Silver Bay Seafood’s push to acquire more waterfront land got a boost recently, when the board of Sitka’s industrial park agreed to open negotiations with the processor.
The board’s decision means that it is setting aside — for the time being — a competing offer from a bulk water company which wants to use the same land to stage container vans to export its product.
Silver Bay’s offer has been in front of the board for a year: to buy or lease Lot 15 at Sitka’s Gary Paxton Industrial Park, and some smaller adjacent properties, for the expansion of their processing capacity and the construction of a marine services center.
The park board has had to reconcile Silver Bay’s proposal against others — most recently, and insistently — from Alaska Bulkwater Inc. which wants the land to stage containers.
Alaska Bulkwater CEO Terry Trapp, speaking by phone, explained to the board at its last meeting on June 25 that the bulk water industry was only now developing infrastructure, and there was a strong preference among buyers to ship water in containers — which can be dropped on to trailers and pulled by trucks — rather than in tanker ships.
“We have several customers that are insistent that we begin loading and shipping containers.”
This is a relatively new development. As part of park upgrades, Sitka has installed a large-diameter water pipeline to the oceanfront. There are also plans on the table for a city-owned bulkhead dock next to the pipe. The board’s vision of bulk water has been largely ship-based.
Member Charles Horan, who returned to the board early this spring following the death of Chris Fondell, was encouraged by Alaska Bulkwater’s interest in the site, but he didn’t think it trumped Silver Bay’s.
“I favor the concept of having Silver Bay get some entitlement to that land to develop a marine service facility. The reason I favor it — beyond the fact that they’ve asked for it — is that I believe they’re capable of doing it, because they bring a user to the marine services table with the highest probability of doing it. Next, they have proven themselves capable, and a good business neighbor, and a good citizen. All those reasons, I think it’s in the interest of the city to get an entrepreneur with that kind of horsepower, with that kind of track record, who can bring new demand, new jobs, new economic activity for the city — I want to negotiate a win-win deal with someone like that.”
The board might have already negotiated a deal with Silver Bay but for Alaska Pacific & Packing, a small-but-proven marine engineering firm which also wanted a slice of the waterfront. Smoothing out that wrinkle took several months. The assembly in May finally awarded a lease to AP&P of about an acre of land and 20,000 square feet of tidelands for a floating dock.
In contrast, Terry Trapp and Alaska Bulkwater sought a fast-track decision, and offered to make a cash deal for the remaining waterfront. Board members, however, did not rise to the bait. Member Dan Jones, like Horan, thought the city should hang on the parcels nearest the prospective dock, and rent them out on a tariff system to whoever needed it, whenever it was needed.
Alaska Bulkwater has been installing floating pipeline and mooring gear at the park this summer. Trapp was unhappy at the board’s reluctance to support this investment by providing additional land.
“We’re not spending this money frivolously. We’re betting… We’re spending this money in a very hard, considered business decision of where we’re going with this business. And to pick up the leftovers, after we’ve put a hard offer on the table, I just don’t see that you guys are meeting your fiduciary responsibility.”
Alaska Bulkwater owns exclusive rights to a large share of Sitka’s bulk water, but those rights — purchased for $1.5-million — will expire if it fails to ship 50 million gallons of water by December 8 of this year.
Despite that performance deadline, there remains some skepticism on the board over whether bulk water will fly. Chair Grant Miller hinted at this, as he told Trapp that Silver Bay just got to the land first.
“We had a decision to make here. A difficult choice between your proposal and another proposal that’s been before us for quite some time. We had some commitment to that. They have demonstrated good faith, they have demonstrated jobs, they have demonstrated a lot of things in the positive to win our support. We have heard a lot of things about water for a very long time, and it was a tough decision. But what we’ve decided to do I think is in the best interest of this community.”
The Gary Paxton Industrial Park board instructed director Garry White to proceed with negotiations with Silver Bay for the acquisition — via lease or sale — of about three acres of waterfront and uplands at the park.
Alaska Bulkwater’s land purchase request was tabled.