Ferry or tour boat? Tour operators want to know

Posted: Monday, May 31, 2010

When is a ferry also a tour boat?

That's the question raised last week when several Homer tour operators called on Rep. Paul Seaton, R-Homer, to investigate use of a $1.5 million state appropriation by the Seldovia Village Tribe in constructing the M/V Kachemak Voyager, an 83-foot, 150-passenger catamaran that started service on Wednesday.

In response to a request by Seaton and the Homer News, the Division of Community and Regional Affairs said it is reviewing the grant to see if SVT complied with the intent of the legislative appropriation.

The original intent of the state grant was to support building a fast ferry to transport cars and passengers between Homer, Seldovia and other Kachemak Bay and lower Cook Inlet ports.

"We've got the ferry that's going nowhere," said Jack Montgomery, owner of Rainbow Tours, a tour boat that goes from Homer to Seldovia. "Forget the bridge to nowhere."

"They have a boat they're calling a ferry that's nothing more than a tour boat," said Tim Cashman Jr., a partner with his father, Tim Cashman Sr., of Alaska Coastal Marine and Alaska Coastal Marine Tours, which operates the Discovery, a tour boat from Homer to Seldovia. "It's doing what Jack (Montgomery) and I have done for years. It's Jack's exact route an hour off."

The Kachemak Voyager carries passengers as well as freight, with a crane to lift totes to its aft upper deck. Its website advertises that on several sailings the Kachemak Voyager takes a sightseeing route to Gull Island and through Eldred Passage similar to the other tour operators. Corporate forms identify the boat's purpose as "scenic and sightseeing transportation." Some Kachemak Voyager sailings take the more direct route used by the Alaska Marine Highway System ferries.

SVT said the Kachemak Voyager isn't a tour boat.

"It's not really a tour boat," said Michael Adams, manager of the Kachemak Voyager project for SVT. "It takes a slower sailing to allow other folks to see the area. It's not necessarily a tour boat."

Cashman, Montgomery and Bill Lovett met with Seaton last Thursday to discuss the Kachemak Voyager and SVT's ferry project. Lovett owns Central Charters, a booking agency. Also attending was Kenai Peninsula Borough Assembly member Mako Haggerty, owner of Mako's Water Taxi, and former borough Assembly member Milli Martin.

Seaton and Sen. Gary Stevens, R-Kodiak, supported SVT and the city of Seldovia in its fiscal year 2007 request for $1.5 million, part of a state match to an $8,035,000 federal request to build a fast ferry to transport cars and passengers in Kachemak Bay. SVT also was to receive a $2 million federal appropriation for a feasibility study. The $8 million included grants from the Bureau of Indian Affairs, the Federal Highway Administration and the Ferry Boat Discretionary Fund.

SVT also applied recently for American Recovery and Reinvestment Act funding of $475,000 to build a gangway and make modifications to JJ Dock in the Homer harbor for its local mooring facility. Public comments are now being taken on an environmental assessment required for the project. That assessment is required before the ARRA funds can be released to SVT. The gangway and other supplies are on the Spit ready to be installed once the stimulus grant is approved.

SVT's ferry project has raised these questions:

How did state and federal officials monitor the project?

Did SVT get approval from state and federal officials to change the scope of its project from a ferry only to a ferry with a tour component?

Is a tour boat allowed under the state and federal grants?

How much did SVT receive, how much did it spend and why does it need more federal money to build Homer dock improvements?

The ferry project, sometimes called the Seldovia Ferry, the Seldovia Fast Ferry and the Kachemak Bay Ferry, dates back to 2003, when it was discussed in the Kenai Peninsula Borough transportation plan. In 2004, former Sen. Ted Stevens, R-Alaska, helped get $2 million appropriated to study a fast ferry. In 2006 the city of Seldovia approved a legislative grant priority list that included $1.5 million for a Kachemak Bay ferry. That amount was included in the fiscal year 2007 capital budget for "construction of the Kachemak Bay ferry and related landing craft docking sites."

"The Kachemak Bay Ferry will serve the general public by transporting vehicles and passengers between Homer, Halibut Cove, Jakolof, Seldovia and possibly other ports in Kachemak Bay such as Port Graham and Nanwalek," the supporting language for the legislative appropriation read.

In September 2007, however, SVT scrapped the larger project in favor of a freight and passenger catamaran that would run only in the summer. The Kachemak Voyager is the result of that shift in concept.

At last week's meeting, the tour operators pressed Seaton to look into the discrepancy between the project the Legislature funded and what it has become. Cashman presented Seaton with a 54-page packet, including a letter of concern signed by over a dozen Homer tourism business owners, describing the project and with documents detailing aspects of the project. Cashman filed federal Freedom of Information Act and state Open Records Act requests and received two legal boxes full of state and federal documents that he made available to the Homer News and to Seaton.

Seaton read Cashman's packet at the meeting.

"I totally agree this is not the project we funded," Seaton said of the Kachemak Voyager.

Seaton said the Legislature has limited powers to investigate uses of state funds once they've passed to the executive side of government.

"We pass laws, we pass the budget. They administer the budget," he said of the executive branch.

Seaton said the Legislature has oversight of state funds through the Division of Legislative Audit. The Legislature can ask for an audit of state funds. Seaton told the tour operators he would call Curtis Thayer, deputy commissioner of the Department of Commerce, Community and Economic Development, the department that managed the SVT grant, to see how the grant was managed. The SVT grant was largely administered during the tenure of former Alaska Gov. Sarah Palin.

Jill Davis, grant manager for the Division of Community and Regional Affairs in Fairbanks, said her office is reviewing the $1.5 million grant.

"We'll need to review this and then determine what to do from there," Davis said.

Davis said if misuse of funds is discovered, the matter would be referred to the Alaska Department of Law for its investigation. Davis said the issue is muddied because of the federal grants.

"It's obvious the feds didn't do their job," Seaton said. "It's really a federal oversight problem and not the state's."

Cashman provided a Feb. 9, 2009, memorandum from U.S. Inspector General Earl Devaney summarizing an investigation of alleged mismanagement of Indian Reservation Roads Program projects by the Alaska region of the Bureau of Indian Affairs. Devaney wrote that "one Alaskan Native community was given funds for a transportation project that is estimated to cost about $14 million; however, the intent of the project has been arbitrarily changed, without approval from BIA, from addressing the transportation needs of the community to creating an avenue of tourism revenue."

The former BIA Alaska Region director, Niles Cesar, was reassigned to northern Wisconsin. Acting Director Eugene Virden said he would have to research the project to determine if proper oversight was done and if SVT acted within its contract with BIA.

Adams said SVT received $8 million of the original $12 million in federal and state grants allocated. Final appropriations didn't come through because Sen. Ted Stevens lost re-election, he said. He said the Kachemak Voyager cost about $3.5 million, not including safety equipment, lines, fenders and other additional equipment. The remaining $4.5 million was used for a feasibility study, engineering studies, docks, infrastructure and permitting, Adams said.

"It's difficult to look at the budget and understand where the money went unless you're familiar with how marine projects work," he said.

An e-mail request for comment from SVT President Crystal Collier was not returned by press time.

Michael Armstrong can be reached at michael.armstrong.@homernews.com.

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