Part of the deal included this 24-inch manifold, which can deliver 1 million gallons of water an hour. (KCAW photo/Robert Woolsey)
The board of Sitka’s industrial park has said “no thanks” to an offer to buy a floating bulk water pipeline.
Alaska Bulk Water Inc. built the pipeline two years ago, but never put together a deal to ship any product.
Investors in 2015 paid $700,000 to install the system, which was designed to load tankers anchored in Silver Bay. It’s made of 1,400 feet of 24-inch plastic pipe, high-visibility floating buoys, and a manifold to connect it to the park’s bulk water terminal on shore.
Terry Trapp, the CEO of Alaska Bulk Water, Inc., told the board of the Gary Paxton Industrial Park at its meeting on May 4 that he thought taking the pipeline off his hands would put Sitka in a good position for the future. He spoke via teleconference.
1,400 feet of 24-inch pipe are on shore now at the park. It will have to be removed by June 15. (KCAW photo/Robert Woolsey)
“What Sitka has up there with the quantity of water that you have, with the deep water port, having this loading station that the city would own would make an awful lot of sense. You’d be in a position to where somebody else like us wouldn’t have to come in and go through the expensive process of having to figure out how are we going to build, and what are we going to build, to be able to load water.”
Trapp was offering the pipeline to Sitka for $400,000, roughly $300,000 less than he paid to design and install it.
The board of the Gary Paxton Industrial Park declined the offer, but it was not a matter of money. Sitka has $1.4 million in cash deposits (in the Bulk Water Fund, and in the GPIP Enterprise Fund) — paid by Trapp — which were to be credited back to him when Alaska Bulk Water began to ship and sell water.
Essentially, Trapp was asking the board to buy back the pipeline with his own money.
Board member Hugh Bevan thought it was a good deal, but he couldn’t find a way to justify the purchase.
“If we had somebody standing by that wanted to buy water with this system, we’d want to hop right on it. We’ve got a bad chicken-and-egg scenario right now.”
Board member Dan Jones, on the other hand, opposed the purchase on any terms. He believed that there were outstanding liens on the pipeline that could land in Sitka’s lap.
“We have communication that indicates that whereas Terry (Trapp) paid for all his pipe, a general contractor then didn’t pay a supplier for the pipe.”
Jones didn’t elaborate further, except to say that he thought a legal opinion would be in order, should the motion to purchase the pipe win approval.
The board was already leaning against the deal when it asked public works director Michael Harmon for his opinion. Harmon responded that he didn’t see where purchasing the pipe fit in with other priorities at the park, like building a multi-purpose dock, or landslide mitigation.
Ultimately, the purchase failed to pass muster with the board, with only member Sheila Finkenbinder in support of advancing the deal to the Sitka assembly, who would make a final decision.
After the no vote, park board chairman Scott Wagner wondered aloud if Sitka should revisit its model for bulk water sales.
“No one’s moved a drop of water,” he said. “I wonder if we should do something different.”
Trapp must remove the pipeline from Silver Bay by June 15. He told board members that he might be able to sell some of it piecemeal.
Alaska Bulk Water’s contract with Sitka was voided after multiple extensions, and no sales of water, in July of 2016.
Read a detailed account of Sitka’s bulk water contracts and extensions by Daily Sitka Sentinel reporter Tom Hesse.
