Silver Bay Seafoods has tendered an offer to buy out the City of Sitka’s industrial park.

The processor began operations in a corner of the former pulp warehouse in Sitka in 2007, and has since grown into one of the state’s largest seafood operations.

Park board members heard details of the sale in a special meeting this week (9-25-14), but took no action. Instead, they decided to hold off a month in order to weigh the offer against a competing proposal from a different company.

Downloadable audio.

Selling off the park is within the GPIP board's mission: “Unlike other property owned by the  municipality, the former Alaska Pulp Corporation mill site was acquired not for governmental  purposes from the state or federal government, but for economic development and disposal."  (GPIP photo)

Selling off the park is within the GPIP board’s mission: “Unlike other property owned by the
municipality, the former Alaska Pulp Corporation mill site was acquired not for governmental
purposes from the state or federal government, but for economic development and disposal.” (GPIP photo)

When it rains it pours. That may have been in the minds of the five member board of the Gary Paxton Industrial Park, as two major players in the seafood industry laid out plans to develop substantial portions of the remaining waterfront in the park.

Silver Bay Seafoods has been at the park for seven years, and now owns its plant and several other properties, including a bunk house. Silver Bay’s growth has been nothing short of extraordinary. It now operates seven plants in the state, as well as plants in Puget Sound and San Francisco, and has one on the drawing board for Ventura, California.

Read Silver Bay Seafoods’ purchase proposal here.

Read Alaska Pacific & Packing’s lease proposal here.

But a great deal of Silver Bay’s success can be attributed to a contractor called Alaska & Pacific Packing. APP designed and built Silver Bay’s innovative processing lines in Sitka, Craig, and Valdez, and now would like to permanently house its manufacturing operation at the park.

Board member Steven Eisenbeisz was interested.

“I’m in support of your idea here. I think it’d be a great service for Sitka. I think it’s something that’s not offered in many other places. And I’m sure you’d go someplace else and work on this if not here in Sitka.”

APP’s CEO Pat Glaab wants to lease about 95,000 square feet of the park for his manufacturing facility, plus another 12,000 square feet of tidelands for a floating dock to moor the tenders and floating processors purchasing his company’s equipment. At going rates, the lease would be worth about $128,000 a year. But the board would consider crediting Glaab $10,000 a year for each full-time employee, which might reduce his rent to less than $50,000 annually.

Industrial park board chair Grant Miller, also a fisherman, thought settling APP’s operation in Sitka would be a boon to the industry.

“And I’d just like to say that I think this whole idea is good also. Not only good for Sitka, but good in the sense that the equipment and stuff that you’re manufacturing will be of service to other vessels in Alaska passing through here.”

APP’s plan is consistent with the development plan of the park, and the board might have wasted no time coming to terms with Glaab, were it not for the fact that Silver Bay is interested in the same property. Silver Bay, in fact, is offering to buy outright all the available waterfront in the park, plus some uplands, for $2.1-million.

“I look back to when this was just a vision and the dream was big. And I think we have far exceeded what I think the expectations of Silver Bay were when this board — and ultimately the assembly — gave approval for what was then a lease, ultimately a purchase, and we have proven that we are not about talk and rhetoric, but about implementation.”

This is Rich Riggs, CEO of Silver Bay. Riggs is a lifelong Sitkan. He stressed that the company — despite its rapid expansion — calls Sitka home. Silver Bay is owned by a consortium of 300 fishermen, with many of those original investors Southeast seiners.

The company’s reputation, however, took a hit a couple of years ago when it processed trawl-caught ocean perch. Although the fish were legally harvested, trawling is banned in Southeast Alaska.

Board member Steven Eisenbeisz said the public was concerned. His question put Riggs on the defensive.

Eisenbeisz – With this expansion, there’s concern that your plan is to bring trawlers into town. Could you speak to that?
Riggs – Sure. That is not the intent here, to be clear. The intent here is to provide value-added to the resources that Alaska fishermen — our owners — are currently harvesting. We did obviously — as is well-known — take a legally-harvested resource in a year when we knew the forecast was low, and we wanted to bring those multiplier dollars to Sitka and make the plant profitable. There’s a more holistic discussion, I personally wrote a letter to the editor in regard to it. But the expansion and growth of Silver Bay here is not intended… What we’re talking about, from our perspective, is for value-added.

That value-added component includes a canning line, which Silver Bay is now operating on a trial basis, cold storage, and processing fish waste into a high-end oil and pet food.

These facilities would be built on either side of Silver Bay’s existing plant. The remainder of the waterfront would be utilized as a marine services center, owned by Silver Bay but operated by Halibut Point Marine. The haul-out would service large boats — over 50 feet in length — that can’t be hauled out with Halibut Point Marine’s current travel-lift.

A marine services center has been a goal of the park. But board member Ptarmica McConnell, participating by phone, wondered if Silver Bay and Halibut Point Marine were setting up a private service.

“I was just curious about the haul-out facility, if that’s going to be for tenders and the herring fleet and large boats, or if any size vessel could go there and use that facility on a space-available basis, or what the intent of the use of that is?”

Halibut Point Marine owner Chris McGraw explained that the new yard would be an extension of his existing service, but with greater capacity. The existing yard would continue to operate as always.

Still, McConnell was concerned about the plan.

“When you sell a property, the new owners can do whatever they want, so there’s no guarantee that they’ll go through with the marine services facility, although they have the best intentions. Things change in business. Unforseen circumstances can come up.”

One thing soon to change at the park is waterfront access. The city has won a $7.5-million grant to build a bulkhead dock. Board member Dan Jones felt that public access to the dock depended on having public uplands available. He was worried about the city being put in an embarrassing position if the public dock were completely surrounded by private land.

“The proposal, as it exists to me, takes too much land for us — with a red-face test — to continue to build the dock. So, how much land do we need for a dock, what does it mean to this proposal?”

Board members expressed an interest in seeing a compromise between Silver Bay and Alaska Pacific & Packing that might put both businesses in the park. KCAW spoke with Glaab after the meeting, and he said Silver Bay remains one of his best clients, but he would rather not lease from them, and preferred to run a completely stand alone business.

Board chair Grant Miller opted to hold off on any action for a month.

“I’d just like to find out if we have any other options rather than just saying Yes to one and No to the other. That would be my hope that we could do that at the next meeting.”

The board then adjourned until October.