December 02, 2022 12:30 PM - 4:30 PM
That's how you'll see it down in Washington state, for example. You're not typically riding along the side of the road. Well, you know, there are a lot of islands hopping there, but if you get my point, that's, that's an argument that's been made for a while. And also, you know, a lot of this had to do with the June access EIS showing the, you know, the original intent was two bees running, basically passing each other to meet the high demand that is theoretically there, I know, certainly know it's post covid now. We can't s overflowing all summer long. It's, and to have a dedicated ship running North Lincoln now is of course our dream. We can do it out of a bay of course. But you know, just like I said, there are some benefits to moving farther out the road and, and again it's, it's economic development and developing more of Alaska too. You're pushing out, you know, expanding other areas in the state, you're shortening that distance. We don't know what the future of genome access looks like and how it could change, but that could, maybe Cascade Point plays a part in that as well. So I'll just ask people to keep an open mind as we keep the analysis going. So thank you.
Yeah, thank you. Similar to what Rob is saying, it's hopefully because this is a new idea, this everybody this doesn't dump on it and say that it is not gonna work until we haven't actually have an ability to take a hard look at it. The, you know, the emotions that get into it sometimes carry us in the wrong direction compared to what Alaska Marine Highway system needs rather than what the public needs. And we're, you know, Alaska Marine Highways is struggling right now. We're talking about different ideas, we're talking about new ways. Get me brought up maybe a smaller or faster ferry type system. Well that's totally different change. Extending the road system so that the ferry don't have to run so far is an idea that has been out there for a long time. You thought with a sewer and homer were both receiving the tus at one point in time.
Department through their due diligence came up with the idea of dropping sewer and doing just Homer, which is absolutely right for Alaska. Marine highways may not be right for the trucking industry. This hauling stuff to Kodiak wanna go through Seward. We've got legislators right now that are talking about putting Seward back on just because the truckers are spending too much time on the road by going to Homer. That's not the kind of conversations we should be having. We should have conversations about what's best Alaska Marine Highway system. And so please, let's let the department do its due diligence, come back with us and then make a determination whether we support it or don't. And we're spending a lot of time talking about with having, without having all the information, like the chairman said, you have a lot of questions. Those questions will get answered at some point in time as the due diligence is done. So that's all I have to think.
Yeah, just looking at Cascade point in our recent talks of the short term plan, long term plan and, and how that's gonna, this is gonna eventually slide into those plans. The original idea was to have those two ships working when Canal. So in both short term and long term, it sounds like to me that we're short two more shift. That's what I'm getting out of this s do for replacement, which was just said Aurora's got eight years left. We're not, we're not talking about building and replacement for La Aurora. We haven't even begun those discussions. We're still on the talina and then we need to tackle the, a main liner and then I thought we were gonna go into when the Kennecott should retire, be replaced. And as I said, that still leaves when we're gonna replace And the and the Aurora, yes, the Talina and the Hubbard sounds like are available to replace the other two for eight months out of the year, but the other four months they're spoken for during high traffic times in the summer.
So it's kind of like we're building the, the cart before the horse here. You know, they, they built South Minkoff, they built coffee and cove. There's a lot of money tied up into terminals before the boats were really there. And now we have the boats and, and kind of not the terminals. So the, the ideas broken away from its original concept. So it, it, it's, it's, I agree with everybody we need to get all the analysis and have it come back in. But I think if you're really, if you're really going to continue to push cascade point, that is going to put us even more in the, the need for new vessels. That's it.
Yeah, yeah. Thank you Cynthia. We expect we're, we're looking forward to getting an MOU in place with Gold Belt and we expect to have an agreement here shortly. And then from there to get to a point of making decisions on the project, I would expect that to be another 14 months and that'll get us through a significant enough portion of engineering and design Yeah. To answer some additional questions.
And is the state by entering into, and you may have answered this if you did, don't, sorry, but with the state entering into an MOU with Gold Belt, if this project is not found to be feasible or as practical as it was hoped to be, is the state on the line for any payments to gold? And are they also going to be working, spending design money as they work through the feasibility? Cause I guess cause the feasibility is a business plan. The feasibility is do we wanna spend money to move forward with this project on, on designing of this project? And, and I think that's the key and that's when it goes out to the public and that's, you know, you get public comment and start working through all the issues. So that, that's what I think we're looking for.
Very, okay. Do any of the other board members, are you looking for more information at this point or are you satisfied with waiting as the process goes forward with the feasibility study to see what information that brings to the table, how that's collected and, and what it means? I'm not seeing any objection to that Captain Hilliard.
And also this is an element of what we've talked about for a long range plan in terms of planning for routes, routes and vessels. And this pro, this hasn't gone to a long range plan with the Amhs. This is all still very new this road. Adam Juno, ATOC Bay has around for a very long time. The idea for it, it hasn't occurred yet. So, you know, the planning, the trick for me as a member is to see, is to understand where that fits into a long range plan for the Marine Highway system in, in a responsible and in efficient way. And this, you know, and that, that's, that's what I would be looking for as a member in order to make a recommendation on the body. You know, at some point we'll make a recommendation when this is ready, you know, for a decision point. But until then, if y'all could keep us please posted just on the process where you are in the, the feasibility studies and also the, the schedule and scope of the public being able to provide comment. Okay. Thank you. All right. I looks like we are ready to
That. That's ok. That's okay. It's kind of there in the shadows. I just wanted to make the point that all feasibility studies, while the scope of work for this feasibility study will be of interest and importance to me because feasibility studies, how you, how they're framed very often is more important than the ultimate conclusion of that feasibility study. Because if it doesn't look at alternatives or factor in decisions that may be made during that 14 month process, then the conclusion that is reached by a feasibility study is very often wrong. So it's, it's very important. I think that we look at the, the scope of the, that feasibility study as a board member, I would like to see it before it goes. I mean, has it gone out bid
Yeah, Madam Chair, can you answer? Yeah, so just to be clear, what we're evaluating at first is we need to understand the capital costs of constructing a terminal at that location. And that's gold belt slam. So there is, they're working and their engineers up till now have been working with our marine engineers on assumptions to understand like what are the needs of amhs and then how would that be incorporated and the terminal. So there's, there's a lot of collaboration and, and back and forth on what those costs would be. So that's how we're intending to move forward the best to get a cost. And that's our first focus with this effort moving forward. If we're looking at other alternatives that have to do with how Amhs is operating as a system that would likely be a better fit in the long range plan than evaluating the capital cost of the terminals.
Well, I mean, again, I think this kind of goes back to this, this puzzling question that doesn't seem to have an answer that from a stepwise process would likely be the first question answered in a feasibility study is, is it, is there market viability for this? Voice construction is something that happens way later and can rechart the course for a prior decision that there is market feasibility. And so it seems to me if there is a cart before the horse situation, it is that, that you're looking at a construction, an investment decision before you've determined market viability. And so I, again, I just go back to that the business case for Cascade Point has not been answered. Not, not, not for this board or I think for the general public. If it has a strong market based reason to be done, then I think you'll have broad agreement from this board and from the general public that it's the right thing to do for the market, for the state, for the system. But it, it just, I I
I think in terms of just logical stepwise processes, the the the question mark that exists over this project has to do with not having a good answer to those things. So I I'm just, I'm, I'm I'm just, it's, it, it doesn't seem, in terms of project management and investment decisions, the sequence of events doesn't seem correct to me. I I'm willing to be, I I'm willing to be corrected on that, but show me the business case for it and I will get behind you on all the other stuff, but I I haven't seen the business case work.
Yeah, a manager chair. Yeah. And, and just one comment on that. Disagree, but this is Gold Belt's project and Gold Belt's terminal. So it's really their decision if they find it of the market case for their needs. Our decision at, at amhs is does it make sense for us and therefore do we wanna enter into a 20 year lease agreement? So we're leasing the use of the facility. So that's why we're involved right now in the design process is because if we wanna use the facilities, it will need to be something that our vessels can dock at. So I think that's why I, I was suggesting that those are separate cases that the long term plan can look at Amhs as a system and how we operate. But Right, the other, the unknown right now is the cost of that. And then Gold Belt will determine their market case if they wanna pursue this project. And a factor of that would no doubt be if Amhs continues to and find the viability of leasing. And initially we have, but that's where we need the long term plan and other decisions to understand what that would look like. And we we're waiting on some additional information before we can make decisions because they will need to know the cost.
Yeah. But I think the stepwise process then would be, gee, if there was a terminal at Cascade Point, AMHS could operate in this fashion. Now I know we've heard some of those numbers and some, what I would say as generalizations, broad generalizations about if a terminal were to exist that the state would lease that facility and pay gold belt for it and operate in a certain way. We're making other investment decisions in big capital investments. Big, big, big things that are gonna change the way am HS operates. And yet we are hearing, I mean I I can tell you, you know, we've, I don't know, we've been asked this for almost a year and every time this this project comes up, what we hear from at least public comment is it won't work. We have good examples of circumstances where something similar has not worked.
And so I I I, I submit this because I've, I've said this to other people that have talked to me about this project. It's like the, the reality is, is that there is no cost of capital for the state of Alaska because, you know, it's large, largely, at least for capital costs. We go for federal funds and we, we end up making subpar decisions cuz they are not truly based on any kind of rate of return analysis, any kind of market analysis that says the demand for this is so great that it is undeniable that there isn't any kind of just general market speculation. If we do this we'll just move stuff around and we'll operate this way. Which is basically what I've heard. I mean, I, I listen, I listened to business pitches all the time and I, you know, when somebody makes a business pitch to me that says, you know, here's my customers, here's what they want, here's what we expect the the market projections to be for this product or service. I'm telling you those things I can look at those numbers, look at those kind, that kind of presentation and see, you know, just prima fascia evidence that it makes sense. And I, I, I think that's really all we're asking for here, is show us the business case for hs. Why a least facility at Cascade Point makes the best sense for the system and for the other investments that we're being asked to provide advice on.
Thank you Annette. I, I agree with you a hundred percent. I, I may have been the mayor of a small town out in the Aleutians. It's a pretty busy place. We did a lot of massive major multimillion dollars, 20, 40, 60 million projects and we never once started one without the feasibility study to decide whether we were going to go down that road or not. Whether it made as much sense as we thought it might be. And so when I was asking earlier in the process of the feasibility study, one a laid out very, very clearly, that's, that's exactly what, not just myself but public would be looking for as well. And, and that's what's lacking. So that's, that's what we're looking for. And I see Bob Carpenter has his hand up and then Captain Hilliard,
Ah, thanks Manam. I'll be brief. I don't wanna keep dragging this out. You know, those are all valid points. I, I think the market based viability is a hundred percent there. That's been proven that the demand to increase traffic up and down Lin Canal as much as possible will be met. Whether that's coming outta a bay and or cascade point, that's to be determined. Our viability analysis, or our feasibility analysis, if you will, is we decided that, oh my gosh, this is a major investment we need to take, get a real, get our arms really around how much this thing's gonna cost us before we jump into it, especially given this high inflation construction environment. And let's really understand it before we make a decision Costwise. And then, you know, then we can weigh that cost against, okay, other investment alternatives versus is this really where we wanna put this amount of money?
