Costs racking up for Alaska ferry sitting idle for 2 years in Ketchikan

Photo courtesy Alaska Department of Transportation and Public Facilities.
Photo courtesy Alaska Department of Transportation and Public Facilities.(KTUU)
Published: Oct. 19, 2021 at 7:54 PM AKDT
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JUNEAU, Alaska (KTUU) - An Alaska ferry sitting idle for close to two years is costing the state of Alaska more in insurance fees than it disclosed to the Legislature.

This story was originally reported by CoastAlaska.

The Malaspina was built in 1963 as part of the Alaska Marine Highway System’s original fleet. It was taken out of service in late 2019, facing a multi-million dollar repair bill.

Since then, the ferry has been tied up at Ward Cove outside of Ketchikan, costing the state close to $450,000 per year in moorage and storage fees. There also appears to have been some costs not disclosed to the Legislature.

“It’s always a concern if the (Senate) Finance Committee feels like it got misled or partial information,” said Sen. Bert Stedman, R-Sitka. “I’m not sure if that’s the case yet.”

But the insurance aspect is complicated.

The state is self-insured in most instances, meaning the Alaska Department of Transportation and Public Facilities’ insurance payments largely head to the Division of Risk Management before being transferred again to the Office of Management and Budget as available revenue to be spent again.

Effectively, it goes from “pocket A to pocket B,” Stedman explained.

There is a gap in this instance not covered by the state’s self-insurance plan. Shannon McCarthy, a spokesperson for the transportation department, said it paid an outside firm roughly $244,000 last fiscal year and $92,000 this fiscal year to insure the ferry.

Stedman has questions for the department about how the insurance fees were paid and where that money has gone.

“I want to follow the cash,” he said.

There are also questions about what will happen to the ship.

Earlier in the year, Gov. Mike Dunleavy’s administration had offered to give the Malaspina to the Philippines government for free. That deal fell apart as it was estimated that it would cost close to $70 million to refurbish the ferry and get it certified by the U.S. Coast Guard.

CoastAlaska revealed the state transportation department has recently received several other offers from prospective buyers. An Alabama-based security firm had expressed interest in paying the state $1 million to bring the Malaspina to Somalia in efforts to combat piracy.

A company from the Middle East also said it was interested in buying the ferry as did a Fiji ferry operator. None of those prospective buyers received a response from the state, CoastAlaska reported.

McCarthy challenged that. She said there had been responses to those prospective buyers, but that the department had been focused on securing the deal with the Philippines government.

She emphasized that the department had not entered “a formal proposal period” to sell the ferry and that most of the inquiries came from groups that had read about the Malaspina in the media. She said because the Philippines deal had fallen through, officials would now push ahead to vet those other offers.

“We will be considering all options again,” McCarthy added.

In March, the department announced that it was also contemplating whether it would scuttle the Malaspina to save the state money. Sam Dapcevich, a spokesperson for the Alaska Marine Highway System, said in June that work was being done with federal officials to see if that was possible.

On Tuesday, McCarthy said that is still being discussed as an option, but it would require work to remove environmentally hazardous parts of the ferry before it could be sunk.

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