Legislature(1995 - 1996)
03/14/1996 01:40 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT SENATE/HOUSE TRANSPORTATION STANDING COMMITTEES
March 14, 1996
1:40 p.m.
SENATE MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Robin Taylor, Vice Chair
Senator Lyda Green
SENATE MEMBERS ABSENT
Senator Georgianna Lincoln
Senator Albert Adams
HOUSE MEMBERS PRESENT
Representative Gary Davis, Chairman
MEMBERS ABSENT
Representative Beverly Masek, Vice Chair
Representative Jeannette James
Representative Tom Brice
Representative Jerry Sanders
Representative Bill Williams
Representative Don Long
OTHER HOUSE MEMBERS PRESENT
Representative Kim Elton
COMMITTEE CALENDAR
OVERVIEW OF SEVERAL FERRY PROPOSALS: LYNN CANAL FERRY PROJECT -
GOLDBELT, INC. PRINCE OF WALES ISL. FERRY PROJECT - CITY OF CRAIG
AK MARINE HIGHWAY SYSTEM - GARY HAYDEN, DIR.
WITNESS REGISTER
BOB MARTIN, Chairman
Board of Directors
Goldbelt, Incorporated
9097 Glacier Highway, Suite 200
Juneau, Alaska 99801
Telephone: (907) 790-4990
POSITION STATEMENT: Overview of Lynn Canal Ferry Project
JOE BEEDLE, President, Chief Executive Officer
Goldbelt, Incorporated
Board of Directors
9097 Glacier Highway, Suite 200
Juneau, Alaska 99801
Telephone: (907) 790-4990
POSITION STATEMENT: Overview of Lynn Canal Ferry Project
IAN BINER, Development Manager
Holyman Limited
181 Miller Street, Level 13, Oracle Plaza
North Sydney, N.S.W. 2060
Australia
Telephone: 61 2 719 1130
POSITION STATEMENT: Overview of Lynn Canal Ferry Project
TOM BRIGGS, City Administrator
City of Craig
P.O. Box 725
Craig, Alaska 99921
Telephone: (907) 826-3275
POSITION STATEMENT: Overview of Prince of Wales Ferry Project
KENT MILLER, Businessman
City of Craig
P.O. Box 6276
Ketchikan, Alaska 99901
Telephone: (907) 225-3992
POSITION STATEMENT: Overview of Prince of Wales Ferry Project
JOHN PEARSON, Community Development Specialist
Metlakatla Indian Community
Metlakatla, Alaska 99926
Telephone: (907) 789-1402
POSITION STATEMENT: Overview of Walden Point Transportation
Corridor
GARY HAYDEN, System Director
Marine Highway System
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-8827
POSITION STATEMENT: Overview of the Alaska Marine Highway System
ACTION NARRATIVE
TAPE 96-10, SIDE A
Number 001
The Joint Senate/House Transportation Standing Committee was called
to order by Chairman Rieger at 1:40 p.m. Senator Rieger and
Representative Gary Davis were present at the call to order.
CHAIRMAN STEVE RIEGER announced that the agenda was an overview of
the various Southeast Alaska ferry proposals including the Lynn
Canal ferry project, the Prince of Wales Island ferry project and
the Metlakatla ferry project.
Senator Lyda Green joined the committee meeting at 1:41 p.m.
BOB MARTIN, Chairman, Board of Directors, Goldbelt, Incorporated,
said he was here today to discuss how the state can benefit from
the private sector participation in the Lynn Canal ferry service.
Senator Robin Taylor joined the committee meeting at 1:43 p.m.
MR. MARTIN said Goldbelt, Incorporated is a Native corporation that
was created in 1973 pursuant to the Alaska Native Settlement Claims
Act (ANSCA). He said the shareholders come from all of the tribes,
both Eskimo and Indian in Alaska, but predominantly from the
Tlingit culture in northern Southeast Alaska. He said Tlingit is
a word which means in Tsimshian, people of the tides. He said the
Tlingit culture has a strong connection with the coast and with the
waters. He said the ferry project both fits the corporation's
personalities as well as being a long range business plan.
Number 152
MR. MARTIN said until recently, all of Goldbelt's assets were
invested in Wall Street, part of the net operating loss (NOL)
settlement trust. He said that when the Internal Revenue Service
settled with Goldbelt of the NOL trust, Goldbelt pledged they would
return those dollars back to Alaska for use by the shareholders,
community and by the region. They also wanted to maximize the
leverage of those dollars and maximize the use of the land. He
said their mining interest in Echo Cove led to discussions of
transportation of miners, tourists and people.
MR. MARTIN said in the area of tourists, Goldbelt wanted to make
sure they were vertically integrated rather than just building
facilities. To accomplish this, Goldbelt has invested in all
aspects of the tourist industry from transportation, entertainment,
housing, restaurants and souvenir shops. To date, Goldbelt has
invested well over $30 million directly into the tourism industry.
He said the full value of some of those investments would be well
over $50 million.
MR. MARTIN said in the past he had been the deputy director for
design and construction of the Southeast region of Department of
Transportation and Public Facilities (DOT/PF). The
responsibilities of DOT/PF included highways, airports, public
buildings, harbors, ferry terminals and the ferries. Due to his
experience, the original mission of the ferry system was to provide
basic transportation services into Southeast and Southcentral
Alaska. He commented these ferry routes were considered
alternative to hard link highways between the communities. He said
in order to provide that service, it required 24-hour a day
operation and the vessels that were used could be characterized as
being slow, but safe and sure.
Number 180
MR. MARTIN said the original projection was that the ferry system
would break even and become self supporting after only four years
of operation, he added that we have yet to reach that point. The
ferries were designed to operate in all weather with services for
passengers, vehicles and freight. One of the disadvantages to the
current ferry system is that first and foremost they are a floating
hotel for their own employees, two crew of employees on all
voyages. He said the ferry is subsidized by $30 million or 40
percent, but added that most of the transportation links in Alaska
are subsidized in one way or another.
MR. MARTIN said building highways incorporates state and federal
participation with ever decreasing funding. Goldbelt would like to
consider that their private participation be seen by the state as
another viable solution to deal with the ever increasing problems
of the Alaska Marine Highway such as an aging fleet with high
operating costs. The demand for ferry services continues to
increase but there has been no increase in capacity since the
Aurora was put into service in 1977. He said state revenues are
declining and because the ferry system must respond to the demands
of the public including political pressure and special requests for
services, many of the decisions to operate the services are
inherently inefficient and within the government system there is no
motive for profit. In addition to this, the state, federal and
international regulations continue to increase and become more
stringent and the requirements to meet those have become more
expensive.