So you're making a good point and, but at the same time we're trying to understand, we, we think there, you know, as I mentioned earlier, it's, there's a lot of philosophy here of how you design a system and this maybe does play into long term planning and system development and all that stuff. And maybe we're a little hard ahead of the horse, but same time we're trying to just understand costs before we go and jump into any kind of commitment. It, it, I guess that's kind of where we're at. I I think we both, we all want the same thing. So what do we gotta do together to get there? We'll, we'll certainly strive for that. So, thanks
No, no, you didn't. I, I believe Captain Hill is just went, you know, he's just, you know, he is just expressing some of the concern and frustration that the board has and trying to understand process that we've been brought into as long term planners that that seems to be undergoing significant forward movement without some of the information that we feel is very important to the reviewed and analyzed people that decision is made. That's all I do believe that Catherine, I guess that from the board then we just want to make sure that we're kept aware and kept in the loop of the process by which this planning is going forward. And that can be, we talked about supplemental information before that you can just send out to the board in between meetings to get familiar with or to ask questions on, to keep us advised at the public part of the process of this and the scope of the, the scope of this feasibility study as Winta pointed out.
That's, that's really important as well. So I think that those three things we're good. We will move on from this. And I would like to suggest that it's just a couple minutes before two o'clock that we take a 10 minute brief break. Let folks get off away from their desk for 10 minutes and we will come back and we will take up items S four, which is the Mattoo Cade Border recommendations summary. And once we get finished with that, we're gonna be moving into our operating budget calendar year 2024, recommendations, options, recommendations and action by the board. So with that, we'll see you back here at 10 after two. Is that enough time?
Okay. Yep. Thank you. It looks like we may be back. I think I'll just give it just another minute to make sure we get everyone back. Okay. I think we'll come back into, we start the meeting after our little 10 minute break. And I am wondering if we want to just brief, I don't know if it's gonna be briefly, but once we've talked about the recommendation to summary on the Matt Muca, then I'll go back to Captain fy. He has a list of updates, system updates for the board and we will do that after the mat memory. So I don't know if that's a, I think that's list either Katherine or Captain FY want to take the mat newstep quarter recommendation summary.
Okay. So what I, what I want to try to do is, is think something that's really complex and try to try to simplify it so we all really understand where we were and where we are now. And recent correspondence with the Coast Guard, first of all the Matt News, who's a solar ship, which means we need a solars designation to run into Prince Real. That means the ship's got higher standards for a lot of things, although those standards of solely narrowing between a solar ship and let's say a non-solar ship as far as the, you know, as far as those requirements. Now going back many years, and I don't know exactly how many, but when, when the ship did its midlife upgrade, conversion, midlife, you know, upgrade the dead end corridors were, were, were missed. Okay? And that's a, that's a solace requirement. They were missed, they were missed by the Coast Guard and us and, and I missed for a long time. And when we got into the repower in the Portland shipyard, that was a, that was a major job then over 40 million, a lot of disruption to the ship, a lot of changes to the ship. You can get drawn into what's called major conversion determinations. Meaning the Coast Guard will come to us and say, Hey, you're making a lot of changes. And because of that we got rules that says you gotta bring this ship up to present day standards.
We tried to get a waiver on that, went all the way to headquarters in dc we failed cause we were in the Portland shipyard for quite some time when a lot of this stuff really got, got, got finalized at the, at the request of the Coast Guard, we did what was called a gap analysis. And what that is, is you, you, you bring a contractor in to look very closely at where is the ship now with all these things that are required against all the things that are required for solis. And then you come up with a, a list of things. And so, so we had that and the Coast Guard had that and we were getting into, I don't know, somewhere around close to a year in that shipyard when the determination came that okay, you know, to to, you know, to, to satisfy us.
You've, you've got to at least for now do something to correct the dead end corridors. And that's when all the lights, bes whistles and alarms stuff came in and, and integrating that into the system. And we knew that was gonna be months and months with supply chain and you know, integrating and installing. And we were quite concerned about that cuz the ship had already been on a surface for a long time. So what we did was in in essence negotiate with the Coast Guard and say, you know, listen, we know we've got all these other upgrades to do to meet, you know, to meet the major conversion determination. Some of the stuff was, was done during the repower, but, but not everything. And we know we gotta correct the debt end corridors. And we, we started negotiating with them and thus, you know, we came to the conclusion of, you know, we'll we'll get this done by December, 2024. Or, or, or we can't say as a so vessel, you know, after that the 2020, the 2027 date that was set by us. That was nothing more than a benchmark to use to start discussing and negotiating terms to this situation and things that would satisfy the Coast Guard. And I, I I I think there's a lot of concern that that boat becomes a pumpkin in 2027 and if we do the things that we had agreed to, it will not, we know that.
So, so that said, you know, we know Paul spent a lot of time and I know he did, you know, coming up with some alternative solutions, spent less time in the yard, less money, you know, I understand that. I mean I understand what, you know, he, he, he came up with Paul did go to the Coast Guard in, in, I think in June o at the sector. I think we know that. And after that meeting, the coast guard sector in June o requested a meeting with us. They, they called the meeting with us and in essence told us that to satisfy what they need to have satisfied, we need to stick with the original plan, which is not only the correction of that and cords, but fixing a whole lot of other stuff. Everything from structural fire protection to all the remaining a class bulkheads.
They've gotta be upgraded from a 30 to a 60 and other things. And it's all things we know about that are already incorporated in our improved plan, except something called a safety center. And you know, we have been aware that that's been kicking around out there and we were told you must do that also and you must have US plans by September 1st, 2023 for us to approve and we will do that. So, so in essence, the Coast Guard basically has posed the book on this and said, you, you gotta do it the way we agreed to. And there's a lot of other things besides dead end corridors that have to be fixed and that's what you need to do. And they, they did put that in a letter to us on November 28th, which I think Catherine got to you, which is, is is pretty straightforward. And I, and I think what's important, because I know that 2024 date is important is, you know, the last, the last sentence or the last paragraph where they, where where they write these decisions, these decisions, these were decisions that we made with them were influenced by the likely possibility of a longer than planned life for the matanuska.
If funding for a replacement vessel cannot be found as expected. Now we all want a replacement vessel for Matt Nuka, we do, but there's, it's gonna take time and this buys us whatever time we're gonna need. Hopefully it's not a lot of time, but, but, but it, it ends the concern about 2027. You know, they don't, they don't put that date in there because that was never, it was an arbitrary date that we just used with the Coast Guard to see how well we think it'll last the 2027. So then let's talk about what we need to do. But they made it very clear in that last sentence, you do, you have to do all this stuff and the keep running and I, I think it's pretty clear what the decision is at this point because the Coast Guard has made it. So that's kinda the long and short of it.
Yeah, I'm just one, the way I read this and and understand it too is that basically the boat is done come December 5th, 2024 unless these criteria is met and that is not going to go away. If the, we decided at the last minute we want to drop the, the SOS portion to even run nationally, not under the SOS flag, then we'd be needing to do a whole nother gap analysis. And
Now Kevin, Keith, Kevin Hood, I don't, I don't believe so I I I think if we are willing to drop the SOS designation, we get out from under this because you know, the, the, the, the, the structural fire protection, the Class A, all that stuff is sous regulations, not non sous regulations. So the way we understand it, we go non sos, we just keep running without any problem.
Well the way it was explained to me is that you would need another gap analysis to see how the bat nuca comes into effect with the CFRs, much like they're looking at for building the testing now, cuz the test's not gonna be, so it would be the same thing. So to run past 2024, you would need another gap analysis to decide what needs to be done for the boat to run domestically
Right. Which I understand. I just wanna, I just wanna put it out there, that thing that I'm reading and being behind this for the last, you know, 2, 3, 4 years is this December 5th, 2024, you know, with maybe a little bit of play on each side, depending on where our COI expires towards the end of 24. Is is kind of the, the, the drop dead date for the Matt Isco to move forward.
That's the way I was explained to me also, Paul, is that that this, this agreement was done before the major conversion started. So the cabin deck is considered under the umbrella of the major conversion back before we entered the Portland cip. So this is not a new major, it's, it's all in one of the same, and this list that we just got this new letter from the Coast Guard is basically the marching hoarders from them saying this is what you guys and, and what we have agreed to do to keep this vote running. So to move forward with that would be to require to resubmit, to msc, resubmit to, you'd have to submit a whole nother package for a whole nother plan. And there's no guarantee that they would accept that with a plan already in place, if that makes sense.
Well, well Paul, it's not just Prince Ruper, it's do you wanna run the Mad Nuca in 2025? That's the question because this arena has already been agreed to by all parties. So it you are correct, we could start asking questions again, it could come up with alternate plans, but it would open, it would open everything completely back up. Everything would have to go back to msc, everything would have to go into sector Juno. A whole new plan would have to be drafted on. What you're gonna do, and I believe Captain Fvi is correct, is why are they gonna spend time and money and their time making another decision when they already have a agreed upon path? And if you're gonna, if you're gonna change that and try to remove the, the SOS portion and just say, hey, okay the mat is not gonna go to Rupert anymore. It doesn't relieve the obligations of of portion of this letter where structural fire protection, which is the, the, the structural fire protection is, is just as, as important and as big of the cost as as it was in that cabinet remodel of this structural fire protection. So it's one thing that that's why they were just gonna gut it to upgrade the boundaries they need to have to match cfr that's now cfr. It's not just sos the same, the same thing that Thes is gonna need to have
This may be a dumb question so I'll do it anyway. What the heck, you know, the run from Prince Ruper to catch a can is like a hundred miles. So it's, you know, it's a day trip obviously and half a day trip, et cetera. And I'm wondering if a lot is oriented towards the cabins, I believe dead end court or whatever, if we just, you know, if we just say we close off a ship that the cabin, this other area that's has all these issues with the fire protection and, and and dead end quarters whatever, and it just basically we, we close that off. We don't only use that space. I mean we got a 60 year old vessel we're dealing with and putting 37 million into it and we gotta take it outta service for 10 months, what have you. I think if the real challenge is to getting vehicles and people from Prince Ruper to catch can and then from there, I mean we continue on because now we're, but we're not gonna have cabins available.
We can put 'em other vessels, et cetera. I'm just wondering if that's even entertained or some other way of getting the vehicles for the marine highway system maybe charter another vessel to fulfill that requirement to get either pared for that matter I guess to some extent. And then I don't know, that wouldn't work. You still gotta get people there. But in any case, I just wanted another option here cuz ultimately we don't want to keep this vessel running forever. It, we've got a 60 year old vessel that in itself, you know, you drive around with 60 year old car, it's not the safest car I drive around, that'd be my 63 Volkswagen I think would be the equivalent of that one. Probably nearly as safe as my new Toyota. So I can understand why we would probably want capital, I recapitalize get some new vessels that when they get 60 years old, but maybe we just got this problem of supply chain and planning and organization. We just can't spit out a new vessel this quickly. And so maybe we have a bridging strategy that kind of circumvent some of these extraordinary costs and long time yard period. Just get, get 'em up to ke a can. But you don't need cabins to get the ketchup can as far as,
Technology that they're requiring the, the new test to be built with. So, so what I'm trying to get across is if the Matt Isca is gonna run in 2025, they're down to having no choice but to complete the remodel or portions of this remodel. Whether it continues being so or not continuing being sos With that being said, the only vessel, other vessel you could possibly take into Prince Rupert is the KE cot and the Kennecott doesn't pull traffic outta Rupert. Most of the service ve and stuff that are using the Kennecott to go up north travel of rifles and guns and they can't bring 'em through Canada. So that's why the, the, the Belling the Kennecott is so effective out of Bellingham to take people straight up to Whittier.
