Sitka voters last October approved spending over $8 million in public funds to build a new marine haulout – but even that much money is not quite enough to get the job done.

A group of subject matter experts convened on Thursday (6-1-23) to run the numbers, and to figure out just how much $8 million will buy.

Note: The Gary Paxton Board of directors will review the four proposed concepts – and recommend one to the Sitka Assembly – at its next meeting, 3 p.m. June 22 in Harrigan Centennial Hall.

$8.2 million seems really doable for a pier and a big machine – called a travelift – to pluck boats out of the water. The problem comes when design and environmental permitting costs are accounted for, as well as contingencies. That leaves around $6 million for actual construction of the pier plus a small boatyard, installation of washdown pads and a water treatment system, and the purchase of the machine, which itself can run over $1 million.

So the question becomes: Scale back and make something happen now, or look for additional funding to build something that not only works now, but could be expanded to accommodate more – and larger – boats in the future?

There’s not enough money on hand to do either, as PND lead engineer Dick Somerville pointed out when he caught a mistake in a spreadsheet.

“Not a big deal. It’s all over budget anyway,” Somerville mused.

Twenty years ago, Wrangell was in a similar position, but counting on a new boatyard to revitalize its economy.

Greg Meissner was the Wrangell harbormaster at the time. He’s consulting now with PND Engineering on the Sitka project. He was at the table for the Sitka meeting on June 1, where stakeholders discussed whether to move forward with a desperately-needed 150-ton travelift, or plan for something bigger.

“We had the same mentality (in Wrangell),” said Meissner. “Get something and get it running, make some money, we’ll go from there. But before we even got things built, we realized we needed a bigger machine. We were looking at 100-ton back in the day, then we got to a 150. And we realized … was the bigger the boat, the more the project is…. You pull a gillnetter out, the guy’s working on it himself, unless someone’s doing some major work on the thing. You put a 90-footer in the yard, there’s three people working on that thing for some company that’s spinning a lot more revenue into the community, whether it’s taxes or your dollar rolling over– whatever it is. So you want that bigger boat.”

Sitka stakeholders looked at four concepts for a pier, travelift, and boatyard. Two of them include an extra pier for a future 300-ton travelift, and one of them – Concept 4 – has a somewhat heftier pier for a 150-ton travelift, that could one day be extended to accommodate a 300-ton travelift.

Marine tradesman Jeremy Serka said that a 150-ton machine would cover the vast majority of Sitka’s fleet, but he was intrigued by the opportunity for expansion.

Sitka municipal administrator John Leach reined in the discussion, before it strayed too far from the intent of last October’s overwhelming vote in favor of a public haulout and boatyard. 

“The goal was not to be a revenue-generator,” said Leach. “We’re going to use our citizens’ money, their tax dollars, to develop a yard that serves our local fleet and our local fishermen. So if we start talking down the road in terms of revenue generation, we know that the smaller pier and the 150 ton lift serves – I think, by the analysis we’ve done over the years – it’s like 97-some odd percent of the local fleet.”

Sitka industrial park director Garry White, meanwhile, had his calculator out and was projecting costs. The results suggested that aiming for something a bit better than bare bones would not be a deal-breaker.

“To go to go from option one, which is the cheapest, to go to option four, the difference is about $684,000,” said White. “And so the question is: Is it worth the plan for the future for $684,000 to grab those bigger ships?”

And where to put those boats once they’re out of the water? Stakeholders reckoned with the number and location of washdown pads, as well as drainage in the boatyard itself, where according to municipal engineer Michael Harmon, “every drop of water” has to be collected and treated. Sitka’s industrial park has plenty of room for boats in the 40-60 foot range, but grading and storm drains could run over $1 million. Harmon urged stakeholders to think about “value trades” in the budget, and sacrifice some upland development in order to build the needed infrastructure and buy the equipment to haul out boats.

The presentation from PND Engineers contained columns of numbers, but none of them, unfortunately, added up to the $8.2 million approved by Sitka voters last October. Depending on the options, the project is short anywhere from roughly $4- to $8 million. Administrator Leach said that Sen. Lisa Murkowski had included a $2 million earmark for Sitka in an upcoming bill, but whether it will pass is uncertain. He also said the city was applying for grant funding to help close the gap.

