February 25, 2022 1:30 PM - 3:30 PM
And then also just very, very recently, we've been notified that there's some congressionally directed funding in the appropriation bill that we're hoping moves forward and that could provide some additional money for. I'm sorry. I'm not sure. I understand the question. What was the 30%
Yeah. So that formula would be applied nationally for all fair service providers, and then would determine what share of the national fund name available that we have, that, that AMHS receives. And, and IIJA, they, they, that formula's applied to their service as well, and they get a very small amount of the FBD based on their, and you can go to that slide, Katherine, the formula that has the passenger's vehicles and not a mile.
Sorry. It takes me a minute to get I'm there flipping, flipping SCR. So on the, the ferry boat, discretional suns where where's the 30% of the total nautical miles come from, and isn't there, doesn't the state re receive parts of the national gas tax or other highway funding that's included in Marine highway miles.
Yeah. So that formula would be applied nationally for all fair service providers, and then would determine what share of the national fund name available that we have, that, that AMHS receives. And, and Iffa, they, they, that formula's applied to their service as well, and they get a very small amount of the FBD based on their, and you can go to that slide, Catherine, the formula that has the passenger's vehicles and not a mile.
Yeah, that's what I, I think so, I mean, you're looking at the total monies that comes in for the highways. I'm just wondering, you know, if that percentage was, if, if we were getting the, the miles, the money based the miles, we actually travel on that side, how that would help with, with capital and, and, and replacement vessel operations money.
Yeah. I was just gonna expand, you know, the federal aid highway program is driven primarily funded from the federal gas tax, right? So for highway construction, Alaska being a Don east state, we, we generate far less tax than we receive back federal aid highway money. But to the other part of that, maybe with Keith is getting to our, our state gas tax, our state motor fuel tax, 30 something million, which D O T our agency receives. And it split out amongst our highways and aviation, you know, our road maintenance and road, our highway maintenance and our Marine highway system portion of it. We get like 3.6 million, I think, for the Marine highway system operations.
Yeah. Wonderful. Thank you. And, and thanks, Marie. I'm sure there's gonna be a lot of follow up questions that we'll send to you and James via email as we needed to go through some of the slides a little more quickly, but that is a material that we have prepared to present for you. And so if you'd like to establish some next steps and what would be also helpful is the meeting topic for two weeks from now, it's currently identified as to discuss goals and performance measures. And I think there are other things that we want to talk about such as retention and recruitment. And so I'd like to, you know, hear from the members, what the interest is, then we can begin compiling materials.
Yes. So that I was kind of one of the questions I was gonna go into this stuff is where, where, where are they at on their kind of hiring process of getting people hired at the, to get the Columbia out and running? And then two, I think that's one question. And then for the agenda for next time, I, I think we really need to look at the short term planning, how we're gonna keep vessels moving in the next two or three years and keep, you know, with respect to what routes where we operate and how we can use existing vessels. We have, I'm not sure it's prudent to not go through with the, with the Matt Nuku scheduled next scheduled CIP project in, in at least until to have that vote as a backup until at least there's a, a new mail design that's functional in the to.
Okay. Thank you. I, I heard you say a couple things, Keith, I think what I'm hearing and, and, and what I'm thinking as well as for the next meeting goals and performance measures should be one. I think we should just keep it to two issues. We have so much to talk about goals and performance measures, but I think we should add staffing challenges that as well. And, and we could do that in, in, in one meeting and just listen to the challenges, listen to things that have been dive deeper into that, especially now that we have realized, you know, we've looked at at the modernization plan for replacing vessels down the road and how that could definitely help some of our staffing challenges. It sounds like. So if we have the two of those items, how does the board feel about combining those just two in the next meeting? Is there a,
That's fine for the, for the next meeting, just from what I've seen from this meeting today that maybe three hour meeting would be more appropriate for us so that we can actually delve into some of these issues. Again, I or only take one item at a time. I, I, and I don't know what our real timing is, is to get down to the final discussion about what the actual, comprehensive long range plan's gonna be. So do we have time to take time to go through this stuff on a weekly basis, or, I mean twice weekly or
Thank you and Matt, that's a good comment, Alan. There there's a tremendous out of information there. And my suggestion or recommendation would be that as board members, we're reading everything that's been sent to us in the past, when we got on this board, everything that's available to us on the M ho website, the reshaping plan, if you haven't already and trying to familiarize yourself as my, and ask also staff, we appreciate all the information, but maybe if we could cut slides down just a little bit, not get into so much minutia, but more of the summaries and where things match and where they don't, that gives us more opportunity to, to have that discussion. That's so important. And, and I think those two things could help with, Cause they're mine as well.
My, my final question deals with the, when the, when this board was the transportation advisory board, you guys worked on long range planning for, I don't know how many years as a, as, as of a, do we have a sample of what you guys put together in the past that went to the legislature as a long term comprehensive plan. The last one that was put together and sent in from Alaska main highways.
Right? Yeah. Yeah. We've got, got that all figured in there as well. And that's part of the problem we have right now with the older vessels. It's just hard, it's hard to find parts for vessels that are pushing 60 years old and, you know, then you add buy America issues on top of that. Sometimes we do have, we do have a hard time finding some parts for these older ships very often.
Thank you, Madam chair. I was just gonna elaborate on what Matt was saying last few years. You know, looking at the, you know, there's a lot of push from the legislature and the administration to drive down costs of the system and primary way to do that is capital investment, right, and modernizing the fleet. So we have a efficient, less cost rate and that would then, you know, we can bring our operating costs down and that of course increases the fair box recovery rate. So just emphasizing what Matt was saying there, the question I had for you, Matt though, and I think I know the answer was these projections for the existing, the, the capital investment for the existing fleet. Did you work with Clauson to get these? Or how did, how did you put these together
Part of it was put together with, with our engineering group. So we got a plan, like what they know that would be coming up in the next 10 years. So I got a full list for every ship of what, what they know we're gonna need to replace on the current fleet in the next 10 years. They don't necessarily go 10 to 20 years out of what they, what they know are gonna replace. So, but we did project based on. So what I did for the years 10 to 20 is I took the past 10 years of what we spent federal, you know, all on the capital, maintenance, everything on the current fleet, what they know that we're gonna need in the next 10 years for maintenance, upkeep, replacement, steel work, all that kind of stuff, and then took that to project out the, the 10 years after. So they, it is, you know, we know it's increasing every 10, five to 10 year block. The costs are increasing quite a bit, the current fleet. So, so that's how went project out the 10 to 20 years.
Yeah. We took that into account and, you know, inflation rate. I mean, if we, of course we took, you know, these dollars 20 years out and discounted back today, it's gonna look like, oh, we only need 10 million because, you know, if inflation stays at seven plus percent that, or whatever, we hit this last year, it's gonna be a lot less. But yeah, I, I converted 'em so that it's comparable year to year, so we can see what it's truly gonna be.
Okay. I, I agree with you it's as operating board, we just have to remember, it's not our job to solve these problems. It is our job to make recommendations with the best information possible that we have and the best strategic re you know, strategic, oh, strategic. I said, it's my favorite George, Bushwood going forward. And, and, and just remembering that it could be, you know, recommendations on how to improve staff morale recommendations on how to reduce the, the difficulty there is to, to fill positions, IBU positions that can start on the ship and move their way up, things like that at that sort. So if, if y'all will look at the screen before you, and we look at goals and measurement goals and performance measures for the next new eating and an update on the modernization plan that we saw today to, to really better understand and have some more time to dig into that. I think it, I think that's what I'm hearing you saying that you would like to see at the next meeting and if that's, so I think that's, that works. And I would just simply request that everybody, if you haven't already read the modernization white paper two or three times, it, it will help tremendously. And as we go through this discussion, so Keith, you have your hand it,
Yeah, just a reminder when you talk about the modernization paper for the staff and that, and that is if we have that type of paper prior to sitting down and having the kind of conversations we had today, it sure would make it a lot easier to have them have these meetings and be them, have them understand, getting more value out of them to go back now and read the modernization paper after we've had the presentation based upon what the modernization do with the financing in long range is a little more difficult.
Yep. Good, good point. A and I guess I would just ask Catherine for, we'll just put one more thing on your plate, but a summary is extremely helpful when we get, when we do get these, these large presentations to go back to and just kind of put things together. So if we can task you or a task mat to do, to do something like that before a goals and performance measures, that would be very helpful. And then my last question, maybe to Catherine is have we given you clear guidance on direction on and where we would like to go for our next meeting?
Yeah. Thank you everybody. I think that does clear it up at the next meeting. We'll go over performance measures. We'll have a presentation. Matt McLaren has materials prepared already that we'll update and be able to share with you as a starting point and then have a dialogue from there as you'd like to see happen. And then meanwhile, in the next couple weeks, we will definitely send out materials as requested, you know, an update on a staffing, an executive summary of materials that we've reviewed over the course of this meeting and the information on the steps, the links, and some updates with print rubric. So we can send that out through email.
