State spending almost $900,000 a year to keep Malaspina tied to the dock

The cost of keeping the idled state ferry Malaspina at the dock in Ketchikan is nearly twice as much as reported to the public and state lawmakers. That's according to internal emails obtained by CoastAlaska under state public records law.

The nearly 60-year-old Malaspina, one of the marine highway's original three sister ships, hasn't carried passengers in almost two years.

It's costing the state almost $900,000 a year to insure and maintain the unused ship.

Gov. Mike Dunleavy's administration has not wanted to invest in the overhaul of the ferry's original engines, and estimates of fixing the ship run upward of $70 million for steel work, new engines and restoring its Coast Guard certificate which lapsed while the ship has been laid up at Ward Cove, a private dock north of Ketchikan.

The state, however, has been unable to decide whether it would be best to scuttle, sell or donate the ship.

As recently as Aug. 31, the marine highway's general manager told CoastAlaska that plans to offload the vessel remain "on a hold."

There's been talk of commercial interest, and the recently released emails show the nature of the inquiries. One firm said it wants the Malaspina for anti-piracy operations off the coast of Somalia.

"We would be using it as a platform for housing personnel over in the Middle East," wrote Jonathan McConnell, president of Meridian Global Consulting, a security firm based in Mobile, Alabama.

The Malaspina has staterooms with more than 230 passenger bunks that could be outfitted as sleeping quarters for security contractors that patrol shipping lanes to deter attacks from pirates off the coast of Somalia, he said.

McConnell provided recent emails between his firm and state officials that show more than a year has gone by since he first expressed interest. He last reached out on July 29, with no answer.

"We felt largely stonewalled by them," McConnell told CoastAlaska. He said his firm is willing to pay fair market value - close to $1 million.

Another prospective buyer in the United Arab Emirates made a cash offer via email for $625,000 for the Malaspina, as-is, emails show.

Several prospective buyers have said the 408-foot-long ship has cash value. It could be sailed or towed on a temporary Coast Guard certificate to be repurposed or sold as scrap.

"There's ample opportunities for use for that vessel," McConnell said. "Laying it up and spending $40 grand a month for a layup is astronomical, frankly."

Emails within the state Department of Transportation show officials were surprised and frustrated with the expense of keeping the ship.

An email from Mary Siroky, a recently retired deputy commissioner, brought to light that the price of insuring the vessel made the true monthly cost of keeping the Malaspina closer to $75,000.

That was nearly twice the figure cited by the agency as the cost of mooring the ship at Ward Cove.

"It seems clear to me, even if we give the Mal away, we're coming out ahead very quickly," deputy commissioner Rob Carpenter wrote in an August 2020 email in response to Siroky.

That was the apparent view of inside the Dunleavy administration which earlier this year tried to gift the ship to the Philippines.

A May 20 letter to the consul general in San Francisco made it clear it could go either to the foreign government or a private operator in the country. Talks between Alaska and the Philippines apparently had been going on for some time. Internal emails show that a month before the official offer bearing the governor's signature was sent, an email from Carpenter had inquired whether that deal with Manilla was still on.

Dunleavy's acting Chief of Staff Randy Ruaro replied the same day, directing the department to hold off.

"Do not do anything with the Malaspina," Ruaro wrote in an email. "The Philippine consul is interested and working on it on their end. The boat is 60 years old. We don't need to rush to do something with it this month or possibly next. Please stand down from issuing anything that would dispose of the vessel until you hear from us to go forward. We will let you know."

Ruaro told CoastAlaska this week that the deal fell through when the Philippine government learned it would cost more than $50 million to rehab the ferry for passenger use.

"They said that would be out of their price range for wanting the boat," he said in a phone interview.

Without plans to get rid of the Malaspina, the state signed a contract with the Ward Cove Group to store the ship.

"With only a single interested party, the state processed a single-source procurement to authorize the award of a new contract to Ward Cove Group for $402,084 annually," the department wrote in an email to CoastAlaska in June.

The Dunleavy administration earlier this year sold the marine highway's two fast ferries to a Spanish firm for service in the Mediterranean. Selling surplus ships had been a key recommendation of the governor's task force giving advice on the future of the fleet.

Tom Barrett, the retired Coast Guard admiral who chaired the working group, said it's apparent the Malaspina is a drain on state coffers. "Sell it, or scrap it," Barrett said in an interview. "But you just don't want to keep holding it there indefinitely. Also you've got insurance, but it's a risk factor, it's an old ship and it's tied up at a dock."

The department confirmed to CoastAlaska that the cost of insuring the Malaspina was approximately $420,000 a year in fiscal year 2021 and said that figure would go up slightly in fiscal year 2022. Add in the $450,000 the state is paying in mooring fees and electricity, and the annual cost is nearly double than it has previously admitted.

"I'm very surprised to learn that the marine highway system is able to allocate this, this insurance cost across each vessel, and that they never bothered to mention it to the Legislature," Juneau Sen. Jesse Kiehl said. He is on the Senate Transportation Committee, which had quizzed state officials on the carrying cost of idled vessels.

"If the department's not coming forward with all the facts, that ties the legislators' hands of doing the job Alaskans sent us here to do," Kiehl said.

Ruaro, now the governor's chief of staff, said he has taken an interest in the Malaspina and will be visiting Ketchikan to inspect the ship at Ward Cove.