Borough biting its nails over ferry

WASILLA — The Mat-Su Borough is fast approaching a threshold in relation to its ice-breaking, car-carrying ferry. Federal money has more or less run out. Without more, the borough will have to spend its own tax dollars to operate the ship.

The assembly will meet Tuesday to discuss the issue.

Dubbed the M/V Susitna, the ship was built as a prototype by the U.S. Navy’s Office of Naval Research. It’s a landing craft, designed to be beached to offload equipment. The prototype is a smaller version of what the Navy has in mind. Still, it could carry at least one tank.

The borough plans to use it to shuttle cars and people between Anchorage and Point MacKenzie. It remains in Ketchikan where it was built by Alaska Ship and Drydock — until the borough figures out what to do with it.

Federal money built a ferry terminal at Port MacKenzie and constructed the ship. The borough even got money to convert the vessel from a military ship to a civilian one — put in seats and whatnot. But funds remaining are not sufficient to build the required landings on either side of Cook Inlet. The borough has been looking for that money for years.

Borough Manager John Moosey said the ferry is due to be delivered in December, maybe later. After that, the borough needs to find something to do with it. Every option is expensive. Even walking away would cost the borough millions because it would have to repay something on the order of $20 million in federal transit dollars used to build the ferry. The grants came with the stipulation that the borough must build a ferry system. If no system is created, the federal dollars must be repaid.

The borough doesn’t know which option to choose.

“We’re working hard. We don’t have an answer yet and that’s why we’re having the assembly special meeting dealing with that on the 30th,” Moosey said. “I want to make sure that the assembly knows the costs moving forward on the ferry.”

Materials Moosey has prepared to present to the assembly outline three options:

• Keep the ship and find something to do with it. The problem here is if no use is found. Keeping it in Ketchikan and not doing anything with it would cost the borough, at minimum, $1.3 million. Bringing the ship to Point MacKenzie or some other place in Cook Inlet would run to $1.7 million per year. There are also risks with bringing the ship north, mostly that if something goes wrong, fixing the vessel would probably require flying people up from Ketchikan.

• Lease the ship out. This option puts the onus to find something to do with the ship on whoever leases it. But the borough would retain the financial risk if something happened to the vessel

• Sell the ship. The interesting part of this option is that the borough would actually have to find a ship to replace it. If the borough doesn’t get into the ferry business, it would have to refund that federal money. M/V Susitna is estimated to be worth $5.5 million. Alternatively, the borough could sell the ship and lease it back. That would reduce the risk of mechanical trouble and get rid of the need to find a replacement ship.

But exactly what can the ferry do without landings in Anchorage or Point MacKenzie? It could run passenger-only between those two areas. It could make runs out to Tyonek — people there have been watching the project with great interest. It could shuttle people around the Kenai Peninsula. An added wrinkle is the ship has warranties on a lot of its components. Assemblyman Mark Ewing explained the problem with those warranties at a Wasilla City Council meeting Monday.

“The warranties are running out on all of the equipment because it took so long to build,” he said.

Moosey said he wants to make sure the ship is put through its paces in Ketchikan before the borough takes it north.

“We have a one-year warranty on the boat. We need to make sure that stuff is working right. We need to do that right now,” he said.

He compared the warranty to warranties on cars. Car companies make thousands of cars, but things still go wrong all the time. The Susitna, by contrast, is an experimental, one-of-a-kind vessel.

“This is a prototype. We really don’t know,” he said.

Moosey’s report said the borough has already gotten one unsolicited offer from someone who wants to buy the ship and lease it to the borough. Whatever the borough decides to do, Moosey said he needs direction from the assembly.

“I need to have my assembly in unison on this issue,” Moosey said.

The actions he proposes in his plan are to keep looking for things to do with the ferry, to keep looking for money to build the landings and to solicit information on the possibility of selling the ship and leasing it back.

Of course, the hand the borough holds contains one big wild card: What happens if someone actually builds a bridge over Knik Arm, traversing the same waters the ferry was supposed to serve and giving motorists a much cheaper alternative?

“A lot of these things are based on timing. How soon is that going to happen?” Moosey said.

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.