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Assembly approves contract to bottle Blue Lake water

The Sitka Assembly last night (TUES 5-13-14) approved a contract with a California company that hopes to bottle water from the city’s Blue Lake reservoir. The contract gives the company, I Water, the right to buy up to 200-million gallons of city water a year.

But the company must start exporting water soon — or risk losing its water rights.

 

Thirty months: that’s how long I Water has to start actively exporting bottled water from Sitka if it wants to hang onto its contract with the city.

Speaking to the assembly over the phone, I Water’s Sebastien Furlan said his fledgling company is ready to deliver.

“We believe in Sitka, you know, and we’re ready to shoot, we’re ready to do this as soon as possible,” Furlan said. “I think this is a win-win, and we can’t wait to get started.”

Under the agreement approved by the assembly, I Water will lease space at the Sawmill Cove Industrial Park (SCIP) to build a water bottling plant, and will have the right to buy up to 200-million gallons of Blue Lake water per year, at one cent per gallon.

But the company must bottle and export 500,000 gallons of water within the first thirty months, or the city can revoke the contract.

The company will pay $15,000 up front toward the water purchase. If nothing comes of the effort, the city will keep that deposit.

SCIP director Garry White called the agreement a “30 month risk.”

“It’s a 30 month agreement,” White said. “They’re going to tie up that amount of our water for 30 months and if they prove it, great. If not, we’ve got $15,000 in the bank that goes towards water credits and we’re giving them the opportunity to be successful.”

The amount of water promised to I Water is just a fraction of what Sitka has available. The city has over 29,000 acre-feet of surplus water that it can sell for export each year. Of that, about 27,000 acre-feet are tied up in a purchase agreement with the company Alaska Bulk Water. That leaves about 1,400 acre-feet available. The agreement with I Water covers about half that amount.

In case of a shortage, I Water would be last in line, receiving its water after enough is allocated to the municipal water system, hydroelectric generation and to protect fish habitat.

If I Water does eventually buy its full allotment, the city would make about $2-million a year from the deal.

But that’s a big “if.” Assembly Member Mike Reif touched the heart of the issue when he asked Furlan who will be buying the bottled water.

“Tell me, I’m just curious, how do you plan, what’s your marketing?,” Reif asked. “How do you plan to sell all this water? Because I want you to be extremely successful.”

Furlan didn’t offer a clear answer. But White said that I Water plans to start distributing in San Diego, and expand from there. The strategy will be to focus on the water’s Alaskan origins, he said.

“We can’t compete against Dasani, we can’t compete against Aquafina,” White said. “We have to set ourselves apart and compete against Fiji water or that type of water.”

Furlan said he isn’t worried.

“We are going to sell quite a bit of water, you know,” he said. “And we might not do 200-million gallons year one, but hopefully we’ll do it year two or year three.

***

In other business, the assembly voted Tuesday night to approve the school district’s request for city funding, and passed on first reading a measure that would allow the city to reassess property that’s been damaged by a disaster, to reduce its property taxes.

The assembly also voted to transfer unused CPET (commercial passenger excise tax – or head tax) money from the Centennial Hall parking lot renovation, and use it to help fund the expansion of Kettleson Memorial Library.

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