Number 242
JOE BEEDLE, President, Chief Executive Officer, was next to
testify. He said the key to Goldbelt's interest in Lynn Canal
ferries is their land ownership. The corporation owns
approximately 1,400 acres at the end of the existing road.
Goldbelt is seeking approval to build a road three miles north to
Cascade Point in Echo Cove where they would build a terminal
accommodating traffic including ferry traffic.
MR. BEEDLE said the concepts of that ferry terminal would be roll-
on and roll-off for fast turn arounds for ferries. Goldbelt would
be willing to provide their own reservation service for the ferry
because of the travel agency operations in Seattle and Juneau or
collaborate with the new state reservation system. Goldbelt would
operate the terminal in Echo Cove and also, if the state so chose,
in Haines and Skagway. They would also handle the maintenance for
this ferry if Goldbelt receives encouragement to enter this market.
Number 267
MR. BEEDLE said the Echo Cove location saves approximately 30 miles
and would be located 45 miles north of Juneau, approximately 30
miles north of the existing ferry terminal. He referred to a slide
and pointed out where the existing road ends and where the ferry
terminal would be located. He said the Echo Cove shortens the
ferry route and saving in distance increases the ability to do more
frequent trips and retain operations within a 12-hour marine law
workday. The shorter distance allows for day boat use whether it's
for conventional hull or fast hull as two ferry runs can occur.
MR. BEEDLE said fast ferries are 50 percent more expensive to build
initially, but because of their speed the ferries can accomplish as
much as 100 percent increase in capacity. The Goldbelt concept is
to do day service so that employees can go home at night. He
commented that greater frequency eliminates the 24-hour cost of
labor and is attractive to the rider. He noted the private sector
could eliminate the operational subsidy that is currently costing
the state money in providing the service and in maintenance and
added that Goldbelt would take over the capital costs of all of
these improvements that Goldbelt is projecting. The Lynn Canal
project builds in flexibility and increases the level of service to
the public.
Number 298
MR. BEEDLE said that Lynn Canal currently has a bottleneck at
demand peak in the summer. Goldbelt would increase throughput for
other destinations and added that if people take the ferry to
Juneau, they are more likely to take the ferry to other locations
including to the south rather than driving down on the Alaskan-
Canadian Highway. He said increased service level in Lynn Canal
certainly is an opportunity for Juneau and increasing the load
factor for the marine highway system elsewhere should also be
attractive.
MR. BEEDLE said the displaced Alaska Marine Highway vessels could
then be used to serve other high demand areas. Goldbelt has
conducted studies and analyzed studies conducted by the state and
has determined that the state's long range plan for ferries asked
that a new mainline ferry be built and the construction for that
has been authorized. The state also recommended that two feeder
ferries be constructed and Goldbelt is offering the opportunity for
one of those feeder ferries, specifically a high speed day boat in
Lynn Canal to be done from the private sector without requiring any
state funds to do so.
Number 312
MR. BEEDLE said the state ferry studies show that load growth is
the most important factor and includes the percentage occupancy and
what can you do on those ferries and if you increase them then the
ferry situation improves. He said Lynn Canal currently provides 40
percent of system traffic, some of which is through put, and added
that Goldbelt believes that it is one of the few areas of the state
that private sector can accept the financial scenario and do it
without state assistance.
MR. BEEDLE pointed out that Lynn Canal has high unaccommodated
demand in the summertime and if service levels are improved,
studies show that traffic demand would increase by as much as 100
percent. Conventional hulls operating out of Echo Cove, operating
as day boats, could make two round trips.
Number 329
MR. BEEDLE said fast ferry day boats can make two trips per day to
both Haines and Skagway during the peak season. The existing fleet
requires extensive capital improvements which would require
dedicated funds to maintain operations rather than providing new
boats. Goldbelt believes the private sector can supplement the
existing state service and be profitable.
Number 336
MR. BEEDLE said public ferry transportation service, originally
necessary because of market failures, provided for economic growth
in the region. Today, demand exceeds capacity and the private
sector can now enter this market. He said that public private
partnerships have worked elsewhere. Growth in Lynn Canal capacity
will feed more traffic into the system, which will increase those
load factors. He concluded that the socio-economic growth will be
stimulated throughout the region.
Number 350
MR. BEEDLE said Goldbelt has been successful to date in a lot of
its expansion because they have chosen partners that tend to be
experts and employ best industry practices in their field. He
commented that Goldbelt would do a worldwide search to try to
attract so that Goldbelt's capital, shareholder base, land base and
current experience can be best utilized. Goldbelt currently owns
$14 million worth of vessels which will be employed this summer in
Glacier Bay and a day boat ferry passenger to Gustavus and other
tour boats. Goldbelt has partnerships with Allen Marine out of
Sitka and his corporation would hope that with bringing in
international talent with local construction talent, such as the
Allens, and local operational talent they could prove the viability
of operating privately in Lynn Canal.
MR. BEEDLE said that Ian Biner would speak next and tell about his
company's experience in the fast ferry market.
Number 362
IAN BINER, Development Manager, Holyman Limited, was next to
testify. He said an Australian company is involved in this project
because his company perceives the Southeast region to be ideal fast
ferry country. It is sheltered water and the distances between
cities are about the right length for high speed ferries. His
company sees opportunities here that mirror other projects that his
company has done elsewhere.
MR. BINER stated the same type of ferry system present in Alaska
also models other systems in other parts of the world. The Alaska
Marine Highway System is an efficient, reliable, government
operated ferry service but one that is collecting a fairly hefty
subsidy from the state. In Denmark, Canada, Australia and New
Zealand as well as many other parts of the world, the level of
subsidy is around the same as it is in Alaska with the same level
of efficiency and it is vulnerable to the introduction of private
participation on some of the routes.