Yeah. I would just say, like, for example, with the performance measures information, it would be great if we could have, I, I understand that there's already an existing presentation and, you know, whatever group is 80 or 90 different performance measures. I mean, can we go ahead and get that by a week from today so that we can familiarize ourselves with it, look at it and at least note for ourselves, what any kinds of questions we might have for follow up, maybe submit some of those in advance so that staff can prepare responses or incorporate that to any presentation. And that I think that'll just help make the meeting more productive.
So you can see there in the years that blue, those blue lines on the right side, they bump up in those years that we're building those ships. But as you follow along with the red, the state funds, essentially what we're showing is here is that we are using more federal funds, but we're using those federal funds to save the state money. So we're using those funds to save, save the state operating money that we need to each year, capital money, overhaul money. We're not, we're using it to not be as reliant on, on that, that distribution or that appropriation from the state. So we'll move on to the next one. This again is just cash flows needed each year. Like I said, just a, a little different way to break out the funding. So this just breaks out operating funds and capital funds. You know, the, from each plan, the left side, our capital funds, the need is going to continually go up.
I mean, we're, there is a high cost on the right side, like we said of building the new ships, but those costs are gonna be there with the current ships because they're getting very, very old. So just the cost to keep those running, keep those going is gonna be very high. So, and you can see on the, the right side, you know, the operating funds are much lesser. We'll be able to streamline the fleet a little bit, run, run more efficiently with, with different ships, modernized ships. So the, in the green there that that annual operating costs will be cheaper as well than keeping the current ships going. We can, we can do things for more fuel efficiency, modern engines, you know, things, some things that will help us with efficiency in that ways too.
So the, the next one is really the same. It just shows our, our, well, this shows our need for state funding for how much money with this plan we would need from the state and UGF appropriations every year. So this was, you know, years past, we were right around 70 million. So that's kind of where we started with this plan. But as we move forward through this plan, we'll need you, you know, less and less, 40-50, 60 million in there in the range of, of UGF from the state, but keeping the current ships, you know, you can see that blue line keeps kind of going up. So we're, you know, we know we would need more appropriation from the state every year as if, if we continue with current current ships and currently right now.
And then I think the last slide they hear the next one. So this goes through the same, the UGF new each year. So it's the, the slide before this just breaks it out by year, how much, you know, different way of showing it, how much of that UGF we need from the state? How much would we need for capital versus how much we need from, from operating funds? So, you know, the, on the left side, the capital and operating are far higher each year. We we'd be much more reliant on getting those appropriations from the state, which, which as we saw the last few years, the, the budget just hasn't been there for the state. So, you know, our budgets have been reduced. So this, this helps us move into a way that we don't have to be as reliant on that, that from the state. So, so I think that's all the slides I have there. So, you know, I just, like I said, just kind of wanted to run through, just give high level what they all show, and then I'm sure there'll be questions that come up as you have more time to digest them, or maybe there's questions now. So I'll leave it up to Chair person Shirley, so,
Okay. I'll go ahead and ask my real briefly. Thanks, Matt. I I'm curious, and I don't know if you have an answer to this yet, but we talk a lot about the fair box recovery percentage. And I know that the legislature in the past has really wanted the system to have a higher, fair box recovery rate. I, I believe I, I could be wrong at 54 or 57% that we've been at. They would like to see that higher. I could be wrong on that easily, with this modernization plan and the shift in vessels, the change in vessels and costs. If we look at ridership and the fair box, basically the, the approximate level that we've been at per se, the past five years. Do you see that? Fair box percentage shifting?
Just briefly. Thank, thank you. That's too much for my eyes to follow that quickly. So I just, I guess just a question is, and looking what is still in the zip, the step in the status of design is the Matt new Cade corridors. So does that mean that money is being extended on this project At this point?
Oh, Madam chair, I, I, this is Captain Falvey I haven't figured out. Yeah. How to raise my hand with zoom. I apologize. I'll get that figured out. I can get it on teams with the dead end corridors. This had initially come up when we repowered the boat. Okay. It should have been done years ago during the midlife and the coast guard missed it and it didn't get picked up on. So when we got into the dead end quarters, we get into a lot of stuff and that, that surfaced. And at that time they gave us five years complete the project. They had also requested that within a year from that, that we come up with some preliminary design as to how we were gonna do that. So we did that Shirley and, and, and Glosson has done that. All right, we have Gloston on retainer and we, in essence, haven't spent any more money with them. So, so a small amount of money has been spent, but not a lot. And we're in a, we're in a holding pattern with the designers right now until the decision can be right.
Okay. Yeah. I don't wanna take up too much time on, on the step, but I, I think that we had talked earlier on at our first meeting that there were projects for a vessel replacement that were in the step already. And I don't know if that we were just talking about the, the Tustumena replacement or if we were talking about something else, this, this is just an awful lot of information to try to absorb.
Yeah. And I, you know, I, I thought it would be helpful to show you what the step looks like, but I, I realize that maybe opening a little bit of a, a box because there's a lot of detail here. So it might be that you wanna go back and spend some time with it. There are project status in each of these, that's where you just need to make sure you select the show Iris projects and, and you can read, there should be current status indicated, and this is a, a really good resource as you move forward, but would agree. We probably can't get into each of those project details right now, if we wanna talk about the funding available to the
Yeah. Great. Thanks everybody. And one task, if we could, before we get into the presentations, chairs, if we could approve the minutes from the last meeting, that would be helpful. And then also wanted to say, we will continue. You know, I'm glad the materials are getting to you and it is our goal to get them to you sooner than the day before so that you do have time to process it and moving forward, I think as we hit our stride with these two meetings, we'll get into a good rhythm that allows for adequate time to, you know, absorb some of this. And I'll just finish up by sharing this screen on opening remarks, which has our priorities that were discussed during the last meeting. If there's anything here that the board doesn't agree with, it would be great to get your feedback on this. And we can certainly circle back to this at the end of the meeting. Because perhaps that'll change as you get additional information.
Okay. Thank you, Katherine. Yeah, on the agenda I missed that. I should have cut that, but minutes on my agenda are not there. So you all, as Katherine said, they got the minutes out very quickly to us for the February 11th meeting. I hope you've had a chance to go over them and look at them. And if anyone has any additions or clarifications for the minutes with the exception of the spellings or wordsmithing, because some things do get lost in translation. If there are any changes to those minutes, please, please speak up. If not, I would entertain a motion,
So what I have on my agenda before me now after the opening remarks is a presentation by Matt McLaren. Who's the AMHS business manager on the 20 year optimization plan introduction that we talked about at our February 11th meeting, wanting to look at that and having Matt go ahead and present that for us, Katherine, if there's anything you would wish to add to that, please feel free to do so if not, we'll turn it over to Matt. Oh, and Matt, I will say, as you move through this presentation, there are areas where kind of moving on to a different topic. If you could stop briefly. So I don't have to interrupt you and just ask if there are any questions I can look at hands and if there aren't hands, if you can wait again for the full presentation, that would be helpful. But if you really do need to have to ask a question, then Matt and I will work to try and give you a chance to do that. And then we'll keep moving through the presentation. Okay. Thank you. All right.
Okay. Hey, I'm here. So it looks like we're kind of not a lot of time to go through a 20 year plan, but we'll get through what we can. I mean, one thing to point out about this plan, has kind of been in development for several years. We are trying to look at long term of what the system needs to keep it sustainable. There are lots of parts to this plan, lots of moving parts. So, you know it really depends on taking the plan as a whole, you know, and a lot of 'em are intertwined, different parts. So cherry picking or picking out certain parts may create problems in other areas, but we'll start through it. This, the first slide is really summary of what we would look at for the next 20 years. The first one, the Tustumena is being replaced with a new vessel that's already underway.
So we know that crew quarters of the Hubbard, and Tazlina, the Hubbard has been been approved already and that's working starting through that process there. But with this plan, we also feel we needed on the Tazlina because we'd be streamlining the fleet a little bit, running less ships, but with the constraints, operating day constraints of the Tazlina without crew quarters on it really limits how far we can go in a day, how far we can run. So to add more flexibility, we need to add some crew quarters on that vessel as well.
Yeah, the plan would be with this plan, at least with the numbers we're looking at, the plan would be to have the CPP project done on the Columbia and then operate the Columbia in the place of the Matanuska and then down the road, replace the Columbia with a new mainliner there. The reason is the Matanuska is coming up close on. We got a five year leeway for a dead end corridor project for the last major project. So that's coming up in, I believe in 2024 Captain Falvey can correct me if I'm off a year, but I believe it's 2024 that that's coming up. And that, you know, that, we do have an estimated cost on that, but we've seen a lot of these older ships. We start doing work on em and they uncover all kinds of other decaying steel things that, you know, add up costs pretty quickly. So, so it would be if the Columbia could operate in her place, you know, until we get a new mainliner built, then that would save us from having to do that dead end corridor project.
