Deal for M/V Susitna ferry on verge of collapse

PALMER — After waiting a week for a down payment, the Mat-Su Borough’s patience is growing thin with a company that appeared interested in buying the M/V Susitna ferry.

“We’re drafting a termination notice if the deposit never shows up, at which point it will be like it never happened,” borough planner Emerson Kruger, who has become kind of the point person for information on the ferry, said in an email Thursday. “Termination may occur by Monday.”

News of a potential deal first came to light at the May 7 assembly meeting when borough manager John Moosey announced a purchase was in the works.

“This morning I signed the purchase agreement for the sale of the ferry at $6 million,” Moosey said in an interview May 10.

He said it was the closest the borough had been to finally ridding itself of the vessel, a military prototype landing craft that the borough converted to use as a ferry between Anchorage and Point MacKenzie.

So, “purchase agreement?” That sounds like a done deal, right?

Turns out it’s not.

“They have 45 days to examine it, go through make sure we meet the conditions and that sort of thing,” Moosey said.

He said the borough didn’t want to get its hopes up, that it had been close before and had a deal scuttled.

By mid-week, it appeared that caution was warranted. The company in question, a limited liability corporation the borough had trouble finding any information on and which appeared to have been created solely to buy the vessel, didn’t come through with the promised $500,000 down payment.

Kruger said that the borough was considering filing a lawsuit to be compensated for time lost in the process.

The purchase agreement is just the latest twist in the slowly unfolding saga of the ferry.

“When this is all over, somebody could pick up all of the emails and discussions and stories in the paper and could write an interesting novel,” Moosey said.

Money to build the vessel was pushed through congress by the late Sen. Ted Stevens. The borough viewed the M/V Susitna as an opportunity to demonstrate a need for a bridge to Anchorage as well as spur development of the Point MacKenzie area. The vessel has icebreaking capabilities and could run year-round.

But the project was scaled down and can now accept fewer cars than the borough had initially hoped.

The bigger problem, though, was with where to dock it. There was money in hand for a landing at Point MacKenzie, but none for Anchorage. Eventually, the Point MacKenzie money was frozen until the Anchorage side was funded. That’s a possibility the borough has continued to work on, but which has seemed increasingly less likely.

Meanwhile, a new assembly hostile to ferry operations has clearly expressed its will to be rid of the boat.

The borough has seemed hopeful about signing deals in the Marianas Islands and also in Los Angeles County. By his reckoning, Kruger said, politics and media accounts played a significant role in scuttling those deals.

The vessel is insured for $60 million, but the borough was willing to take the current $6 million offer, Moosey said, because it would cover the borough’s outstanding liability.

Part of why it’s so hard to be rid of the craft is that the federal government paid to outfit it for civilian use and build a terminal for ferry service on the Point MacKenzie side. Some of that money will have to be paid back if the borough doesn’t set up a ferry system.

“We think this is going to do it because the dollars match what we owe back to the (Federal Transit Administration),” Moosey said back when the deal seemed more likely to happen.

Contact Andrew Wellner at 352-2270 or

andrew.wellner@frontiersman.com.