Number 399
MR. BINER explained that his company just recently set up an
operation in Denmark, operating between Jutland and Sjaelland, an
island where the city of Copenhagen is based. They operate from
the second largest city, Arhus, which has a population of 150,000
to a city of Kalunborg which has a population of 15,000. He said
a thousand cars are moved on this route in a ship that holds 150
cars and 600 passengers. A second vessel was recently deployed on
this route. This service was in direct competition with the state
owned Danish State Railway Ferry (DSRF) that was operating in an
absolutely parallel route. His company went in with prices that
were 10 percent higher than the national ferry, but the national
ferry took three and a half hours and his company takes one and a
half hours.
Number 420
MR. BINER said his company was concerned that the national ferry
system would take a hostile approach, so they met with the DSRF and
put together a cooperative agreement whereby the DSRF operates the
terminal on one end of the service; his company operates the
terminal on the other end; each of the organizations sell tickets
on the service; the revenue is pooled and except for the fact that
his company owns the boats, it is a cooperative service and has
worked very well. He commented it is the model for services that
his company will be starting over the next couple of years.
Number 432
MR. BINER said his company's experience of working with high speed
ferries and working alongside government organizations is the
reason why Goldbelt contacted them in the first place. High speed
ferries are as different to conventional ferries as buses are from
airplanes. Anyone who thinks that you can take a crew off of a
conventional ferry that is running across Alaska and put that crew
on a high speed ferry is fooling themselves. High speed ferries
are a different operation and everyone who has gone into the high
speed ferry business has made the same expensive mistakes that his
company made early on in their operations. He said the boats
require a bit of mothering and his company has learned how to
handle the boats. Last year, his company did not lose one day to
breakdown which is quite remarkable. If high speed ferry systems
are going to be implemented, he suggested talking with people who
are currently operating high speed ferries to avoid making the same
mistakes.
Number 450
MR. BINER shared a story regarding turnaround time in his company's
experience in Denmark. He said the Danish told his company they
would turn around the 150-car boat in 18 minutes; that is unload
150 cars and reload 150 cars which included tying up, untying and
getting in and out of the port. His company told the Danes there
was no way that type of schedule could be maintained. Three weeks
after service started, they established a record 13 minutes, 18
seconds for a 150-car turnaround and they are currently doing that
16 times a day every single day of the week.
Number 461
MR. BEEDLE said Goldbelt believes that the capacity needs to
increase in Lynn Canal to match demand. Goldbelt believes the
increased capacity will have positive impacts on the entire ferry
system and not detract from the current ferry system. Goldbelt
also believes that private sector participation is the most
effective cost alternative and that applying best industry practice
is the way to make it work. It is their belief that we can all
learn from other similar situations around the world and that if
his corporation can get a positive indication from the
Administration and the legislature, they are committed to making
this project work.
Number 474
SENATOR TAYLOR asked for information regarding the winter schedule.
Number 475
MR. BEEDLE said originally the ferry proposal was only for the
summer but upon discussions with the state, Goldbelt recognized
they need to provide year round service. He said the winter
schedule does not demand more than one trip per day. Goldbelt
believes that demand will increase once a vessel is placed in this
route and this increase will mandate service once daily.
Number 485
SENATOR TAYLOR asked the length of this vessel.
Number 486
MR. BEEDLE responded it is a 52-passenger vessel.
Number 490
MR. BINER referred to a slide of a vessel which depicted the wheel
house area as being separated from the passenger and said the
reason for that is there are high speed ferry regulations which
require that people sitting in the command position have a 360
degree vision. He noted the passenger accommodation area was
arranged in rows aircraft style, but his company is inclined to
move away from that arrangement to allow people the option of
moving around and a table style arrangement is much more
comfortable and friendly. He pointed out that the car deck area
where cars load in the stern and unload off in the front, makes for
a very fast turnaround. The configuration of the boat illustrated
allows for a small shop in the middle and a cafeteria. It's a very
efficient, small catamaran.
SENATOR TAYLOR asked what the vessel capacity was for vehicles and
for vans.
Number 505
MR. BEEDLE said it is a 52-passenger car vessel and added that if
you carry many vans, it doesn't work for this high speed catamaran.
Goldbelt would work jointly with Alaska Marine Lines, who have
indicated that in summertime they would cover service five times
a week to provide the service for vans. Goldbelt also proposes
that if there is a situation where the state has a problem
maintaining the Malaspina, it could be placed on a day boat run for
heavy van traffic. High speed catamaran ferries do not mix with
heavy loads.
Number 513
SENATOR TAYLOR commented that he needed a year round transportation
system which could carry school buses and vans.
Number 525
MR. BEEDLE said the state ferry system has excessive capacity in
the winter, but in the summer it is mostly 20-foot vehicles and a
need to provide those people transportation. The state ferry
system was built to handle the heavy traffic and does not need to
withdraw entirely from the Lynn Canal market. The long haul and
main haul vessels could continue to make that run. He said where
the masses are getting frustrated is by not being able to roll on
their smaller vehicle.
Number 534
CHAIRMAN RIEGER inquired as to the Malaspina capacity.
MR. BEEDLE replied 100 vehicles, but added that a better example
would be the Aurora and LeConte capacity which is 40 vehicles. He
said the Goldbelt ferry would be roughly the same in terms of
vehicle capacity minus the heavy traffic.
CHAIRMAN RIEGER asked if the Alaska Marine Highway schedule was
once a day to the Lynn Canal area.
MR. BEEDLE said on the twice a day schedule, there is no question
that Goldbelt could take care of the vehicle traffic. The high
speed vessel could do as many as three or four runs as traffic
increased and eventually increase to two vessels that could do a
complimentary run.
Number 541
SENATOR TAYLOR said he did not question that it could be done, and
added he felt the state needed to move into shuttle ferries. His
concern is providing this type of service in the wintertime given
the conditions in the Lynn Canal.
Number 546
MR. BEEDLE said the vessel will go 25 to 35 knots, 40 knots was an
example of what the equipment can do. If the state encourages a
mono-hall, conventional hull, Goldbelt would consider that type of
vessel. He noted evidence of the studies have shown 14 to 15 foot
maximum recorded waves in Lynn Canal.
Number 555
SENATOR TAYLOR asked what the state was going to do when the
revenues from the Lynn Canal are lost. If the state could lease
land from Goldbelt they could accomplish the same service without
losing the revenues for the rest of the system.