Yeah. I'll, I'll talk about those in the numbers. Yeah, but it would be essentially another one after the, the TRV. And then later down the road wanted to replace the Columbia. The nice thing with the, the TRV design, you know, we've done a lot of the design work over the past several years, so that same design could be used and modified slightly to get a new main liner or two off that same, essentially same design. Of course there would have to be some tweaks to it, but it would save us a lot of design cost.
Yeah. So just keeping apples to apples here, first of all, the Matanuska was given a path on its eliminated dead end corridors that was volunteered. That option was a presented by AMHS to the coast guard in leu of doing some small repairs at the time. Secondly, the Columbia is more expensive to run in the short term. So it's not really a cost savings. I don't think in the short term to get rid of the Matanuska. And the third thing I wanted to point out is the Alaska class ferries what we're talking about being, I believe being the Hubbard and Tazlina were not what was recommended previously as designed with left class design actually was, it was more like a Taku replacement style vessel. And the last thing I wanted to contribute was the Hubbard and Tazlina. I don't, those are not SOLAS, so I don't believe they would be able to service chain or Rupert. Those are gonna be very limited to capacity vessels of what, how many terminals they can make. And that's all I got.
Thank you. I noticed on the vessels specific information about them that the ACF, the they're 280 feet long, they burn 250 gallons an hour. Is there any consideration, maybe a smaller vessel to serve the six smaller ports in Southeast that wouldn't be so expensive to run? I can. It seems like we go that back to these reports, like the Northern economics report and the accountants say, you know, we can't afford to go there. There's not enough people. There's not enough traffic. It's too expensive to run the vessel. Maybe we've overbuilt the vessels.
Got on mute. Yeah, I understand all of this. And I, I think the forward funding concept from the last slide, and then it shows up in here under the governor's budget is a great idea. Dion. I think we should figure out how the state can continue to forward fund so that you don't have the, any, the issues that's very similar to the school districts needing forward funding. So they make their teachers pay work. It would be a lot EAs a lot better for me. If this slide also showed FY 24 and FY 25 projections so that we could see what, what the impact of this is, like I say, board, funding's great, but using the one time federal dollars in one year raises a lot of concerns for me about 24 and 25. So if we're going to say that this is the proof plan and, and don't have any problems with it, I, I wanna know that we're planning for the future as well as just for FY 23.
So great. Maybe I can speak to that just a little bit by getting the six months extra in the year we got it. We, we used largely COVID relief funds from Krisa those federal dollars by getting an extra six months, once as long as we continue to request 12 months at a time and get a, it, we will always be in forward funded as far as our budget cycle we'll we will stay aligned with the calendar year because we'll, we'll keep adding 12 months. The other part is the federal funds we're using for calendar year 23 are part of a five year program. The, the rural ferry service program that's in the infrastructure investment and jobs act. So that program has 200 million available to ensure essential rural ferry service for specifically for rural fairies that serve a, a rural community, you know, 50,000 people or less that's 50 miles apart. And there's very few ferry systems that would meet those CR that criteria, if, if any, other than the AMHS. So we're looking at potentially having a federal, a federal program for five years at this point. And as to projections the legislature, we don't know, you know, what the legislature will appropriate, but you know, this is what, this is what we have in front of the legislature right now.
Yes, that's. I understand that portion of it and also understand the legislature. So it makes me very nervous to try to plan what they might do the forward. The five year funding is there there's 141,000 here from, or 135,000 this year. So does that mean that there's another 135 a year for the next five years, it's already dedicated to Alaska.
So we have 135 million in our budget for this. See, for the proposed for next year, there's 200 million available every year for five years for this program, it's a billion dollar program across five years. So we, we could get 135 million. We might get more than that up to 200 million every a year. So there's 200 million available every year for five years with this federal program, we haven't the, the federal transit administration has not released yet all the requirements for this program. So we're still working with, with them on this program, but it is, is a brand new program for five years.
Right? So now I'm looking at myself now. I was just gonna say, you know, the governor has mentioned, or our chief of staff I know has mentioned at Southeast conference, there's a bill that we're working on putting, you know, making the Marine highway fund or the vessel replacement fund. So they're notable by the CBR sweep. I think the intent is to accumulate revenue, utilize the federal money now, accumulate system revenue to build sort of an endowment of sorts for Fu for the future. So that's something to consider as well. Again, like Matt said, the federal, whether we can deposit federal money would be highly suspect, I think, but that's not to say we don't have annual needs and can't start utilizing it for the TRV. For example, we'll need cash flows for ERV and then things like that. So there's a lot to consider. And I think, you know, coming up with the need is probably the, a good priority is like, what do we need to do when, and then when do we, what are those CASHS and then figure out how to fund. It might be a better, better approach. I, I did know Katherine sent me a message that we have our, one of our program development. Well, she's a planner for Southeast or south coast and she's she's up next and can probably speak to a lot of this as well. So thanks. Yeah.
Yeah, I just wanted to add that again, OMB director or Neil Steiner said a week or two ago, that the way that he characterized the federal funds available was that it would essentially allow for Marine highway operations for five years and the ability to bank fairbox revenues during that time period.
Okay. If there are no further questions at this point for Matt again, or Dom, sorry, Dom, thank you very much for the presentation. It was, it was helpful. So we will go ahead and hearing no objection. Move forward to Marie Heideman and talk about the step and the, I, I J a overview, which we've already talked about quite a bit, but now we can get some, some clear information on that. Thank you, Marie.
Okay. Good. I'm much more used to teams than zoom. So I'm gonna just go over the STIP briefly and the federal highways program, which is where we will get into the funding that's available to the Marine highway system. And, and briefly we'll look at some of what we have coming ahead of us for the division of program development. So I'll start with STIP and I guess I would throw out, I only have a couple slides on the stiff, and I'm gonna just show you the STIP website. And if there's any particular questions you have, you know, you have now, I'd be happy to take them and then try to work them in as I, as, but otherwise I can take questions as we go at the end. However, however you all want,
Okay. Next slide then. So the STIP is statewide transportation improvement program. We like to just call it one word STIP, but it's really four words. It's a four year program. It is required by federal regulations. And there's also state regulations that direct how, how we develop in STIP and program funding in Alaska. It does need to be federally fiscally constrained. So the requirement really is that any project that's going to use federal aid highway funding must be in the STIP, any of that funding and the StIP needs to be fiscally constrained. So the projects in the STIP need to represent what we reasonably anticipate to be available. Sometimes we don't always know exactly what funding will be available in the out years, but we need to reasonably anticipate the funding and have the projects in the STIP, meet that fiscal constraint.
Okay. So the, the primary routine and regular funding that is available to the AMHS is the ferry boat program. And this is an allocation, which we, we skipped the slides before, but it's, it's not really that pertinent. There's apportionment and allocation. And the allocation is not in a statutory formula, but there is still a formula. And we've been receiving these funds since 1997. They used to be called ferry boat discretionary. A lot of us still call them ferry boat discretionary. It is for design construct of ferry boats and terminals. It's not for operations or maintenance. It can be like large overhaul refurbishment, that type of maintenance, but not, not your day to day maintenance, a couple things of, no for eligibilities that have occurred over time, that we, we have been able to designate the Marine highway system route as national highway system, which does make it eligible for a national highway performance program funding. And then the other thing on this slide that is important for your board to consider is that these funds are restricted for both some terminals that are publicly operated or have a majority ownership interest, and are determined to be in the best interest of the public. So this would be important if you have any conversation around privatization of AMHS just to keep in mind that you could find yourself without access to this funding. And, and maybe some of the other funding programs too, that are in
The formula for the funding, the funding is here is based on ferry passengers vehicles carried in total miles. So this is going to fluctuate a little bit, you know, year to year. And, you know, some decisions you make could change this formula if, if we carry more or less passengers or vehicles or the miles travel change, essentially next slide. And then briefly just for the, IIJA, this program is continuing and it's funded at a higher level. It was 400 million over five years, and now it's 570 million over five years that equates to about hundred 10 million a year. And then I know you all have heard about it, and there's been some discussion already, but there's also a new ferry pilot program for electric for low fair, just discretionary grant. So it does need to be applied for the program that do was just talking about very service for rural communities is also a discretionary grant program.
This one is 200 million annually, 1 billion over five years. I have been told that it can be used for capital and operating funds that this is a clarification provided this week, that it's that's eligible both. And it does need to be for rural communities, 50 miles apart. So that does put Alaska in a very advantageous position to be able to take, receive a lot of this funding, but you, we won't just receive it, right? So the discretionary grant program, so we are going to need to apply. And I assume that nomination does to be competitive, to have the funding awarded to our state. It just sounds like we won't have a lot of competition, but we, we do still need to define ahead of putting a nomination together, what that funding is for. And we need to wait and find out what all the rules and, and timelines around it, because, you know, typically there's going to be a, a period of time within which you have to be able to spend the money, so that can limit your ability to do, you know, a replacement vessel. But yeah, we, we kind of, we need to wait and see what the rules and requirements are around that, that funding, but it, it will looks like it's going to be a great, great resource for AMHS.
