The state ferry Malaspina sits in layup in Ward Cove near Ketchikan on May 10, 2020. (Eric Stone/KRBD)

The Department of Transportation said Tuesday that four parties have expressed interest in the Malaspina, a mainline ferry that’s been a mainstay of the fleet since the 1960s. It’s the latest twist in the process initiated by the Dunleavy administration to unload an iconic state ferry that’s been idle for more than two years.

The Malaspina ferry hasn’t sailed since December 2019. The Dunleavy administration decided then to tie it up at a private facility near Ketchikan rather than invest at least $16 million into the steel work needed to keep it seaworthy.

But even idle, the state is paying upwards of $75,000 a month in mooring fees and insurance costs at the private Ward Cove facility.

DOT announced on February 18 that an unnamed U.S. buyer who would keep the 450-passenger ship in Alaska was interested. It solicited proposals from other interested parties and got three more prospective buyers by the March 7 deadline.

“Hopefully we’ll have something in there that can allow the Malaspina to remain in Alaska,” DOT spokesperson Sam Dapcevich said Wednesday, “and that preserves the vessel’s historical value and promotes the marine highway system.”

Records request reveals interested parties include Ward Cove Dock Group

John Binkley on Juneau’s downtown waterfront on Sept. 9, 2019. He has a stake in the Ward Cove Dock Group which owns a newly created venture now making a bid for the Malaspina ferry. (Photo by Adelyn Baxter/KTOO)

CoastAlaska put in a public records request to DOT for the letter so interest from prospective buyers.  It was denied by the agency which said it would only release them after the sale was finalized.

But it did release the names of four interested parties. On top of the list is M/V Malaspina, a limited liability company incorporated on the March 7 deadline set by DOT to express interest in the ferry.  Its agent is listed as John Binkley, a prominent Fairbanks Republican.

He also owns half of the Ward Cove Dock Group with the Spokely family of Ketchikan, a partnership with the family firm that’s paid by the state to store the Malaspina and other idled marine highway vessels.

Binkley confirmed he and his partners are interested but said he wasn’t ready to talk about it.

Other interested parties were more forthcoming.

“We like these projects — we like to think big and nothing really scares us,” said Greg Meyer of Cordova. He and his wife own a waterfront restaurant in the Prince William Sound community. He says his family was sad when the ferry Taku was sold for scrap in 2018.

The Malaspina could be redeveloped on tidelands that are part of a former Cordova cannery property they own and make use of the vessel’s staterooms.

A1945 photo of the the Cordova waterfront property now owned by Greg Meyer and Sylvia Lange of Cannery Row LLC. The couple has proposed to beach the Malaspina on tidelands it owns as a restaurant and hotel. (Photo courtesy of Greg Meyer)

“We would be interested in converting the ferry into a floating hotel/restaurant,” Meyer wrote in his pitch letter to the state.

There are other potential uses for the former passenger ferry, he told CoastAlaska.

“Cordova has a housing shortage,” Meyer said by phone. “And we have seasonal workers that can never get housing in the summer. So it would help us to stimulate our economy.”

Another interested party is Meridian Global Consulting, a Mobile, Alabama-based firm that said in its letter that it owns three vessels of similar size.

“Meridian’s intent in purchasing the Malaspina is to use her as a floating hotel and
restaurant in and around Alaska,” wrote the firm’s owner Jonathan McConnell.

But how interested the firm is depends on the terms set by the state agency.

“If they’re going to ask, you know, $4 million for this vessel — then it’s not worth it,” McConnell said by phone from Riyadh, Saudi Arabia.

This isn’t the first time he’s approached the state to buy the Malaspina. Last year Meridian offered $625,000 for the ship to be repurposed as a floating barracks. It would house security contractors working to protect international shipping off the Horn of Africa.

But now the state says it wants the Malaspina to remain in Alaska. And he says his firm could do that. McConnell says he’s talking to partners in Alaska to turn it into a floating attraction.

“It’s a pretty neat experience to be able to eat a meal on board an old, beautiful vessel,” McConnell added.