MR. BEEDLE said the ferry studies of the revenue, excluding the
capital expenditure, show that the state loses $500,000 on
operations. He said, "Six million dollars worth of inflow, $6
million worth of outflow, there are other numbers in there, $2
million worth of overhead, zero capital. So, you are going to lose
$6 million and you're not going to spend $6 million. Yes, you
could redeploy to other locations. The argument that the state
will make is that you aren't going to pick up that kind of revenue.
We believe that you put that revenue in high demand routes, like
main hulls, you can pick it up for a portion of the year, the same
portion of the year that you call creaming the crop." Goldbelt
believes the state will save some money, not a lot, because it is
the closest to break even that this ferry system has - the Lynn
Canal - and that's the only reason why it is attractive to the
private sector.
Number 575
SENATOR TAYLOR asked why there is not a high speed ferry operating
in Puget Sound.
Number 577
MR. BEEDLE said this idea is being studied. Currently, Washington
State does not allow private parties to operate ferry service and
build the terminal within ten miles of the state ferry terminals.
The state of Washington has chosen their own equipment and added
that high speed ferries have just been proven within the last five
years. He said because of the time response of governmental
bodies, the state of Washington is now just getting into the
involvement with the high speed ferries.
Number 584
MR. BINER said the total number of high speed car carrying vessels
in the world is less than 16. The first of these ferries was built
in Australia about seven years ago, and Australia currently builds
more than 60 percent of the world's high speed car carrying
vessels. There are only five shipyards capable of building these
vessels.
Number 592
MR. BINER said the Washington State ferry system is looking quite
aggressively at the high speed ferry solution and said they have
gone through the same capital assessment program that the people at
the British Columbia (B.C.) ferry system went through before B.C.
decided to build their new ships. He stated that British Columbia
is faced with a growth of demand of about 7 percent a year and
realized that to embark on a capital equipment expansion program
that would meet that demand using conventional ferries, they would
need to spend, over the life of the vessel, a 15 year period, 20
percent more on conventional tonnage because they don't get the
capacity and utilization. He commented that high speed ferries
make a great deal of economic sense and that is why they are
beginning to be utilized in all parts of the world.
Number 623
TOM BRIGGS, City Administrator, City of Craig, showed a slide of
the Prince of Wales Island. He said the distance between Ketchikan
and Hollis is 36 miles by ferry with an 8 mile stretch of
treacherous water in the Clarence Straits. Prince of Wales Island
is the largest in Southeast and this ferry project is essential to
the island community. He said on this island there are about 10
communities, 6 of which are either first or second class cities and
several community associations and a significant road system.
MR. BRIGGS said Craig is the largest community, with a population
of 2,000, and the fastest growing community with a population over
1,000 in Alaska. There are 6,000 people on the island which
increases in the summer with logging, fishing and tourism.
MR. BRIGGS said the current ferry service is provided usually, by
the Aurora from Hollis to Ketchikan which is a 2 hour, 45 minute
run. Service in the summer is provided six days a week, the
service in the winter is provided two days a week. In the winter,
because of the poor flying conditions, the residents of the island
rely on the ferry service
Number 664
MR. BRIGGS said the island has hundreds of miles of roads that were
built by forest highway funds to provide access for timber
harvesting. The residents must go to Ketchikan to receive medical
services, expanded financial services and wholesale and retail
trade. The marine highway brings goods as well as people to the
Prince of Wales community. Because of the decline in marine ferry
services, the island has lobbied for ferry services on a daily,
year round basis for day-to-day services. He noted the ferry route
between Prince of Wales Island and Ketchikan is their highway.
TAPE 96-10, SIDE B
Number 001
MR. BRIGGS said those communities cannot function without those
transportation connections and added that his community cannot
function unless they can get to and from Ketchikan. In recent
years, it has become apparent their community is having no affect
when pleading their case to the legislature because of the
increasing demand for state funds. He added that his community
understands this situation, but the service to his community is
declining. This year's Alaska Marine Highway System proposed
budget is reduced by $1.5 million from the current budget. Every
reduction in the budget translates into a reduction of services to
Prince of Wales Island; the first reduction in services is to
outports including his island.
Number 099
MR. BRIGGS said he is not appearing before the committee to plead
for more money for the Alaska Marine Highway System, but to propose
a solution to the problem. The Prince of Wales Island has found a
way to provide year round daily ferry service from Prince of Wales
Island to Ketchikan at virtually no cost to the state of Alaska.
He would ask Kent Miller to explain to the committee why it was
important enough for them to take on such a task.
Number 110
KENT MILLER, Businessman, City of Craig, reiterated that Prince of
Wales Island is one of the largest, isolated population centers.
By isolated, he means that it has no instrumented airport with all
weather jet service, no mainline ferry, no road connection to the
neighboring communities and no direct container barge service to
the Pacific Northwest. Many of these things have not developed
because of the lack of public sector participation.
MR. MILLER said the Prince of Wales Island is heavily dependent on
a shuttle ferry link to Ketchikan which is being reduced year by
year. This ferry service is a lifeline for the tourist economy and
to receive health care. Prince of Wales Island is one of the few
communities any where in the United States with a population of
5,000 that has no all weather access to a hospital.
Number 120
MR. MILLER said Prince of Wales Island is striving to maintain an
economy since the decline in the timber industry in 1990. The wage
and salary economy has lost 760 timber jobs; a $20 million dollar
decline in payroll. Although many of these jobs were reported in
Ketchikan, a very large percentage of the total were Prince of
Wales jobs. The island's population and personal income have
continued to slowly grow because of diversification of trade and
services on the island and because of increased value added in
fishing, fish processing, and lumber and milling. Lack of
transportation is now frustrating the island's capability to grow
and will end this economic growth.
Number 128
MR. MILLER noted that in 1993, the Department of Transportation and
Public Facilities (DOT/PF) proposed an alternative fast ferry
service for Prince of Wales Island, a $30 million, 30 knot fast
ferry which would require a $5 million operating subsidy. After
that proposal, the city of Craig proposed an alternative ferry
which has just come out of the design process and it is a 149-
passenger, 28-car ferry, with side and stern loading similar to the
Alaskan Marine Highway System vessels and is able to use existing
ferry terminals. The ferry is a 14-knot boat which can make the
trip from Hollis to Ketchikan in about three hours. Two ferries
were proposed; one for the Hollis to Ketchikan to replace the
existing service or augment the service and the other ferry to
develop a new link from Coffman Cove to Petersburg and Wrangell
which would run twice a day enabling Prince of Wales residents to
each day go to Ketchikan in the morning and return at night with a
net savings in transportation cost.
