Daily Sitka Sentinel

Water Payment Delay Puts Sales Off Again

By TOM HESSE

Sentinel Staff Writer

If Sitka’s bulk water story is starting to sound a little familiar to you, you’re not alone. 

“It’s like that movie ‘50 First Dates.’ I keep reliving this over and over again,” Alaska Bulk Water Inc. President Terry Trapp said. 

While addressing the Gary Paxton Industrial Park Board of Directors, Monday, Trapp explained via telephone the latest in a string of missed deadlines for payments on bulk water and likened the experience to the 2004 Adam Sandler comedy. 

Alaska Bulk Water has missed a slew of payment deadlines dating back to December when its last contract ended – a three-year deal that it paid $1 million for. An attempt to renew that contract for another three years fell flat, and a more recent agreement that brought in a second company, Arctic Blue Waters, also failed to come to fruition because of a missed payment at the end of June. 

Arctic Blue Waters and Alaska Bulk Water Inc. joined in a loose agreement to bid on bulk water purchases of Blue Lake water, in which Arctic Blue Waters would cover Alaska Bulk Water’s share of a $1.1 million deal. Despite an extension of the payment deadline, the city never received the money, prompting Monday’s meeting of the park board. 

“ABWI did not anticipate that this would be a problem, and only learned of this problem about 10 days ago,” Trapp wrote in a letter to the board. 

The payment deadline was June 30, meaning it was two weeks after that date that Trapp found out the money hadn’t been sent. With the deadline missed, the contracts are voided. 

Fred Paley, who had previously attempted to export bulk water from Sitka in the mid 1990s, is the president of Arctic Blue Waters. Paley and Trapp got together to make a pitch for a new bulk water deal on behalf of their two companies in response to a city Request for Proposals issued earlier this year. 

The city started looking for new bulk water buyers in March after Alaska Bulk Water’s contract was voided because of a missed a payment deadline.

Paley told the GPIP board Monday that his situation was similar to Trapp’s: the missed payment had to do with another entity backing out.

“We were depending on a third party to come up with these funds,” Paley said. “I’m told today that it could be as early as Wednesday or Thursday,” Paley said. 

Alaska Bulk Water missed the December payment deadline, and subsequent extensions, on its old contract for similar reasons with its own investors. Alaska Bulk Water had held the rights at Blue Lake since 2006, spending more than $1.3 million on water credits and installing more than $1 million worth of infrastructure, Trapp said. 

When the contract was voided, the rights went back on the market where they received four proposals. Only two of those proposals, from Alaska Bulk Water and Arctic Blue Waters, were considered “responsive.”

At Monday’s meeting both companies cited their experience in the market and their investment in Sitka as reasons they should get an extension. 

“We were there 12 years before, spent $6.6 million, weren’t successful but we’re still in the water game today,” Paley said. 

“We’re scrambling right now to get this done. I don’t know if it’s two weeks or a month or something shorter than that,” Trapp said. 

Alaska Bulk Water requested the chance to pay for its share of the allocation – a smaller amount of 1 billion gallons a year for $100,000. Paley said Arctic Blue Waters was hoping to have the $1 million for its larger share within the next two weeks. 

Both companies also say they have tentative agreements in place to ship water overseas to “countries in the Middle East.” 

The board took no action to entertain any contract extensions, but did leave the door open for either group to purchase water rights should the money become available. Board member Charles Horan summed up the sentiment of the board when he said the park was still open to marketing water but, added: 

“If you bring something through the door, bring money.”

“I’m inclined to move on but not say ‘we’re done.’ You’ve tried hard, it’s a tough market to get into, you’ve let us down, we’re a little disappointed, but if you come to us with money in hand we’re ready to work with you.” 

The board directed Park Director Garry White to continue working with anyone interested in water and also to  look at other ways to market the resource. 

“What I’m going to emphasize is that chase needs to be up front,” White said. 

In the meantime, Alaska Bulk Water still has its mooring buoys installed in the bay in front of the industrial park, as well as a pipeline the company built on park land they’re not leasing. Assembly liaison Steven Eisenbeisz advocated for some sort of lease agreement to allow  the company to keep their infrastructure in place. The board had past agreements with Alaska Bulk Water but those lapsed when the new contract fell through. 

“They are incumbering city land that could otherwise be used,” Eisenbeisz said. 

The board voted unanimously to allow the infrastructure to stay on a month-to-month permitted basis at the cost of $500 a month. 

When the Assembly holds its regular meeting tonight the bulk water issue will be on the agenda for discussion.