The fourth interested party is HighSeas, Ltd which DOT says is registered in India. A BBC investigation last year found the firm had bought a historic British ocean liner at auction saying it would be used as a floating hotel in Dubai. But it was broken up for scrap.

The firm’s chairman didn’t immediately respond to a message seeking comment.

State looking to avoid a Taku scenario

DOT’s regional spokesman Sam Dapcevich says his agency acknowledges there has been commercial interest in the ship. But it wants to ensure that the Malaspina comes to a dignified end.

“The state doesn’t want the vessel to end up a derelict somewhere because someone bought it and didn’t have the means to take care of it,” Dapcevich said. “We prefer that it not be cut up for scrap, like what took place with the Taku years ago.”

Other ideas thrown around last year included scuttling the Malaspina in deep water. Gov. Dunleavy had also offered to give it away to the Philippines. But state officials say the government in Manila wasn’t interested.

DOT hasn’t committed to any timeline but says any transfer would have to be approved by the feds because of federal highway dollars used for its upkeep.

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The state ferry Malaspina sits in layup in Ward Cove near Ketchikan on May 10, 2020. It’s been costing the state nearly $75,000 a month to keep it tied up. (Eric Stone/KRBD)

The Dunleavy administration announced Friday that an unnamed U.S. buyer is interested in purchasing one of Alaska’s original mainline state ferries for an undisclosed amount.

It’s the latest twist in the fate of the ferry Malaspina, which hasn’t sailed since December 2019.

Now, the state is asking other interested parties to step forward before March 7. DOT officials say their preference would be for the 59-year-old vessel to remain in Alaska, though that wouldn’t be a requirement.

Last year Gov. Mike Dunleavy offered to give the ship away to the Philippines. But the offer wasn’t accepted due to the amount of work needed to rehab a vessel that had been stripped and suffered storm damage while moored in Ketchikan.

The 450-passenger vessel has been sidelined since the state agency balked at the estimated $16 million in steel work needed to keep the ship seaworthy.

DOT emails detailed spiraling costs of keeping ship in state ownership

A CoastAlaska investigation last year found that the state is paying nearly $75,000 a month to keep it. That includes insurance costs and mooring fees at a private berth in Ketchikan owned by the Ward Cove Group.

Several interested buyers said last year that their inquiries to purchase the ship had been ignored even as agency officials privately expressed concern over the mounting costs of keeping the idled ship in the fleet. That’s according to interviews and review of several hundred emails released to CoastAlaska in a records request.

Alaska Marine Highway System officials last year told lawmakers they were working with the Environmental Protection Agency to prepare to scuttle the Malaspina in deep water. But a notice posted on a state website says: “Letters of interest that propose scuttling the vessel are not being considered at this time.”

In response to CoastAlaska’s questions, DOT says its priority is finding “what is in the best interest of the state in exchange for the vessel,” DOT spokesperson Shannon McCarthy wrote. “While typically, this means top dollar, there is value in preserving the vessel’s historical value for Alaskans.”

She added: “The ship served as a primary mode of transportation for many communities over five decades the public is rightfully nostalgic for the vessel.”

The Malaspina was built in 1963 and was one of the marine highway’s original three mainline ferries. The Taku was sold for scrap in 2018; the Matanuska is still in service.

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Cruise traffic calling at a new dock at Ward Cove could mean a multimillion-dollar hit to Ketchikan’s city finances. That’s according to a report from the McDowell Group.

It should be noted that the report does not account for the pandemic’s impact on the cruise industry. The future of cruising is up in the air — though cruise lines have said they’re seeing lots of bookings for 2021, local officials in Ketchikan say they anticipate a steep dropoff in cruise passengers next summer.

But, that said, back to the report — Norwegian Cruise Line is a partner in the two-berth megaship dock seven miles north of Ketchikan. And analysts say moving ships like the Joy and Bliss outside of city limits will mean $4.3 million less in city revenue every year. That’s losses from head taxes, dockage fees and sales taxes as roughly 20% of Ketchikan’s passengers are projected to move to the new dock.

Analysts say the city could lose even more if other lines follow Norwegian’s lead.

The report was released earlier this month. On Thursday, representatives for the consulting firm will present the findings from the $43,000 study to the Ketchikan City Council.