MR. MILLER said the northern route would initially be a five month
summer, one day a week service which would develop the Prince of
Wales highway system as a link to the north and supplement the
existing Alaska Marine Highway System. The idea behind this
service was to propose the most economical boats, using existing
technology which has been widely applied in the states already.
The vessel would operate out of its own fare box and make a
contribution to its debt service. The city of Craig is proposing
establishment of an island-wide port authority which would sell a
municipal bond to pay about one-third of the total capital cost of
the development of the Hollis to Ketchikan route. He said this is
a unique and unprecedented step for a municipality to take in
Southeast Alaska and represents the earnest intention of the island
to improve the service, to pay a fair price for it and an
indication of the desperation they feel.
MR. MILLER said this system would not work under a private contract
because, as Mr. Beedle said, the Lynn Canal service is the only
route in the state that lends itself to that service. Ferry
services nationwide are financed with a hefty contribution of
federal and state funds. The island ferry proposal would have a
larger local match than virtually any other ferry service that he
knew of. He said the public sector development is necessary in
this case.
Number 161
MR. BRIGGS continued that one ferry vessel will cost $10 million
and the city of Craig is proposing that this be paid in two phases.
He said, "Port Authority under Title 29, fund the vessel by a
combination of three sources of funds: $7.1 million federal
highway monies which includes a 10 percent state match so it's
somewhat less than $7.1 million; $3.6 million of bonds issued
either through the municipal bond bank or AIDEA; and the state's
match involvement is included in the...that's the third source of
funds." The bonding payback will be funded from the fare box.
Also, the city of Craig is asking the Federal Highway
Administration for $700,000 to upgrade the terminal in Hollis which
is now just a trailer. With these funds the ferry will run from
Hollis to Ketchikan twice a day, seven days a week.
Number 171
MR. BRIGGS said that once the port authority has this vessel on
line and has taken time to study and develop operating
recommendations, they then will seek funding for the northern run.
The northern run will use the same type of vessel to run from
Coffman Cove which is on the road system, to Wrangell to Blind
Slough in Petersburg and back again. This second service would
occur a couple of years down the road depending on whether the
Hollis to Ketchikan run proves to be feasible.
Number 193
MR. BRIGGS said to go to the next stage which is the construction
documents is a $400,000 pass through grant from the Federal Highway
Administration, which has indicated the project is eligible for, to
get the construction documents ready for bid. He said, "During the
14 to 16 weeks of construction documents, we will have hopefully
formed the port authority and have found the other funds and be
ready to go to construction as soon as the funds and the documents
are ready."
Number 195
CHAIRMAN RIEGER asked the vessel capacity.
MR. BRIGGS replied the vessel would hold 149 people and 28 long
vehicles. He said if the vehicles are less than 15 feet, like a
Ford Ranger, the car capacity would be 32 to 35 vehicles. He
reiterated it would have a 14.5 knot cruising speed.
Number 196
JOHN PEARSON, Community Development Specialist, Metlakatla Indian
Community, said he would be discussing two projects, Walden Point
Road and the ferry service associated with that road. Metlakatla
is in the Ketchikan/Annette Island corridor for transportation with
the community lying 16 miles south of Ketchikan and Walden Point.
Annette Bay is the closest point to the Ketchikan, Saxman road
system at a distance of .7 mile.
Number 213
MR. PEARSON said in 1956, the Alaska Road Commission engineered,
approved and submitted to the federal government a request for $3
million to build the Walden Point Road. During this time, the city
of Ketchikan was going to purchase and operate a ferry between
Ketchikan and Walden Point to provide access to Annette Field. He
said that proposal was denied because of efforts to upgrade the
Alaska Highway. As a result, the city of Ketchikan built the
International Airport and Annette Field sits idle.
Number 223
MR. PEARSON said the council has placed the Walden Point Road
project at the top of their priority list. The project is divided
into three parts, the first is construction of 14 miles of road
between Metlakatla and Walden Point, the second is development of
a small shuttle ferry link between Walden Point and the Ketchikan,
Saxman road system and the third is participation into the regional
intertie.
Number 238
MR. PEARSON said this proposal would have benefits for the
community, for the region and for the development of cost effective
transportation linkages within the state of Alaska. Construction
of the 14 miles of road and operation of a small 110-foot feeder
ferry similar to that used in Ketchikan would replace the use of
the Aurora ferry which, in 1994, was operating at a daily cost of
$20,400. He explained the cost of the small feeder ferry based on
service of 365 days a year is $1,600. A detailed analysis of those
using the ferry service would be people having difficulty getting
in and out of small planes, like senior citizens, and sports teams
who operate on a smaller budget. The ferry system and the road
would be cost effective.
Number 253
MR. PEARSON pointed out the Walden Point road and the ferry shuttle
will provide the Ketchikan area with thousands of acres of flat
land ready to be developed. Walden Point road will open up
educational opportunities, easy access to jobs for all three
partnership communities, basic services including hospital and day-
to-day services. In addition, the relationship between the people
of Metlakatla to people in Saxman and Ketchikan would benefit.
Number 274
MR. PEARSON referred to the power intertie portion and said it is
a project that was addressed by the Alaska Power Authority a few
years ago. This study concluded that within four to five years,
the community will have a need for additional power and facilities
are available at Mountain Point to "plug into that power source."
Also, Three Lakes in Metlakatla and Annette Island could produce
power for the intertie. Last year, the Southeast Region of the
Department of Transportation & Public Facilities, the Division of
Energy in the Department of Community and Regional Affairs and the
Metlakatla Indian Community joined in the joint funding of a cost
benefit study of the project.
Number 283
MR. PEARSON said that on an economic standpoint, all three projects
are viable as separate, stand alone, projects. The study clearly
points out that major benefits will come to the Alaska Marine
Highway System by being able to redeploy the Aurora vessel to other
areas at greater profits. The total capital costs of the project,
as developed in the cost benefit study, is high but no
consideration was given as to what the community of Metlakatla
could provide such as rock, land, existing engineering that has
been completed and portions of the road that are already in place.
He noted that a map of Annette Island would show that many of the
14.5 miles are already in place in the form of usable logging
roads. He added there is a 20 percent contingency factor in the
study. The study gives a place for the project to start, to
approach various funding sources and to look at the community's
contribution.
