The board of Sitka’s Gary Paxton Industrial Park began exploring the prospect of private management of the city’s new haulout and boatyard because there was consensus that hauling boats would not pencil out favorably for the municipal government.
So the board solicited proposals from the private sector, and received only one that it considered viable, from Highmark Marine in Kodiak.
Highmark’s proposal is detailed, and covers all the bases the board asked for hauling boats, managing dry storage, and coordinating with local vendors. It includes leasing a currently vacant building as retail space for supplies typically needed in a working boatyard.
Highmark would charge about $25 per foot to haul a boat in the 40-foot range, with additional fees for a variety of services, including hazardous waste disposal and equipment rental.
Find Highmark’s proposal in the GPIP 2-26-25 meeting packet.
Bottom line: Highmark hopes to clear a 10-percent profit, with “no room for remitted payments to the City and Borough of Sitka.”
That detail fired people up.
“Frankly, this offer, this bid from Highmark is real crap,” said Mike Nurco, a 22-year marine tradesperson in Sitka. He’s one of a dozen boat owners and others involved in the industry who testified against the proposal – often in very strong terms.
Nurco continued, “Apparently, through Highmark’s benevolence to keep the fisherman’s haulout rates as low as possible at the end of every day, there were no monies or payment of any kind to our City and Borough of Sitka. Zero.”
Nurco has raised objections to out-of-town management of the haulout before, as have others, but concern appeared to escalate when the public finally saw numbers. The haulout is being constructed entirely with public funding, primarily from the sale of the former Sitka Community Hospital. Under the proposed agreement with Highmark, Sitka would continue to own and maintain the property and the travelift – at an estimated $110,000 annually – but the revenue would go to Highmark. All of it.
To Chris Hanson, a local machinist, this sounded like an extraordinarily generous subsidy.
“An important thing to understand is that Sitkans like supporting Sitkans,” said Hanson. “There’s no benefit to providing a city infrastructure and a $110,000 year subsidy to a company that’s based out of town, for them to come in and set up, not only to haul our boats and export the profit based on that, that 10-percent that they’re anticipating getting, but also to come in and set up shop to compete with the citizens’ infrastructure that we’ve built up ourselves to work on these boats.”
The board’s job was to decide whether or not to recommend the proposal to the Sitka Assembly. Whatever the board decided, the assembly would make the final call. Nevertheless, they were feeling boxed in: The city had undertaken an analysis and concluded that – if the city were to run the haulout – it would require three full-time personnel, working year-round. Union rules would limit their ability to work outside of normal hours. Health insurance and other benefits also increased the cost of operating the yard with city employees.
Find the city’s financial analysis in the 2-26-25 GPIP meeting packet.
So, the board chose to punt, and postpone a decision on whether to advance Highmark’s proposal to the assembly until its next meeting in the third week of March. In the meantime, board member Casey Campbell proposed a work session with the public to comb through the numbers and see if private management really was the best course.
Board member Lauren Howard agreed, arguing that the board needed to reconcile its vision of management with the concerns of the public that have been heard at almost every meeting since privatization was introduced.
“To me, a public works project is run by the city,” said Howard. “It’s a city operated facility. It’s city operated lands, city operated equipment. So I think that it’s a real struggle to move ahead with the private operation, given the public outcry and the fact that this is a public works project, and that was the impetus of this project from the beginning.”
The vote to postpone was 3-1, with chair Scott Wagner opposed.