I think Katherine, if we can look at the FBP funding amounts slide, we run with all the numbers. That'd be good. This just shows where we were with the backpack and, and where we are with. IIJA so nationally, it was 80 million per year. And, and per that formula, we were getting 20 to 21% with, with one outlier year 24% . Not, not really sure why if, if we project forward and assume that we're gonna be around 20.7%, then we can expect to receive 23 to 24 million per year. So this is fund funding that MHS can count on. You don't need to apply for it. It's not discretionary grant. It's, it's going to be there and available for you. And, and typically, I, I think with this allocated funding is the same as the apportioned funding that you'll have one plus three years.
So the FY 22 funding would be provided in 22, and that's the year one. And then three additional years, it will remain available 22 funding will be available through the 25. So it can build up if needed for a larger project or just, you know, waiting for project design to complete. And the next slide will show that too. We have some funds that are built up right now. The last three years from the fast act have a total of 48.7 million on the books. It is planned for, there's a list here of the projects that are expecting to use that funding. But this is this, this funding is what all of those projects in the staff are being funded with this. This is the source of funding that's being used for a NHS major refurbishment overall that's replacement. And we're basically using that as a match. I mean, for the tustumena replacement out up to 220 million, how much of that is federal funds for SBD funding or SBP? The match is 20% and that is higher. Our other portions programs are typically at the sliding scale with a 9.03% match, but this program is 20%.
Yeah, Shirley, I just a, you know, on the, on the formulation, you know, quite a few years back when that was being reformulated, because it was, we worked pretty closely with the delegation and, you know, everyone within the state and that formulation is based on route miles, not the total miles that all your ships travel in the course of the year. It's a big difference. And that's why we have a huge advantage over just about every anybody, including Washington state fairs. Cause they're running short hops, you know, and you've got quite a few short hops that don't ally up to a whole lot. There's where we have the advantage.
I I'm sure that we can ask Rob or, or Catherine to come up with the last plan that came past M a as it concerns a long term STR planning strategy and get that out to the board. And I see Rob with his hand at, so go to Rob first to answer that question and then Paul, and then Wanetta
I, I am not familiar with the plan that was submitted, but we'll certainly look just sure. There nothing else. There was, you probably know Shirley or, or some kind of suggestions or, or minutes if nothing else that were, or we could ask Robert, I guess then, but to the timing of all this, to me, we're not in a giant hurry here. I'd prefer we take our time. This budget is, I mean, we're in session right now. We have a budget before the legislature, from the governor. The legislature's gonna, we're gonna work with the legislature to get something out for the immediate term.
I'm thinking, you know, our, as a board, the longer term strategies where we need to look and, and even something for next year, you know, a proposal for the next budget cycle makes sense. And the, and the investment strategy and how it works into the, you know, the future step and the future tenure plan. And I will say one good thing. We did just get close on the Marine highway, a de the dedicated planner in the program development for the Marine highway system. We've got four good applicants. And so hoping to get one, a dedicated planner on board that can assist us in, in doing this planning and, and help Catherine. That's good news. And I, I guess I'll just leave it at that. Thanks.
Yeah, I've been following everything along. I haven't spoken up too much, but I, I think I've understand everything going on. I think for the next meeting, we should have a follow up on the long term plan that we've been discussed. And if we can get a timeline presentation of the 20 year plan, and maybe even with the white paper included in it, so we can just see it in one place. And I think it's important to note that in Marie's presentation to 200 million a year from the infrastructure the is for both capital and operating. And I would like to see lot of that, what we could do to keep it into capital improvements. And I would like to see the, the future program speed it up as much as we can do it. That's a, go ahead.
It, it's difficult. It's difficult because everything seems like a priority at once, but again, we should be long term and strategic and thinking about designing a, a strategy and performance measures for the long term of the system, what the, what the optimize system of the future will be, and, and look like with regard to the next meeting, what I will say is, I don't think we can take on both staffing challenges and performance measures at the same time. I think staffing challenges is both a short term and a long term challenge. And if, if the concern about addressing that is that will meet the staffing challenges to stand up vessels that have not been in operation recent operation. I, I get that. I I'm concerned about those issues as well, but I, I would, I, I guess just prefer to be a little bit more mental about these meetings. I think addressing the staffing challenges, if it helps people understand what they short term operation challenges may be, let's, let's do it, but let's move performance measures to that strategic discussion at a separate meeting. That's that would be my preference. Thank you.
I, I would like to also entertain that strategic that we talk about additional sources of revenue with the governor's projection and wanting us to recover more. I think a big part of that is, is how we do business and how can we generate more revenue with, with the way the system's going.
And that could certainly be under goals in performance measures to meet some of those operational items norm we're talking about the next meeting meeting too, and it, and it sounds like there's I, and a wish to move the staffing challenges to the meeting after that, which would also give folks a time staff time to really dig into possible solutions to that. And what's worked and what's not cuz I know that they're allowed out there. So I think right now, if I'm not mistaken, we're looking at goals and performance measures and a follow up on the modernization plan. That map provided us basically with timeline and funding attached to it for the next meeting and holding off there. What are your thoughts?
Yeah, I, I agree. I think we should separate out the workforce versus replace performance goals. I'm hoping we would come back to VA vessel replacement. I thought that was far too short and I'm looking forward to the performance part. Cause I was around when we were increasing revenues ridership on the boats, we really did some good stuff there back in the day and had some full boats going back and forth out here. And another old comment, this has nothing to do with next meeting, but my wife and I were wintering you in Arizona for about five years. We did a prince rep route on the way back, and then we did a CA yard to segway route on the way back. And we did the crunch, the number and we found out it was much less expensive to go to Skagway. It was a wonderful drive. That's all I got. Thank you.
I was just gonna the staffing challenges topic. I mean, we can just provide a pretty quick update on that. It doesn't need to be a full meeting in my address, what we're facing and some of the effort we're putting out there right now we're faculty issue. But I mean, we're certainly welcome to do a, you know, half an hour just brief on it if you'd like,
Right. And thank you. And I saw a good brief on that the other day and I think it was in house transportation, Jim and Adam Adamson came in and provided some information with Ling Wally. And so I, I think we're all clear that there's a staffing shortage, but I think when we get to that discussion item, it would be of a, how do we resolve it? How does the modern does the modernization of the fleet help resolve that view our goals and performance measures help resolve some of those and what basically solutions not, I I've don't need to spend time going over the numbers. How many of these positions are open? And that I think we all, we all understand that, but the discussion that I think we should be ready to have, or, or to hear is what can we do about it? What does, what do the crew, what do they want us to do about it? What are, what are their ideas for the solutions? What does, what does management want to do about it? What are their ideas to the solutions and where they either meet or they, or they diverge. So that, I think that would be helpful to just get a better idea, but if you could send out, I guess the, just the, the quick and dirty numbers to the board members, just so they, I have it that might help Juan outta your hand. Is that
Thanks Shirley. Yeah, there was a, I mean the, the title here is staffing solutions. I think it was previously staffing challenges, but I think that staffing challenges is that short term discussion staffing solutions or workforce development is the long term discussion. And there was a, a plan there. I, I think there's perhaps some elements that I know that I would like to see flushed out a little bit more in terms of how it aligns, for example, with wheat modernization. So for, for example, that's been one of the, the challenges in, in some of the routes and some of the vessels of keeping cruise certifications and being able to operate the vessels in, in ways that would maximize or optimized service. All of those kinds of issues around staffing, I think are really more of where I would hope the board would wanna focus our attention. We wanna understand what those short, short term challenges are. And in, in reality, we probably are not in a position as a board to, to weigh in on those as much as I think we should be able to look at the longer range, higher level issues and hopefully understand what the alignment, what the alignment, because there's, there's the calculus of, you know, the routes, the vessels, the crew, and what that equals.
Yes. Thank you. And I was remembering that I think it was 83 performance measures that, that Mr. McLaren had. So my, my ask of, of Matt also, you can send them all out to us, but Matt, if you could, in your summary, could you summarize the performance measures that the, that KCO and the bulk to operate the vessels and the terminals feel are the really rise to the top are the most important to them, the system and the people that they serve so that we don't have. So we're not going over 83 different performance measures unless we absolutely have to, it would be very helpful to know what what's most important.
Okay. We thank you in advance. All right. Are there any closing comments from the members of the board if put your hand up and if not, I'll give that a few minutes and if not, we'll go ahead and adjourn. All right. Seeing that. I wanna thank you very much, Matt, for, for presenting all the information captain FAL. Thank you for being there to answer those questions and welcome, mam. Thank you. And thank you to Marie and Dom for presenting the information and, and, and just, just a very final note. When presenting, I think to this, to this board, we need information and we need data and numbers, but we're a little bit different than a house or a Senate committee, because we, we actually need to come up with, with a plan and we need to, we need to come up with recommendations and piece it together. So the more that you can summarize for us, and the more that you can have these conversations that with us that are, that are more direct to the operations and not just so much numbers and graphs, I think that would be really helpful for all of us. So that was my last comment, but Keith Haslin Keith.
