Borough slashes ferry price

PALMER — After three years and dozens of conceivable uses, the borough appears closer to taking the M/V Susitna off taxpayer hands.

A January extreme rain event in Ward Cove — where the Susitna’s saga has deposited it for now — drove water down 45-degree exhaust shafts into three of the vessel’s four, 10-cylinder engines, said port director Marc Van Dongen. As a result, the ferry, a scale prototype for a potential shallow-draft landing craft capable of high speeds, is inoperable.

When the rains struck, borough officials were trying to sell the vessel for $4 million. They’ve now halved that price, Van Dongen said.

“We hired factory-approved technicians to go ahead and tear it down and troubleshoot,” he said. “They gave us three different cost estimates for three different repairs, and the insurance company signed off on the middle repair” of the three.

The insurance company still requires a deductible. As a result, officials will require a $250,000 down payment from one of five potential buyers, which will be paid to the insurance company to begin repairs.

Borough officials have elucidated numerous potential uses in the past, ranging from a mobile agricultural platform to an oil spill specialty response vessel. After the price fell to $2 million, five parties stepped up with offers near the borough’s asking price.

None of the bidders are governments, Van Dongen said. Three are from overseas, which could act as a brake on the sale, since special permissions will likely be required before the cutting-edge ferry can be sold. Two others are from in the country. One company is headquartered in Texas, and the other is headquartered in Alaska. The Texas and Alaska companies would likely focus on oil spill response, Van Dongen said. One of the overseas parties is the Red Cross of the Philippines.

Officials are keeping the amounts offered out of the public eye for the moment, Van Dongen said.

“Four are in the ball park,” he said. “One’s higher than what we were asking and one’s lower than what we were asking.”

A ferry sale would cap the potential financial impact to the borough at little more than $2 million over three years, which Van Dongen contrasted Monday with the anticipated $6.5 million per year the ferry would likely have cost to operate. By that logic, mothballing the ferry near Ketchikan has saved taxpayers roughly $17.5 million altogether, Van Dongen said.

“That may be a conservative figure,” he said.

However, as numerous figures like to point out, $2 million is still greater than zero. Van Dongen said he shares that frustration.

“From day one, I did not think it was a smart thing for the borough to be doing,” he said. “It was a pet project of a prior borough manager.”

Van Dongen said he’s frustrated the ferry was ever constructed.

“I can tell you as a port manager, I don’t need a ferry to make the port successful,” he said. “What the port needs is a rail line.”

However, taxpayers thinking of a $1.75-million project to submit at the next assembly meeting might want to reconsider. The borough has also seen about $12.3 million in Federal Transit Authority funds called in for repayment. That money helped construct a ferry terminal, as well as feasibility studies, environmental studies and route studies.

Mat-Su Borough officials are presently negotiating with federal officials to cut the cost to the price of the ferry terminal — presently serving as an office building at Port MacKenzie and the proceeds of the ferry sale, Van Dongen said. Numerous federal projects are funded that don’t see the light of day, he said.

“We did not misappropriate those funds,” Van Dongen said. “That was all done in good faith.”

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.