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Philippine Red Cross Proposes to Buy $80M Susitna Ferry for $1.7M


September 19, 2015
Saturday PM

(SitNews) - The Matanuska-Susitna Borough Assembly recently approved the sale of its never used, ill-fated $80 million Susitna Ferry still berthed in Ketchikan. If the sale goes through, the Susitna Ferry will be plying the Philippine Sea delivering food and supplies to island shores and serving as a floating hospital after hurricanes if a near-final sale is completed between the Matanuska-Susitna Borough and the Philippine Red Cross. The Assembly gave Mat-Su Borough Manager John Moosey the approval to finalize the deal late on September 1, 2015.

jpg Philippine Red Cross Proposes to Buy $80M Susitna Ferry for $1.7M

The Susitna Ferry continues to be berthed at Ward Cove in Ketchikan
while the Matanuska-Susitna Borough continues to work to sell it.
Photo courtesy Matanuska-Susitna Borough, SitNews file photo August 12, 2014

For $1.75 million, the international humanitarian organization hopes to buy the Susitna Ferry, a ship that is said to be capable of operating as both a cargo-loaded barge that can haul itself onto shore and a twin-hulled vessel that cuts through choppy seas. The Susitna was built as a smaller scale prototype for the U.S. Navy, which funded most of the construction costs for the $80 million vessel. The ferry never left the Ward Cove dock near Ketchikan where it racked up more than $2 million in storage and insurance bills since the Mat-Su Borough acquired it in 2011.

The Mat-Su Borough will make repairs to the engines prior to completion of the sale and prior to delivery. Three of the four engines were damaged during heavy rain earlier in 2014. The rain damage was estimated to be approximately $1M.

The Philippine Red Cross wants to put the vessel's agile operating modes to work in the disaster-prone Philippine Islands. Richard Gordon, Chairman and CEO of the Philippine Red Cross and also a former Senator of the Republic of the Philippines, highlights how. “There is an average of 170 maritime accidents in the country every year, mostly in the Visayas area. The ship will be used to provide disaster relief and emergency services. It will also provide search and rescue services after maritime disasters. The Susitna will serve as a mobile clinic/hospital ship serving some of the most isolated of the 7,107 Philippine Islands.,” he said. “This ship will also be made available to other Red Cross societies in other countries for saving lives. Other government and non-government organizations involved in disaster relief and recovery operations may avail of the vessel,” Gordon said.

Mat-Su Borough Manager Moosey inherited the project when he arrived at the Borough four years ago. The Susitna Ferry was an attempt at connecting the two miles of water separating the rural, growing Borough and land-crowded Anchorage with ferry passenger service. The ship was also intended to serve as a rescue craft if passenger airliners fell into icy Cook Inlet. A ferry terminal was built on the Mat-Su Borough side, but ferry landings on both sides of Knik Arm were never fully funded.

For over three years, the Borough enlisted ship brokers worldwide to sell the vessel, and tried to entice 500 members of a ship owners organization to buy the vessel, followed through on dozens of dead-end offers, and tried to give the vessel to several other American government entities. The Philippine Red Cross is the closest the Borough has come to selling the Susitna.

“I’m elated that this ship will be put to the noble work of saving lives after disasters in the Philippines. We exhausted our options on disposing of this vessel. It’s time to give it new life, and release our taxpayers from the burden of its upkeep,” Moosey said.

The story of the ill-fated ferry began in August 24, 2006, when onlookers gathered at the shipyard of Alaska Ship & Drydock Inc. in Ketchikan to witness the keel laying of what was to be originally a $28 million high-tech vessel.

Senator Lisa Murkowski, the vessel's sponsor, attended the keel laying and performed the honors by welding her name onto the keel of the M/V Susitna. By the end of the construction of the Susitna Ferry, it would become a $80 million project funded through the Office of Naval Research's Sea Warfare and Weapons Department.

The Details of the Sale:

The Mat-Su Borough will receive $1,750,000 and $60,000 for upkeep costs during repair.

Conditions of the sale:

• The Philippine Red Cross will deposit $250,000 for the Mat-Su Borough’s insurance deductible to pay for repairs to engines from heavy rainfall in Ketchikan.

• The Philippine Red Cross will cover Mat-Su Borough costs of ship dockage/utilities during the repair period.

• The Mat-Su Borough only pays insurance during repair, $16,000 a month.

• The Mat-Su Borough pays sales agent Lew Madden 2.5 percent for finding a buyer and completing the transaction.

Because the Susitna was a military prototype, the Mat-Su Borough must get written consent of federal agencies before the sale to a foreign entity. The Borough has been working for the past nine months on the approval. Borough Attorney Nick Spiropoulos said the Borough is nearly at day 90 in the timeline for the decision. It’s not clear when the federal government will make its determination, but he said he hoped it was in the next 30 days.

The Mat-Su Borough also received some $12.3 million in federal funding from the Federal Transit Administration for the ship project and construction of the ferry terminal building and has been informed by FTA of an obligation to repay the grants. The Mat-Su Borough is in discussions regarding the obligation and what may be done to mitigate a portion of this obligation. In 2013, Federal Transit Administration demanded the Mat-Su Borough pay back $12.3 million in grants.



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