently ended on an upbeat note yet without resolution. The negotiating teams set a May 9 date for another round, just six days before LIBC deadline for getting a deal done.

Reading between the lines of this early report in the Herald, and what’s been said leading up to today, the hang-up would appear to be LIBC’s desire for financial support of a planned marina development that they desire to implement at Gooseberry Point. (That’s from statements made by the tribal head of planning, Richard Jefferson, at a dinner for Lummi Islanders hosted by Lummi Nation last month. This appeared on home page of www.plicferry.org in LUMMI NATION DINNER SUMMARY: “At a dinner March 28 for Lummi Island community hosted by Lummi Nation, LIBC representatives said they were satisfied with County’s offer for solutions to traffic and safety concerns, both short-term and long-term. But now they must find common ground on helping fund a new marina at Gooseberry Point (if permits can be obtained).”

There’s more here, too (scroll down to the 2nd segment, right after the * * * divider):

http://plicferry.org/wp-content/uploads/2011/04/Kremen-and-others-on-running-the-ferry-4-1-11.pdf

At that dinner, Jefferson commented that the County would have to recognize and commit its financial responsibility toward any impact the ferry operating at Gooseberry would have on a marina complex there. He detailed several places that Lummi Nation has explored for its vision for a marina, with Gooseberry as first choice, but acknowledged that it would have to meet permit requirements. Point being, in negotiations, there would be no guarantee for the County that a marina would be located where the ferry operates and, therefore, impact the marina.

This appeared on the Ferry Forum in a summary of the dinner: “Jefferson responded to a request for more information about the marina in relationship to the ferry by saying it was a long-term goal of his and most tribal members to have a marina at Gooseberry Pt for fishermen and maybe sports fisherman or other boats, with or without the ferry. He described various designs his Planning Department has explored, including ones that could incorporate a county ferry landing.”

County officials have not chimed in on this topic. Their discussions about the negotiations and lease offers have been discussed each of the last two weeks in executive sessions (closed to the public).

Here, again, is the link to John Stark’s first notes out of today’s meeting, on the political blog of the Herald on-line:

http://blogs.bellinghamherald.com/politics/politics/lummi-island-ferry-talks-show-some-progress/

4 thoughts on “Negotiations Close-but Not Close Enough

  1. As I mentioned in the PLIC meeting last night, I’ll expand on my comment here a bit.
    We are in danger of entering the ‘death spiral’ of ferry operations, as some have come to call it. At some point of ever increasing fares to cover a CPI-automatic lease increase each year, plus operating costs, we will have fewer and fewer ferry riders to shoulder the burden. That means higher fares each and every year.
    In 2010 about 200,000 people-trips generated about a million in fare revenue, or a little less than $6 bucks a trip.
    As the Herald points out today, a lease payment of an additional $200,000 per year is a done deal, plus millions of road improvements, which islanders will likely be asked to pay for ‘our fair share’ of (whatever that means). All this is tied to the Consumer Price Index(CPI).
    So I ran some numbers to see what ‘normal inflation’(about 3%), historical inflation highs(about 12%), and hyperinflation do to our ferry operation.
    NORMAL INFLATION (3%) – Add to our current cost per rider of $5.71 avg, another 6.80 to cover the cost of the lease payment, $8 mil in road improvements and $4 mil in marina costs over the 25 year life of a new lease. (just my guess of the final deal)
    So, the new fare would be about 12 bucks each. Adjusting for 3% inflation raises that to $16. (note, the road improvements and marina are paid by tax payers in general, including us, in my calculations – to keep it simple)
    12% INFLATION: This scenario uses the average inflation rate experienced for 3 years running at the end of the ’70′s. and after WWII. Given the circumstances of then and now, it’s quite plausible.
    With a sustained rate of inflation of 12% over the entire 25 year lease (not likely, as either the economy recovers at some point, or goes way south into hyperinflation) the results on ferry fares would be thus:
    Our 17 mil. payment to LIBC would climb to over $100 mil. through the life of the lease, causing fares to rise to over $47 per trip. But that’s IF everyone continues to ride as normal. Nobody moves off the island. Everyone continues to travel as normal.
    If just half the current day trips are eliminated, that leaves the entire burden on only 100,000 trips per year, so now we’re looking at $100 per crossing.
    HYPERINFLATION: or “the Economic Meltdown of America”, as some would call it. Yes, it’s a real danger, and has happened in many countries around the world in the last 100 years. (http://dailycapitalist.com/2010/09/30/will-we-have-hyperinflation-in-america/), but I’m not proposing here that it’s a likely argument.
    The point is this, if $100 ferry fares don’t get your attention, then hyper-inflated ones are not going to either.
    So, my point is this, a ferry agreement is what we all are longing for. A bad deal, is one where we get hitched to a really crappy economy for multiple years, thereby placing us on a very slippery slope, and a not so nice landing on the bottom.

  2. To be fair, I should point out that my examples of sustained inflation of either 3% or 12% are on the ‘worst case’ side of things, especially since I allocated all the road and marina costs to islanders over a 25 year period.
    It can also be said that fare elasticity doesn’t really exist when there is only one boat and provider, therefore ridership doesn’t really go down very much with higher prices. I don’t subscribe to that camp, at least for any discretionary trips.
    So let me throw another monkey wrench into the settlement equation.
    The county settles at some really high number, counting the yet to be discussed parking/drydock issue rapidly approaching us, and expects us to pay 55% or higher for our share of the improvements (disguised as part of the lease agreement).
    IF, in my scenario of dwindling ridership to support CPI price increases holds true, then at some point an alternate service provider would have the incentive to start a private ferry service to Lummi Is. That would leave the county holding the bag for all the costs, assuming the private provider was more competitive, as no riders would mean no fares, and 55% of nothing is still nothing.
    Suppose the county enacts a ferry taxing district on just Lummi Islanders, using the property tax? Then the funds(not all by any means), would be collected regardless of how many riders were on the boat.
    I’m sure some law somewhere exists that wouldn’t allow a private company to compete with the county ferry, as transit has similar protections, or that some ordinance couldn’t be concocted to stymie such an effort, but it begs the question.
    IF the County is about to settle for 25 years, laying a huge golden egg for the Lummi’s, and they’re about to get a windfall of tax receipts, and the islanders are the ones expected to fund a large portion of this, then both parties, in still secret negotiation, should be forewarned – “You may be killing mother goose, responsible for most of the egg laying operations around here.”

  3. Finally it is spoken and revealed.

    Fair and Reasonable negotiations only work when both sides have something to gain or lose… No Ferry Accomodation at Fair Market Prices Equals No Support for the Marina..

    Works good on picket signs and lawns

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