By SHANNON HAUGLAND
Sentinel Staff Writer
The Assembly tonight will consider putting a question on the October 4 city election ballot to dedicate $8.18 million toward construction of a boatyard and haulout.
The funds represent the $8.25 million the city received from the sale of the Sitka Community Hospital building and real estate to SEARHC, minus administrative expenses to close the sale.
Funds from the sale of city property are deposited into the Sitka Permanent Fund, and can be withdrawn only by consent of the voters in an election.
The ballot proposition ordinance passed on first reading July 12 by a 6-1 vote and is up for second and final reading tonight.
In other business tonight, the Assembly will consider the collective bargaining agreement with the Alaska State Employees Association, and renewal of the contract with the Chamber of Commerce to provide visitor services on behalf of the city.
A resolution also will be proposed supporting U.S. Senate Resolution 2907, the Truth and Healing Commission on Indian Boarding School Policies in the United States Act, and “encouraging the commission to come to Tlingit Ani as part of the commission’s search for truth and the process of healing.” Kevin Knox and Rebecca Himschoot co-sponsored the ordinance.
Haulout and Boatyard
Assembly members Kevin Mosher and Thor Christianson sponsored the boatyard funding ordinance following the failure of other public and private financing options for the facilities.
At the May 24 Assembly meeting the two volunteered as a committee to explore new options to fund a haulout, which is critical infrastructure in a fishing community. They ruled out three other options for funding that were considered after determining that:
– reinstating the property tax on boats would cost more to implement in time and resources than could be collected.
– a general increase in sales tax dedicated to the project would create a divide between shipyard users and nonusers. Also “general governmental funds would be used to fund a single sector of the community instead of the entire community,” they said in a memo.
– increasing harbor rates would not be affordable to many boat owners and could force vessels to leave the harbor system.
Option 4 was to use the $8.18 million in net proceeds from the hospital property sale, which were deposited in the Permanent Fund.
Christianson said he sees the ballot question as the best chance to “pull boats” as soon as possible, instead of waiting for state or federal help, which may not be coming. He said the hospital sale provides “an unusual if not unique opportunity.”
“The fact that the money has not hit the budget yet is very important,” he said. “It also has a better chance of passing (than the other options).”
Quoting the mayor from the last meeting, Christianson said, “It’s trading one asset (the hospital) for another.” He also sees it as more of an investment, since having a boatyard and haulout would generate sales tax revenues that would offset the costs, by increasing the boatyard work in town.
“The fact that it will put money back in the city’s pocket is very important,” Christianson said. “There would be substantial sales tax revenue generated that would offset the losses to the Permanent Fund. It’s more of an investment in our future than just building a new building would be.”
The finance department estimated the earnings from the $8.18 million in the Permanent Fund would be about $340,000 a year, starting in fiscal year 2026.
“At the end of the day it was the only option we could see working that wouldn’t cause all kinds of issues,” Christianson said. He added that the dedication of revenue to the project would “get us (the city) skin in the game.”
Mosher agreed. “You’re more likely to attract federal and state grants if you have invested your own money into it.” He added, “Choosing not to invest would have worse repercussions. If we choose not to invest in our fishing fleet, it would have a worse effect on our economy.”
The proposed ballot question asks:
“Shall the City and Borough of Sitka appropriate and distribute from the Sitka Permanent Fund an amount not to exceed $8,181,040.28, which is the net proceeds received by the municipality from the sale of municipal real property known as the Sitka Community Hospital Site, for the sole purpose of constructing a marine vessel haulout and shipyard at the Gary Paxton Industrial Park?”
Besides the legal requirement for a vote to withdraw funds from the Permanent Fund, asking voters the question is a good idea for other reasons, Mosher said.
“This is a really big decision, it’s a huge amount of money,” he said. “It’s a big-picture decision on whether we want to support the fleet by building a haulout.”
Garry White, director of the industrial park, said he believes the $8.18 million in the ballot question will be enough to purchase a haulout system, washdown pad and EPA-approved water treatment system.
“It’ll get vessels out of the water and washed,” he said. “I think it will definitely benefit the harbor community - we have one of the biggest harbor systems in the state.”
Kevin Knox, who voted against the ordinance to put the item on the ballot on first reading, said he didn’t know how he would vote tonight.
“I’m undecided at this point,” he said. “Before we voted last time, I asked people to contact me and convince me to vote the other way, and no one reached out. So I don’t know what to do.”
In other business at tonight’s meeting are budget items to repair the scrapyard baler and to build an ADA-accessible bus shelter.
The meeting starts at 6 p.m. in Harrigan Centennial Hall. Remote attendance is also available through the city’s YouTube channel or cityofsitka.com under “Assembly Meetings.”