Number 313
MR. PEARSON said the Metlakatla community is looking into the
tourism industry and said the road will become part of that tourism
opportunity. The project has received widespread support in the
region, Southeast Conference, as well as in the communities of
Saxman, Ketchikan and Metlakatla. There is almost zero opposition
to the project.
Number 326
MR. PEARSON stated last July, a meeting was held with the leaders
of Ketchikan, Saxman and Metlakatla and Senator Stevens. At this
time, Senator Stevens said he would do whatever he could to make
this project move ahead and has worked with the Department of
Defense to secure funding to be used for the military to do
construction of a pioneer road to assist the island. He pointed
out this is possible because of the land status and added that
somewhere in the area of $10 million is being considered for this
project.
Number 339
MR. PEARSON referred to a handout entitled Metlakatla, Alaska
Community Priority, Walden Point and said this is some basic
information. He asked the committee to consider the implementation
of a feeder ferry system which could be used in Metlakatla as well
as other places. Unlike other road construction projects, the
Walden Point Road has no maintenance costs involved because the
land status makes it the responsibility of the Bureau of Indian
Affairs (BIA) office. He commented the community would welcome any
advice of assistance from the state and is looking to form a
partnership in any way possible because they view this ferry and
road as being critical to the community. The Alaska Marine Highway
System has provided some good service, but it is expensive service.
He noted he would make the cost benefit study available to the
committee.
Number 375
CHAIRMAN RIEGER asked what the ferry capacity was.
Number 375
MR. PEARSON said the configuration for the ferry is 110 feet long,
90 tons, carry 11 vehicles, carry two 40 foot containers, carry one
20 foot vehicle and 35 passengers. The service would make one
round trip every hour and the operation of the ferry would be
covered by the fares. The cost of the ferry was estimated at $3.1
million for the construction and then the development of the
terminal facilities. After looking at several examples in the
state of Washington, this system made the most sense for Metlakatla
and other communities such as Pennock Island.
Number 398
CHAIRMAN RIEGER asked Mr. Hayden what the state's reaction was to
the proposals and the status of the proposals.
GARY HAYDEN, System Director, Marine Highway System, Department of
Transportation and Public Facilities, said the state views these
three projects as opportunities for the state of Alaska, for the
region and for the Alaska Marine Highway System. The opportunities
include travel, to provide more transportation, to move more people
within and around Southeast Alaska and when this is accomplished,
the state will support lifestyles, develop economically and promote
net growth. He said the challenge is how to make the transition of
the proposals into existing services and how to fund them.
Number 420
MR. HAYDEN presented a slide titled, "Operations Triangle," and
said there are three variables that seem to come into play with
most of their decisions. Those variables include service, cost and
revenue and in the center of this triangle is people's opinions,
attitudes, satisfactions and responses to the services provided by
the Alaska Marine Highway System.
Number 438
MR. HAYDEN presented a slide titled, "Transportation Service," and
said most people's perceptions of service range from being
satisfied or dissatisfied and that individuals' perception of
service varies. Service might be perceived as the weeks of
operation that a vessel is running throughout the year, the number
of port calls, and how many times a town receives ferry service
within a seven day period, the time of the day the ferry arrives
and departs from a town, the consistency in the schedule, the
capacity of the ferry system and the vessels that are deployed in
a particular link to meet the traffic demand within that link. He
said service depends on the hours of operation; whether it is a 24-
hour operation or a 12-hour. Currently, the Alaska Marine Highway
system runs seven days a week, 24 hours a day and provides service
365 days out of the year. Service is also defined in terms of how
long it takes to transit between two ports of call, how long and
when the system has vessels to run each year. He noted that
vessels come off line for overhaul, for a refurbishment program and
are out of service which affects the service to people.
MR. HAYDEN stated that service, options and people's opinions vary
depending on their travel opportunities and what modes of
transportation are available to them. One of the challenges during
a transition when discussing these options is how to maintain
service and optimize service to the rest of the region within
Southeast Alaska.
Number 470
MR. HAYDEN showed a slide titled, "Economics," which he said was an
important issue in these proposals in terms of economics to the
Alaska Marine Highway System, the economics of the port authority
of the Prince of Wales Island, the economics of Goldbelt and the
regional economics. In all three of the proposals, and also with
the Alaska Marine Highway System, these three points are key when
making a decision of how to provide these services and said they
include the manning levels, the operating hours and the cost to the
traveler. The manning levels are different depending on what type
of classification the vessel receives by the Coast Guard.
Number 487
MR. HAYDEN presented a slide titled, "Revenue," and said the Alaska
Marine Highway runs, system-wide, 40 percent of the funds are
derived from general funds and the other 60 percent from ticket
sales. Revenues could be analyzed on the basis of city pairs and
different numbers will be achieved because of the different number
of people and vehicles that use the route. The Hollis to Ketchikan
route operates 70 percent general fund and 30 percent revenues,
whereas the north Lynn Canal service is a break even operation; no
general fund money is used.
MR. HAYDEN said another factor to consider is price elasticity.
Within the Alaska Marine Highway System rate structure, the system
has been fairly cautious that when raising the rates the increased
tariffs do not decrease the ridership.
Number 510
MR. HAYDEN referred to a slide title, "Hollis Vehicle Traffic," and
said in 1994 the state provided a higher frequency in service but
traffic did not follow increased frequency. He noted that 1992
marked the peak in traffic and it has been declining since then.
Number 519
MR. HAYDEN showed a slide titled, "Hollis Passenger Traffic," which
demonstrated the same trend as the previous slide.
Number 524
MR. HAYDEN presented another slide titled, "Average Passengers Per
Trip to Hollis," and said there appears to be a variation in the
number of passengers per month, but in 1994 the average ridership
was down. The Alaska Marine Highway has funded two studies with
the city of Craig concerning their proposal. In 1994, there was a
$50,000 grant to the city to do a preliminary report and in 1995
another $160,000 analysis was done. A month or so ago, the state
received the results of the analysis which projected a $350,000 net
revenue without any debt service on sales of approximately $3
million. The operating costs for the first full year of service
would be around $2.7 million or $2.5 million.