Okay, well, Keith's hand is up, but I don't know where he is. So no one, no one else's hand is up again. Thank you. I, everybody, for being a part of the meeting, we appreciate, we appreciate everything and Kathryn will make sure to get questions into you in a timely manner. Well, in advance, if possible, at least a week in advance before the next meeting. And if not, I would entertain a motion to adjourn. So move. Okay. A and Winta all right. We are adjourned at 3 48. Thank you all. Thanks everybody. Thank you. Have a great weekend. You hi.
And we'll go over this with everybody too at the start of the meeting, some folks meeting and some so we'll make sure everybody's comfortable before we get going. Okay. It looks like we may have everyone except for Captain Arzt who I know is excused. Looks like we're ready to roll here. So let's, let's try. We'll do the roll call and call the AMHOB meeting of February 25th to order.
We do have a quorum. I believe norm Carson will be trying to get online here briefly. And Captain Artz is excused. His ship handling schedule change this morning. We had talked yesterday afternoon and he is going to be on the water. So he's unable to attend today. So having said that, before we get rolling to review the agenda, I do wanna go over just some, some brief kind of rules and best practices for zoom meetings. I believe that there are several people on this call who are very familiar with it. Wanetta has been living and breathing the facilitation and participation in zoom meetings for the last two years as a vibe. But I know there are folks that have not. In order for us to be able to do this in the most efficient way and fair way, there are a few rules.
So the first thing I'd like everyone to do is just take your cursor down to the bottom of the screen, where you'll see little buttons that say, participant chair, share, share screen, etcetera. You're looking for the button that says reactions. And if you click on that, you will see little faces, which we don't need to use, but you'll also see a bar that says, raise hands. Wanetta is showing you how right now that's gonna be very, very important as we go through the process this morning, that if you have a question and we'll talk about timing on questions in a moment, but if you have a question, or you have the floor, you will need to unmute yourself. And I would ask that everyone stays on mute. It's very easy to forget that you're unmuted in a public meeting, and raise your hand and then unmute yourself when you do have the floor. And then if you can remember to put your hand down once you've done that when you put the raise hand, when you're done speaking, you can click to lower the hand so I know that you don't have a follow up question and for just about everything, we're going to use the hand and I'll just let you know right now it can be with a large screen and
It, give me a moment to make sure that I've got folks basically in a row to, to get to you for your questions during the middle of a presentation, we're not gonna stop the presenter and, and ask a specific question. I'm gonna ask you to hold your questions until the presenter is at a natural stop point between some topics on the presentations you're going to have, and I'll work with them before we move to something that's a little bit different. I'll just briefly ask if both have questions, have questions, but as much as you can, if you can just write them down and we can ask them all after the presentation that helps. But if you have something that needs to be addressed before we move on to another issue, and it's important, go ahead and put your hand up and, and I'll ask the presenter to wait, but let's try and keep that as a minimum, as much as possible.
And I think that's about it. Staying on mute is important because there's a lot of background noise and I've asked Wanetta to help me with this meeting. If there are things that are occurring outside of these base rules, Wanetta is gonna break in with a point of order to the chair and then I'll be able to address it and re-state Wanetta's point of order. And just remind everybody, you know, we have these rules, while they may seem a little difficult, but they're there for a reason, and that reason is so that we have efficient meetings and that the public who's listening and is able to follow us easily. So do we have any questions on the basic rules before we move on to reviewing the agenda? Okay. And just so you know, Katherine, all I can see on my side, I have the shared screen and I've only got, I can't see the other board members, so I don't, if somebody's gonna have a hand up, the only screen I have right now is Wanetta.
Side by side speaker. That's why I'm one side by side speaker. So if everybody can get on side by side gallery, that's up on the top right hand corner. Okay. That is thanks Wanetta. Alright, we have the agenda before us and I am unaware of any additions or deletions to the agenda. Katherine, do you have any from DOT?
Okay. If there is no objection to the agenda as presented during, then we will go ahead and approve the agenda before us. So to just opening remarks around the table, if you would like to make a remark at the start of this meeting before we get going, that would be helpful. And then Katherine, I'll ask you if you have any instructions or needs from us before we start to get into the presentations. So if we could just start maybe with Paul and if you would just unmute yourself.
Yeah, good afternoon everybody. My only remarks are, is to thank the staff for getting this presentation to us. I had a chance to go through it last night and kind of familiarize myself a little bit. So this will be easier to listen to the presentations and build questions. So thanks.
I think you've got Rob And myself, But I'll just say that I wanted to thank Katherine and the staff on the quick turn on the records from the prior meeting, as well as the advanced information for today's meeting. I hope my fellow board members maybe feel a bit as I do. It is a lot of information to consume in a quick amount of time with a great deal of information that may not always be familiar, but I'm hopeful that today's informational presentation will help illuminate it even more and look forward to those presentations. And I'll turn it back to you Shirley.
The Aurora and LeConte, essentially what would happen is in this plan, the Hubbard and Tazlina would replace those vessel as operating vessels. There would be an opportunity here or, or the LeConte, one of those two thirty fives to be able to be maintained as a backup vessel or have, you know, if, if we had another vessel go down that could maybe provide some backup service there. So that's part of the cost that we've got built into this plan as well. The Kennicott and Columbia would provide the main mainline service. The Matanuska would be retired after the Columbia CPP project is done. So we'd essentially be down to two main liners and then we'd move on with, you know, down the road. After that point, the Columbia would need to be replaced as she's getting older as well.
And then with this, as you know, we talked about the Hubbard and Tazlina and the crew quarters, the docks in the system where those ships would need to be operated. They're not all ready at this time to accommodate those vessels Chenega Bay, we need some modifications, Pelican, Cordova, and possibly to Tatitlek, depending on the decision that's made there. I mean, we've looked at possibly outsourcing that service a little bit to Tatitlek. We've done that in the past and it, and that's one of the ports, it has actually worked out well with outsourcing, and then also new dock Cascade Point. So any before we get into kind of some numbers stuff, any questions?
Now. I got one. I can't find my hand button here. Yeah, Alan Austerman. Looking at the 20 year on the slide that talks about dock modifications in Chenega, Pelican and Cordova with the new Tustumena coming online. Have they talked about dock modifications, both in Kodiak and Homer, where the majority of the traffic is with that ship to drive on drive off?
Well, as far as those Homer/Kodiak, ports they are roll on, roll off already. The new ship will be able to accommodate those ports as they, as they are right now, the new vessel does need an elevator anyway, though, because most of the docks out the chain are fixed docks. So depending on the tide, we need the elevator to be able to get those vehicles on and off the ships. But, but Homer/Kodiak have, they have ramps that go up and down. So those are, those can be loaded as, as they are, but the TRV is being designed to accommodate all those ports.
And Matt, I actually had one quick question that I see, he has his hand up, to just real brief, the Matanuska being retired. When you talk about the new main liner to replace Columbia, I'm guessing it's a TRV type vessel. How about the Mat is she is planned to have her replaced as well.
Well, can I back up to the first comments from Keith? So yeah, we have done the cost difference for the Matanuska I mean, we're expecting, we did get a waiver on the dead end corridors through 2024. That was with the agreement there. But by 2024, we do have to do that dead end corridor project if we're gonna keep the Matanuska running, you know, when they start ripping in those, I mean, I would fully expect that to be a 30 plus million dollar project, running the Columbia is more expensive to operate, but running it for the short term, the cost over those same amount of years, it will be cheaper to keep the Columbia as a replace the Columbia than to keep the Matanuska running. And then the Hubbard/Tazlina, they don't need to be SOLAS cuz we're not planning on running those to Prince Rupert anyway.
And then, you know, and then as far as your question Norm on the cost, we've done the cost, I've done a cost analysis for the Hubbard, the ACS versus Aurora, the LeConte and you know, the capacity is higher. We'll be able to carry more on there. So the net cost to the state, it will actually save us money by running those ACFS instead of the two 30 fives that we're running those right now, because we'll also in addition to that we're also gonna save on overhaul costs by not, you know, we just did each Aurora and LeConte cost us 5 million plus for steelwork. So, you know, we're operating new ships. We're not gonna have that annual, you know, those big costs every year to keep those, those ships operating like the Aurora and LeConte.
And if I can, there's three more hands up. We're just on the first slide and a lot of these questions, answers as we move through, if we let Matt go through his presentation, which is why I was hoping that we would be able to do that beforehand, but because Rob has his hand up for quite a while, I will go to Rob first and then Norm, if you have a last quick follow up, I'm gonna say, let Matt continue on with the presentation. So Rob first, then Matt.
Yeah, Madam chair. I, I was just gonna say this time, topic alone is a two hour meeting at minimum and I'm a little worried we're getting we're already at two o'clock. So I guess what is the intent here to just quickly go through this? And then we have an entire two hour presentation. I know there's a ton of questions we can ask on this. This is not a 15 minute endeavor at all. So that's, that's my only thoughts.
