Voters will now decide whether to fund a marine haulout using money from the sale of Sitka Community Hospital. When the Sitka Assembly met on Tuesday (7-26-22), it approved a ballot proposition asking voters to tap the city’s permanent fund to cover the costs of the project.
Sitka’s commercial fishing fleet has been without a haulout since this spring, but plans to build one have been in the works for the last two years, following the closure of a privately owned haulout that serviced most local vessels. But finding funding for a haulout has been a challenge, and after pursuing several paths, the assembly hit a dead end, and went back to the drawing board.
Sponsors of the resulting ballot proposition see using $8.1 million from the sale of the community hospital building as ‘trading one city asset for another.’ By charter, the proceeds of the sale were automatically deposited in the Sitka Permanent Fund. Only a vote of citizens can withdraw it.
Several community members spoke in support, including Chris Ystad, who said a haulout would go beyond supporting the fleet. It would support Sitka’s economy.
“We have one of the largest fleets in Alaska. And right now, we do not have a way to maintain it,” he said. “There are two boats that I can think of this year that just spent six figures, each one of them in Wrangell. That was not here, and it should have been. And they both said that it should have been. They wanted to be done here, because they are Sitkans and they want to bring business here.”
Nancy Yaw-Davis said while she wants a haulout in Sitka, she would vote no in October, and wanted to know if any other ways to spend the money had been considered.
“What really bugged me here is I don’t know if all $8 million has already been dedicated to one economic aspect of our complexity. Is that the only thing that was ever discussed for the use of that money?” she asked. “Did you ever discuss other possible uses? You’re kidding. I thought I just missed it.”
When the ballot proposal was first considered by the assembly in early July, concerns about drawing money from Sitka’s permanent fund were discussed. Foremost, is the loss of about $340,000 a year in interest that supports Sitka’s general fund. Sponsor Thor Christianson said at the end of the day, he believes that a haulout in the community would make up for those losses in sales tax revenue.
“Honestly, I wouldn’t support going to the permanent fund for something that wasn’t an economic engine,” Christianson said. “Every dollar that’s spent out there [at the haulout] will be taxed at, we’ll call it, 5.5 percent. And back in the napkin, that’s about, if we see $6 million worth of economic activity, and that means everything. That means haulout fees, that means people working on boats, that means people buying bottom paint at LFS. I don’t think that’s an unreasonable number to hit at least once it’s up and running.”
Most assembly members were in favor of the measure, including Crystal Duncan, who said she supported taking the measure to the voters, but worried that the $8.1 million figure wasn’t telling the whole story–that more planning and money would be needed to get the project across the finish line.
“I’m thinking, as somebody goes into the ballot box, I don’t expect them to research intensely,” Duncan said. “I’m looking at it right now, as it reads, it looks like ‘$8.1, we’ll get it done. We’re going to take it from here, put it there, we’re gonna have a marine haulout.’ And I don’t know if we’re fully there.”
Christianson said $8.1 million would get boats out of the water, but building out the haulout beyond a “barebones” version would require more capital. $8.1 is close to the amount the city asked for when it applied for federal RAISE grant back in April, and it’s possible that the grant could still come through this September. That would offset some of the cost to Sitka’s permanent fund. City Administrator John Leach said there were still a lot of unknowns, but getting the money could help Sitka leverage more money from the feds.
“There’s a lot that could happen here. But right now, if this doesn’t go to the voters and if grant monies don’t come in…we’re at a point where it’s $0, or money from this sale,” Leach said. “Those are really our only two choices left right now, and we keep our fingers crossed waiting for grant funding to come through.”
Assembly member Kevin Knox was the lone vote against the measure on first reading. He voiced concerns that tapping the city’s permanent fund – albeit for a good cause – was not without risks.
When we’re taking monies out of the permanent fund that has a diversity of investments, and putting it into one sector…we are running a risk,” Knox said. “If there’s a collapse in our fisheries, if there’s a collapse in tourism or other things like that…and then the haulout ends up failing or becoming a greater liability on the city, we will have to make up for that somehow.”
Knox said it was unlikely he would support the measure at the polls, but he supported putting it in front of the voters for consideration. The measure passed 6-0, making it the second ballot prop that voters will get to weigh in on this fall.