Feds recall ferry grants

PALMER — The federal government on Tuesday asked the Mat-Su Borough to repay $12.5 million in grants paid to establish a ferry service between Anchorage and Mat-Su.

“After ten years of working to bring the project to fruition, MSB has been unable to implement ferry service in accordance with the requirements of the grant agreements,” wrote Therese McMillan, Acting administrator with the Federal Transit Authority, in a letter to the borough. “Over the past year, FTA has collaborated with the MSB on acceptable methods for disposing of the ferry vessel and recouping the federal investment. Unfortunately, MSB’s many efforts to dispose of the asset, or to find a public use for the ferry, have been unsuccessful.”

The borough has 30 days to repay the money.

Borough Manager John Moosey said in a borough press release that he wasn’t surprised the borough was asked to return the grants, but he did seem disappointed.

“I expected this to be done much easier but this is a challenge,” Moosey said. “We’ve been diligently looking for solutions to this issue for the last 2.5 years.”

The fear that the borough would have to repay the FTA grants was a lot of what drove the plan to sell the M/V Susitna, a military prototype of a beach landing craft that the borough received for free after it was built in Ketchikan.

The FTA grant money went to build a ferry terminal building in Point MacKenzie and study landings on each side.

The ship’s special design meant that it needed special landings on the Anchorage and Mat-Su sides. The borough had a spot picked out at Point MacKenzie but its preferred landing on the Anchorage side — near Ship Creek – had been a point of contention with that municipality. More than one mayor of Anchorage has announced plans for waterfront development of the Ship Creek area that didn’t include a trestle dock to handle the $78-million ferry.

The vessel’s capacity is also not quite what the borough had initially planned. During construction it was scaled down until now it can handle just 20 cars and 120 passengers, a size borough officials have said is tough to make profitable on commuter runs.

The borough assembly eventually decided to try to sell the vessel and abandon the idea of a commuter ferry. Potential buyers for the vessel have envisioned numerous ferry runs in various locales around the globe but also unconventional uses. Potential roles include everything from a firefighting vessel in California to a vessel for shuttling charity workers in the Amazon to an offshore platform on which to grow cabbages.

Among others, the Philippine Navy, an oilfield services company in Washington state and a wind power company in the United Kingdom have all visited Ketchikan to see and test the Susitna.

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