by Phillip Manning ~ July 6th, 2016
As of last Thursday, the Mat-Su Borough no longer owns the MV Susitna.
When the borough acquired Susitna, the intent was to establish a ferry service between Port Mackenzie and Government Hill in Anchorage. While the Mat-Su Borough moved forward with the plan, the Municipality of Anchorage could not decide where a ferry dock and terminal should be placed, and the plan ultimately fell through.
Following years of attempts to sell the vessel, and a recent round of multi-million dollar repairs, the borough has sold the ship, a former naval prototype, to the Philippine Red Cross. The Susitna is on its way to the South Pacific, where it will be used as an emergency hospital ship for the thousands of islands that make up the Philippines.
Future potential costs notwithstanding, final sale of the vessel had to be put off until costly engine repairs were completed. Three of the ship’s four engines were damaged last year when rainwater that leaked in through Susitna’s smokestacks got into them. Part of the purchase agreement with the Philippine Red Cross included the buyer’s payment of the $250,000 insurance deductible. Whether or not the borough’s insurance claim will be paid in full is not yet certain, though Assembly Member Dan Mayfield, whose career included many years in the insurance industry, says he believes the claim will be accepted.
Susitna’s final sale price of $1.75 million is far below the $80 million it cost the U.S. Navy to build the ship. The borough did not pay for the vessel directly, but has had to shoulder maintenance costs for its storage in Ward Cove.
Even with monthly maintenance no longer a factor, and assuming that Lloyd’s of London, the borough’s insurer for the ship, pays the claim in full, the Mat-Su may still have to spend money on the failed ferry plan. When the borough acquired its vessel, the Federal Transit Administration approved a grant for $12 million in order to fund the establishment of the ferry service. A ferry terminal was constructed on the Mat-Su side, and the FTA has since asked for repayment of the grant. Borough staff and elected officials have been in negotiations with the federal government for over a year regarding how much of the grant will be paid back. The borough argues that circumstances beyond its own control resulted in the plan’s failure.
The finalization of the sale comes as welcome news to the Mat-Su Borough, which will have to figure out how to deal with an unexpected $5.7 million drop in revenue due to Governor Bill Walker’s vetoing school bond reimbursement.