Thank you. You know, again, we, we've talked about this so many times that this is really the poster child for the reason to have a vessel maintenance replacement and, you know, refurbished, not refurbishment, but you know, stretching the life of the ship out because we're kind of stuck the Matt pays much of a bigger role than just him, prince Rupert and she's, she can be a real money maker from Bellingham and goes all the way up to Skagway and we just don't even know if we can crew Columbia. She's, she's old too and tired. So as, as much as it's, you know, nobody wants to spend the money that much money and take that much time for a project like this, the alternative is to is to be down a mainliner and we just can't do that.
Well the alternative too, Shirley, not to interrupt you, but I just want to reiterate on this point, the alternative is to spend more money and more time. Okay, so the Manus goes on a ticking clock, which I bring up. We would have to start another gap analysis now. So you'd have to spend the money for that to get somebody up, to get 'em to evaluate it, to turn that over to the Coast Guard, to have the Coast Guard look at it and to see what they feel the ship's efficiencies are for operating into 20, you know, 25 and beyond. So that's really where you open up. Well right now we have a clear path of what needs to be done. If, if you're gonna go back to square one and open this up again, no matter how it's gonna be, then there, there, there is that possibility that, that there's more things out there that could come into light and even more, sorry to interrupt.
No, that's okay. I, and I would agree with you and then I would, I would say for, if y'all haven't had a chance to read, there's a, a memo that Captain Fbe sent on November 12th to Rob and to Catherine regarding the decision for AM hop. It's, it's a short memo on that, that paragraph lays out exactly exactly what everyone's been talking about. The fact that there have been, they looked at pros, cons, had multiple conversations, consultants, ams, engineering staff taking into account concerns, recommendations from AM hop along with amhs concerns of approaching the Coast Guard for a third time. Forget another change for formally approved when you lead through that, you know, and that's what we had asked for. We were looking for, you know, this is, it is a long it's complex issue. It's been percolating for a long time and it's just gotten worse. So what was the process by which this, this final decision was made to move ahead with, with the complete passenger deck replacement And that is to make sure, you know, to give her the best chance of, of operating beyond 2027. Cause we don't know that we're gonna have a new main liner to replace her in 2027. You know, we just, we just don't.
So we asked for the process that was followed to come to this decision and we, we've got that process here. Does anybody have further questions on the process? Because the di the di is cast, I believe the di is cast and, and then, you know, just need to, we need to follow through at this point. That's just my personal opinion. Monta.
Thanks Shirley. You know, again, with these aging vessels, I mean, you know, it's, it's, it's, it's like a lot of things that with these big capital costs and, you know, big impacts on, on operating capacity with or without some of these investments. But you know, the thing with the matanuska that I just keep coming back to is it's still a very old ship that's lived beyond its usable life. And you know, we're we're talking about one aspect of the ship. I mean, what what was the last rate of, of steel wastage when, when the ship was in the yard? What, when was the ship last repowered, what is the likelihood of those kinds of major maintenance projects coming up within the next few years? The only reason we can have this conversation is that we don't bear the cost of capital for the most of the project. So, so that's, I I get that, you know, we're between the rock, proverbial rock and a hard spot here in terms of maintaining mainline capacity because we've, you know, gotten to this point without having the vessel replacements. But it does seem to me to be an unconscionable use of capital for very little rate of return on the vessel in terms of usable life. Thank you Captain. He
Isca just received new engines mechanically in that part. She's flying. Every year we replace more and more steel and with a proper preventative maintenance program, I do not see an issue getting another 10 to 15 years out of that boat. I'm hoping we will not need it that long because it is going to continue to take a good chunk of change to maintain that little boat. One of the reasons I've been so passionate about this is we kind of have our hands tied behind our back. We've sold Thena, we've sold the Taku, you've got the Kenco and us. That's the only so boats you have left. So it, it greatly hampers the system itself for our short long term plan. We are greatly hammered by what vessels can go where, how and and do so at the best cost. It's way, way cheaper to run. The mad news gun is Columbia, it's a million and a half a quarter if I did my map right.
It's, and the kennecott is, is the kennecott's gonna need some help here in the next few years with all her backlog of maintenance? The the point when, when you're taking this with the argument of looking at building new equipment, it becomes a such an urgency when you're looking at it at this end because most people don't run boats this long. You know, we agree that these shifts should have been replaced earlier, they haven't been. So what we're left with is, is the task and that's, I I know it's a high price tag, but there's really, I, I guess the only way to do that would be to see if we would, if they would let us lease a boat, could we lease a boat from somewhere for five years, a ferry boat that they would let us run that would, that would, you know, fit into the system. What else is out there? There's that would the better op options to look at than to curtail doing the work in itself because you know that we're just, we'd have to drop print, sorry,
I don't forget who said I think we're kind of in a rock in a hard spot. I think we just gotta go forth with the having the work done, unfortunately. It's just, you know, we got in that situation, I think we can just grind our milk for so long. It's just, we gotta deal with and hopefully that we'll be able to get some with this infrastructure grants and whatever that these federal government's hand out, which is approaches close to a billion dollars that we'll be able to start the process of getting some newer vessels online. But in interim, I think we just have to go this path cuz we really don't have too many other ways around it at this point. And I guess at the end of the day too, we, we talk about safety as a high priority. We probably shouldn't be pushing against the safety issues.
We should be embracing the safety issues. So in which case we just gotta go forth and, and then move on to other projects and more strategic. This is something that we're kind of inherited. That's not a strategic thing. It's just a thing that has to be done at the moment. And, and so now we gotta look back at, well what are we gonna do in the future to make sure we don't keep on getting these interesting or predicaments that we get it caught. So that's my kind of 2 cents I think, I think we've explored every different potential option that seems to make, you know, that seems viable or even worth entertaining. It looks like we're kind of, we need that as a valuable leg. It's, it's a lovely ship. I love the lines on it and so, but I think we'll probably have her for a couple more years and just, you know, live with it and make the best of the situation and make sure we're starting planning for replacements now. Not waiting until That's all I got.
Well I'm, I'm just listening and try to digest it all of that and I get, I can't see a way around it at this point in time based upon trying to make sure we continue the service until we can get the new ships on and it's just something we have to bite into and do. Are we going to make a motion to do that today or are we just discussing it?
You know, I, this, this is the current plan that A D O T NHS are following and we had asked for just process information on how they came to that to pick the option that was chosen. So, you know, if somebody wanted to create wording for resolution, a for to specific project supporting it in the reasoning they could do that. Or it might just be part of, we'll probably, you know, we'll need to do some sort of a, a first year report for the governor and the legislature of the work of the AHA and this would be one of those elements of that why, why this project came forward, how, what the challenges and the risks and the issues were and what the board looked at. But I I it's up to you. Do you wanna do a resolution for something that's gonna go on regardless? I I guess I'm just not sure.
Yeah, again, I just feel like there's no good choices and you know, I don't, I I still don't feel like we've seen the analysis of what does it look like if we drop Rupert's service. Everything I've heard in the past is, is fighting to keep Rupert's service and you know, the, i I just, it just, it again, it just feels like an unconscionable use of of capital for an investment that's not going to have a very long life or increase anything significantly for the system. So I remain skeptical that it's a good decision. Thanks
Okay, well thank you for putting together the memo Captain savi and for taking the concerns and the questions of the board members and staff as seriously as you did. And you know, the question of Prince Rupert, that is a much larger question for another, another day or another year when we start, you know, in the long range plan looking for routes. But until then I just, you know, just reminder, just what Captain Hellier has said several times and Captain f we've got to have that vessel move in past 2025 and it's not just for Prince Rupert, it is critically important for the Bellingham and the Southeast one too, cuz we may not be able to crew to Columbia. That's why she's tied up now.
Other thing I was gonna add that probably is a good motivation that we, the lesson learned from this is that we'll take limits and lemonade that realize we get a lot of old vessels in our plate and we should be wait till the end sells box in a corner and, and it's really highlights importance to start looking at recapitalizing or upgrading our plate, which is pretty old in many cases. We got, this is not the only old vessel, we don't think 'em at old, but they're getting pretty old at this point. Even the Ken got, it's hard to believe it's old. I remember it's a brand new vessel, but it's getting old. So in any case, I think this get motivates us to think about recapitalizing and, and there are some funding available do that. So we should be pursuing that. That's all.
Thank you. I and, and Rob, I think I just looked at the step, the amendment was finalized and came out just a couple days and I pulled it up and I did seed funding for design for a replacement main liner and it could be either for the Columbia or the mat. Can you give us just a, a brief update on the timing of that?
Yes, soon. I was just talking about that with Catherine yesterday and we're getting ready to head into the session and we were, you know, given it's, it's, even though the fiscal year just started, you know, we got that, that legislative authority last session, 30 million, which I don't think we need that much for design, but we also have it in step and, you know, getting into, I don't want to jump ahead of Greg Jennings, but they've been on a shipyard tour at which he can talk about in great detail. But I think one of the things that might intrigue these shipyards also is the, the promise of a main liner also coming down the pipe. So getting that RFP out and getting activity on that design is, is of high importance for us right now. So we're, we're motivated to do that and I I would think we'll have something out. Unfortunately the holidays are coming up, so I'm not sure if they have it before or after, but it's, it's definitely something we want to get done soon. So yeah, obviously that that,
Okay, thank you. That's, that's helpful and helpful. So, okay, if no one has anything else, I would suggest that we go ahead and move down to the general manager's report from Captain FY and I know Greg Jennings is, is on here as well too. And I would turn it over to you, captain Fy.
Okay maam. Yeah, thanks. I also had sent, you know, a written report and what I try to do is keep it like really high level as a, as you know, you've worked with me in the office, you know how I can get into the weeds and I could write pages, but I tried to keep it high level so you know, we've got that, I'll touch on a few of those more important items too. But you know, we're in overhauls now, the Aurora, she's up at Seward, she's on time on budget. She'll be out of there on December 15th. We're not seeing any troubles there. The Matt News's in her overhaul now, so we're about halfway through there. Kennecott is coming in January 13th and she'll go until May 11th and Latoya's been done. TuiNa and come in next January 4th for LA and TuiNa January 6th. We are of course deputy commission Carpenter mentioned gonna run the tassle.
I think it's from January 12th to February 26th. Those are the dates that we kinda locked in on as far as being able to get crew onto the boats. Considering we're onto the boat, considering we're so very, very shorthanded. You know, I, I know we talked a lot about outsourcing what considering potentially looking at an outsource for Kodiak, port Lions and Oinky potentially maybe a little bit while the sine is gone. We're not when we're not sure, but we might look at that. The Hubbard Hook cabins, it's, it's basically done, but I just granted another no cost extension until January 13th. They are still vigor, still having trouble getting H V A C electronic parts. It's, it's a problem. They hope to be able to deliver the boat to us by January 13th, but I was cautioned it could, still, could still slide a little bit with the H V A C, the Columbia CCP project.
