Borough may have to pay ferry repair costs up front

WASILLA — Borough officials will weigh paying the full cost of repairs to the rain-damaged M/V Susitna up front, rather than using a $250,000 down payment and insurance money to fund the repairs, officials said.

A resolution introduced Thursday at a seven-minute special meeting of the assembly puts the total cost of those repairs at $1.12 million, meaning in addition to the Phillipine Red Cross’s payment, the borough’s taxpayers will have to pony up $870,000 to make up the difference.

A public hearing on the payment will be held during the regular Dec. 1 assembly meeting.

The new development came about as a result of the borough’s insurance company for the ferry, Lloyd’s of London, said borough manager John Moosey.

“What we asked to do originally is take the $250,000 and then we were going to turn that over to the insurance company and they’re going to do the repair,” Moosey said. “The insurance company said they’d rather just reimburse us. We have to have permission from the assembly, because we don’t have the $900,000 ourselves, we have to use general funds.”

The change was largely procedural, Moosey added. The borough would receive the $900,000 payment from the insurance company once repairs were completed.

“The borough does not have to put any money into this,” he said. “At the end of the day it’ll be zero-cost repaired.”

The ferry has been at a Ward Cove moorage in Southeast for years following a decision by Anchorage officials not to accept a commercial ferry service from Point MacKenzie. Heavy January rains last year damaged three of the unique Defense Department prototype vessel’s engines.

In the plan’s heyday, borough officials had also obtained $12 million in Federal Transit Authority funding for a ferry terminal constructed at Point Mac. Since the plan’s demise, officials have used the terminal for office space, and FTA has asked the borough to repay the money. For now, the federal government is still asking for the full amount in repayment, though that could change in the future, Moosey said.

“It’s been discussions with the FTA and them really kind of dragging their feet,” he said.

The delays were by design, giving the borough time to come up with some kind of funds for repayment. That’s good news because the borough may end up paying less than $12 million. It’s bad news because the borough spent roughly $2 million on maintenance, upkeep and moorage fees since accepting custody of the ferry from the feds, and the proceeds from the ferry sale will go to the FTA, rather than recover those funds, Moosey said.

“Those are sunk costs,” he said. “I wish I could say this covers all our sins, but that would not be correct.”

Contact reporter Brian O’Connor at 352-2270, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.