No, I agree. And, and I'm really hopeful that, that we're just taking this information in at this point, allowing that to, to present all the way, everything is gonna tie together. It all ties together on one way or another from all of the comments that we heard from the board members thus far. So if we can just get them all, all put out there together as a plan, it's just something, again that we need to start as individual board members as well, going through this process, realizing where priorities lay, whether they're long or short, short term, but this is a better chance to help you us understand what modernization could mean to the fleet. And so we just, you know, if we could just give Matt the time to get to the whole presentation or, or a large chunk of it before we start asking individual questions, that would be very helpful. But Norm I think I was calling you for a follow up?
Excuse me. Yeah, no, I was not suggesting that we take the take away the ACFs to the larger towns. What I am saying is we've got six towns with the populations that run from 90 to 700 versus the larger towns like Sitka with 8,000 and Haines 2,500, but we're putting the same vessel there. I think it is time we consider the smaller vessels for the smaller ports. That's it. Thank you.
Yes, please. And, and this, I'm not gonna ask you to stop after every slide, Matt, but I mean, if, if there's a, if there's a break to going to a different topic under this discussion, that might be good. And if the board can keep their, just keep their comments directly to the information that were being presented, we got a lot to go through.
Okay. Yeah. And a lot of it'll be, it'll kind of come clear. What I'll try to do is just kind of present. There's a lot in slides with graphs and numbers. I'll just for time sake, I'll just in this meeting, try to just explain what they're showing and then later, you know, the board can digest them and ask questions from there. So I'll try to just kind of move through 'em quick that way. So, so the benefits of this plan, we took a lot of the recommendations from the reshaping group. We're lowering our operational costs by 18 to 22 million in the next three to four years, by eliminating some vessels, downsizing the fleet, you know, reducing our operating weeks, but keeping service throughout the year, you know, still eliminating service gaps, increasing flexibility in the system based on having a fleet that we can operate in multiple areas and reducing some service frequency in some areas, but it'll help reduce our overall costs.
So then the next slide just shows on the left side, oh, sorry, one there. So the left side is our, our current fleet. So this just goes through what we talked about as we, we move through a timeline of what ships would be replaced and as we, as we move forward and this is so it's just basically the ships we'd have, have operating and then, you know, which ship they would replace. There's the color code up in the top right. So I think so then we can kind of move on to the next slide. So this just shows with this optimization, with the, the change out of fleet, this slide includes the total cost, including build the cost of building new ships versus the cost of keeping the same ships operating throughout the year. So the red line there is essentially keeping the current ships operating as they are.
You can see the green line optimization plan there. There are a couple little bumps in there in costs, and that's because of the cost of the new ships that we're building. So there is some capital costs there. It doesn't necessarily have to be state money. It could be federal money, but there are some, some costs bumping up there. So this is a total cost to the system operating and capital based on each plan. So the difference there is a after 20 years, it's just, just a little bit over $1 billion cheaper to build the new ships and, and go with the optimization plan over the next 20 years. So even though it doesn't look like a big difference, a billion, a billion dollars is quite a bit quite a bit over 20 years, I would say, or it's essentially 30, about the third 33% cheaper to, to build a new ship. So, and then in the, the next slide, we come into a little bit more detail. This shows the cost by year the annual cash, the cumulative annual cash flow needed.
So the, on the left is the continue with current fleet. You know, our operating funds just continually go up. Capital cost goes up, you know, after 20 years from now, a lot of, you know, if we're keeping the Matanuska around, it's gonna be an 80 year old ship. And there's not many, I don't know any ships that can hang around 80 years. They've been replaced with steel several times over by that point. And then the, the modernization plan on the right shows, the, the cumulative cost capital and operating through the year. So yeah, our capital, you can see the comparison of the dark blue, the, of the capital, you know, it's, it is cheaper to keep, you know, modernize the fleet, even with the cost of the new ships and operating and saying, our operating costs are gonna go down. We're gonna save money each year in the operating budget by, by having newer ships, less, less cost to operate as well. So then the next slide, just a lot of the several slides, just break out similar information in just a little bit different ways. This is just our, our annual how much cash we need to, to do this plan each year.
And this is in millions. So this is both operating and capital funds. So you can see at the, at the beginning, you know, the blue lines there continue with the current fleet. So this in the red there in years, 4, 5, 6, 7, 8, that's, that's not only the TRV, but also building another new main liner as well. So yeah, and those years we do have higher costs system wide of the cost of building new ships. They're not, they're not cheap to do, but then it, it comes a time. Then we are saving a lot of money every year. Then, you know, this plan, we have another new ship, you know, year 11 through 16, another new main liner to replace the Kennicott at that point. And then you can see our, after that point, our annual operating costs are far cheaper than, than we would have. Our annual operating and capital costs are far cheaper than we'd have as compared to keeping with the current ships.
So we've got the biggest reason that is just the age of the ships. So, and then this next, the next slide, we, I kind of broke it out into the two plans and just to compare, you know, to go with how much money we need each year, but then compare the use of how much we would need in federal funds compared to how much we would need in state funds. And we know, you know, with the state budgets, you know, it's up and down. We don't know where it's gonna go in the next 20 years, but with the, with keeping with the current fleet, what we do know is we're gonna be far more heavily reliant on state funds every year to keep things going than we would with building new ships, with federal funds. And the, you know, the plan on the right, the modernization plan does assume that we are using federal funds to build these new ships.
Yeah. Yeah. We definitely see that shifting cause part of this plan we're yeah, we we've been around 33, 34%. We've we're trying to bump that up a little bit. Of course, the last couple years, the goal from the legislature, or like I said, it was 50 or 55. They wanted to shoot a little bit higher that's but then that's right. When, when COVID hit, we had less ridership. So there are a lot of, we certainly didn't hit that, that percentage, but what this, what we're trying to do with this plan is, is keep ships with, with capacity that are, are able to do more things so we can keep more, more ridership there. I mean, we've, we've been able to keep our revenues increasing per operating week, or we've been consistent with that. But we really think with this plan, we'll be able to maintain our revenues.
And then as you see on the slides, our, our annual operating costs will go down. So it's very realistic that we'll be up around the 50 plus percent range in, in cost recovery. I mean, I can do a projection out for it. I think I have one, but I don't have it in front of me now. I, it seems like we went out about five years with it as part of this plan, but we can certainly project it further, but just, just based on the cost numbers and where our revenue will be, that we, we can get there.
Thanks, Shirley, Matt, just going back to what some recommendations were from the reshaping group also in terms of fleet standardization and streamlining maintenance requirements. So we'll have the Alaska class vessels, the new Tustumena as, as a standard I'm or I guess, as a standard and then the Columbia. And is there, is there then a fourth class of vessels?
Well, we'd essentially be, we would be to consistent. We would have the, like the last class fair. Yeah. They're, they're smaller. We have that design. We can, you know, down the road build more of that design with this plan. We're looking at using the TRV design as, as a mainliner course to be a true mainliner, it's gotta be, you know, it'll be bigger, but we can stretch that design out, but, but the TRV is a ocean going vessel. So we can use that. We can use that to, for the new mainliners. And that's what we're looking at with this plan is to use that same base design and then just, you know, do some, some changes off that, of course, a mainliner down here, we don't need the elevator in it, for example, you know, that could be taken out, but we would be down to like a standard mainliner and then essentially a, you know, the ACF of course the Lituya is kind of a one off that just runs to met Lituya. So that would be, we'd basically be to a standard mainliner a standard ACF and then the Lituya yeah.
Yeah. It'll make a lot more sense there. I mean, with that plan, we didn't with the summary page, we didn't list out every year, what, you know, what each thing's gonna cost, but we hit the high points of, for federal and state money for the comparison of the cost of building new ships and, and the cost of keeping the current fleet. So that is in there it'll these numbers should make more sense from looking at that. Yeah.
And I'm, I'm assuming that I think I saw some place where maybe within the first few pages of the modernization plan where you're gonna cut the number ships in half, over 20 years. I think we would, at least I would, we need to have more information about what that does to the service and scheduling and all the rest of that stuff that goes with it. So I have a better understanding of what, what this all means.
Yeah. We can definitely provide that. I mean, we've been, what we, what we're trying to do with the plan is make more flexibility. So by saying that, I mean, you know, as, as we run, sometimes now we've got, you know, say you have the, Tazlina running up Lynn Canal, and then we have say the LeConte running around the village in the Southeast. So, so that's essentially two vessels operating there where we can, we can shift that and, and serve those areas with one vessel with, with higher capacity on that vessel. So we can still move the demand that's in those areas, but not have the cost of running two ships. So that's, that's kind of what we're looking at here, but it, we can certainly provide that with, you know, port calls or port calls to each community. What it's gonna look like 20 year us from now compared to what we've done the last few years, that that would be doable. We can provide that. Thank you.
