A report prepared by former harbormaster Richard Young provides some insight into how the Crescent City Harbor District got into such dire financial straits that a tax initiative is being proposed for the November election to help the port pay back a $5 million loan.
Four natural disasters in five years, including two tsunamis, caused millions of dollars in damage to the harbor’s marina and other facilities, said Young, who was the harbormaster from 2004 to 2014. However, the port has been having financial difficulty for years due to the decline in the groundfish and salmon fisheries and the variability in the pink shrimp and Dungeness crab fisheries, he said.
“It started before I got there,” Young said of the harbor’s financial struggles. “In fact it goes all the way back to when fisheries started to decline because Crescent City has always been a fishing harbor.”
The harbor commission has spent months discussing the pros and cons of a sales tax initiative or a property tax assessment to raise enough revenue to pay down the port’s debt and make much-needed repairs to Citizens Dock, Whalers Island groin, a crumbling sea wall and other facilities. However, the Del Norte Commercial Fisherman’s Marketing Association along with local elected officials Don McArthur and John Roberts have spearheaded a citizens initiative seeking to increase the transient occupancy tax visitors to motels and hotels in the county pay from 8 percent to 10 percent. The initiative also seeks to place a 2 percent transient occupancy tax on recreational vehicles renting space at parks in the county.
Money generated by these taxes would help the harbor pay down a $5.3 million U.S. Department of Agriculture loan used to rebuild the marina following the 2006 and 2011 tsunamis. Harbor commissioner Brian Stone has estimated that, if successful, the increased TOT tax could generate between $240,000 and $275,000 for the harbor each year.
Young, who also has a background in economics and commercial fishing, said he prepared his analysis of the port’s current financial situation at the request of the Crescent City Harbor District. He said since he spent 10 years of his career as its CEO and has a background in economics and fishing, he seemed like the natural person to try to explain how the harbor got into the position that it’s in now.
A condensed, and updated, version of Young’s analysis was released Jan. 18. He completed a more in depth analysis in June 2016.
Storms and tsunamis
The first of the four natural disasters to impact the harbor was a brutal winter storm that struck the North Coast around New Years Day 2006. According to Young’s analysis, the total cost of repairs following this federally-declared major disaster amounted to more than $2.1 million.
Eleven months later, on Nov. 15, 2006, an 8.3 magnitude earthquake in the Kuril Islands generated a tsunami that created more than $20 million in damage at the Crescent City Harbor.
The tsunami was only about 3 feet, Young said. He said he received a call from National Weather Service Meteorologist-in-Charge Troy Nicolini, who is part of the Redwood Coast Tsunami Work Group, who told Young that the tsunami was expected to hit at about noon or 12:30 p.m.
“We went out, myself and a couple other staff people, and warned all the boat owners in the harbor,” Young said. “We thought 3 feet, what the heck, that can’t hurt much, and so we sort of ignored things. And then at about 1 o’clock we saw one of the harbor commissioners, Gary Young, (who said) look the docks are breaking apart and sure enough our H Dock, which is the first main dock, was broken in two pieces.”
Even though the surge was only 3 feet, the tsunami had broken apart the wooden boards holding H Dock together, Young said. Now, the dock was a concrete float smashing into boats and other things in the harbor’s marina. The port’s G and F docks suffered similar damage, he said.
The Crescent City Harbor was the only harbor in California to be damaged by the 2006 tsunami, Young said. The state declared it a disaster, which meant that the California Office of Emergency Services would fund about 25 percent of the repairs to the port’s facilities.
Harbor staff put together an initial cost estimate of $750,000, thinking that they would get new boards and put the docks back together, Young said. However, the port’s maintenance crew clued Young in to a more serious problem.
“Some of the concrete floats were cracked underwater, and the way these things are made (is) they’re filled with styrofoam — the concrete protects the styrofoam,” Young said. “When they’re cracked, the styrofoam slowly absorbs water and deteriorates, which means they’re going to fail. We started thinking about what that meant and of course it occurred to us pretty quickly that if these ones that we are removing are broken underwater, maybe some of the others are broken underwater too.”
After hiring a local diver to inspect the marina, Young said he and his staff discovered that about 50 percent of the floats were broken underwater. The marina’s pilings were damaged as well. The final estimate was $20 million, he said.
“Everybody thinks of a tsunami like the Indonesian one or the Japanese one as a huge wave of water that rolls in and destroys everything in its path,” Young said. “What did the damage in Crescent City was the current because the current comes through that harbor mouth so fast; it’s just like a river.”
When the damage estimate became $20 million, Young said he and harbor commissioners were seriously concerned. This meant the port would have to pay $5 million to cover its share of the cost to do the repairs, he said, and at the time it was approximately $500,000 to $600,000 in debt.