It’s a relatively light week for the council, with only five items listed under “new business” on the agenda.

Among the handful of items is a request from the nonprofit that runs Ketchikan’s domestic violence shelter, Women in Safe Homes. WISH is asking the council to back its request for nearly $700,000 in federally-funded grants from the Alaska Housing Finance Corporation.

According to a letter from WISH chief Agnes Moran, $400,000 of that would be split between two forms of rental assistance. A “rapid rehousing” program would provide move-in deposits and up to six months of rent for people currently staying in local shelters. Another part of the program would provide rental assistance for people in danger of losing their current housing.

The remaining $290,000 would go towards WISH’s renovation of the former juvenile jail it plans to repurpose as a shelter. Moran says that $290,000 “fully funds” the $1.4 million renovation — and could allow WISH to retain its current shelter for even more capacity.

Ketchikan’s City Council meets at 7 p.m. Thursday at the Ted Ferry Civic Center. The meeting is broadcast on local cable channels and streamed at the city’s website. The full agenda is available online, and residents can weigh in at the beginning of the meeting.

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It’s official: the Army Corps of Engineers has green-lit a two-berth cruise ship dock on Ketchikan’s Ward Cove.

The Army Corps issued the permit Tuesday. Fairbanks investor John Binkley of the Ward Cove Dock Group says the hope is to get the berths in place for this season.

“We’ll probably be started next week with the actual construction,” Binkley said in a Wednesday phone interview. “The barge’ll be here — should be here by the end of the week, and then it’ll start getting positioned next week, and hopefully by the end of the week they’ll be ready to start putting piling in.”

He’s part of the partnership with Ketchikan investors David and Andrew Spokely who own the former Ketchikan Pulp Company mill site property. Norwegian Cruise Line is also investing an undisclosed amount of capital in exchange for preferential berthing.

Ketchikan city officials have shared reservations the project which is outside its jurisdiction. The city sent an 11-page letter to the Army Corps as it considered the permit application raising questions about the proposed dock’s impact on city revenue — some ships that currently pay Ketchikan head taxes could move over to Ward Cove — and transportation to and from the site seven miles north of downtown Ketchikan. 

The City Council commissioned a study to determine the impacts of the dock in October, but it’s unclear when that study will be completed.

Some residents along with state and federal regulators have raised questions about environmental consequences. Ward Cove contains waste from decades of discharge from the pulp mill. And there’s a potential to stir up legacy pollution at the bottom of the cove. The former Ketchikan Pulp Company was a major employer in the region from the 1950s up to the late 1990s.

Binkley says regulators addressed some of those concerns and folded them into the federal permit.

“There are quite a few requirements that go along with the permit,” he said. “One of those is called a benthic survey, a marine survey that’s going on right now.”

He says teams are surveying the bottom of the cove to determine the condition of the six-to-twelve-inch sand cap before construction gets started. That sand cap has allowed bottom-dwelling sea creatures to rebound since the pulp mill closed. 

“And then after we’ve been in operation, we’ll do that again just to make sure that we’re not disturbing any of that marine life down at the bottom of the bay,” Binkley said.

The developers still plan to push for a summer opening date. Earlier projections were to have a permit in hand by December 1 — but the delay has pushed things back.

“So we’re behind a couple of months, but it’ll go fairly quickly,” Binkley said. “We’ll be ready sometime this summer.”

Binkley says the uplands — the former mill site where Binkley says cruise passengers will disembark — will be ready around the same time.

Correction: An earlier version of this story misstated that dive teams are surveying the bottom of Ward Cove. In fact, crews are taking samples of the sea floor remotely from a vessel on the surface.

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A plan to convert Ketchikan’s former pulp mill into a private cruise destination will be further studied in coming weeks by state and federal agencies. That’s as the first phase of the $50 million project at Ward Cove is being reviewed by the Army Corps of Engineers.

At a summer open house, developers’ attorney Stephen Bradford told reporters that there’s a feeling in Ketchikan that downtown’s becoming saturated by cruise ships.

