Oyster spat from Oceans Alaska.

Oyster spat from OceansAlaska.

The Ketchikan Gateway Borough Assembly agreed Monday to adjust its loan agreement with OceansAlaska shellfish hatchery, advancing $50,000 from the 2017 allocation so that the facility can continue operations.

OceansAlaska officials presented information to the Assembly, explaining that while the facility met its production goal for this year, the timing was off. Hatchery Manager Ron Zebal told the Assembly that certain areas need oyster seeds of a certain size, at certain times of the year.

“So, what happened? We succeeded at producing, which was the primary thing that I set out to prove, at least,” he said. “On the other hand, cash-flow-wise, we were cash-flow poor. Why? Because what we produced, which can be overwintered successfully, was not available at the right size at the right time, and that’s the key to the whole business. We have to have the seed available based on these planting windows.”

Zabal stressed that there are markets for the oyster seed OceansAlaska has produced, and the seed will store well while those markets are explored.

The Assembly last year agreed to a $600,000 loan to OceansAlaska, dispersed over five years and paid back to the borough over 25 years, starting in 2019.

The amended loan agreement pays most of the 2017 payment to OceansAlaska right away, and allows OceansAlaska to sell some equipment that it’s not using. The equipment is among the assets that OceansAlaska put up as collateral for the borough loan, which is why permission was needed to sell it.

When the issue came before the Assembly last year, there was significant concern and the loan barely passed. Last night, though, the amendment to the loan passed easily, with only minor concerns.

Assembly Member Mike Painter said the projections look good, but sometimes, the unexpected happens.

“I have concerns of, ‘OK, well this is forecasted,’ but when we get to 2017, (you) might be in the ditch,” he said. “There’s things that can happen. I understand and appreciate the fact that you’re doing what you’re doing and reduced your salary and are trying to make a go of this. I’m one of seven or eight people that are protector of the public funds, and hopefully this doesn’t get squandered.”

OceansAlaska Board President Tomi Marsh agreed, but said the board has made conservative projections, and wants to make sure the organization can pay the loan back.

“That’s why we’re working so hard to do anything we can to make this work,” she said. “We tried to make the business plan very conservative, tried to think outside the box, like how we could create other revenues, whether it’s selling equipment that we’re not using. And so, that’s what we’re trying to do, our due diligence to get the money back to the borough and make OceansAlaska successful, because you guys have had a lot of faith in us and we want to hold that up.”

Also Monday, the Assembly approved an ordinance clarifying that service area boards are advisory boards, and that the Assembly has final decision-making powers.

The Assembly also approved a prioritized list of community capital projects. The list was developed by the Borough Lobbying Executive Committee, which includes representatives from the borough, City of Ketchikan and City of Saxman.

Six projects are on the list. Those project are about $4.8 million for airport improvements; about $8.5 million for reconstruction of Front and Stedman streets; about $6.7 million for construction of the Saxman Harbor; about $2.3 million to replace the roof at Houghtaling Elementary School; $720,000 for security upgrades at the public schools; and about $1.7 million to extend the South Tongass sewer system.