Although the entire park is just over 71 acres, there are less than 10 acres remaining in the so-called “core area.”

There will be no bulk water shipments from Sitka this summer. The company that owns the rights to market Sitka’s Blue Lake water in bulk had said it would ship its first load in July. But now it will likely ask to extend its deadline.

Meanwhile, Sitka is fielding inquiries from companies interested in bottling Blue Lake water. But the city is running into an unexpected problem: there’s not enough land to accommodate new players at the Gary Paxton Industrial Park.

After years in which the city struggled to attract businesses to the site of its former pulp mill, suddenly it’s running out of room. Much of that land is locked up in businesses that have yet to deliver the promised revenue and jobs.

Now the park is looking to expand.

Note: The Sitka Assembly will vote Tuesday (8-11-15) on whether to grant conceptual approval to the plan to expand the Gary Paxton Industrial Park. The plan would have to go through the Planning Commission before any final decision is made.

When Sitka took over the site of its old pulp mill fifteen years ago, the city set up the Gary Paxton Industrial Park — formerly the Sawmill Cove Industrial Park — with a specific mission: to “maximize its economic benefit to the community through creation of meaningful jobs.”

And for years, the park had trouble finding many takers. Here’s Grant Miller, the chair of the park’s board:

“It’s not that long ago that we weren’t able to do anything out there.”

But now, suddenly, there’s not enough land to go around.

In just the last year, the city has fielded a string of proposals, entering into agreements with Silver Bay Seafood, the fish-processor; the locally-owned Monarch Tannery; Alaska & Pacific Packing, which plans to fabricate seafood processing equipment; and a water bottling start-up, iWater.

About an acre is leased to NSRAA, the Northern Southeast Regional Aquaculture Association. Another three acres are tied up in the defunct True Alaska Bottling plant, which has stood empty for years.
Then there’s the park’s perimeter, which includes the Fortress of the Bear and the city’s scrap yard; the rest of the park is too steep to be developed easily.

That leaves less than ten acres of prime real estate, with too many suitors. Silver Bay has proposed buying yet more land — this time for a marine services center. Alaska Bulk Water is eyeing those same plots. And then there’s the city itself, which has state funding to build a multipurpose dock at the park.

Now park director Garry White says he’s had interest from two separate groups who want to bottle Sitka’s water and market it in China. One potential investor visited for two weeks in July, White said.

“He’s dead serious on acquiring ten acres to put up a bottling plant. But we don’t have ten acres.”

So White proposed a solution: Why not expand the park? Specifically, he suggested that the board ask the city to transfer about twenty acres of land along Sawmill Creek Road, southeast of the current park.
The suggestion was met with enthusiasm by board member Charles Horan:

“We should put this in Gary’s bag of land to offer when folks come kicking tires.”

The board voted unanimously to request the additional land.

White says the recent surge in interest is the city’s efforts paying off.

“So we’ve been marketing for 15 years. It shows that when you put money towards marketing, things come to fruition at some point.”

It also shows how hard it is. White estimates there are about forty full-time, year-round jobs at the park, mostly at Silver Bay, Fortress of the Bear, NSRAA. That’s down from over 400 during the pulp mill days. (White estimates another 375 seasonal jobs in fish processing and tourism.) But most of the projects at the park haven’t delivered any jobs yet. Some are too new: The sale to Monarch Tannery was approved this spring but hasn’t yet closed. Alaska & Pacific Packing is just setting up.

And others are simply gambles. Alaska Bulk Water is asking for its fifth extension as it tries to build a business-model — exporting bulk water — for which there isn’t much precedent. I Water must bottle half a million gallons of water by December 2016 to hang onto its contract, but so far it hasn’t broken ground. Meanwhile, the bottling plant on the park’s west end has stood empty for years, a constant reminder of business plans that sound good but don’t pan out.

Board member Dan Jones asked if some of the recent interest might be another mirage.

“You know, they think they want ten acres, but would they really buy it? To me, it’s a really good question. Is there really a demand there?”

It’s a sensitive question because the park operates under its own rules when it disposes of public land. Anywhere else in the city, a sale over $500,000 requires voter approval. Sales at the park, on the other hand, require just one vote by the assembly – that’s means major land sales can spend less time at the assembly table than the lease for an espresso stand at the airport.
But White says he’s confident that businesses will come through.

“I feel the development’s coming. I really do.”

And when it does, he says, there had better be somewhere for it to land.

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.

Downloadable audio.

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.

The board of Sitka’s Gary Paxton Industrial Park on Wednesday (12-17-14) approved the sale of a significant portion of park waterfront to Silver Bay Seafoods.

Plans for a joint venture in a marine services center remain on hold for the time being.

Downloadable audio.

In just eight years, Silver Bay has already acquired a substantial portion of the park, including the plant and dock at lower left, and nearby bunkhouses.

Read Silver Bay Seafood’s complete purchase proposal.
Read Alaska Pacific & Packing’s complete lease proposal.

The deal won’t be final until the Sitka assembly has its say — and ironing out the details alone may take several more meetings — but the prospect of transforming the former home of Sitka’s pulp mill into a huge seafood plant and marine services center clearly has the public’s attention.

“Jobs, jobs, jobs. Jobs have always been Number 1 since the pulp mill shut down. And that’s what this site was to be developed for,” said Nancy Davis, one of the original board members of the Gary Paxton Industrial Park.