“Ketchikan reached a million visitors a couple of summers ago,” Bradford told KRBD in July. “And it really prompted a discussion of when is enough enough.”

Developers propose a solution that problem: more berth space for more ships, seven miles north of the historic town.

A partnership between the Spokely’s Ward Cove Group and the Binkley famiy’s Godspeed, Inc. is working with Norwegian Cruise Lines to convert the city’s former pulp mill into an entertainment complex that could eventually be a destination unto itself.

The property’s been owned by father-and-son David and Andrew Spokely since 2011. Both families are politically active: the elder Spokely founded the Alaska Free Market Coalition, a PAC that reported spending more than $20,000 to help elect Republican Mike Dunleavy.

The Binkley family partners are based in Fairbanks. Their father John Binkley is a former Republican legislator and president of Cruise Lines International Association Alaska, the industry’s main trade group in the state.

The major regulatory hurdle to break ground lies with the Army Corps of Engineers. It has to vet plans to build a 500-foot floating dock that could accommodate both of Norwegian Cruise Lines megaship sisters: the Joy and Bliss as soon as next year.

“We were just very concerned because those ships are over a thousand feet long,” said Benjamin Storey, the region’s environmental manager for the Alaska Department of Transportation. He wrote a letter raising questions about the project.

It was among more than 30 letters obtained by CoastAlaska following a freedom of information request with the Army Corps. Most were from residents critical or skeptical of the project’s feasibility. One letter was from an adjacent business expressing outright support.

“We were really surprised that they had projected how fast they would build it up,” Storey said in an interview.

That’s because Ward Cove is already home to the Alaska Marine Highway System’s layup dock and headquarters. Initial plans called for breaking ground before the end of the year.

“When we realized like all the agencies and the amount of consultation we have to go through, we were like, how is that even possible?” he added.

The U.S. Coast Guard is working with state officials to develop a risk assessment to look at navigation concerns on the cove. It hasn’t been completed, Coast Guard Lt. Jesse Collins said Thursday.

There’s also scrutiny from the Department of Environmental Conservation over building over the contaminated former mill site. The pulp mill operated from the 1950s up until 1997 and was a major employer in town. But following its closure, the EPA put a number of restrictions on the site to keep pollution from leaching into the wider environment.

EPA wouldn’t comment except to say it had requested the Army Corps give it another month to weigh in. The comment period has been extended until September 19.

Sally Schlichting with the DEC’s contaminated sites program wouldn’t say in any detail what her agency’s concerns are, but she says there’s a lot of history in Ward Cove that’ll be taken into consideration when they file comments with the Army Corps.

“We have quite an extensive environmental record for this site, six file boxes, at least,” she said.

She says DEC will be looking at the proposed floating dock that’s phase one.

“But we’re also looking at the long term use of the facility,” she said. “It’s not just the construction of the dock itself but also as a cruise ship dock with cruise ship traffic and activity.”

State biologists are also studying potential effects to fish species.

“It’s somewhat narrow, especially with the large cruise ship in there,” Alaska Department of Fish and Game’s Mark Minnillo said of the water body. “And with bow thrusters and propellers and the noise created by those ships, there’s potential for disturbance to the migrating adult salmon species.”

The Craig-based habitat biologist is finalizing comments on behalf of his agency. He notes the cove is connected to Ward Lake, a popular place for Ketchikan anglers fishing for salmon and steelhead.

Decades of logs and other debris dumped in Ward Cove led to an EPA-approved closure plan that puts restrictions on the property.

A sand layer was placed over about 27 acres of seafloor nearly two decades ago. It’s at most a foot deep and is designed to help bottom-dwelling organisms recover.

The floating dock is being designed by Turnagain Marine Construction. The company’s president Jason Davis says the design takes that into account.

“You know, I think this is a very responsible and very appropriate development for Ward Cove,” he said by phone in Anchorage.

And there’s plenty of room for everybody, he said.

“This facility is designed so that there’s enough maneuvering room for all the Ward Cove dock users,” Davis said, “and we’re designing that to the standard of the industry for vessel navigation.”

It’s unclear whether the project will receive its permits in time for next year’s cruise season. But that remains the developers’ goal.

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