Thank you. And it just real briefly, I just wanna make sure everyone knows what Alan was referring to was the draft 20 year fleet modernization white paper that we got this morning. Katherine sent it out. So it's not these graphs. It's, it's, it's a, it's a written description of what Matt is talking about, what the graphs mean and how and how the service would shift and change around. So if you hadn't had a time to, to look at that and absorb that these are just obviously plans that it's white paper, it's, it's some thing to work off of. And I, I would ask that everybody really takes some time after this meeting goes through that white paper. And if you have questions about how these things tie together, send them back to Katherine so she can get them, get answers to them, but like a suggested, it answers all lot of these graphs and questions and nothing is in stone. Nothing but, well, a few things, sorry, I guess, but it's a start. So having said that, I'm gonna ask us to go ahead and let Matt wrap up if possible. And we'll see, there are more questions before you move on.
Right. Thanks, Matt. You might wanna stick around a little bit as well for future questions. And again, everybody just, just read the white paper and, and then if you have questions on that, we can dig deeper into it. So if there are no more questions from that at this point, I don't see any hands. So thank you.
I was doing thumbs up. Thanks Matt. And if I could general information for any of the public viewing on the AMHOB website on the engage tab, these files are, are available for your view. So if you're interested in looking at these materials, you can go ahead and click on the file section, which is underneath the streaming window. And then you'll see the files that will be reviewed during today's meeting. And with that is here with us when we're ready to move on.
Okay. Can we go to the next slide? Okay. So this is a slide showing, well, well first I'll just say I'm, I'm the admin services division director for the department of transportation and we, we house the department wide budget section and handle significant amount of the budget and finances for the department. So this, this slide shows the proposed governor's budget. So that's the 12 months of funding most recently put forward by the governor $141 million, 12 month budget there. Largely we were looking ahead at the IIJA bill and at the section 7, 11 0 3 rural ferry service, the new program in there and programming those dollars into the budget. There's also in, in that budget, 5 million of AMHS revenue fund. So that's fair box receipts that we also put in our budget for things like advertising alcohol. I think food service items, things that we know would not be federally eligible. So that's, that's the purpose of that? Any, any questions on that? Are we, do we move to the next slide?
Okay. So one, one thing that was good for the system stability that happened in the current budget cycle is it was forward funded and that's a kind of a double sided coin. It was not only forward funded by shifting the budget cycle further into the future, but it was also funded with federal dollars from, from COVID relief funds that made it not dependent on its own revenue, at least for the near future. So, so in, in the old way, of course we would be right now in session talking about a budget that would take place on July one. And we, we wouldn't know what that was. We'd be working with the legislature, but with, with what was done last year, they added an additional six month some funding, which pushes out the budget cycle to align it with the calendar year. So instead of us talking today about what the budget's gonna be starting July one, we're talking about what the budget's gonna be on January 1st, 2023, that accomplishes a couple different things. One, we don't have a, a new budget in the middle of summer so that they were able to put out their schedule last, last August for, for this entire season, knowing, knowing their funding all the way out to January.
The, the second thing that, that, that accomplishes is it allows, this allows them to, to keep their revenue and, and a much, a much, they have much more visibility into this future. But so that was accomplished in the tables above with the green there, the green funds using the COVID relief funds. And you can see in the graph in the bottom, how we're now able to release a full, a full schedule, much further in advance. And when we were analyzing this, one of the things that we, we found in looking at past years, Matt McLaren, and myself through also correlation and usability of the system and the correlation and revenue of about 8% when we got the schedule out much sooner. So having a, a, a budget that's, you know, much further out and doesn't, doesn't have a, a break in the middle of summer has certainly been helpful for the system, Matt.
I have one just real quick to make sure I understand if I could. So, and I'm looking at the, the layers. So for the next schedule release of what's like end of September, 1st of October, 2022 for the winter and summer schedule that would be released for the 12 months and the 33rd legislature doesn't meet until January of 2023. So can, can you help me walk through why I'm, why I'm confused by this? You know, is there a break, in other words, if we put out the schedule that far in advance and then have to wait for the legislature to approve the funding or what do I have wrong?
Sure. Great, great question. So right now, if you look at the, say row four here on this, on this diagram, if you look at the red dot there today is February 25th. Oh, that's the wrong year. Yikes. It's 25th, 2022. So I apologize about that. The typo, we are in the second regular session right now, and that's the yellow and that corresponds with the yellow winter and summer schedule and the yellow requested funding. So that's the funding out there we're talking about. So today, and that's the funding we'll know before, you know, ideally before July 1st and, and by, by getting that, we'll be able to release up there on row one, the schedule for, for those yellow squares, the 33rd legislature we'll be talking about beyond the yellow out there in, in calendar year, year 20, 24. That's when we'll be talking about that.
All right. So this is a comparison of, of our, of our budgets since 2019, and it shows our planned weeks of service and our planned court calls and our projected revenues, so that we're comparing budgets and plans that that were proposed each year. And then, so you'll see, going from, from 22 to the 23, governor's proposed budget, we're looking at a significant service level increase. It's an increase. I, I believe off 113 service weeks and an increase of over 2000 port calls with, with the governor's budget. And again, that's in no, not this summer, but you know, the, the next, the next schedule we released from, from September to October, I'm going into calendar year 23. So it's an increase of 23 million over the current, the current year's kind of operating 12 month budget. Any questions on that?
Thank you. Ma'am chair. I just wanted to expand on what Dom was saying a little bit and he's spot on that. You know, we're, this is our proposal, the governor's proposal for, you know, funding, the operations of the system, the 200 million we've had to, and from our analysis, there's very little competition for this money. We are gonna get the majority of it for the next five years. So the governor's budget has a proposal here for the operations. And if we do get, let's just say, we get the entire 200 million, there'll be 60 million more that could put towards capital just in this one year. Now I know the debate on the hill right now is an interest in maybe maintaining state money towards operations and utilizing this federal money for capital vessel replacement. And that's certainly something to look at. And, and I think overall plan, like you said, I mean, we, how much do you need in a particular year for capital, for vessel replacement?
You know, what vessels are being replaced and what's the cash flow and timeline, you know, so what we have proposed is let's, let's bond operations. Why the state's in the conditions it's in, in, and then get a plan in place going forward. But also we have hope, and I think there's been discussion of that. The, this is a federal highway act often. They don't change very O they don't change very often. They get reauthorized, they get extended. This five year program could be a 10 year program. It could just keep on going. This could be a new program that just is in perpetuity. So we're, we're hopeful. It's not just a five year, one time influx of money for the Marine highway system.
Well, you can ask first. I, I was just gonna say, not in expanding on both Rob, I done what they said too. I, not that I want to create more work for myself, but I think it's important to see, like Rob was saying, you know, if, and Dom, if there's a $200 million program out there and we qualify for 180 million of it, but we're, we're using 135 million to operate, I'm gonna put together kind of an analysis of, you know, if, if we get more than we plan to operate it each year, what we can do with that money, if the legislature wants to appropriate some state money to protect us, you know, five years down the road or help us build new ships, you know, just some options of maybe what we can look at of, of these different pots of money out there right now.
Cause there's seems like there's a lot of federal money out there for different things. Some can be used, you know, for infrastructure, shore side things we know we're gonna, if we're gonna run the ACF to Pelican, we're gonna need work on a dock. There there's low emission grants out there as well. So I'm gonna, I just to let the board know, I I'm gonna put some things together. I don't know how soon I'll have it all put together, but just, just some odd options. And maybe we can look at of different uses of this funding. If we get more funding than we need to operate each year of how we can preserve that and, and use that what's in the best interest of the system.
Great. Thank, thank you, Matt. That, that was, that was my question that I had, I understand that got 200 million a yearly share is definitely gonna go to Alaska because Senator McKowski wrote the bill that way, and it was very successful and it's nice to be hopeful that, you know, five years down the road or four years down the road, when they reassess that other senators small, you know, other smaller runs and their states go, don't go, Hey, wait a minute. This wasn't the Alaska ferry bill. It was, you know, the American ferry bill. So I'm, I'm generally never hopeful when it comes to Congress and inconsistency. However, what my question is, you know, does D O T and a make Jess, do you think this is the best and highest use of those funds up to a hundred, maybe million a year for five years to use it on operating these older vessels that we just keep pouring money to, instead of asking, having the state to take a role in and in paying it, maybe at least half of the operating costs, you know, and this way I get it UGS there's, there's no state money going into the operation of the ferry up leave.
The 5 million is from the AMHS dedicated fund. But what if the state were to the legislature were to provide half of the 135 million and the other half was provided by the federal funding leaving quite a bit more in the vessel replacement fund, cuz you know, we're talking about, I'm not talking about the testimonial. She's pretty much taking care of funding wise, but we're talking about replacing Columbian in the mat and, and having to get rolling off in, on that in the next couple of years, sooner than later to use those funds that way. So, you know, this is just such a windfall and, and it's hard for me to understand why the state wouldn't be putting more into the operations and allowing this thorough money to just get us up to step as quickly as we can with the newer vessels. And I don't know who that question.
