For more than two decades, companies have hoped to export Sitka’s water and market it globally. But so far, none of those efforts have come to fruition. That’s part of the reason a new contract for exporting bulk raw water elicited strong skepticism from assembly members at Tuesday’s (2-23-21) meeting.
It isn’t the first time the owner of Arctic Blue Waters Alaska, Fred Paley, has held a contract with the city. The company’s last contract ended after he failed to make a required $90,000 payment. Mayor Steven Eisenbeisz worried that this time wouldn’t be any different.
“It seems to be a bad business partner to me when someone comes and requests another 20-year lease for our assets, and they haven’t even complied with the terms of their last two,” Eisenbeisz said. “I tend to wonder why we continue with this, apparently for the last 20 years now.”
The length of the lease was also a concern for several assembly members, who worried about how much could change in the next 20 years and cited water as a valuable commodity. Member Kevin Knox expressed uncertainty about how climate change could impact Sitka’s water supply.
“Climate models and other things aren’t as accurate as we would like them to be and looking at it today it looks maybe rosy. But 20 years from now it might be catastrophic. And we can’t tell,” Knox said. “That part of it feels a little scary.”
The agreement ensures that municipal water uses retain first right and priority of the water.
“Our electrical needs get served first, and we can stop the taking of water under any circumstances if it affects our ability to provide hydroelectric power,” municipal attorney Brian Hanson said.
State permits allow Sitka to export approximately 9.5 billion gallons of raw water annually. Currently, the city has one active water purchase agreement with Eckert Fine Beverages for around 1 percent of that total allotment. So far, the company has exported a few thousand gallons to a California subidiary, Reigncane Vodka. In an email to KCAW, company principal Brian Eckhert attributed the slowdown to Covid.
This new contract requires Arctic Blue Waters Alaska to make a $10,000 non-refundable payment and export at least 50 million gallons of water within a 60 month period or the city can terminate the agreement. The city has already made about 1.4 million dollars selling water rights since 2009.
Member Thor Christianson, who serves as the liaison for the Gary Paxton Industrial Park, said he didn’t have strong feelings but thought it was a low-risk way to cash a few checks.
“And the way this is written is that if they start moving a bunch of water they can continue to have rights. If they don’t they won’t,” Christianson said. “I strongly suspect they’re not going to hit that 50 million gallon mark, but if they do, it means we’ve got a viable operation going.”
He also worried that if the city doesn’t utilize its permits to export water, the state could take them away.
Park Executive Director Garry White said he understood the concerns about past failures to follow through, but also reminded assembly members that setting up a water export business in a remote community takes time.
“Frankly it’s a pretty tough business, it’s pretty tough to figure out how to take a really heavy commodity product and move it from our remote location to another spot in the world,” White said. “I’m not the smartest guy about water, there’s probably other people that are smarter out there. And I would like to allow them to have the ability to try. I don’t have as many people looking at having us do this as I did in the past.”
Ultimately, the assembly chose to table the decision until their regularly scheduled meeting on March 23. That’s to allow for additional comment from the public and the industrial park board.
Read more coverage of Tuesday’s Sitka assembly meeting here
Note: This story was updated on 3-14-22 to include information that Eckhert Fine Beverages had exported a few thousand gallons of water to Reigncane Vodka.
Erin McKinstry is a Report for America corps member.