MR. HAYDEN said the traffic consumptions is very critical to the
analysis and the economic viability to the port authority being
able to operate out of the fare box. The study used the Alaska
Marine Highway System traffic numbers of 1992 to set their base
year, which was 48,600 passengers and 15,000 vehicles. Those
numbers were used to make projections that increased demand for
traffic up to 52 percent, and in the most recent studies that
figure was increased to 69 percent. The assumption of the study is
that if better service is provided, then there will be initial
induced demand on their ferry system. He noted the other factor
that is important is the assumed annual growth in traffic over time
and this impacts what the revenues will be. That number has
changed from $1.7 million to $2.1 million. The city assumed in
their economic analysis, the same tariff structure that the state
has.
Number 568
MR. HAYDEN referred to a slide titled, "Break Even, Chart 2," and
said this graph looks at an induced demand of 30 percent to 45
percent which is lower than the city of Craig's projections. The
graph starts out with assumed growth of 1.5 percent to 2.7 percent,
with the conclusion being that it would be a break even point at 35
percent of induced demand as long as there was an annual growth of
2.1 percent. He said in the opinion of the state, those numbers
are aggressive and to break even the ferry will have to increase
their rates some percentage to generate revenue if they do not have
the projected traffic. The proposed fare was 10 percent to 15
percent increase over the state ferry rates.
Number 587
MR. HAYDEN showed a slide titled, "AMHS Response Options," which
discussed the options if the Prince of Wales Island ferry went into
service. He said the first option would be to divest the M/V
Aurora which would reduce costs and lower revenue with a net
decrease in general fund subsidy coming into the Alaska Marine
Highway System. He believed the preferred option would be to
increase service somewhere else where the AMHS is running either in
Southeast, run the vessels longer in the shorter seasons of fall,
spring or winter, or the vessel could be redeployed in one of
several locations around Prince William Sound around the time that
the Whittier Tunnel comes into line. He suggested the Aurora could
be put into Lynn Canal to provide capacity, or more people could be
brought in from Prince Rupert to Ketchikan, or it could become a
dedicated boat between Juneau and Sitka. He said other options
could be discussed in a public forum to determine the best way to
improve service.
Number 614
MR. HAYDEN presented a slide titled, "North Lynn Canal," and said
the state has not analyzed Goldbelt's proposal in detail because
the same type of information has not been received as was sent
regarding the Prince of Wales proposal.
Number 633
MR. HAYDEN referred to a slide titled, "Parsons Brinckerhoff
Survey," and said he recently contracted out with Parsons
Brinckerhoff, in conjunction with the Juneau access environmental
statement, to study what it would mean if there was a road to
Juneau and what it would mean to the marine highway services that
are currently being provided in the north Lynn Canal. The study
found that the ferry currently provides 4,256 hours of operation in
north Lynn Canal carrying 39,000 vehicles, 140,000 passengers with
a cost and a revenue at a break even point. Overall, it generates
15 percent of Alaska Marine Highway System revenues for all of
Southeast and carries 30 percent of both passengers and vehicles.
MR. HAYDEN said the study looked at the possibility of vacating
north Lynn Canal and how to utilize the 4,256 hours the ferry would
have. He said one option was to drop the service hours, another
was to decommission a vessel and then reschedule its service hours
into the other vessels and provide off season passage. The third
option was how to reallocate the service hours to the rest of
Southeast.
Number 646
MR. HAYDEN referred to a slide titled, "Findings," and said the
study concluded that if north Lynn Canal service was eliminated
with no other service changes, the general fund would remain the
same and that decommissioning a vessel would reduce the service
opportunities for the rest of Southeast. The AMHS currently has
three boats that run out of Prince Rupert, making two trips through
Southeast and one vessel out of Bellingham, making one trip. If a
vessel was decommissioned, the AMHS would only be providing two-
thirds of capacity out of Prince Rupert so less traffic would be
moving up to Juneau.
MR. HAYDEN said the study looked at several different ways to how
redeploy the vessels and concluded that there were no other links
that would generate the equivalent amount of...
TAPE 96-11, SIDE A
Number 001
MR. HAYDEN presented a slide titled, "Public Decisions," and said
there are regional decisions that need to be made as well as more
discussion on the technical aspects on all three of these projects
and the AMHS is interested in maintaining dialogues with all three
of the parties. Discussions need to occur with the communities
concerning redeployment, working with the Southeast Conference, the
transportation committees and the communities. Also, as the
commissioner had testified previously, the department is in the
process of starting and developing a Southeast transportation plan
that will look at what these opportunities are and what they can
mean to the rest of Southeast. Concurrent with that, in the near
future the environmental impact statement for Juneau access will
create another opportunity for public discussion and input into
these decisions. The fourth item occurring is that Goldbelt will
perform an environmental analysis, whether it is an environmental
analysis or an environmental impact statement, on their development
at the end of the road and will provide public input.
MR. HAYDEN said the need and establishment of a port authority on
Prince of Wales Island needs to be voted on by the people and
eventually, the port authority would have to do a bond issue.
Number 033
MR. HAYDEN reiterated the opportunities are to increase service,
but the challenge is how to manage that transition to get increased
service and don't decrease service by affecting both cost and
revenue.
Number 044
CHAIRMAN RIEGER said it seems there would be plenty of places to
redeploy a vessel in the summertime and not lose revenue. He asked
if the real problem is working out the ferry service in the winter.
Number 052
MR. HAYDEN didn't believe so and said the Parsons Brinckerhoff
study looked at where to put those 4,200 hours, those could be
summer 4,200 hours, and generate a revenue to cover the cost of
that time and the study concluded that it wasn't possible. He said
revenues can be generated, but not enough to offset what it costs
to provide those services. Southeast is not "bottlenecked," all
the time. There are sailings that are full, but a significant
amount of sailings are under capacity coming out of Prince Rupert.
During the summer, the Bellingham vessel is running full all summer
long.
Number 069
CHAIRMAN RIEGER asked if the Lynn Canal run was "bottlenecked" in
the summer.
Number 072
MR. HAYDEN replied last summer and the years that the AMHS has
provided double shuffles in north Lynn Canal, there has been
capacity that has not been used. A person might not be able to get
on the morning ferry, but is able to get on the afternoon ferry.
The projections do show a traffic increase and so at some point it
will become "bottlenecked" again.
