Borough gets more time to pay ferry bill

PALMER — The Mat-Su Borough has won an extension for the deadline it faces to pay back federal money relating to its ferry.

“We initially got the letter that said pay by September 5 and we got a 60 day extension to November 5 but before November came up we got an extension to January 15,” said Mat-Su Borough Attorney Nick Spiropoulos.

Officials spent $12.3 million in Federal Transit Administration funds to build a ferry terminal at Point MacKenzie, to study potential landings and routes, and to outfit for passenger travel the ferry M/V Susitna, originally built as a military prototype. The FTA has now asked the borough to re-pay that amount.

The feds gave the borough the money with the understanding that it would take the ship — built in Ketchikan with money secured by U.S. Sen. Ted Stevens — and use it to shuttle commuters back and forth to Anchorage. The plan eventually dried up when it became clear an Anchorage landing was not going to materialize.

The borough is attempting to sell the vessel and the list of potential uses that have been considered is long and sometimes off-the-wall — everything from a fire evacuation vessel in California to converting the vessel into an offshore farm for growing cabbages. Each time the ferry comes up the borough seems to have a new story about a potential buyer that visited the vessel in Ketchikan where it’s currently docked, costing the borough thousands of dollars each month in wharfage fees.

Spiropoulos said the default process is a complicated and unfamiliar one for the borough and officials have met with the transit administration.

“We actually met with them in October and talked about how does this work,” he said. “They told us how it went with New Jersey when they had a default with the state of New Jersey.”

The borough is hoping to avoid paying back the full amount. Part of the process for seeking a reduction will be to show the feds the borough has tried diligently to set up ferry service.

“We had a letter of agreement with Anchorage for awhile,” Spiropoulos said. “Anchorage withdrew midway through the project.”

He said the borough is gathering up the documentation on the project including letters like that one in order to have something to show FTA.

“It’s things like that we’re finding and putting together to get a clear history of how we got to this point,” he said.