Well maybe I don't, maybe Rob can, Rob can jump in after or Don before, but I don't know, just I've given that some thought to, I mean, I don't, I guess we don't know all the terms yet, cuz the notice they, I don't think they put out the notice of funding opportunity yet for the, the federal money. So we don't know all the use. I don't know if we can use that to put in the vessel replacement fund for later. I know, you know, if the state appropriated money then that could potentially be appropriated into a vessel replacement fund. So I mean, if that's the case, my preference would be to use a federal money to operate the next five years. And then if, if the state wanted to appropriate money for new ships in the down the road, then he can appropriate that into the vessel replacement fund each year. So that five years from now we have that and can stay in there. I, I mean, but I agree with you Shirley, if, if you know, if that federal money can be used to build ships or put into vest replacement fund and we don't lose it from there, then that that's a great, great point. Great place to put it. I mean, Rob and Dom can jump in their feelings on that. I, you know, I don't know all the terms yet, so
Right. And I, and I guess my last follow up that this might be for captain Fay, if you's still on, you know, when you look at the timeline and when I say timeline for design and destruction of a, a new vessel, I'm forgetting the nine years of the TuiNa debacle, we we've got a good TRV platform to start with now. And if that platform were to be used to replace, to say the Columbia, how quickly could that be started and how quickly could we think go out to, to, to bid, to, to start work on those vessels? It, it feels to me that we can start work on the, we know we need well before five years, we start the process. If we can't do that, we'll pick got really big problems.
Madam chairs, captain FAL. Yeah. Thank you. No, we've like I say, like Matt had indicated we, you know, we've got TRV design, you know, that's an ocean class design. It's not. So for the social class, I have to make a decision on that as far as, you know, the next main line of kind of just running up through this, you know, from Bermingham to, through the system, we may want more functionality, but pretty quickly, because what we would do is, you know, would remove the elevator and probably stretch the mid body a little bit, but that's pretty simple Naval architect. So no, it probably built pretty quickly, you know, within a year we could probably be, you know, well along with wanting to be, look, you know, the shipyard, if you had the funding.
I just wanted to make the point that Senator Alki on multiple occasion now has characterized this funding as essential fair service funding, similar to essential air service like Matt has said, you know, there, there isn't a lot of guidance yet. These things typically take time, but I, and I haven't looked to see what additional or colloque there might be about this particular pot of funding, but it, it seems to me that the Senator is characterizing it as operating funds. So I, I think that would narrow it, you know, significantly. And the, the, the idea of ho holding federal funds in reserve in, in some way, it just kind of flies in the face of my experience with federal funding that they typically don't allow that kind of thing to occur, unless there's some encumbrance towards a, you know, capital encumbrance towards a project specific.
There's a public process. We notice the STIP publicly and we have STIP amendments and administrative modifications. So the STIP is a living document. We're changing it often in response to project development schedules and different issues that may come up or, or funding changes. And those, those changes are all approved by the federal highway administration. And the it's very important that we comply with all the roles, the it's a requirement for the federal funding and then the state funding or the state regulations overlay over the federal. And they help define some of state programs and how we distribute funding. The four main programs being the national highway system, the Alaska highway system, community transportation program, and trails and recreational access.
We also know that the STIP, you know, the projects in the STIP typically take longer than four years to develop. So we maintain a 10 year STIP, which helps us to kind of meet that fiscal constraint over the length of the project, as opposed to just the at four years at a time. Next slide, looking at the STIP from a kind of high level overview we have about 25% of the STIP there's about like 300 projects typically, or, or not projects, but line items in the STIP. It fluctuates, but there's usually about 300, about 25% of that statewide program. These are projects and programs that include preservation and maintenance bridge and cold safety transit rail. The rest are falling into those programs. I described the national highway system, Alaska highway system CTP and transportation alternatives, also the Alaska Marine highway system. So these are typical, our capital improvement projects and programs. And from here, Katherine, if I can have a screen, I'd really love to just show the AMHS projects and the website. I think that's gonna be more helpful than trying to describe any of this on a PowerPoint slide for you should just be able to start sharing your screen.
Oh, can you guys see the DOT homepage? Yep. Okay, good. So hopefully you all have this bookmark and you can go down here to STIP, and then there's a lot of handy resources to and learn about the, the official copy is the PDF. We are currently in the 20 to 2023 steps. So we're in the third year of our four years. And you know, we do anticipate an update soon. We typically will update every two to three years, so there's overlap. So we're not going from one four year shift to, to the next four years where we're kind of leapfrogging every couple of years, this particular fifth is on amendment three. There's a lot. The preamble of has a lot of really great information, definitely worth some time to read, if not now, then when we do our next update, some of the information because we are in year three, some of the information is dated. Cause it's going to talk about the fast act, not IIJA, when we update and develop a new STIP will be, we'll have information more about IIJA. There's a good introduction overview. There can be a lot of definitions in here and, and you can see this talks about the funding level.
All the phases will be defined and the different fund codes are defined and then some discussion on our performance programming performance. So then that's the PDF, but really it's more user friendly if you're looking for a particular project to, to go ahead and just use this project search, and I can show you all of the Marine highways project. We have five divisions and I like to show the IRIS projects. Some of our sip entries are programs that contain multiple projects. By selecting this, you can see all those individual projects and there's 11 projects. We've got a couple surveys. So you'll notice there's a few individual projects like the Gustavus ferry, terminal , but the majority of the funding is listed in, in this program, ferry refurbishment it's showing at about 17 million a year. And then you can see the list of projects that are currently active. There's also a smaller program for very growth and terminals. And I think what AMHS will do is start a project here, which is, is very nice and flexible because the STIP doesn't have to go through an amendment. If you identify a new project, they can just start it within this program. And then later sometimes AMHS will request to kick it out and give it its own STIP grid where you can see just one project, one active project with a description.
Real quick, I do have other folks who have questions, but so in terms of, we just talked about for the federal highway's funding for vessel replacement, how has to be in the step and in order for us to go through the process and get that funding if I have that correctly. Okay. Sorry
The question the, I, I a no I'm no, what I'm asking is that's okay. I, I'm not explaining it. Well, it's my, my bad, in order for us, we've talked about previously and looked at the modernization plan that the Columbia would be replaced and then probably the mat or the mat and the Columbia. I think Columbia, the mat in order to do that, they have to be in the step in order to get the federal funding for the best replacement. The step goes through 20, 23 only. So are either of those replacement vessels going to be in the step moving forward. And Rob, Rob's got his hand waving.
Thanks Madam chair. So those are not in the step now, but you're right. So anything using normal federal highway funding would go into the step and, you know, you'll see that we're working on an amendment for the step right now, which you would see the TRV show up again, it'll be programmed in. So anything that we would say suggests for the future, if it, if it's within the four year window, anyway, that is the step, which is a small a window. You know, program development has a 10 year plan. They actually work off of, but the step is only four years. You would want to add it, even if it's just like planning, design, whatever phase you're at the other point I was gonna make is the 200 million rural variable money will also be need, will be added to this fit, but it could be added as one big bucket, just 200 million for that program. And then how we expanded it would be, you know, we figure that part out later just to get it in there as a planning for the planning tool purpose though. Thank you.
Not necessarily though, guys, that adds considerable cost as we all, we discussed internally to a mainliner, but that's not to say there can't be a smaller vessel created or, or constructed. That's one idea that can go catch a can Rooter, for example, that's sous and much smaller, like a CLA Alaska class size that then we can put solace to it. So that's something to look at for the investment horizon. I had more thoughts, but I, I lost them. Thanks.
No, you're correct. And for the, for the operating board, that's one of the questions that we're gonna have to look at at when we look at this whole system from 30,000 feet, is where does the prince roofer route fit in? Does it fit in and does it fit in with existing vessels or does it fit in with, with a different type of vessel? That's a big question that we're gonna have to look at. So I, I have a couple of items that I'd like to ask Catherine, if we could get more information on, based on this discussion and the first was, could we look, could it a simplified, not, not, not like it looks on the step website on the web page, but a list of the AMHS items that are in the step for right now that they may be a Turmo modification. It may be a vessel maintenance project going a few years out that connect in some way with the modernization plan that we saw so that we can see which what is kind of fitting that to the step.
And what's not just, just so we understand it better one and second could, you know, at some point I think we're really gonna need to have a conversation about, and if we could get information to the board members in the meantime of the, the history of that route, the revenue and cost on that route, what the difference is, if, what any changes may have been to ridership up into Alaska, without prince utilizing only belly him and how that affected us, if we can start to cut, collect some of that and, and get a summary of that to the board, we're gonna have to talk about that. That what, on the next meetings, that'll be up to the board and staff to decide one. So that's all I had.
Yeah, yeah. Let's move on. And actually, I think I'm, I'm gonna fly through the next slide. I don't think they're as pertinent as the slide where I talk about before funding. I, I can go over them in a little bit if you'd like, or we can just start here. This is, this is probably what's most important to you.
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