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FTA demands Mat-Su Borough repay grants

By Shannon Ballard Photojournalist: Jacob Curtis - 6:52 PM August 7, 2014
PALMER –

The Mat-Su Borough has a big debt to pay and only 30 days to do it.

The federal government says the borough failed to keep a promise and now owes millions of dollars.

Ten years ago the Federal Transit Administration gave the Mat-Su Borough grants to get a ferry running between the borough and Anchorage.

A lot of money was spent, and because the project ultimately failed, the FTA sent a collection notice this week for the $12.3 million it invested.

$6 million of that was spent turning the MV Susitna from a navy vessel into a ferry, $4 million on a ferry terminal at Point Mackenzie and $2 million on design plans for ferry landings on both sides of Cook Inlet.

Some would call it money wasted because the boat never served its purpose. It has been docked in Ketchikan for years.

The FTA wants all the money it gave returned. Now, the hard part for the borough is figuring out how to come up with the cash.

“It has been part of our challenge as we have the boat in Ketchikan that we have monthly costs and at the same time we have this grant from the FTA that needs to be resolved. So we’re getting pinched both ways on this issue,“ said Mat-Su Borough manager John Moosey.

Ideally the borough would like to sell the MV Susitna and use that money to resolve the issue.

Unfortunately, there are not a lot people in the market for an ice-breaking, catamaran-style ferry.

The borough has been trying to sell it for years with no luck.

“At first I thought this wouldn’t be a hard thing to do. It’s an $80 million vessel; it shouldn’t be hard to sell it for maybe 50 cents on the dollar. I’ve since learned that we’d be lucky to sell it for $6 million,” said Mat-Su Borough Port Director Marc VanDogen.

While the FTA gave the borough 30 days to come up with the $12.3 million, the borough expects it will take longer.

That could lead to interest and penalties, according to the collection notice.

The Mat-Su Assembly will hold a special meeting on Aug. 12 to figure out what they are going to do.

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