Petro Marine Almost Loses Lease To Bidding
Petro Marine Services had a big scare last week when the Homer City Council considered putting the lease for a property the business has used for years up for public bid. The company could have been forced to move millions of dollars of equipment. A city employee says opening the lease up for bid was a hard conversation to have but it was important to keep the city’s options open.
Unlock a chain link fence, walk down a steep ramp and you’ll end up on one of the fuel floats in the Homer Harbor. They’re leased by Petro Marine Services, the business that people go to when it’s time fill up the boat.
“Yeah it’s a gas station for boats that’s exactly what it is,” said Pete LaPlante, Petro Marine's Plant Manager in Homer.
We’re standing on one of two floats Petro Marine has fuel pumps on.
“We have what’s known as the Coal Point lease which is the Homer Marina. It’s a year round operation. Then we also have what the city refers to as the 30 acre lease. We call it the Homer fuel dock. It’s a separate facility on the other side of the harbor entrance that we mainly use seasonally as an overflow when the Marina Dock gets overcrowded in the summer months,” said LaPlante.
The leases for both docks and their onshore facilities expire in 2018. The leases run 20 year terms with two five year options.
“And so in effect it’s a 30 year lease,” said LaPlante.
Petro Marine Services has been in Homer since the late 1980’s. According to the company’s website it is a subsidiary of Petro 49. The parent company owns multiple fuel oriented businesses with locations throughout Alaska.
Petro Marine first signed for its Coal Point lease in 1991 and for its Homer Fuel Dock lease in 1993.
Petro Marine was making plans for its future and decided to start an early renewal on both leases. They were caught by surprise when the city drafted two resolutions. One to renew the Coal Point lease and one to let other companies bid on the Homer Fuel Dock lease.
The city council voted down the resolution to open bidding on the Homer Fuel Dock lease, but not before giving Petro Marine a lot of anxiety.
LaPlante says if another company won the bidding on the lease it would have cost Petro Marine a significant investment.
“When you’ve invested a lot of money in equipment, now you’re no longer able to use it… it’s not worth what it was. That’s really where the problem lay,” said LaPlante.
The company would have lost the use of a fuel float, a ramp…,
“And then onshore there’s a tank farm with a wall around it. It’s all contained, secondary containment we call it. And then a piping and pump system that runs down to provide the fuel for the tanks to the customers on the float,” said LaPlante.
According to Petro Marine Service’s Anchorage office, building a facility similar to the one LaPlante just described could easily cost up to $2.5 million.
Bryan Hawkins is Port and Harbor Director for the City of Homer. He says the city was just following the its lease policy when it drafted the resolution to open the fuel dock lease to public bidding.
“That’s the general direction that the lease policies give us. At the term of a lease you put it out to RFP unless you can show that it’s in the public’s interest to enter into a new term with that company,” explained Hawkins.
Hawkins says Petro Marine is a good tenant, but the lease policy requires city employees to look out for the city’s best interests.
“The other thing to consider is maybe there’s another company out there that will do the same and competition in the market place does benefit the customer,” said Hawkins.
Hawkins adds that he knows Petro Marine Services has a big investment in its fuel floats and other infrastructure and, he says, there’s always a difficult conversation to be had when a city lease comes up for renewal.
“However it’s in the public’s best interest, that’s who we serve, to have that conversation,” said Hawkins.
The city council voted unanimously to renew Petro Marine Service’s Coal Point lease during its February 22nd regular meeting. The resolution to not renew the Homer Fuel Dock lease was voted down unanimously as well. Hawkins says the city will work on a new resolution supporting a renewal of that lease.