By SHANNON HAUGLAND
Sentinel Staff Writer
On a 6-1 vote, the Assembly on Tuesday moved an ordinance forward to place a question on the fall ballot related to dedicating up to $8.18 million from the hospital sale proceeds to a new boat haulout at the industrial park.
The ordinance will be up for second and final reading at the July 26 Assembly meeting. If it passes on final reading, The question will be on the Oct. 4 city election ballot.
The question for voters is whether to dedicate up to $8.18 million - the net proceeds from the sale of the Sitka Community Hospital property - toward construction of a community haulout and boatyard at Gary Paxton Industrial Park.
The proposal to get the haulout project under way with city money is the latest in a series of concepts that have so far not been successful.
“We have tried just about everything,” said co-sponsor Thor Christianson. “We have tried to raise money through grants, we’ve tried to do private; we tried to do public/private (joint venture).” They failed for various reasons, he said, “mainly, a lot of it because of the economics of a shipyard.”
If it is successful, Christianson said, “It won’t give us a gold-plated shipyard by any stretch but it’ll get boats pulling out and also will allow us ... to raise money from other sources.”
The haulout question was one of two agenda items at the Tuesday meeting. The other was a special report about the Sawmill Creek Road upgrade project (see story).
Haulout
Voting in favor of putting the question to the voters were co-sponsors Kevin Mosher and Thor Christianson; joined by Rebecca Himschoot, Dave Miller, Crystal Duncan and Mayor Steven Eisenbeisz. Kevin Knox voted against.
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? Yes or No.”
The city charter requires proceeds from sale of city property to be placed into the Sitka Permanent Fund. A public vote is required to allow withdrawal of money from the fund.
At the May 24 Assembly meeting Christianson and Mosher volunteered as a committee to explore new options to fund a haulout, which is critical infrastructure in a fishing community. Within the past year the owners of Sitka’s last privately owned haulout shut it down in order to develop the property as a cruise ship terminal and visitor activities.
In introducing the discussion of the new funding proposal at the Tuesday Assembly meeting Christianson said other options that were considered included reinstating the property tax on boats, increasing the sales tax or raising harbor rates, which “for various reasons either didn’t raise enough money or were very unlikely to work.”
He said that voter approval of the proposition in October will result in less money for the permanent fund, but the withdrawal won’t “put a hole in the budget,” since the city has not yet budgeted the earnings from the hospital sale proceeds.
Since the Halibut Point Marine haulout closed earlier this year boat owners have had to travel to Hoonah or Wrangell for haulout service.
The Gary Paxton Industrial Park board of directors met Monday and supported the ballot proposition.
GPIP director Garry White said the ballot question uses the language “up to $8.18 million,” indicating that the entire amount may not be needed, since the city has other funding proposals under way. One is the federal RAISE program, and the other is to the Denali Commission, which funds community planning, engineering and environmental studies.
“If we get those funds we won’t necessarily need the entire $8.18 million,” White said today. But he said he hopes that amount will be enough for Travelift, Travelift piers, washdown pad and waste water treatment.
A handful of people testified from the public.
Linda Behnken, director of Alaska Longline Fishermen’s Association, expressed support for the ballot proposal.
“To let you know how committed fishermen are to this project, we have fishermen who continue to contribute to our effort to gather funding, to move this project forward.”
That includes contributions of up to $100,000 of their own funds, she said.
“This is really important to our fleet,” Behnken said. “It’s also hugely important to the economy of this community to generate the economic activity for the trade sectors. ... Virtually every business in Sitka benefits from fishing dollars. So we support this.”
Behnken and a number of others in the fishing community formed an LLC called the Sitka Community Boatyard in an earlier attempt to raise money for a haulout.
Jeremy Serka, another member of that group, said the boatyard will benefit owners of all kinds of boats.
“I’m preparing for this boatyard,” he said. “It’s going to happen someday hopefully soon before guys start moving away. ... Hopefully people that aren’t affiliated with the fishing industry will see the benefit that it’s going to bring to this town.”
Christianson said the city’s investment in the boatyard - “skin in the game” - could lead to an expansion in the future to serve larger vessels such as the ferries and Coast Guard vessels.
He said he believes the sales tax generated by the boat yard and related activity would more than make up for the loss of earnings the $8.18 million would provide for the city general fund.
“At the very least it would offset if not eclipse it,” he said.
Mosher said that using the hospital sale money is not a perfect solution, “but at the end of the day if we want a haulout we’re going to have to pay for it.” Having a facility “is absolutely crucial to the community,” he said.
Knox said he agrees about the need for a haulout, but is concerned about the loss of permanent fund earnings that are supposed to “reduce the tax burden for the community of Sitka into the future and in perpetuity.”
For him, he said, it’s a question of direct benefit of permanent fund earnings versus an indirect benefit of a haulout.
Himschoot said she had similar concerns about using community funds to support private industry and said her worst fear is that it becomes a general fund liability.
“On the other hand I can see some really good reasons why we need to do this,” she said. “So I’m 100 percent for putting it on the ballot and letting the community decide. It’s their assets, it’s the community’s permanent fund, and we need this haulout and we haven’t solved it any other way.”
Eisenbeisz said he was heartened to hear other Assembly members expressing a desire to protect the permanent fund, “not only for ourselves, but our children, and their children.”
But he said he was going to support the ballot question ordinance.
“I see this as trading one asset for another,” he said. “The voters did vote on selling the hospital and its assets and now we’ll have an opportunity to see if they want to change one asset - the Sitka Community Hospital site - into another asset, which would be a publicly owned and privately run haul out if it goes forward as anticipated right now.”
He said basic infrastructure is a key to economic development.
“Especially at the haulout site, I believe that without basic infrastructure, there will be zero economic development,” Eisenbeisz said. “I think there is a role for government to play in this. The swapping of one asset for another is something that’s easily digestible.” Without the hospital sale, he said, “I would be singing a different tune right now.”
Knox proposed an amendment to the ballot question to pay back the Sitka permanent fund on an annual basis over three decades. After City Attorney Brian Hanson expressed legal concerns, Knox withdrew his amendment.