You know, as we've discussed at a few of the meetings, that's a sole source situation. We do have, you know, a sole source with Vigor Industries. We are still awaiting a, a quote from vigor regarding price, you know, for their end of it and terms. ORT is in the middle of this because they're providing, you know, you know, all the gear, you know, all the CCP system gear, it's all being manufactured in this country. So we work around the Biomark legally and Vigor is still negotiating with Mozilla, you know, as far as terms liability, things like that. So they've asked for an extension until December 7th next week. So hopefully by next week I'll, I'll hear something as far as that goes. We know that once we have a deal in place and a contract in place, probably about seven to eight months to get the equipment and probably seven or eight months to install it.
So we're losing ground as we speak, but technically the vote could run, you know, in the summer of 24, technically speaking. But, but we'll see. You know, a lot of this is gonna depend upon timing with the Columbia CCP and, you know, moving ahead on the Mattus cadet and corridors, you know, both of those boats out at the same time. The, the Columbia's technically ready to run. She's, she's ready to go. If we can, we can get a crew to run it. The ship is mechanically ready to go. I could run that boat in a few days, so we gotta look closely at that. The Kennecott a year from this past October does need to go in and get two new, two new generators. We have agreed to A C O B C with a D E C on emissions. We actually just completely finalized that degree.
It's a very complex agreement and that's a done deal now. And we've got timelines that we've locked into and agreed to. The chip needs two new boilers and it needs a lot of pain. So we're gonna do all that under the, under the, under the federal project. I had mentioned also in, in my report, our, our, our staffing levels on the engineering on shoreside engineering side, it's, it's, it's, it's not good. Okay. And you know, we have PCNs for 10 professional engineers and right now we've got three plus the manager. So we've got, we've got four and we're missing six engineers. And, and the bottom line is we just can't, with the qualifications we need for these, you know, port engineers and physical construction managers, port engineers handle the state side of things and the, the physical construction managers handle the federal projects. We just can't offer the kind of money that these, you know, type folks in the lower 48 are, are, are making.
So we are now looking at subcontracted help, Catherine's gonna help us with that, try to contract some subcontracted help because we, we can't run the entire marine engineering department forever with just three people and a manager. It, it's just too much. So we're, we, we know we got some challenges there and Catherine's gonna help us with some contract and try to get some contracted help in summer schedule. Is is in essence ready to go. Okay, we've got, we've got it drafted out draft, we've got the spiders soon. I, I'm gonna need to meet with our commissioner and Rob and Catherine to do a final review on it and then we'll get it out there for public review. We are going to go back to the public teleconference methods where people can call in a couple reasons. We, we really do think that's better than just taking written comments cuz we could dialogue with the public, but we also have a very robust Title six program that's associated with the Federal Highways money we get and a lot more requirements with the I A J money.
There's been a lot more things attached to that getting down into pedal six type stuff and probably other stuff. So we've got some more things that we need to do to satisfy Title six. My office manages the pedal six program. So anyways, we're gonna, you know, one of the things that we, you know, we need to do is go back to the public teleconference, which I, I really think is better. Even if only 10 people call in, you know, at least we're actually talking to the public and dialoguing and we got Carrie and myself there to explain things and it's just better. So hopefully within, I'm gonna just say hopefully within two weeks we'll have something out there, but we wanna be sure we're all in agreement with it and we'll, and we'll get those draft schedules out and we'll put 'em out there for a couple weeks of comment, make adjustments as we always do if we can and then get 'em out there. So yeah, those are kind of the high points if there's any questions.
Thanks. Just a real quick question for that summer schedule and I, and I know the operating budget numbers that we're looking for, the options are running nine ships or running eight ships and avoiding gaps, but we're still having such a hard time accruing the vessels. You know, I would just be really concerned that we don't overpromise on a summer schedule and underperform. Yeah, and and I'm not sure, I'm not sure what the best way is.
Yeah, yeah, you're right Shirley. And, and we gotta be careful. We, we are, we are hiring new hires, but we are hiring 'em, but, but we're losing 'em on the, on the, on the backside with tending to, you know, lose skilled unlicensed. We have, we have lost some officers. We know that there's a list of senior officers that are in the training program for the cruise pilots, you know, you know, for the cruise ships, we know that and we know who they are, you know, and when they go, because they probably will go, that remains to be seen. So that's, that's always a, that's always an unknown challenge. You know, we are expanding the role of the, of, of the head hearted company that we have in Anchorage. We are gonna get them more involved. We think we may be, you know, losing some of the unlicensed because because of the system we have set up, we can't get back to them quick enough.
The head owners have advised us that when you get somebody on the hook, you gotta grab 'em quick and we may and we may be, you know, five, 10 days is not quick enough, you know, so their contract expires December 31st. They're gonna spend the entire day with me and my staff on December 14th and we're gonna come up with a new, with a new protocol and embed that into their contract after December 31st. They're gonna have a bigger role. They're gonna get out on the road more for us, you know, in job fairs. I'm gonna start getting staff moving around more on the road to job fairs. We, we are aggressively attacking this, but it's, it's, it's a, it's a tough job market out there in the, in in the marine business, you know, especially for, you know, the skilled and license the Oilers, the junior engineers, the abs and things like that. That's where the real problem is. So we're not given up, you know, to say we, but we gotta be careful not to, not to over promise at the same time. Yeah, yeah,
No, no, no. This would just be from Kodiak to the, to the two out to the two out ports and it might be potentially something I could carry a few vehicles and, and, and, and, and some passengers. You know, and I know I i I didn't weigh in on the outsourcing. I mean we're just trying to cover the gaps, you know, the outsourcing history that I had provided was for 10 years, you know, in the past years and years in the past we tended to do this when we had a known need, you know, where we actually knew we had a need, you know, but we also need to know that, you know, as we've been doing this outsourcing, we just, we haven't been doing it blindly. We've been talking to the communities. Catherine spent a lot of time talking to the communities. We really felt that, you know, on the runs that we had set up, there was a need.
Yeah, you gotta you gotta be careful the weather with the smaller boats and that's, yeah, that's, that, that's true. But we are trying to close those gaps as best we can and provide 'em where we know we have an own need, you know, and, and Ed Page made some good points too. Maybe there's, you know, other platforms that might be better for gap closing, you know, with this, you know, you know, with the smaller boats, I, but I mean it's, our, our, our intent is it's a good intent to try to cover those gaps, but we're just not throwing things out there and saying, oh geez, you know, but we we're talking to the communities before we set up a contract and set up, you know, a schedule, you know, so anyways.
Sure, thanks. And for Oin and Port Lys and Cynthia might know more about this, you know, are, are there numbers that, you know, what are the numbers of ridership in January and February from Kodiak to those areas? And do they have, I know in the summertime that there are commercial, private commercial carriers run groceries back and forth and folks, do they not, do they not provide service on the winner?
Okay, thank you. I, I guess the question just, just simply being, you know, sometimes maybe outsourcing is not completely necessary needed. It can be extremely expensive and it, you know, it can definitely, you know, the vessels that are available to do that kind of work in that area, they do not have the same ability to provide the safety standards that the Marine Ferry does. So I I, I would hope that y'all would look at that very carefully before making a decision to do something like that. Other questions for, for items on his update? Did, do we have an update on the demeanor, the TRV and the RFP for that?
Madame Chair, Gregory Jennings here, I think I can provide an update on that. First off, I just wanna apologize everybody, my voice is a little rough from a couple of days talking to people. We have had some movement, positive movement on the demeanor replacement vessel project. Biggest thing of note is that the solicitation for the propulsion system integrator has closed. We received bids and went through performance evaluation committee on that and we're able to select a contractor for that and pretty much a unanimous decision of all the reviewers. Siemens Energy was selected and we are released the intent to negotiate with Siemens Energy. We've been able to speak to them down here at Work Boat where we've been meeting with shipyards and they're very excited to get a board and that documentation and negotiation process will be kicking off and earnest here as soon as their team gets back to their home offices and they can get the paperwork over to us.
Everybody's really excited to get a board and I get working on it and I think it's gonna be a good process. We've already had some conversations about, you know, Siemens is a full-fledged company that can provide not only propulsion, but a lot of other solutions. And that's what we were looking for was as innovations, you're gonna be a member of this team and yeah, they're gonna provide a propulsion package, but what else can they bring to the table to enhance value and service of this new modern ferry state of Alaska? The, the vehicle elevator turntable system RFP is being solicited right now or is that for advertisement? We've had positive conversations with a minimum of two companies very interested in this work. It's right up their alley. Very complex mechanical, one off custom systems, it's their bread and butter. They're both doing work for the military and for private customers.
So they are very well versed in this and we have been fielding questions, very good questions on process and financial e development from them and we were working through those comments. Now, one of the challenges with this is the type of vendors that are interested in this, just this type of prime government contracting with a state organization is new to them. So there's a learning curve for them to develop these proposals. So we have extended that one through Friday next week just so we can answer all their questions, make sure they're all moving in the right direction. We can get really legitimate proposals beyond that. We've been talking to shipyards all week. We started on Monday in Dakota Creek in Anacor is Washington. Met with their team, viewed their facilities, really talked about the project approach and their capabilities and what we're looking for in this vessel and in this teaming arrangement we've gone on to, talked to, I'm gonna list them here to Thomas Cuma, Louisiana, Conrad down in the area here, Bollinger, who's also local eastern over in Panama City, Florida.
And we've had meetings with Nichols Brothers who's up in the Pacific Northwest and then St. Cary Bay ship who is up in the Great Lakes. We've had the same conversation, pretty much all of them about how this process is working, what we've done to the RFP since last time it was on the street, what we're looking for them to provide in this proposal, you know, really drilling into the type of qualifications we're looking for, the fact that it's not cost based, that it is really a qualification selection. And we've got received a really overwhelmingly positive support and impressions after having the time to sit down, shake hands, and talk through their questions one on one. So this, this trip has been extremely educational for them and for us. We're taking 'em back. A lot of lessons learned and we're gonna take some time and do another draft of the rfp, make sure we've got everything, all the lessons learned from these industry partners, pushed in there and looking to get that out on the street and, you know, January pretty much and, and get that out to them.
We've also discussed with them and, and accelerated or or quicker turnaround time than they're used to, mainly because this is just qualifications. They don't have to put together a full cost estimate, which is where the time really lies. Usually. We are doing two more yard visits. We're going to go out to, sorry Conrad on Monday and then Eastern over in Panama City, Florida on Tuesday. And we have the pleasure of attending Thomas C'S Yard today, early this morning and walking the Arctic Fjord, which is a 330 foot factory trawler. And it is an amazingly complex vessel built by a small, talented group of people at Thomas e. And honestly, that ship puts the complexity of ours to shame and it's good to see that the Gulf Coast builders have the capability to do that kind of complex work on a pretty aggressive schedule and to compensate for huge challenges like hurricanes and stuff.
