Due diligence on ferry operation

MAT-SU— The gamut of ideas was considered tonight (Aug. 30) by the Matanuska-Susitna Borough Assembly as it weighed how to reduce the operating costs of the M/V Susitna Ferry while fulfilling obligations to the Federal Transit Administration and the Office of Naval Research.

The Assembly directed Borough Manager John Moosey to return with more information on eight specific areas and a recommendation.

Borough Mayor Larry DeVilbiss expressed empathy for the Manager when he told him: “We’re asking you to do it all at once and some of it in opposite directions.”

The eight areas of due diligence are:

1. To research the costs of storing the vessel over winter, including at Port MacKenzie out of water, an innovative idea by Assembly Member Mark Ewing that could prevent paying for a crew.
2. To seek funding for ferry landings. The Borough may have enough for a pedestrian-only landing at Port MacKenzie. Yet Kenai and Tyonek are interested in landings. The Borough is working on seeking a cooperative grant with Kenai. There remains interest at Anchorage.
3. To evaluate the sale and lease back option
4. To seek Requests for Information on a sale and lease back option or RFI
5. To determine the value of the intellectual property. The Borough owns 50 percent of that property, for a ship that operates as two ships in one, a fast twin-hulled ship that can break ice and land on the beach, and a barge that lowers its deck 21 feet in 10 minutes.
6. To acquire an updated cost benefit analysis of the ferry
7. To know the value of the ferry to Port MacKenzie and incorporate into cost considerations
8. To re-explore grant obligations.

Borough Port Commission Chairman John Riggs advised the Assembly not to shelve the ferry but to build a ferry landing for pedestrians that has funding now. “We know we can modify it in the future. This will give us a place to park it and put it to some use,” Riggs said. Nearly 30 different groups have inquired about using the ferry.

The longest serving Port Commissioner, David Cruz, championed the ferry and said, “I don’t want to lose this boat.” “We’ve got a beautiful ferry terminal, a boat, we’re just lacking a couple of docks,” Cruz said. “I’m in favor of expanding the Alaska Marine Highway system. This boat is a state-of-the-art boat. … If the State had it, they’d run it from Homer to Kodiak, Nobody runs from Homer, Kenai, Anchorage, Tyonek. That’s where this boat’s going to shine,” Cruz said.

Listen to Port Commissioner Dave Cruz through widget on upper right

Lew Madden is the Borough’s Owners Representative and Co-inventor of the ship. Madden delivered best and worst case scenarios of what to do with the ship until landings are built, or a user is found. Berthing the Susitna at Ketchikan for a year appeared the least expensive of the berthing proposals at $ 1.3 million while berthing at Port MacKenzie for a year appeared the most expensive considered at $1.7 million because of a required crew. Madden also talked about possible fares and operation expenses.

“Like a highway, ferries never make a profit,” Madden told the body. But he said the ship could “approach the black” in the fifth year of operation. In part, the profitability of the ship was reduced, Madden said, when the prototype’s load capacity shrank to 134 passengers and 20 cars.

The Borough is obligated to operate a ferry system or repay some $20 million to the Federal Transit Administration for its grants, Madden said. The Borough is also obligated to take title of the vessel and collect data for the Navy, Madden said.

Participating via phone, Assembly Member Mark Ewing of District 4 (Wasilla) presented a new idea to the debate involving what he learned as a commercial fisherman: haul the boat out of saltwater, wash it with fresh water and store it. No crew needed. Potentially over a million dollars saved.

Madden, described Ewing’s idea as “innovative” and “interesting.” A “classic Alaska solution.” Discussion followed on whether a designed trailer could haul out the twin-hulled ship or pneumatic high-pressure air bags could do it.

Of the many groups interested in the ferry, four of them are the most likely to occur: CIRI may want to use the ship next summer for crews and wind power generation on Fire Island; Shell Oil is interested in ferrying workers in the Arctic Ocean; Tyonek Native Corporation and the company Pac Rim Coal are interested in building a ferry landing, as well as a private land owner in Kenai for thick summer dipnetting and tourism traffic. A proposal also came forward unsolicited from a group that wants to buy the ferry and lease it back to the Borough.

Manager Moosey reminded the Assembly of the ferry as an asset during emergencies such as earthquakes where a ribbon of highway would likely be broken and for potential downed passenger aircraft in Upper Cook Inlet. Moosey said the discussion is helping to make clear: “What’s the value that the Assembly is willing to pay for this service of having this ferry, because there is an advantage, but there’s also a cost. “

For more information call Public Affairs Director Patty Sullivan at 745-9577 or This email address is being protected from spambots. You need JavaScript enabled to view it.