SMIC, Harbor Improvements Dominate Council Agenda

By Heidi Zemach for SCN -

Harbormaster Mack Funk, in black, with SMIC land leaser Larry Harmon to his right, and Pinkney Cunningham, left. Heidi Zemach photo.

The City of Seward will spend $1.4 million to purchase a new 330-ton boat lift for Seward Marine Industrial Center, and will increase the cost of lifting these large boats out of the water by about 25 percent. Seward City Council passed a resolution at Monday night’s July 14 regular meeting allowing the city administration to purchase a new 330-ton boat lift from Marine Travelift, and for a portion of the cost, trade in the current 250 ton boat lift, which is more than 20 years old and although working well, has been experiencing some serious problems.

250-ton Travel Lift to be replaced at SMIC. Rick Smeriglio photo.

250-ton Travel Lift to be replaced at SMIC. Rick Smeriglio photo.

The travel lift is used across the bay at the city-owned industrial land known as “SMIC” to remove vessels of up to 120’ from the water and transport them to the new wash-down pad for cleaning and repairs. In the resolution council also agreed to waive the normal city codes competitive procurement requirements and enter into a sole-source contract with a company it currently does regular business with, declaring the deal to be in the public’s best interest. The resolution was put to a council vote without the city consulting the Ports and Harbor Advisory Board (PACAB) on increasing harbor tariff rates to help pay for it, although administration had recently briefed PACAB on its plans for a new travel lift, which none on the board had objected to. After several failed amendments, the resolution passed with only one nay vote by Ristine Casagranda, who said she felt strongly that PACAB should be consulted. Council member Dan Butts was absent.

The resolution raises the current minimum charge of $346 for the first hour or less of use to $425. Thus, the minimum charge to lift a vessel from the water with the new 330-ton travel lift will now go up by about 25 percent. The overall length of the vessel, and time, will determine the total lift fee. The other funds tapped by administration to help pay for it includes $62 thousand from SMIC Enterprise Fund cash reserves, $350 from General Fund reserves, and a $1 million dollar loan from the city Motor Pool fund.

Kenai Fjords Tours General Manager Ron Wille (file photo) as he toasts the new guest house on Fox Island at its opening event. last year. Heidi Zemach photo

Kenai Fjords Tours General Manager Ron Wille  toasts the new guest house on Fox Island at its opening event last year. Heidi Zemach file photo

Kenai Fjords Tours General Manager Ron Wille, who runs one of Seward’s two large wildlife cruise tour fleet operators, spoke in support of the new travel lift at SMIC, calling a reliable travel lift “very necessary” for large operators. But he opposed increasing the travel lift fees. Vessel owners and operators already contribute significantly to Small Boat Harbor and to city General Fund revenues, he said. Those growing fees now include the new required wash-down pad fee at SMIC, which has greatly increased the overall price of lifting vessels from the water, Wille said. There’s also a tax on boats, head taxes for all passengers, a seven-percent sales taxes on every transaction, raw fish taxes, and it costs vessel owners 26 cents per kilowatt for harbor electrical fees, which are higher than most electric consumers pay. Since its inception, and through last year, KFT has contributed $3.1 million to the city just for passenger head taxes, he said. As for the $1 million loan from the Motor Pool toward the purchase, Wille suggested it be a direct transfer rather than a loan, which normally means that the harbor department would be charged interest.

“We have raised rates, and we have to pay for changes, the same way on this with new equipment that costs more than last one,” said Council member David Squires. “But I think we’re starting to price ourselves out of business to where we’re starting to drive customers away.”

“When you comparing the increased boat lift tariff with those currently charged at several other Alaska harbors, Seward would still be considered at the low end,” Assistant City Manager Long said.



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“I appreciate all the boats that use the travel lift, and understand they contribute to the General Fund, but the General Fund has been supporting SMIC, and I think it’s absurd to ask General Fund to support SMIC any further,” said Council member Casagranda. The ship lift operation is a clear example of a city-run service that should be privatized, she added. When the idea was proposed for SMIC more than a decade ago, vessel operators objected to the idea, Long countered.

Vigor Marine Industrial also has a 5,000 ton Syncro-Lift capable of lifting boats up to 350’ with an 80’ beam, said Pinkney Cunningham, former general manager of Seward Ships Drydock. The new travel lift would not compete with the city-owned Sycro-Lift for customers, he said, as it is used for lifting considerably larger boats, and it costs a minimum of $12,000 per lift due to the labor costs.

There were several other significant harbor-related items on Monday’s agenda.

The council directed the city administration to begin negotiating a potential sale of land currently leased to Harmon Properties, LLC at SMIC. Larry Harmon, who owns Harmon Construction and Harmon Properties, has been preparing the land for the possible sale, and told the council that he would like to put four warehouses of different sizes on the property to be used for boat storage, but that he doesn’t want to make that large an investment there without actually owning the land.

In arguing in favor of moving forward, so that Harmon would not lose the opportunity to develop there during the current construction season, council member Christy Terry made clear that the sale would not actually go through until it came back to the council for approval. Meanwhile, council will await receipt of the SMIC Master Plan, now being researched and developed as part of a $10 million state-funded grant by AIDEA, the Alaska Industrial Development and Export Authority.

Harmon’s land purchase proposal was emphatically supported by businessman Tom Tougas, who owns Major Marine Tours, Seward’s other large wildlife cruise fleet. “If you want to see quality investment you have to let them own the land,” he said. Harmon is a longtime local contractor, who hires locally and has been a part of the town, he said. Meanwhile his lot at SMIC still has no electricity. Seventeen years ago, Tougas and the late Stan Stevens, of Valdez, had also requested the opportunity to buy some industrial marine property at SMIC, but the deal fell through as the city didn’t want to sell it, he said. At that time, the city also told them that they were awaiting a master plan for SMIC, he said. Adding that he’s excited by Vigor Marine’s acquiring the city lease at SMIC held by Seward Ships Drydock, Tougas said he hoped that the council wouldn’t overlook the locals who are proposing their own business opportunities there.

S-float, one of the three floats due to be replaced at the Small Boat Harbor. It's used for smaller boats, and is third on the priority list. Rick Smiglio photo.

S-float, one of the three floats due to be replaced at the Small Boat Harbor. It’s used for smaller boats, and is third on the priority list. Rick Smeriglio photo.

Council also authorized city administration to submit a $2.6 million Municipal Harbor Facility grant application to the Alaska Department of Transportation and Public Facilities for the removal and replacement of B, C, and S floats in the Seward Small Boat Harbor, in that order.  Replacing those floats has been the boat harbor’s highest priority. They were installed after the ’64 earthquake, and are in constant need of repair, and with state matching grants for capital projects likely to go away due to predicted state budget deficits, this would be an opportune time to request funding.

Finally, council approved an engineering contract with R&M Consultants to design and administer construction of a new fish cleaning station at the north east end of the small boat harbor. The harbor is finding it difficult to remove its fish waste in a timely manner because of the tides and its design. At council member Iris Darling’s suggestion, they did away with the usual 10-percent contingency fee for potential cost overruns. Darling said contractors should be held to their original estimates, or come to the council to explain why they need additional funds.

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