I mean the vessel's not being delivered on time, but the customer is happy with the timeframe, given the challenges they've had to face with covid and hurricanes and been very happy with that. So that it's been a very, very successful trip. A lot of lessons learned and a lot of positive movement on the design side. Things are still continuing with Glo. We, we've made some good headway. We're working with the Coast Guard right now on an evacuation plan analysis, which is tweaking interior arrangements a little bit, really honing things in and we're working on putting together a full fledged package of design documents of the current state of the design and specifications for the shipyard rfp, just making sure every, all the drawings are at their latest state, they're reviewed prior to being, going out, making sure they're all consistent. That's where a lot of their work lies, along with working with ABS and Coast Guard on compliance issues for the elevator and for our propulsion system and, you know, concepts, if there's any questions about status, I, I'm perfectly happy to speak to whatever interests them more. Okay,
So RFP timeline with, with the holiday coming and, and for us having a need to go through this one more time with the lessons learned from this. We are currently planning for January. We were talking to the shipyards and saying between four to eight weeks. We wanted another shorter side of that. We also realize that if we drop this on, you know, December 21st, those weeks until after January 1st or that time period is pretty much wasted for everybody. So we'd rather take some extra time to use that holiday period to identify improvements to the rfp, really make sure there's no inconsistencies in it and we wanna be able to release a copy of the, the GCs for construction with it. So I just want to go through those one more time with the rest of the team to make sure we're comfortable with release on all of that. So I would say early January and we will continue to provide updates on that, but the yards are excited to see it and they're excited to propose.
Thanks manager, Greg Catherine, you guys have great, what you guys have done this road tour. I know it's probably been pretty strenuous and repetitive talking to seeing story over and over, but really thank you guys for taking that on. It's gonna pay dividends hand over for sure. I really appreciate that. So on the RFP closure, when you expect that, that's how long after it goes out for the shipyard?
Yeah, so talking to the shipyards, we we're, most of them were receptive to a six to eight week advertising period. I, after talking to them I would propose a six and then if absolutely needed maybe a two week extension or one week extension of fit timelines. But again, they, they now understand this is just a qualification. So it's basically a proposal of their capabilities and past projects. It's a much simpler proposal for them to put together than originally imagined. So I do believe in accelerated timelines is appropriate. We will definitely review that and make sure it's in line with the needs of the RP before we release those Sir.
Yes, that is still the case. Talking to the yard, we're still advertising or, or or requesting a 2027 enter into service date. You know, and we've expressed that for the, the department of transportation early 2027 is preferred and that strategies for enhancing schedule and and expediting schedule will be one of our major talking points during the pre-construction phase is to utilize their experience and the flexibility of CMGC to enhance that schedule and that timeframe reality that comes down to about a 36 to 40 month build schedule nominally so, and most of them for the most part believe that was definitely doable. You know, there's geographic limitations with a few of the yards with transit times and things like that, but all of those are issues we can work through the the preconstruction process.
I would like to quickly say that, you know, the decision to bring along their chief contract in northern region really enhanced the level of conversation here. Having Barbie along to talk about the nitty gritty of cmgc cuz she's been through the process, I think resonated really well with the shipyards and she was able to speak to their experiences with past contractors. So the team we put together for this trip really kind of nailed all the right points and has made it very successful.
Yeah, that sounds like that trip was worth its weight and goals but that's what you have to do. So sounds like you put together a really good team. Anybody else will ask, go around for questions for Captain FY or the or Mr. Jennings on the supplemental items, the review before we move on, Cynthia,
That, sorry, I thought I was muted. It's not quite how the process works. So we will go out for a qualifications bid and select a shipyard. So it's not a down select to a select few, it's, it's a selection of one shipyard to work with during the pre-construction process. And then we will negotiate solely with that yard on a guaranteed maximum price. And if we come to a successful negotiation, then move straight into cons a construction contract, the only time another shipyard would enter the fray was if we were unable to reach a guaranteed maximum price with the selected yard. And that is, we believe very unlikely because cost is a part of this conversation from day one of getting them aboard. So the really the goal of the whole entire preconstruction process is to solve the problems of cost and schedule so that by the time we get to negotiations we're pretty agreed on the cost and we are really dealing a hundred percent with just cost. We're talking labor hours, materials and processes because we are already during the RFP process going to understand their fee component. So that would be their overhead or and profit is already selected and that's already a known quantity. So we're only talking about construction cost.
Thank you. Right. Okay, thank you. If we have no more, looks like there more questions, good updates. Thank you. Look, Favi and Greg much appreciated the board. Do you wanna take a quick five minute break or do you wanna keep motor? We have one last item and that is operating budget. Okay. Science keep going. Operating budget for calendar year 24, which changes things a little bit. Options and recommendations and I believe Matt was going to leave that off.
Madam Chair, I'm Matt today. Matt's flying at the moment, he's returning from vacation so he wasn't able but he, he did provide us all with a pretty good summary, which I hope you all had a chance to read on the budget options kind of before us. And I don't know how much detail we want to get into other than to discuss each one of the options again, excuse me, them being ranking from the most amount of ships we have of nine operational scenario, that scenario A down to a six ship operating scenario. I think there's pros and cons to a few of them. Most notably I I I my, well Scott, would you like to walk through each one real quick? Madam chair, would that be good?
Yeah, so basically as I was saying here, if you scroll down to the, the bottom of first page we have option A, which is all my vessels operating. This would basically provide a dedicated southeast main liner, which basically, you know, you have a matuski that's feeding into Rupert and then Kennecott, I'm sorry not Kennecott, Columbia and Kennecott both run throughout southeast and up up north. Proco. The challenge with this one I think is I outlined here is that we have, we would have one extra vessel running kind of on top of each other. Cause as someone alluded to earlier, the ACS are sort of intended at this point to kind of replace a couple two 30 fives. I'm not sure that's still a long term plan or not, but I, I envision scenario where ACF is dedicated to North Lincoln now and then 1 2 35 runs the villages and then you'd have a 2 35 and or ACF up in Prince William sound.
But there would be an extra vessel that potentially would be running on routes where there's not any demand which leads into option B. And that would be, that extra vessel would be in sort of a, a layup status, keep ready status, you go to option B there on the next page. And that would provide, I prefer that version where you have that, we always seem to need that extra vessel and that gives us the max. You don't have any gaps in service and you do have that, that support if it's needed. Dropping down to options C, this would be Columbia not operating it's, we'd have matanuska and Kenco running as the two main liners in the other vessels.
Excuse me. This would leave some gaps in princeling sound and Homo Kodiak during those vessel overhauls. And then the last one would be option D, which is the i the six vessel option, which of course leaves the most gaps in service. But the problem with there's not a problem, not with options C necessarily. Our intent I think has been to run Columbia if we can. I, I guess a lot of this plays into, I was asking questions earlier today and a few other times is, you know, as far as overhauls or not overhauls, CIPS that we have in the future is, which one of these scenarios is, is more likely to even be a reality in the regard of, you know, we have plans for a Columbia CPP project look controllable pitch propeller project. We also have the ous etic orders project, we have the Kennecott generator project is how the timing of all those and maybe probably can maybe speak to that real quick is how the timing of all those plays into which one of these budget budget scenarios is even the most likely. But at the same time I could argue with myself that we're gonna be looking for as many supplemental service options as possible to backfill some of these things. So with that I'll kind of stop talking. There are a lot of numbers there we can talk about if you'd like as well. I, I guess I would kind of, well I'll, I'll defer. I'm just gonna stop for a bit and let let some discussion happen and then we can keep going. Thank you.
Right, that's a good question. Right now we're in, we haven't executed, we've got design started on Palina three quarters. We haven't executed a construction contract yet. We're, we're kind of in a state of, we wanna see how the hub turns out and how, how it performs before we fully go forth on a, on a decision go forward decision on Talina. So I'm not sure how to address that. She might be totally operational or she might be in under construction as well. That definitely plays into things and, and yeah, I'll stop there.
Okay, so that option, option b I mean basically making sure that, asking for the funding that if we can crew all these vessels that they can operate without having option A, a vessel just kind of running around, not really picking up many passengers because there was someone already someone on that route. So I, anyway, all you had your hand up.
Adam Jar, I, you know, that's tough. Of course we're talking entire calendar year away before this will even be in effect. So we're hopeful of course, that we're, we're still aggressively pursuing all the hiring we can and to, to budget, you know, I think we have to budget or hope, hope for the plan for that we have full crew and then adjust as necessary when we get there.
Yeah, proving is definitely, you know, that's the one thing we don't know your way and, but the way that I'm, I'm looking at this is to asking for the operating funds because if you can crew these vessels it provides, provides the service that, that the communities at our visitors are looking for. I guess board, should we just keep moving? Do you wanna go down into numbers? Look at numbers. Why, why don't we do that? We'll just move down Rob to option A start with a and just looking at
Sure, not a problem. So this this page, this is a summary page. It kind of, it's probably the best thing to look at. Yeah, it shows the last prior five fiscal years of actuals and then it throws off to the, the right side, the current year, calendar year budget and then the four options. And basically at the top it, it summarizes the operating costs into vessel operations shore side and then, you know, some miscellaneous allocated administrative costs throughout the rest of the agency. Excuse me. And then it breaks down our, the funding scenario that would fund that, that particular budget. And then below that at the very bottom it shows the operating statistics that that would be provided under each scenario. So for example, option A is 168 million of total cost, the funding source breakout. Now these are just, this is a proposal Matt through in assuming the current nofo notice of funding opportunity guidance we got from it the FTA for this last welfare fairy grant program.
Right. Which we suspect will change. So this is, I I would prefer the board stay away necessarily from a, a specific funding source breakout and more of just a generalized conceptual how they would, what they would support. I know you Madam Jerry, you mentioned before, you know that there was druthers of having the majority of the rural fairy program going towards capital for example. And then we focused as much state money on operations. I don't know if that's the feeling of the board. I know there's, that's just been conversation that's had, well anyway, they moving down to the bottom, you get into like under option A, you have 370 weeks of service, 6,004 calls, et cetera. You can see the difference between A and B, the weeks of service, but not as they owner where the percentage change is there but not as, as much of a difference in port calls. And this all assumes that $3 price per gallon, which is a wild card at this point, but does seem to be declining. And then of course option B is a one 59 million option CS one 40 and down to 1 34. Any, any questions on any of that?
You know, and that, you know, we, we've talked about performance measures et cetera before and that's when, you know, I thought that was a really good number, a good number to, to go back to. I, I just, you know, option A, I mean I just, I just, that would just be everything having to work out perfect and we'd still have the vessel just driving around costing us money to operate but not generating any revenue. So, you know, when I look at option B, C and D to me are what we might come down to. If you can't crew, we might end up with a C Ory. I hope not. I hope not, but, but it's certainly possible and option B I think is really justifiable in terms of going to the legislature. Just, just my 2 cents whatever.
Well of course OMB and the governor are working on their budget package for release here in like 12 days or 14 days. And we've been working with OMB of course on our budget request. And now I don't know the direction that will come from that overall package. They have to weigh, you know, the governor's office at OMB has to weigh all the needs of the state. So we, you know, ideally from an ideal situation, option B would provide the most service that we would certainly want to, to provide. But again, we have to, you know, balance throughout the rest of the state's needs as well. So of course I can't tell you what will be released on December 14th or 15th or not, but I dunno if that answers your question or
I I have a question, Rob. I'm just curious, when we look at the system funding under generated revenues, and this probably is more of a map question unfortunately, but option A 56 mil and change and option B 51, almost 52, but we're providing very close to the same amount of service, a few less weeks. I I I just thought the revenue would be a little closer.
