By GARLAND KENNEDY
Sentinel Staff Writer
The Assembly has scheduled a vote Tuesday night on whether to accept a private proposal to construct a boat haulout facility at Gary Paxton Industrial Park.
The park board directors approved and forwarded to the Assembly a proposal by Sitka Industrial Maritime Shipyard, but City Administrator John Leach has issued a memo recommending that the Assembly reject all bids at Tuesday’s meeting.
The city issued a request for proposals in January for a privately-run boat haulout facility to serve the local fishing fleet after Halibut Point Marine, which operates the only publicly-available boat haulout in Sitka, said it plans to shut it down next year.
“The goal of City and Borough of Sitka is to create a privately funded and managed marine services shipyard at the GPIP,” the city’s RFP said. “Specifically, CBS is seeking a private sector developer to construct and operate a marine vessel haulout facility and an EPA approved boat washdown area.”
The park board voted unanimously a week ago to recommend that the Assembly accept the SIMS proposal for a three-phase project, with the initial phase to include “a basic facility utilizing the current ramp structure, a new EPA-approved wash rack, a 300 (ton) haul out machine, and ... boat storage,” by June 2021.
Nels Lawson II watches at right as his 40-foot wooden troller, Heart Song, is hauled at the Halibut Point Marine Services Yard this afternoon. The facility uses an 88-ton capacity Travelift. A proposal for a new haulout at the Gary Paxton Industrial Park is being considered by the Assembly. The proposed haulout facility would use a 300-ton capacity Travelift. (Sentinel Photo by James Poulson)
In his memo, on June 25, Leach wrote: “(We) recommend the Assembly reject all bids, wait for a BUILD (federal) grant funding decision, and then resolicit with more structured requirements.”
Leach cited SIMS’ proposed funding design as a key reason to reject the proposal.
“My recommendation to reject all bids was because the change in financing differs significantly from their original proposal,” Leach told the Sentinel. “First off, there was no (BUILD) grant money when this first went out to bid and it still might not be at play. But we stand a very good chance because we scored very well on the application. The original proposal requested a loan from the city.”
Like many others involved in the project, Leach noted the need for urgency.
“We were notified in November that our current haulout capability in town, Halibut Point Marine, was closing their doors in the summer of 2021. We were trying to move forward as quickly as possible to get a haulout capability for the City of Sitka. We went to an RFP as quick as we could with the info we knew at the time.”
In their proposal, SIMS hoped to use money from the Sitka Economic Development Fund to finance equipment, construction, and more.
“The company proposes using the economic development fund through (Sitka Economic Development Association) for the purchase of equipment, construction, permitting, and associated startup costs for Phase One of the MHF (marine haul out facility),” SIMS partners Kelly Warren and Dan Cooper wrote in their April 15 letter to the city.
The partners said the funds would be paid back from the proceeds of operating the haulout.
“The loan amount would be approximately $1.5 million with a 15-year term... The company also proposes that CBS redirect 25% of the company’s loan payments per year back to the company for infrastructure improvements at the MHS,” the SIMS partners said.
Since making their original offer, Warren and Cooper said they would have to change their original ramp design to pier and sling style.
Leach said it’s the SIMS partners’ proposed funding approach that he objects to, not the change in the design.
“I believe, and the Municipal Attorney concurs, that although SIMS’ shift from the ramp to pier style haulout was not a substantial shift in the proposal, the new funding design and city infrastructure requirement is. If their bid now relies on the outcome of a BUILD grant, and they shifted from a $1.5 million loan request to a city infrastructure requirement (financial investment), SIMS has gone outside the scope of their original bid,” Leach wrote.
He went on to recommend that the city wait to hear about federal grant funding for the project, “and then solicit with more structured requirements.”
Locals within the marine industry also are voicing concerns about the SIMS proposal for building the haulout.
Jeremy Serka, owner of Sitka Custom Marine, said, “These guys are offering no capital, hardly any money to put into it, and yet they are getting exclusive rights to all the property and to run the shipyards. And that means boat owners would not be allowed to work on their own boats... We really don’t want a privatized boat yard where boat owners can’t do their own work.”
Michael Litman, owner of Precision Boatworks, also has problems with the SIMS proposal.
“It’s a city-owned resource, public owned, and the commercial fishing fleet needs a way to maintain their boats. So a successful haulout would mean all the services the boats require to perform the maintenance, and the infrastructure which would be stable and affordable for the boat owners,” Litman told the Sentinel.
Kelly Warren, one of the two partners in SIMS, said that his objective in the project was to provide a service to Sitka.
“Benefit the city as a whole by bringing in more business, more infrastructure, more boats, more services,” he said in an interview. “What I’m actually doing is wanting to build a shipyard that can take care of the fleet in Sitka, the fleet from outside of town to Sitka.”
Warren said he has been involved in various aspects of fisheries industries for three decades. He acknowledged that financing was a sticking point for the project, especially once he learned that the current ramp at the GPIP site was unsuitable for an amphibious haulout.
“The information we did not have at that time (during negotiations between SIMS and the city) was all the charts and studies the city had done which reflected that the ramp cannot be used to haul vessels...It’s not a feasible option without spending a lot of money and getting a lot of permits,” Warren said. He said that this is what required SIMS’ to change its original ramp proposal to a sling lift and pier.
Dan Cooper, the other partner in SIMS, agreed with Warren that providing an essential service to the community was a big reason for their offer.
“We wanted to build a shipyard for the city of Sitka and we didn’t look at it as a great moneymaker,” he said.
Garry White, director of the Gary Paxton Industrial Park, told the Sentinel that since the November 2019 announcement that the Halibut Point Marine facility would close, the building of a new one has been a top priority for the GPIP board.
“Everybody went into crisis when we understood that we potentially are not going to have a haulout next summer. And everyone is moving as fast as we can to get that done,” White said.
He added that financing has been a key sticking point, noting that possibilities for a city-run haulout would cost over $600,000 annually from city coffers. In dealing with SIMS, White said, the high cost of equipment and start up remained an issue.
“They (SIMS) understood that it’s really expensive to build all this infrastructure. And they came back and said it doesn’t look like we can make this profitable and we would like to hold off and wait to see if the city will get these grant funds,” White said. He stated that final word on the BUILDS grant funding should become public in mid-September.
The Assembly meets Tuesday night to vote on the proposal. The text of SIMS’ proposal, including Leach’s analysis and reply, can be found on the city website, cityofsitka.com, under the Municipal Clerk tab.
“The goal here, the community goal is to get a haulout that is going to service the fleet’s needs, and I think everybody including SIMS has been going that direction. The fact of the matter is that it’s a very expensive project,” White said.