Nevertheless, PND is moving ahead with geotechnical work, which it hopes to complete by the end of this year. If the environmental permitting works out – and of course, the money – the project could break ground next year, and be operational by January 1, 2025.

Size Matters: Since Sitka first began to investigate building a shipyard at its industrial park, there’s been no consensus on the capacity of the equipment. Pictured is a 300-ton Marine Travelift, which some say is too large for the majority of Sitka’s vessels. (Marine Travelift promotional image)

A plan for a new marine haul out and boatyard at Sitka’s industrial park is headed to the assembly table — this time with negotiated terms. While the plan calls for private management and operation of the facility, it also involves significant amounts of public funding — and not everyone is happy about it.

The board of the Gary Paxton Industrial Park met on June 22 to review the negotiated terms of a prospective agreement with SIMS, the Sitka Industrial Marine Shipyard.

Note: The park board voted 4-0 to move the project to the assembly table. The assembly will take up the matter at a special meeting on Tuesday, June 30. Sitka municipal administrator John Leach has recommended that the assembly reject the SIMS bid pending the outcome of the BUILD grant.

SIMS was formerly known as WC Enterprises, and their proposal outscored one other business when their plans were reviewed in city hall last month.

But principal Dan Cooper told the board that — besides the change in name — he and his partner, Kelly Warren had made some other changes as well: Gone is the amphibious lift that could have rolled in and out of the water, in favor of a traditional sling lift that travels on a custom-built pier. 

And, as Cooper explained, that travelift will be large.

“We did check into another big concern, which is can we haul small boats with this lift?” Cooper said, showing a photo of a giant machine holding a pair of recreational vessels. “And here’s a picture of a very large lift hauling small boats. And there is not an issue — even checking with manufacturers where we’ve been getting prices — they say all the way down to 30 feet and up to 100 feet with the same lift is not a problem. Ideally we don’t want to be hauling the smaller boats with the larger lift, so we are looking at a second lift to do smaller boats, and increase our efficiency at the yard.”

The Sitka Industrial Marine Shipyard is entering a crowded field in Southeast. One major competitive advantage for Sitka, according to Dan Cooper: Regular air service to Seattle for parts and supplies. (Flickr photo/Jonathan Caves)

The size and capacity of the haul out has been an ongoing source of contention, since the project was first discussed before the board last fall. Speaking from the public, Mike Nurco suggested that SIMS was off-track in a big way.

“A 300-ton lift is a great thing,” said Nurco, “but it’s not the lift to start the Sitka boatyard with. It’s too big. I don’t care what anybody says. You’re not going to haul a 30-foot boat easily at all with a 300-ton lift. Anybody in the business knows it. The pictures I saw up there, the straps were anemic for a 300-ton lift — you going to change the straps every time you haul a 30-footer? It’s not practical. Yes, we do need a 300-ton lift eventually, but you will haul far more boats in Sitka with a 150 (ton lift).”

Nurco also objected to the negotiated financial arrangements, which include the city’s backing a $375,000 loan for SIMS, and offering a three-year “ramp up” of zero lease payments.

Nurco thought the deal had strayed far from what Sitka was looking for when it issued the Request for Proposals, or RFP.

“I could be wrong but it seems my interpretation of the RFP was that the entity that came forward with a proposal for the RFP was supposed to finance on their own,” Nurco said. “They were supposed to bring their financing to bear on the whole project. And now it just seems like the whole dynamic is completely different, as far as the city doing a lot of the funding.”

Nurco was seconded by marine tradesman Jeremy Serka, who has also been carefully following the issue from the public.

“You know Warren and Cooper are skilled guys, but they’re not in this business,” Serka said. “This is a new business for them. You guys are throwing all your eggs in their basket, and what are they offering the city for this? Nothing! I haven’t seen any money. They’re hoping to get a loan. This is my livelihood, this is every fisherman’s livelihood, and we’re all throwing in their basket.”

The finances for the entire project look much different, should the city receive a grant from the US Department of Transportation’s BUILD program. There’s an application of $8.2 million pending which — in the event it is awarded — would fund the basic infrastructure costs for the haul out and washdown pad, and eliminate the “ramp up” lease scheme.

The park’s executive director, Garry White, felt pretty good about Sitka’s chances for the grant — but he would feel better altogether about the project if the money were already in hand.