Yeah just curious, just curious. Yeah, I, it would be very difficult for me as a board member to justify anyone on, on the legislature in the public who asked why I picked option A, knowing that we're having all these issues and problems with vessels and extended overhauls and not being able to run the routes and and crewing issues. Option B is something that I feel I would just definitely be able to justify in terms of service revenue and cost. Realizing even then that I think Keith Kellard kind of alluded to this, we might end up with the C or i D regardless just because accruing, but at least we will have asked for the full funding. And I think, I think that's important. I think that's important. Oh, I'm sorry Cat and page your hand.
I, I, that's my, my feelings too. I think B is the best option, you know A is too far and of course as accruing issues like Hillary said, we may not even be able to pull off a B, but I think B makes sense for pencil out number operating weeks, et cetera. The funny thing just, just seconding those, that thought process. I agree with everything you said there. That's all
Yeah, I just concur with everybody in this discussion and when I initially reviewed these options was leaning towards option B I think it would serve the, the public best and with the understanding if we can't staff it, we're gonna have to look at option C and possibly D, but we can shoot for for B I think that would be ideal.
Yeah, I think just one other perspective I wanted to offer up to the board, not about the difference between the scenarios, but when we lack the staffing to run a certain route, we are trying to still provide service through supplemental contracts using vendors such as Allen Marine and Gold Belt and like Phillips. So just, I just wanted to mention that because if we choose a service that's just based on the availability of our vessels, that may be $1 amount, but if we want to continue to offer some sort of supplemental service, if we don't have the vessels, then that might, you know, be a different dollar amount. So I just wanted to throw that out there as it is a factor right now as we're short-staffed or vessels have extended overhaul periods, we're still, there is still a cost to that supplemental service which is, you know, not insignificant.
I am a yes with the qualification that this is conceptual obviously and that this is I think an operationally the best budget. But again, I defer to course my administrative leaders in that I understand they have to balance the budget across all state agencies and I would support anything that is needed in that regard as well. So thank you.
Okay. Motion passes. Be unanimously. Catherine had put together a short letter that would be a formal letter from the board that was going to be just open to be able to be edited to whichever, whichever option that that you picked. And we were pretty sure it was going to be able or probably be so we can put up some of that language or Catherine, do you wanna edit that letter later and then send it out to the board so everyone can see it before?
Yeah, I have a question about our budget. Is I prudent based on the number of in person meetings we have to do we wanna say like once a quarter we're gonna meet in person or you know, twice a year. Do we need to put something in this about the budget itself I guess for the, for the board to keep our functions going as well?
I don't believe so. Captain Hillier this, this would be specifically simply just for the operations of, of the system itself. We can take a look at the budget that's in place for board operations and see where we are with that. But correct me if I'm wrong, I don't, I don't know Robert Catherine, but I don't believe our budget. Maybe I'm wrong. It's in d o t's budget. Correct. The but it wouldn't be in the operating budget of Amhs?
Well I was just wondering if we should make a budgetary recommendation for the board based on how many in person meetings we have. We know what about what it costs to fly people around and where we have the meetings and what's needed that if we should tackle our needs as well. This to keep functioning.
I see. I, you know, I think that's something that we could best look at at our next meeting and just make some decisions as a board looking at your calendars. Cause we've got that amount, we've, we've got a specific amount attached to the board that's, and it's kind of up to us how, how fair amount of that gets spent based on how much we travel. But I, but I don't believe it belongs in, in this formal letter to the governor.
Thank you. I need, I agree with what that this says. Get want up front, get into that other stuff. As far as what Keith is saying, I believe that we are part of boards and commissions and I'm not sure that our budget is, all of our money is sitting in Amhs. That'd be a good question for next week.
We will find that out. I mean we're listed under boards and commissions, but our funding does have to come from a specific department, so we'll, we'll have that. Okay, well I think we, well I know that that was our last item item before the board and we've wrapped that up with a, a formal decision on an option for the draft budget. And once we get this, the letter completely finished, Catherine and cleaned up and I'll sign it on behalf of the board, would you please send out a copy to all board members? Alright, shall we, before we go into final closing comments by board, can we check and see if there's anybody on who would like to make public comment?
In that case, before we go for closing remarks by the board members, just go briefly, I wanna review what I think we're looking at for our next meeting. For next meeting agenda items, which was kind of reviewing service levels, the service and post court calls based on past service levels and community responses. See where we've been in the past and, and where we're falling here, where we think we should be. The succession training plan for critical positions throughout the system, how that process and that training is going to work. And then a third item, which is the am ho budget and schedule for the next calendar year 2023. Is there anything that I've missed? Okay, hearing then we can go around, around the square and for just for final comments. So I'm just gonna start on the left corner and go with Mr. Osterman.
Yeah, thank you. My only comments would be thanks to the staff for everything that we had. Appreciate having it front so I have time to digest it over time. And then thank you Madam Chair for having these four hour meetings. I think we accomplished a little bit more given the time to have the discussions that we need to have in reference to coming up with decisions and understanding some of the issues better than burping through something for 15, 20 minutes every couple weeks and not really get there. Thank you, Ture.
I went A to p I don't know how it happen. Okay. Anyway. No, I, I want, I think the board package was very helpful because being able to read that ahead of time and not be caught flatfoot in some of the discussion. I had some opinions already at that, so I appreciate the, the work done there and I think a lot of issues recover a lot of good discussion today and wouldn't feel compressed. So that was good. So yeah, thanks to everybody's effort and chairman for Handl this things. So that's it.
My teammate? No, I wing man, same thing. I appreciate the getting the packets up as they were, they were easy for even me to understand and this worked out well. I enjoyed coming down here. One of the stuff with the captain page here, we got, we could have an informal meeting between us here. It helped out quite a bit. It's the bloody Mary that kept him around. Well that's true. Thank you.
Oh thanks man. Jar, I echo everybody's sentiments. Staff put a lot of work into this one. We're, we're gonna try to do that again for the next one too, so it was lot smoother. A lot of production today. Appreciate that from everybody and yeah, you know, we, we do take everybody's input seriously, so please keep it coming and we will keep on working forward together. Thank you.
Thanks Shirley. Yeah, I appreciate the meeting again, I wanna say thanks to Paul and Ed for their comments and work on the Matt Nuka topic and for the discussion today with the legislative discussion starting on January 17th. I am and I believe our next meeting is, is it the fourth? I haven't looked at the calendar.
Yeah. Okay. So I'm just wondering as a agenda item, what kind of communication we want to have with the legislature and the administration prior to the start of the legislative session and would be, I think it would be helpful to spend a good deal of the agenda on putting that together. And other than that, I look forward to continuing discussion on, on the planning process. Thank you.
Yes, was very nice to have all the materials this time and have a chance to, to sit down and read them. That was much better. It'd be, I would hope by the next meeting on some idea of where the governor's gonna take his budget in presenting to the legislature where he wants to go. And the other question I had is the federal fund side. When are we gonna, is there any information about the strings that come with that? How, how it can be spent, what can be used for yet? Do we have any idea of how we can start to plan with that in the next year?
I think that's everyone for the board. My only comments, again, it was good, good information that you have into to be able to work, work through some issues, put put some issues to, to rest and realize that, that, you know, they've then over a decade in the making these, these problems. And you know, I I'm really glad that we have a role in the next year to really try and work with A D O T to make sure that there is a long range plan in place that avoids things of like the Matt Muca in the future. And I, and I think that we're definitely gonna go down that path. I'd like to thank Sam for being on board and pretending to be Tara for just a little bit. Thank you Tara, for, for your healthcare. Catal has always thank you for, for your insight and, and your experience. It it really makes a difference. And Joanne, we didn't hear from you today. We didn't talk to you. That's why I should have just called on you. But glad to have you on board. Glad to see that you're hanging in there and there you are. And I'm not sure who's on the line with just the number, but
Okay. I would like to thank you all and then we will add a legislative report from Am ho to the January 6th meeting. So start thinking of items that y'all feel are importance that we need to touch base on and we'll try and keep it as short and simple as possible for them because they're gonna be up to their ears and alligators from day one. So Catherine, do you have anything?
No, I don't think so. Thanks everybody. And we'll plan on having to pack it out on the 27th. I think that was the, about the same amount of time as we did this last time, so right after the Christmas. So everyone has happy holidays wherever you end up. And you know, I would appreciate just some follow up on our agenda items and I think this can be done through email, but if we have materials that we wanna have prepared for the board to review, these are a little bit amorphous and it would be helpful just to talk through what could be a good way to look at this information.
I just realized nor, and I had the same problem. I had a hard time logging in today too. That's for user name and password, which stumped me. And then I went back out and then tried again and, and that's what happened to Norm. That's what he couldn't get in. So, so I was late, but I dunno if there's any little, did we do something wrong there, have the wrong link or something like that. But we both have the same issue where normally hit the launch button, it gets me in this time after you user name, password, and I logged out, try it again, it got me in. So anyway, if anyone how's, I'll set that problem, have any ideas, let us know. Otherwise we'll
Well we are live. Trust me, I've been bitten my alligators many, many times. We all have. Okay. All right. Well thank you all very much for all of your work. Thanks Now, thanks to the team for all your hard work. Thanks for the board members. Really appreciate it. And I hope everyone has a really safe and joyful Christmas. All right, likewise. See you. Take care everyone. Next we're gonna see.
Sure. To provide service when, you know, during the gap months when our ships are in overhaul and, and we're just, I guess we're trying things out. It is, you know, we tried 'em out for a while. Like I said, we got this history showing that not a lot of people write it, they're not comfortable with it, that they often want to bring their cars, but you know, again, the pressure doesn't stop. And so we keep trying to, I, I guess we're trying to see what works and what doesn't. And I think we've been successful on some of the southeast con contract service with, you know, when the weather cooperates and, and the, the bigger cats can run it. It can be successful and has been successful, but you're right, there's times it doesn't and it's not safe. And I think Catherine speak more to that and, and I know Fab can, if you wanted to go through the historical document, he could walk through that, but thank you.
Thanks Mr. Catherine. Yeah, thanks. I think those are all like really excellent points and I, I just wanna say we are really grateful for our partners there with the vendors that were successful in that rfp, which is Kimberly and Phillips because, you know, they worked with us pretty last minute to try to fill this gap and in a new way so that we can accommodate the needs of the schools in the area. And so certainly they would come the same conclusion that given the weather that they had experienced, they, they didn't wanna continue. So we did end up just canceling that agreement for now and then look forward to working together at, at a later time. So we were just trying to be responsive because of the gaps and because the communities are really asking us to find solutions and we don't have other vessels. You know, the RFP process is our way or through an itb a way to figure out what is available and when there aren't other, you know, we're kind of limited to who applies. And so we just continue to do outreach and that hopefully there's others, especially in the winter months that are interested in, in submitting. But the, these, I just wanna mention that these vendors did a standup job and were, were really working to come up with some solutions here. They ran into unfortunate conditions and, and reacted appropriately and safely. So I Thank you.
Yeah, thank you. We've had several of these discussions, piecemeals and trying to come up with some of these thoughts to put together as we get out of this short term cycle here and get the budget done and start concentrating a little bit on the long term prior to the department getting into building a long term plan, it would seem to me that these are the kind of conversations we need to put before ourselves so we can make our own recommendations. And, and they go all the way down to what is the service level that we wanna provide. And we haven't had that conversation in any depth. We can't come to a, an agreement on what type of ferry we gonna run and everything else unless we know what kind of service we're gonna provide. And so this, this is all should be part of our pre-planning before we get into the long term operational plan.
