Inter Island ferry weathering rough financial times

Posted: Monday, August 18, 2003

KETCHIKAN (AP) After weathering two financially difficult years, the Inter Island Ferry Authority remains afloat.

Buoyed by increased ridership and efforts to restructure its debt, officials of the Southeast ferry service are predicting a $123,000 budget surplus this fiscal year.

''If we keep doing this over the next couple of years, holy smokes, we'll really be doing something,'' said IFA Chairman Dennis Watson.

The Inter Island Ferry Authority was formed in 1997 by communities of Coffman Cove, Craig, Klawock and Thorne Bay out of frustration with the state's ferry system.

It had a difficult start in early 2002 when electrical problems kept a ferry out of service for 12 days during its first month of operation.

The ferry authority had financial problems too and was forced to borrow money to build the Prince of Wales after the state declined to provide local match funding. The local match was required by the federal funding mechanism used to pay most of the ferry's construction costs.

An audit of Inter Island Ferry Authority operations for 2001-2002 showed it was $652,000 in debt, prompting accounting firm Shaffer & Harrington to doubt whether the ferry service could survive.

A combination of increased ridership, cost cutting and debt restructuring has had a positive effect on the viability of the ferry service, Watson said.

Ridership on the Prince of Wales was up sharply in 2003, the ferry service said. The ferry service is also working to refinance its debt to get more favorable interest rates over a longer repayment period.

The ferry authority board approved a $2.3 million budget for the 2003-2004 fiscal year in July. It estimates the ferry authority will have a $123,000 surplus after meeting its operating expenses and capital costs, including debt service, for the fiscal year that began July 1.

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