“The board’s protection of the waterfront, which was so important when we began, was to prevent the lease or sale to someone who would just let it sit and have nothing happen. Example: The Boat Company.”

The small cruise line’s plans to stage its ships here went south with the economy in 2008. But so did the plans of True Alaska Bottling. The city sold TAB its plant in 2006. Water bottling never panned out, and Silver Bay attempted to buy the 3-acre site in foreclosure, but other investors have held on to the vacant building ever since.

Some argue that TAB is the main reason to keep the park in city hands, and lease property to Silver Bay.

“No matter what somebody puts on paper,” said Pat Glaub. “It doesn’t tell what the actual future will be.”

A slide from Silver Bay’s presentation to the GPIP Board. The proposed purchases would put much of the 11-acre waterfront in the processor’s hands. (KCAW photo)

Glaub owns Alaska Pacific & Packing. He’s submitted a competing offer for an area of waterfront also sought by Silver Bay. Glaub’s business is small, but he’s serious.

“I had a conversation today about an ice facility for Bristol Bay, which is a three-barge ice-producing equipment. Something in the neighborhood of 1,200 tons of ice a day, to help with Bristol Bay quality issues.”

The park board has heard proposals from plenty of dreamers, but Glaub is different. He helped develop the innovative processing lines for Silver Bay’s Sitka plant and two others. His wants to establish an engineering firm in the park that converts Navy barges into floating processors.

“If I can’t handle it here, I can do it in Bellingham, I can do it in Everett, I can do it in different places. But I would love to build those three barges here.”

Glaub says he has an amicable relationship with Silver Bay — he even has an ownership stake in the business — but he’d rather remain independent, and control his own future.

Read previous reporting on Silver Bay Seafoods and Alaska Pacific & Packing.

Rich Riggs, the CEO of Silver Bay, doesn’t rule out working with Glaub. “I really look at what Mr. Glaub has proposed as a complement to this marine services center.”

Riggs and board chair Troy Denkinger outlined Silver Bay’s proposal for buying most of the remaining waterfront in the park, for fish waste processing, expanded cold storage, and a joint venture with Halibut Point Marine to build a marine services center. The facility would have a 250-ton travel lift to haul the fleet’s biggest boats, and on-site tradespeople in welding and fabrication, fiberglass, electronics, and propulsion.

Riggs suggested that Glaub’s business could join the suite of services available at the park.

“So what we have done is provide a space within Area F for those exact operations, and look forward to it complementing this marine services center.”

Glaub stated bluntly that working upland on a site, surrounded by Silver Bay, was unacceptable.

Other members of the public attending the meeting were also concerned about Silver Bay’s monopolizing the site.

Jeff Farvour is a commercial fisherman and boat owner. Several years ago he brought forward a citizen initiative to bring large land disposals at the industrial park under voter control. The city challenged the initiative language, and its been tied up in court ever since. Still, Farvour advocated on behalf of the public.

“Just on first blush, I guess I’d be more of a proponent of having more diverse tenants out there. I think that might be in the best long-term interest of the city.”

And the city does have interests in its industrial park. Foremost among them: A multi-purpose bulkhead dock. The city already has $7.5-million in hand for the dock. Silver Bay’s proposal asks the city to add infrastructure for a travel lift to the bulkhead. Silver Bay, on the other hand, would buy the 250-ton travel lift.

Board member Ptarmica McConnell did not want to put the cart before the horse.

“I think that before we can really make a decision on those waterfront lots in question, that we need to talk about the multipurpose dock, and the money we’ve received for it. Whether we can use some of that money for the haul-out portion of it, and obviously we’d have to look for more money to finish it.”

Industrial park director Garry White said he’d be willing to investigate that question. He suggested that proceeds from leases and sales might be used to cover the additional $3-million needed to included a haul-out facility with the bulkhead dock.

This is when city administrator Mark Gorman stepped in.

“We need to be clear in what the community of Sitka needs in that bulkhead, and it should complement what Silver Bay is doing. But first and foremost that facility is for the public. If it’s perceived that we’re building it for Silver Bay, there’ll be a backlash.”

Board member Dan Jones proposed removing 35,000 square feet from Silver Bay’s proposed purchase, immediately upland of the dock. His objective was to further protect public access to the dock. “You can’t have a dock without uplands,” Jones said. He offered an amendment to this effect, but it failed.

In the end, the board approved only some of Silver Bay’s offer. They agreed to sell the park’s former wastewater treatment building, which Silver Bay will use to build a fish oil plant. They also approved the sale of the large parcel just to the north of the TAB building. If approved by the assembly, the two sales would be worth about $1.1-million.

And finally, the board approved leasing the former pulp mill administration building to Silver Bay for $1 per year until certain covenants expire on the property, and then selling it to the processor for $233,000.

Park director White said the building had been appraised at $0 and was considered a liability at the site. Board member Chris Fondell ask White to draft language in the agreement to ensure that the building never be returned to city ownership.

Details of the rest of Silver Bay’s acquisition offer will be hammered out in a work session with the assembly. Large questions hang in the balance: The city has been looking for a solution to marine services for a long time, yet it has been burned before by ambitious property schemes in Sawmill Cove.

Mark Gorman said some “shuttle diplomacy” might help allow both Silver Bay and Alaska Pacific & Packing to realize their goals for the site.

Park board chair Grant Miller, participating by phone, said the entire proposal met his expectations for the park.

“Whatever it takes, I think we need to do it. We’ve been hemorrhaging boats from Sitka for too long now.”

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)

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.