Thanks Ellen. Yeah. You know, I agree this, this is long range plan elements. Absolutely. And, and it comes in terms of what we talked about in our meeting in Anchorage, looking at routes, what routes need to continue to be in the system and maybe some routes do not, but another thing to remember is economies that scale when you have vessels like an ACF or a 2 35 that's crude and moving for two weeks anyway, they can do the larger the communities and they also stop on the smaller communities. Takes away the need for that, for those new smaller vessels just to be used seasonally primarily. So, and it all comes back again to planning and business plan and what mounts and what vessels. So, you know, in a more long term discussion, when does this work and when does it not? You know, I we're not, we're definitely not there yet. But you have to look at the ridership as well. The ridership in the winter and many of these communities in zero to a handful. It it is what it's, so having said that, captain Miller has his hand up.
Yes. I think this goes back a little bit into the realm of essential service. What is the, the bare minimum the state wants to operate? We have to project for all kinds of weathers all different times of year. We're looking at this, this year round service. So what is essential to maintain in, in the winter months and or, or year round? What is the essential level of service for year round and what do we need to add on as tourists and routes start to prosper? So this is something that I'm, you know, bringing up a lot, is that we need to have a baseline to model all our numbers and long term and short term planning office, in my opinion. Thank you.
And, and I guess the last thing I would just remind, you know, the whole purpose, not the whole purpose, but a primary purpose or goal of our, the new fleet, upgraded vessels and new vessels, sort to close those gaps. So, you know, in, in the short term for short term needs for communities that really need the supplemental service, if there's a provider who can provide that cycling. So that's fine, but in the longer term, you know, looking down the road, this is what we're trying to avoid, we don't wanna have to do in the future. So, so that's just keep this information with you, keep it in your, in your book with long term planning goals, et cetera. Something that we definitely come back and revisit. And I did get a message from Sam saying that they do have the audio link fixed now for members of the public. So if we'd like to just wrap up this discussion, go to public comment and then we'll go back and I'll ask Rob Bar, would you like to start Rob, with the cascade point summary or should we go to the math Muca?
Okay. Thank you Madam Chair. I will get going on the public comment. So the person who phone number ends with five five twenty, you should be able to speak in just a moment. You had your hand raised and if anyone else would like to speak, please raise your hand and we'll get to you next.
Okay. My name's Tom Henderson. I'm in, I've been using the Marine Highway since whole 1963 or so and many, many times down over the years. And I want to touch on something I tried to bring up four years ago with Captain FY and one member of the previous advisory board. And that is some of the rates on the deck of the fairies, motorcycle rates.
I looked up the rates today from Haynes to Bellingham for my pickup, which is 19 foot vehicle. The rate is between 1231 and 1293 depending on what day of the week ago that that breaks down to 65 to $68 per linear foot of deck space for my motorcycle, which is seven feet long. The rate is 1,111 to 1161, which breaks down to 159 to $166 per linear foot. Now I'm wondering why the Marine Highway discourages use of the small vehicles by it's, that's more than a double the price. That's about two and a half times the price per linear foot.
I've avoided using the ferry quite a few times in the past, leaving a bike in Hayes and then flying to Haynes to get it, leaving it here all winter long. Last time I tried to thought or thought about putting a bike on the ferry was to bring it up from Bellingham and I found it was quite a bit cheaper, the tune of about $500 cheaper to ship it on aml, take a cab down the SeaTac and fly home. So it, it seems like there's some little odd rates there for bikes and I'd like to see those addressed. I know that it discourages a lot of bikers from using the Marine Highway. I've talked to bikers who said it's just too expensive, we're not gonna do that. You probably are not aware that Alaska is one of the very top long distance biker destinations in the us There's a lot of bikes on the highway.
I rode down from Wasilla last August, about 30% of the traffic was bikes on on the one particular day I was on the highway. I see a lot of bikes coming into Haynes. I don't know how many or if any of 'em get on the ferry. I think up the Segway that little hop between Hayes and Segway is pretty popular. But you know, bikers are independent travelers and I'm sure you know what independent travelers are compared to the, you know, all the t-shirt buyers getting off the, the cruise ships, they leave a lot of money behind. So I think we're missing out not only the Marine highway, but the communities are missing out by these very high prices for bikes. And I'm hoping there's something you could do about it. Thank you.
I, madam chair, we did adjust the rates and I'm trying to go through email files now to see just how much we did reduce them. And I don't have that at the tip of my finger. A lot of this has to do with how we, you know, can actually park those bikes safely, right. You know, in a, in a, in what we consider a cardiac space. But this past may, I believe we adjusted those REITs down and I'm just trying to, you know, like I say, I'm trying to get to exactly how much through to my iPhone here, but a lot of it has to do, well, it has to do with how we can safely, safely park those bikes in the space they actually take doing so. But we did adjust the rates down, you know,
So in other words, if, you know, we, we've got card space and we've got linear feet laid out for, for cars, RVs, et cetera. And if you take a regular car's about 20 foot and, and you block that space at and you put a seven foot motorcycle in there, you now you've lost the space for a 20 foot vehicle. So the question was in the past was, is there a better way to load more than one motorcycle in one vehicle space to keep them, you know, safe and from being knocked over and then charging accordingly?
Yeah. And, and that's, that's the exact situation that we try to wrestle with, you know, with the ships crews and the boats are loading the boats and, you know, try to keep the bikes safe at the same time, not tumbling over onto another bike and damaging the bikes. So you, we can continue to look at it. Madam chair.
Sorry, manager. Yeah, I was gonna say we had a, we got a great letter from a, a constituent last spring laying out a great argument for why motorcycles should be less expensive than vehicles. And, you know, we took it, we, we make some good points. We had counterpoints of course, that, you know, they need to be lashed down and we can't, you know, necessarily load them perpendicular to cars even though that would take up less space. It's just, you know, there's various reasons of securing them and making sure they're safe. But, you know, it was hard not to take, you know, what he was saying, the argument. And we, I I believe we reduced him at least 25% if not more the rates. So, and that was effect effective all last summer. But I mean, you're right though, you should be able to still those things everywhere, but it really comes down to safely stone them and so they don't fall over, get damaged, et cetera, et cetera. But yeah, thanks for calling in Toms.
Thank you. Okay, well it's good to know that it's still, it's still being looked at and I don't know if it's a matter of taking a couple of spaces up, up forward and just blocking them off for just motorcycles and making some changes to that, to the structure so that they can be lashed down or, or secured to the deck and, and it would be a finite number of spaces for motorcycles then, but at least it would be there then the cost could be back to that 50% maybe. So
Yes. Hey, I was, I requested this, I had one more comment, which I forgot to add. I've ridden fairies, you know, Bellingham fairies or Washington fairies, Canadian fairies, Mexican fairies, Italian fairies, and they all kind of have it figured out, you know, they kind of put all the bikes together and I realize they've gotta be strapped down. That's what everybody does and there's ways to do it. And I have talked with the deck crews and they, they will say there's no reason that they need to take a full width of deck space. There are ways to strap 'em down. So I think talking to the deck crew, there are probably ways to do it, which could greatly reduce the deck space of one individual bike. You may not see it sitting there, but I think if you get on the deck and talk to the deck crew, there are, there are things that can be done and it's still, even though they've been reduced, it's still basically the same price from our bike as a 19 foot vehicle, you know, a hundred dollars difference. That's kinda hard to get around. Thank you. And thanks for your time.
Well, the, the, the terminal was, was put up my understanding it was, it was, it was put up in 2006 and seven and it was, it was still new in 2007 and I rode past it on a rowing trip in 2012 and it was abandoned and, and it was built with federal money. And the, the concern as of 2015 was the state might have to pay it back. A fellow named Jeremy Woodrow spoke to that to, to k2. And the reason why, and this is a quote, he said, there could be a potential to have to pay back those federal funds if we don't actually use the terminal for ferry service. And so Cascade point is 25 miles, or 20 what? 20 something almost about the same distance as Midco, south Midco terminal is from Petersburg. And the reason that it didn't fly was because nobody used it.
No. It just, it, it was just too far to go. And so what we're looking at in Juno is, is having to go, like if, if you rent a hotel room in Juno, they'll send a van out to a bay to pick you up, for example. And nobody's gonna do an 80 mile round trip all the way out to Cascade Point. But the OV terminal used all the same verbiage when they were, when they were selling the idea that, that it's being used at Cascade point where, for example, the, the American Society of Civil Engineers said the primary drivers for the new terminal were to reduce system cost, improve service, and develop greater connectivity to in the service area. And none of that happened, and it's just out there with very expensive project that, that did not work. So I think it would behoove us to, to take a, a real close look at that terminal and, and why that didn't work and and Cascade point it just for so many people who travel to have to go all the way from, from Cascade point into town. And especially if somebody is sick and has to go to the hospital, for example, then, and a bunch of people are coming from town or from some smaller community into town, then they have to do that extra 50 mile round trip from where they would've had to go coming out of a bay. And so that's, that's my take on it and I would appreciate it if you guys would look into that.
Yeah, great, thanks Madam Chair, first of all, apologies to everyone. I'm putting my video on and off when I'm sneezing allergies or something going on, so I'm trying to spare you all from having to watch that. So the information provided to the board and that's posted online for the public, I just wanna mention that it, it isn't new information. This is some information that's been shared with the board before. And then also a comment that was provided when the Cascade Point lease payment project was in the step and we had a common response that was provided to the public. So with that, just in in general, I can provide an update on this project. And you know, one thing to put some context to the situation is that d o t statewide is looking strategically at how we're investing state and federal funds. And I think the commissioner has come on onto the line to talk a little bit about that, where we're focusing on safety and then state of good repair, economic vitality, sustainability and resiliency.
And so all of the projects that are being put into the step and in our capital budget are within a, a framework of those strategic investment areas. So with Cascade Point, you know, this was a project that has stemmed back to 2020 to the reshaping working groups recommendations to D O T that we look at this project because they felt that this was a way for D O T to reduce some of the operating costs and potentially increased revenue. So from that point, D O T had been investigating it, although there has not been there and there is not funding committed yet to this project. So as we've moved forward with evaluating this project, there has been some time and effort from staff looking at the possible scenarios for the public benefits from this project and also the operational cost savings. And so some of these numbers are, are presented here in the materials that were shared.
And so this item that's in the SIP right now is for these payments because we're working on an agreement right now with Gold Belt to just map out how this could look. We don't have an MOU in place yet, although that is the next step for us. And then at that point, the next steps will be to just pursue some preliminary design. At this point, it's unsure what the capital cost of this project would be. And so that'll be the first point for us is to just do this feasibility analysis. And then from there we expect that it'll take about 14 months and then there'll be some environmental that'll happen from there. So if the project moves forward and all parties are agreeable that this isn't the best interest of the state and Gold Belt is interested in pursuing this as well, that's when the next steps of the project will unfold.