With the help from the county, the harbor district obtained a $5 million Community Development Block Grant to make the repairs from the 2006 tsunami, Young said. However, realizing Crescent City’s vulnerability to tsunamis — it’s experienced about five such waves in roughly 60 years — commissioners decided to design a marina that would withstand a 50 year tsunami, he said. This increased the design phase as well as the cost by $8 million, Young said.
With the design completed and the money ready, all that was left was getting through the permitting process. Young said he obtained the harbor’s coastal development permit from the California Coastal Commission on February 11.
“We think we’re all ready to start and in March, a tsunami destroys the harbor again,” he said.
Although it created a total of about $21.8 million in damage, according to Young’s analysis, he said the 2011 Tohoku Japanese earthquake and tsunami affirmed Crescent City’s need for a port that could resist such waves. Since it was a major federal disaster, the Federal Emergency Management Agency would step in to help
In a federal disaster, FEMA would pay about 75 percent of the cost to make repairs or rebuild, Young said. The state would pay about 18.75 percent of the cost for repairs, he said. The harbor would pay about 6.25 percent, he said.
“In round numbers, we’re up to $5 million in what the harbor owes at the end of all this,” Young said, referring to the $5 million loan the port obtained from the U.S. Department of Agriculture to rebuild the inner boat basin. “We could have not built it, but then there’s no harbor, there’s no place for fishermen to work, there’s nothing. So, yeah, the harbor stuck its neck out because the community needs that harbor.”
Decline in fisheries
The two destructive tsunamis and winter storms — a second storm in January 2008 caused $95,657 in damages — came at a time when revenue at the harbor had been decreasing due to the decline in the four major fisheries that its commercial fleet depends on.
Those fisheries include the groundfish, Dungeness crab, salmon and pink shrimp, Young said. The harbor receives poundage fees for any seafood that comes through its docks, he said.
The highest fee, about 3 cents a pound, comes from the Dungeness crab fishery, according to current harbormaster Charlie Helms.
Helms estimated the harbor typically receives $75,000 to $80,000 a year in total poundage fees “for everything” that comes through the port.
According to Young, fishermen didn’t go after groundfish until after World War II and remained stable through about 1970. At that point, due to the concern about foreign fishing fleets potentially depleting the U.S.’s groundfish stock, the Magnuson Stevens Act was passed in 1976, which resulted in new investments in fisheries, Young said.
“There were all kinds of subsidies, low interest loans, production credit, people started lending money to fishermen and there was a huge expansion in the number of boats,” he said, adding that the amount of groundfish coming through the Crescent City Harbor skyrocketed between the 70s and early 80s. “By 1980, the fishery managers began to get some data that said ‘hey, look, we’re catching too many fish,’ and they started to tighten up the regulations.”
During the 1970s, in addition to the commercial fishing fleet expanding, the economic development administration created after the 1964 tsunami helped fund the port’s inner boat basin, built two new fish plants and the Fashion Blacksmith facility, Young said. But, he said, it wasn’t sustainable.
Young noted the port had a robust recreational salmon fleet in the 1980s with up to 600 boats. That fleet supported the harbor’s two RV parks, he said.
From 1992-1994, in 1995, 1998, 2005-2006, 2008, 2009, 2010 and 2016, the salmon fishery was declared a disaster in Crescent City. Even in non-disaster years, low salmon stocks have led to the complete closure of both the recreational and commercial salmon fisheries in the area, according to his analysis.
The pink shrimp fishery was also important to Crescent City, Young said, but it went through a difficult time in the 1980s and 1990s as did the Dungeness crab fishery.
“Those are the four major fisheries in Crescent City and the North Coast and when all four are at a low point at the same time, then you’ve got trouble in River City and that’s where we were,” Young said. “The salmon problems are related to the Klamath River, until we can resolve the issues on the Klamath River, and they’re really complex and contentious, it’s not going to come back.”
In his analysis, Young notes that a 2003 groundfish buyback removed more vessels from Crescent City than any other port on the West Coast and two local processors went out of business in 2001, which cost the local fishery the opportunity to participate in the Whiting fishery.
Despite the challenges, there are still about 100 commercial fishing vessels based in the harbor and each is a small business averaging about 2.5 jobs per boat, Young states. Most are locally owned. Commercial fishing also provides good wages, often better than what government or private sector jobs can offer, Young said.
When asked his thoughts on proposed tax initiatives to help the port pay off its $5 million USDA loan, Young pointed out that fishing promotes tourism in the area and is part of Crescent City’s heritage.
“I know this is contentious. I know nobody likes paying taxes, but what would Del Norte County be like without a harbor?” He asked. “What would Crescent City be like without a harbor? What would the tourism industry be like without a harbor? Why would anybody stop here?”
Reach Jessica Cejnar at firstname.lastname@example.org .