“The best thing we could have done is built a time machine and gone back and applied for the grant in the past, and already known if we have it,” said White. “And then walk into this process — but that didn’t happen. So we are where we are.”

Park board members supported the plan by SIMS, despite objections from the other proposer, Baker Hensley, who complained that SIMS had cherry-picked the best ideas from his proposal, in modifying their own.

Board member Sheila Finkenbinder was ready to send it to the assembly for the finishing touches.

“Personally, I feel that the proposal that was brought forward by WC was quite a bit more detailed and comprehensive than the Baker (Hensley) proposal,” said Finkenbinder, “and I feel pretty comfortable going ahead with it even though things have changed.”

Assembly member Thor Christianson is liaison to the park board. He tried to assure those present that the financial terms were not over-generous, and were intended to promote business growth.

“The city as a leasing entity has a different goal in mind, than if I owned it personally,” Christianson said. “Our goal is to not just get every last penny out of it, but to have businesses going there and give them the best chance to survive. And I think if the other proposal had been the one you’d approved, we’d be talking about the same thing, just because we want them to survive.”

Although Sitka Sound Industries proposed hauling out boats on a hydraulic trailer similar to the one pictured here, board members preferred a plan that offered a 300-ton travelift. (GPIP image/SSI proposal)

A proposal for a new marine haul out and boatyard is on its way to the Sitka Assembly, for consideration in May.

The board of the Gary Paxton Industrial Park on Monday (4-27-20) evaluated a pair of competing proposals for a new marine services center at the park, and sent the high scorer on to city hall. Board members, working under a fast timeline, hope the city will refine the plan before committing to it.

Based on the relatively low scores, the park board wasn’t exactly dazzled by the proposals: Although both proposers had extensive experience in marine industries, neither had any previous experience in either managing — or working for — a haul out and boatyard. And, neither was bringing much capital with them, instead relying on the city to bankroll the early investment in equipment.

Shipwright Jeremy Serka, testifying from the public, thought the proposals were inadequate.

“They’re not focused,” he said. “There’s no engineering here. There’s nothing there. And the fact that one of these has to be accepted — in its current form — is not enough for me, and frankly for anybody else in the marine trades.”

The main difference between the two proposals was the equipment: Sitka Sound Industries, fronted by Baker Hensley and Mark Quinn, planned to purchase a 60-ton hydraulic boat trailer, which could haul out boats up to 60-feet long — most, but not all of the Sitka fleet. WC Enterprises, managed by Kelly Warren and Dan Cooper, would use a 300-ton travelift, which might actually be too big for many of Sitka’s mid- and small-sized fishing vessels.

See both proposals in the April 27, 2020, Gary Paxton Industrial Park board packet.

This was a problem for Linda Behnken, the executive director of the Alaska Longline Fishermen’s Association, in her public testimony.

“The research we had done so far said a big hoist, that the big hoist just can’t safely, easily work with small vessels,” Behnken said. “And since that’s such a key piece of the objective of this yard is that it efficiently service the small-boat fleet that’s the heart and soul of Sitka’s fleet. You need to know the answer to that question before you eliminate the other proposal from moving ahead.”

Jeff Farvour, a member of the public who has served on a task force exploring the haul out issue, asked if the process were too rushed to meet somewhere in the middle.

“I very much appreciate the two proposals,” said Farvour. “I think they complement each other. But I think this needs some more planning. If you have to slow this down to do this right, I think that’s more important than possibly moving too quickly forward.”

The industrial park board has been moving on a fast timeline, after Sitka’s lone haul out, Halibut Point Marine, announced that it would be closing down within the next two years.

Board member Mike Johnson reminded everyone that the board was intentionally casting a wide net.

“We were more or less asked to create a document that was pretty broad, and not well-defined, so that we could mine up more ideas and not discourage potential bidders from putting in a proposal,” said Johnson.

Johnson, along with other board members, scored the Warren-Cooper proposal slightly above the one written by Hensley and Quinn, saying that if the 300-ton hoist did not adequately serve the Sitka fleet, they’d have to buy a relatively inexpensive hydraulic trailer, or risk going out of business.

Johnson said that the Sitka Assembly would likely do much more work to “dial in” the plan.

The motion to accept the WC Enterprises proposal passed unanimously. The Sitka Assembly is expected to take up the matter in May.