So at this point I see a number of hands up and you know, I'm happy to answer any questions that I can and if we wanna go into further details about some of these project concepts, you know, I'd welcome a couple people from DOD that we put this as an agenda item, we can get more presentations from Gold Belt and Kirk Miller who's working pretty de on detailed design and could speak to it. And so he's our marine engineer that's very familiar with the pluses and minuses about this particular site and what it's gonna take from a development perspective. And so with that, I'll, I'll, I'll stop. Thank you. Okay, Juan, would you like to go first? Thanks Shirley. I'm just trying to get the sequencing of all of this. So
Yeah, just, just the sec, I'm just interested in the sequencing. It's, it seems very forward thinking of the state to anticipate least funding for this project when it's still in the feasibility stage. But you know, I understand that that's, you know, perhaps necessary if you do have a decision on it. But it does seem, at least in terms of the competition for step funding, particularly for other projects within the Marine highway system and the state transportation, state transportation system as a whole, it, it does seem, you know, somewhat premature in having that in the step and in advance of a feasibility study and a decision and capital funding for a project. The step is amended regularly. So, you know, once that decision sequence has been executed, the opportunity to amend the step with lease funding for this project would certainly be available. So it does seem, seem premature at this point to try and do, even if it's for future funding to do a carve out for that lease. Thank you
Oh, good, thank you ma'am. I just was gonna to, to win's point, she, she made valid ones in that regard of it's, we can't amend the, I think at the time, you know, as we all know, the Skip's a planning document. It's not a commitment of funding necessarily. It's, it's our, our intent that we're hoping to pursue obviously with our federal federal aid partners. And, you know, as, as Catherine said, this is definitely something we are still navigating this, you know, this public private partnership that we're working with the old belt. But, but I, you know, it's, it's been a, it's been a priority of administration. I think there's, we're all, but it's, it's not for sure. As, as Kathryn said, we're still evaluating, but you're right, maybe, maybe we could have waited a little longer in the stiff, but it's not, there's no harm to file. We haven't committed any money to it yet other than, you know, it's, it's more of a, it was to get awareness, I would say, in the stiff to get that public comment to start coming in. And, and when we put those stiff amendments out, that opens that window for people to kind of like ring the alarm. We're thinking about this, everyone please, please provide that input. So thank you.
Yeah, yeah, thanks Dan. Chair. Yeah, so Captain Hillard, the cost estimate right now is very high rough order of magnitude. That's partially what this first phase will get us to. The past estimates for the build out of the terminal are, are roughly around 36 million. And so one thing that's different with this project is that it is a public private partnership that we're focusing on. And that's partly why, you know, we wanted to put it in the step because if this did prove to be a viable project and it made sense for all parties that, that the state is committed and that that could help provide assurance to private investors willing to put money on the capital construction of this terminal dot wouldn't be constructing the terminal. This would be something that Gold Belt would construct. But we do want the ability to use this terminal, it could be a viable solution for Amhs and provide that operational cost savings. And the best way to do that would be through lease payments. And so part of this strategy would be front loading the lease payments for what would be a 20 year period. So that's why there is, it's structured the way it is. And as, as far as access, I mean this is on gold belt land,
Correct. Yeah. So we're estimating that the 36 million or, or the 10 million a year and we're spreading it over four years, some of those costs will need to be until we have an agreement in face with Gold Belt. And until we get further along in this feasibility, it'll be hard to come up with more concrete numbers the way that costs are escalating right now. There's just a lot of uncertainties at the time that the, this was put into the, this was an accurate assess to the, of our engineers.
Madam Chair, if it's okay, I can answer that as well, please. Yeah, so we had a quite a large team of staff that went down to spend a couple days in PET can with staff captains, engineers. We had a large number of people looking at this and we, it was a pretty great work session and we ran numbers and scenarios in all sorts of ways and it was determined that especially given the, the time savings round trip for terminal at Cascade point, that it, it made a lot of economic sense, believe it or not. And it sounds hard to believe, but we do have the, the modeling and, and we continue to refine it as we get updated assumptions and we'll have to continue to do so. But that, that's how we came up with the, some of the assumptions that are listed in the document provided. It was just a very collaborative effort.
Yes. I guess for me to understand this a little better, what SHIP would be dedicated to this service for the North Lynn Canal and how would that be coordinated if there is a ship, what ship is it? And then how would that be coordinated with the development of the, the i the whole project?
Yeah, thank you Paul. So the modeling that was done as we just ran some numbers was the, like using a vessel in acf, like ta and then we looked at it with and without crew quarters, with and without an MSD board and, and looked at how much stored we may need to have at Cascade point if we didn't have a waste management system on board. So there's, there's quite a few variables that, that go into it that still need further evaluation. And so that was a vessel that we were looking at. And I think ultimately as we go forward with a long range plan, you know, we have in a potential and we know both pains and sc we are interested in a shuttle that goes back and forth and at least on, on some or majority of the days, you could have a talina that doesn't do the full route, but that goes back and forth and can do a greater number of trips to help with some of the traffic that that is there and is and, and could use the service if it was offered frequently and consistently. So I, I think, I hope that answers your questions.
I think, you know, in, in looking at the, the overview and, and the, the benefits and the things that were decided, one of the first things that really strikes me is that the reworking, a reshaping group didn't spend a lot of time on this issue. If, if any it, it, it appeared in the end document to the governor. But in talking to members of that, that's not something that was highly discussed, number one. And number two that the reshaping group said that if you build this cascade point terminal, then there's no need to put in crew quarters on the TA or the Hubbard, which is not, obviously not a good idea because it keeps them from flexible vessels that can go other places and they can only do one route. So, so using that as an assumption when we know that the Tassle and the Hubbard are getting three quarters doesn't make sense to me.
The, you know, reducing, looking at the, you know, the costs, looking at revenue, increasing revenue, I, I'd just be very curious to know, you know, what assumptions were used that more people are somehow gonna get into Segway and Hayes, you know, the Alaska Airlines bringing in more flights or you know, more cruise passengers. Have we won in the past on that route? I mean a war laconte have run that route for years. The the mat runs that she comes all the way through. And I'm just really curious about the modeling use to say that if you're just running faster trips, more people are gonna, you know, build it and they will come type thing, which we already know didn't work in South mint cost. And then the third, under the assumptions, user benefits talks about reduced outta pocket costs. Well there might be a 25% decrease in their ticket to get on the ferry, but now they've gotta find somebody who's willing to drive a car 80 miles round trip or a taxi or a bus service to come pick them up.
So, you know, to me that's, that's kind of a wash, say that one element of their travel may cost a little less, but now they have this new element that that's gotta make this trip. So, you know, there, there's just a lot to this that, that is very unclear and very murky and it would be really helpful to, you know, as this, if it continues to move forward to be able to look at the modeling that was done, I assume by, by Matt McLaren and, and the, and Carrie Strout as the scheduler. I mean nobody knows more about who rides the ferrys and how many of them they do. And also, you know, the captains of the Aurora particularly. So I'll stop there. I just have a lot more questions than answers on this. So Ed Captain page has been very patient, they've gotta stand up. I'll go to Page, then I'll go to Deputy Commissioner Carpenter, then to Captain Hill.
Okay. I wasn't sure my hand was showing up or not. Anyway, thank you. First of all being goes there, I still had to do another search and rescue case. So I got rescued Norm and brought him over here, a simple technology, got his car, drove over here and put, placed me in front my computer so I get one saved there on that one. Maybe they'll get a medal for that or something on. Of course I raised some of this issue with the cascade point. I can honestly say I've reached out a lot of people asking and the thoughts of this and I haven't heard any positive reaction. And, and so I think there are a lot of questions to be answered before we go too much for that. I think a lot of the focus here, unfortunately I believe it would probably benefit the Alaska Marine Highway system.
I think that's pretty clear. But at the cost of the, of the traveler. So I look at the fee for me right now to go to up the skagway would be $64. So if I say 25% one fourth of that, it'd be 15, $16. But I have to drive 16 miles, say $15 basically. Cause I have to drive up the ferry terminal and park my car and drive back down again. I finish my trip and, and so I just, the inconveniences, I think you transfer the burden onto the, the customers who are inconvenienced by going that much further. And so I think that hasn't probably weighed into the, the computation, it's just weighed in what's the benefit of marine highway system and not that disadvantage cost occur by the travelers. And generally if you do any research, you'll find out the most efficient way of transporting vehicles and people in cargo is clearly vessels.
And that the least, you know, one of the least effective ways, the most, the most costly effect, costly way is of course an aircraft. But the next it has is a ground transportation, vehicles, the trucks, whatever. So real, the more efficient way is the ferry. So I just think that probably need a lot more analysis. I don't see any positive side on it right now from the people I've talked to and, and probably need some more work. And I'm gonna drop the mic because my partner here now has something to say too. Go, Hey, good afternoon. Yeah, I have a, a comment, I, because of my background in DPS public safety, I'm curious on will Gold built be providing security out at the terminal? If not then public safety will have to be considering doing some more people on board to provide security out there.
It'd be a prime area for thefts and vandalism, I can assure you that. And I can see abandoned cars coming up, traffic accidents, probably some drunk drivers. What? So even regardless whether Gold Belt takes the terminal security area itself, either Juno Police Department or the Department of Public Safety or have have some troopers out, there's one thing nice about Marine Highways, we don't have to put patrol cars out here along the icy straits and run radar on the ferry going by cuz they always obey the speed limit and they're never drunk. So that's good. Anyway, that's all I got. Thank you
Okay. Yeah, I was just gonna mention like as, as the, regarding the model, be happy to share that we actually have shared that with the board before, so there's nothing secretive about that model. And if we wanna spend some time going through that and looking at the assumptions, I think that would be a great working session, especially now as we have longer meetings to, to get into it a little bit further. I I think that could be a, a great exercise. And then, and then yeah, secondly a lot of the public benefit, say Captain Page's comments, it's really not only in cost but the time savings that that two hours is a pretty significant reduction in travel time. And so there are a lot of ways that have been discussed about getting passengers safely from Cascade point into town over that 30 miles. And I think just because, yeah, so there, so there are things that, that can be discussed if this project moves forward. And I just wanna state again that the phase that we're at right now is in data collection. So we really need to just understand even what the cost of this terminal are gonna be, if it's a viable project or not. And that's the focus where we're at right now is not, not in making strong decisions, but in just getting more information and that's what this feasibility
Thank you Madam Chair. And just addressing a couple of points as far as the mely exclusivity of the Talina crew quarters versus not. I think actually they work well together that you have crew quarters on Talina, let's say, if that was the vessel and that, you know, the intent is seasonal operations outta Cascade point, given the, the, we've seen in the last few days the horrible weather that can blow up in Lin Canal. But is that she would run seasonally during the high peak demand time of the summer and then rest of the year it could be redirected to run like villages throughout the system, however, and then provide that redundancy. We know when we to have vessels that can do, you know, Swiss army knife kind of work and I, I respect everyone's opinion on, and they're all, they're all pretty good points on what we're talking about here.
But you gotta kind of think outside the box a little bit too, I think in that, you know, conceptually, if you think about a very system on a road system that the, you know, you're supposed to drive as far as you can and then you get on, you take the ferry, which is supposed to be an extension of the road to the next road. I mean, you know, we keep talking about passengers and all these, you know, how are they gonna get out there? But the majority of our passengers, if we will, are driving cars. And that's what the marine highway system is supposed to be is is extension of our highway system. So if we, instead of running the ferry alongside the road, we push the ferry terminal out to the end of the road and then we drive and then we jump to the next point.
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