The Alaska Industrial Development and Export Authority board of directors has voted to give the borough $7.8 million toward site preparation costs at the 6-Mile deepwater industrial property and also loan the borough $15 million toward design expenses for a possible privately owned shipyard on the borough-owned land.

The deal, approved by the board at its Nov. 4 meeting in Anchorage, requires that the borough electric utility make available 2 megawatts “of consistent baseload power” to AIDEA, which, through a state-owned subsidiary, would “facilitate the development of data center capacity in Wrangell.”

The subsidiary, Alaska Data Corp., which AIDEA created in March, would commit to buy the full 2 megawatts. “That revenue is the pledged repayment source” for the $15 million loan, according to the borough’s presentation at the meeting.

The presentation further explained that the municipal utility proposes to sell the power at 15.5 cents per kilowatt-hour, about two cents above the rate it charges existing large commercial customers.

The loan could be “repaid from the margin on 2 megawatts of hydropower sold to Alaska Data Corp.,” according to the borough’s presentation.

The actual financial terms of any power sales agreement are subject to further negotiation, according to the resolution adopted by the AIDEA board.

The 2 megawatts would be about 7% of total generating capacity at the Tyee Lake hydroelectric project after a third turbine is added to the plant next year.

Payments on the $15 million loan for final design work would be deferred for two years, while the borough works to pull together private and public financing for the shipyard, which could cost more than $600 million to build. 

If the borough proceeds with final design of the shipyard development and the project does not go ahead within two years after AIDEA hands over the loan money, the borough would be responsible to repay the debt “from any source of revenue available … and the borough will pledge to take all necessary actions to produce revenue for the payments,” according to the AIDEA board resolution.

The borough has been awarded a $31.2 million federal grant for site work — utilities, streets, extending power and shoreline stabilization work — at the former 6-Mile sawmill property, which the municipality purchased in 2022 for economic development opportunities.

The federal grant requires a local match of $7.8 million, which the AIDEA money will fully cover.

The borough estimates final design and permitting could cost $15 million, which the AIDEA money also would fully cover.

Design, permitting and construction could take at least five years, dependent on pulling together enough funding to pay for the project that could, at full development, create several hundred jobs with the shipyard operating at capacity, according to a presentation to the assembly earlier this year.

The borough assembly has held several executive sessions — closed-door meetings — to discuss the 6-Mile development but has never discussed the possibility of a power sales agreement, data center development or state loan in a public session.

If the private shipyard goes ahead, the operator would pay to lease the property from the borough.

“Today, too much of that work leaves Alaska for shipyards in the Lower 48,” Borough Manager Mason Villarma said in a prepared statement issued by AIDEA two days after the board meeting. 

Wrangell has been working with JAG Marine Group on the 6-Mile shipyard project. JAG leases and operates the shipyard in Ketchikan, which is owned by AIDEA. 

“Given the close proximity of our communities and the abundance of maritime assets, infrastructure and skilled workforce between us, this is a natural fit,” Villarma said in the prepared statement. “Ketchikan and Wrangell have an opportunity to work together to grow Alaska’s shipbuilding and vessel repair industry.”

The Wrangell shipyard’s target customer would be the U.S. government, including the U.S. Navy, Coast Guard and research vessels, particularly ships that operate in Pacific and Arctic waters.

“AIDEA’s investment in the Wrangell shipyard complements its partnership with JAG Marine to expand operations at the Ketchikan shipyard,” the agency said in its prepared statement. A second shipbuilding and repair yard would “provide redundancy, (and) additional capacity,” AIDEA said.

The Wrangell yard would be larger than the Ketchikan operation, both in footprint and the size of ships it could handle.

The Sentinel was unable to contact Villarma for further information on the deal with the state economic development agency.

Assembly approval would be required for any agreement with AIDEA, Mayor Patty Gilbert said on Saturday.

The borough assembly in February approved spending $550,000 to hire a contractor for a feasibility study for the Wrangell shipyard; JAG, which also runs marine service operations in Michigan and Virginia, put in $200,000.

AIDEA approved the Wrangell funding at a special board meeting as it is pumping out projects and money in the final weeks of the administration of Gov. Mike Dunleavy. A new governor will take over on Dec. 7.

The state corporation, which has been around almost 60 years, has financed roads, oil and gas exploration and production ventures, hotels and multiple other businesses in the state.

Its financing activity has ramped up significantly in the final weeks of the Dunleavy administration, as some members of the seven-member AIDEA board will be removed by the new governor.

It’s also likely the new governor will review much of the corporation’s spending decisions, many of which have drawn criticism from legislators and opponents of AIDEA-endorsed projects, such as $86 million for a road into the Ambler mining district in Northwest Alaska.

The corporation also has committed $10 million to a geothermal energy company, $25 million in a nuclear energy research venture and $75 million to create a fiber company “to transform Alaska into a global digital hub,” according to the agency.

“I think there will be a top-to-bottom leadership change at AIDEA,” Jonathan Kreiss-Tomkins, the likely winner in the race for governor, said at a campaign event in Fairbanks in October. “I don’t know if there is another agency or acronym in the State of Alaska that sort of better represents the frustration and loss of faith and lack of transparency in government than AIDEA over the last four years.”