Number 083
SENATOR TAYLOR said the DOT/PF has an extensive study which was
completed two years ago by Rodger Allington and concluded that this
entire system would be gridlocked by the year 2006. He noted a
tide book generates the scheduling for the entire ferry system in
Southeast because the route covers two narrow passes including
Wrangell Narrows and Sturgis Narrows which the ferries need to
navigate at full tide. As a consequence there is nor regularity in
scheduling. He added that convenience to certain ports to allow
for crew changes and other factors also influences scheduling. He
referred to the ferry schedule which often tends to leave Wrangell
at 3 a.m. during the winter. There did not appear to be systemic
changes within this operation to make some sense relative to
service.
Number 115
SENATOR TAYLOR said he thought it was phenomenal that the British
Columbia ferries are telling Mr. Biner that they are projecting an
increase of 7 percent and consider that figure reasonable, and are
making capital and scheduling decisions based upon that figure. He
commented the people of Prince of Wales Island are being dramatic
to think they might have an increase of 2 percent to 3 percent in
traffic. He questioned the lack of transportation improvements
that have been made in the Southeast corridor over the past 19
years. He asked to compare other parts of the state and their
transportation improvements to what has occurred in Southeast.
SENATOR TAYLOR said he could not believe that the DOT/PF would
allow a group to come in and "cherry pick" the best route and then
say that the best scenario would be to decommission the existing
vessel.
MR. HAYDEN said that was not the only possibility, but that these
were opportunities and that the challenge was how to figure out how
to make the transition to not lose service and more service can be
provided.
Number 152
CHAIRMAN RIEGER said the perception is that the AMHS is capacity
constrained, especially in the summer.
MR. HAYDEN said if the definition of service includes a particular
time of the day or a particular day of the week, then there are
constraints on the system.
Number 159
CHAIRMAN RIEGER asked if the ferry system was willing to make way
for these private proposals and redeploy the vessels elsewhere or
are the proposals viewed as competition with the AMHS. Also, he
asked if the DOT/PF regarded a private supplement to what you are
doing as an opportunity to take a vessel out so that something can
be done somewhere else.
Number 168
MR. HAYDEN said yes, those are opportunities and the challenge is
how to figure out how to make that work to prevent an impact on the
rest of the system. He said, "You cannot treat just two city pairs
in isolation of the rest of the fleet because those vessels are
running the whole system, not just that link.
CHAIRMAN RIEGER said when looking at those runs, it appears that
those runs could be redeployed to some other route, or additional
frequency on another run.
Number 180
MR. HAYDEN said the Aurora runs Ketchikan to Hollis to Ketchikan to
Metlakatla and back to Ketchikan. Every other week, the Aurora
goes to Hyder during the summertime. In the wintertime that same
vessel, when the LeConte is out of service, serves not only the
southern panhandle but goes up to north Lynn Canal and provides
service for north Lynn Canal and when the Aurora is out of service,
the LeConte services both those places.
Number 190
CHAIRMAN RIEGER commented that if the Ketchikan to Hollis run were
taken out, an extra run could be made to Wrangell or somewhere
else.
Number 193
MR. HAYDEN said although he has not looked at the other city pairs,
he is confident that other places can be found to redeploy the
vessel and generate more revenue than the 70/30 percent that is
currently be used to operate.
Number 197
SENATOR TAYLOR showed a map of Southeast Alaska depicting U.S.
Forest Service roads that are currently in existence. He said the
map contained highlights of all the proposed ferry runs which would
be considered shuttle ferries or alternate ferries including the
one that Goldbelt has suggested. He showed a ferry run from Sitka
to Kake, another one from Juneau to Hoonah. He noted the U.S.
Forest Service has been spending up to $200 million to build roads
and have built 200 miles of road per year for several years. All
of that was disregarded by the AMHS in the manner in which we
interconnect between these communities. As a consequence, the
entire fleet has to run all the way from Skagway to Ketchikan and
work its way through these various passes, which means the schedule
changes almost every day. There is no continuity.
SENATOR TAYLOR said in the state of Washington ferry system
provides regular scheduling and as a result transportation flows.
On the other hand, what frequently happens with the AMHS is that
decisions are made in the fall and the public has to continually
check the schedule to see what ship is going to be laid up when,
for how long, and when it will come back into service. Also, if
the ferry that normally services the Prince of Wales route is
pulled off to provide service to the Hoonah/Angoon area for
example, individuals on Prince of Wales Island lose ferry service
for most of the week. He pointed out the small amount of
additional road would be necessary to connect Ketchikan to other
communities if the existing road system was utilized. He noted
that two years ago, the state spent $16 million to pave the road to
the hatchery in Petersburg. Between Kake and Petersburg, the
existing logging roads are about 7.5 miles apart, but the
Administration has not told the Forest Service to build the 7.5
miles so that people from Kake could drive to Petersburg. As a
consequence, the people of Kake have to wait for a ferry to come
through in order to get to Petersburg. While the state is talking
about spending over $30 million of state money per year, a logging
road could be built for $200,000 per mile. He noted the quality of
a logging road is better than the Egan Expressway with respect to
how long it would hold up under heavy loads. The road system he
was discussing would cost less than $15 million. He said there
were a lot of benefits to be derived and the existing mainliners
could still be used to make the long runs. As an example of the
kind of transportation system people in Southeast are dependent
upon, he commented that his secretary was told it would be five
days before a ferry would leave from Ketchikan going to Wrangell.
People are frustrated with the system and the ridership is going
down. He noted that ferry employees who live in a community that
is serviced by the ferry, but change ports in another community,
would rather pay for a plane ticket than ride their own ferry
system at no cost because it would take them one or two days to get
to work due to the inefficient scheduling. He thought it was time
for systematic changes. He said the ferry boat that runs between
the Ketchikan Airport and the city of Ketchikan carries more
vehicles and passengers than the AMHS Southeast fleet carries in a
year and they do it with two employees. That's how this system
could work with inexpensive T-boats such as those suggested by
Goldbelt. The budget being submitted reduces the funding for the
ferry system by $1.5 million which will tie up more boats longer
and increase the frustration of the public.
CHAIRMAN RIEGER commented that it makes intuitive sense that the
shuttle-feeder system as proposed today and as Senator Taylor had
discussed has a lot of potential and seems like the way to go.
ADJOURNMENT
There being no further business to come before the House
Transportation Standing Committee, Chairman Rieger adjourned the
meeting at 3:36 p.m.
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