KETCHIKAN (KDN) — The state is in negotiations to sell the ferry Malaspina to a Ketchikan-based entity thats proposing to keep the iconic vessel in Ketchikan as a maritime museum and possibly a training facility.
The Alaska Department of Transportation announced Monday that it’s negotiating with MV Malaspina LLC, which, according to a letter of intent from the company to DOT, is wholly owned by the Ward Cove Dock Group.
The DOT announcement said that the agency had received and reviewed four proposals regarding the Malaspina, and that the “MVM” proposal “meets the State's goals to preserve the Malaspina and showcase the Alaska Marine Highway System history for Alaskans and visitors.”  
The company’s letter of intent states that more and more of AMHS’ history is lost as the years pass.
“Future generations deserve to know and understand this important chapter in Alaska’s history,” states the letter signed by company President John Binkley. “MVM, in cooperation with Alaska Marine Highway System staff, hope to create a museum onboard the vessel to showcase the history of AMHS, beginning pre-statehood with Chilkoot Motorship Lines, to the arrival of the M/V MALASPINA as the first ferry built by the State of Alaska, and through the growth of the system to include over 30 communities across 3,500 miles. The museum will include curated historical items and memorabilia obtained by AMHS and to show the KTOO documentary featuring the history of AMHS.”
In addition, the letter continues, the company will “explore opportunities to work with the University of Alaska Southeast Maritime Training Center in Ketchikan. We envision being an asset to UAS for their bridge and navigation license program, engineer license program, and for AB and deckhand ratings.
“To help support the significant and ongoing costs to maintain the vessel, we will find additional ways that the Vessel can support MVM’s operations in Ward Cove,” the letter states.
The 59-year-old vessel first arrived in Ketchikan in early 1963 and operated as one of AMHS’ mainline until December of 2019, when it was moored at Ward Cove in long-term layup status because of the high estimated costs of needed repairs, according to DOT information.
“Repair estimates were initially around $16 million, but have increased substantially since discovering significant steel damage, along with estimated midlife conversion requirements and the ship's need for a repower, including engines, reduction gears, and propellors,” according to the DOT announcement.
The costs of maintaining the ferry was referenced in the company’s letter of interest.
“To help support the significant and ongoing costs to maintain the vessel, we will find additional ways that the Vessel can support MVM’s operations in Ward Cove,” Binkley wrote.
The Ward Cove Dock Group is a 50-50 partnership between Godspeed Inc., which is owned by the Binkley family of Fairbanks, and Power Systems and Supplies of Alaska, which is owned by the Spokely family of Ketchikan.
The Ward Cove Dock Group opened its cruise ship dock at the site of the former Ketchikan Pulp Co. mill in 2021. 
DOT had receved letters from four companies interested in taking ownership of the Malaspina, but this past week was not sharing  information about the proposals other than the corporate names.
The request for proposals said the responses “shall be held confidential until the state closes the sale of the Malaspina.”
The state “is in the process of reviewing the proposals,” Sam Dapcevich, Transportation Department spokesman, said last week.
Dapcevich said the four companies that submitted proposals are: Alaska-based MVM LLC, Alaska-based Cannery Row Inc., Alabama-based Meridian Global, and India-based Highseas Ltd.
The state gave interested parties less than three weeks to submit proposals to take ownership of the 408-foot-long ferry, capable of hauling 450 passengers and about 85 cars. The notice went out Feb. 18 and offers were due March 7.
In its letter soliciting interest in the vessel, the Transportation Department asked for “a detailed description of your company’s ownership; a detailed description of your company’s intentions for purchasing Malaspina; indicate where the vessel will be residing; documentation demonstrating that you are technically and financially capable of relocating, refurbishing, operating and maintaining the vessel; (and) any considerations to preserve the vessel’s historical value and positively promote the Alaska Marine Highway System.”
“Hopefully, we’ll have something in there (the four proposals) that can allow the Malaspina to remain in Alaska,” Dapcevich told CoastAlaska public radio last week.
The state limited the offering “to U.S. buyers that intend to retain the ship in Alaska.” 
It is unclear how Highseas Ltd. would meet that requirement.
The notice also said, “Letters of interest that propose scuttling the vessel are not being considered at this time.”
CoastAlaska reported last week that a 2021 BBC news investigation found that Highseas had bought a historic British ocean liner at auction. Despite saying the ship would be used as a floating hotel in Dubai, the vessel was broken up for scrap.
The state in 2018 sold the Taku, which was built in the early 1960s, same as the Malaspina, for $171,000 to a Dubai-based company that took the former Alaska ferry to India where it was dismantled for scrap.
The Transportation Department under Gov. Mike Dunleavy has been culling the fleet to cut costs, getting rid of ships it no longer uses. The state about a year ago sold its two fast ferries, the Chenega and Fairweather, built at a combined cost of $68 million less than 20 years earlier, for just over $5 million to a Mediterranean-based catamaran operator.
Almost a year ago, an official said the department had considered turning the Malaspina into an artificial reef. Sinking the ship as a reef could cost between $500,000 and $1 million, but could make long-term financial sense, the deputy commissioner told a legislative committee last March.
The Malaspina needs at least $16 million in steel work to go back into service, plus new engines at a cost of several tens of millions of dollars, according to the Transportation Department, which has kept the vessel tied up at a private facility in Ketchikan since December 2019 at an expense of about $75,000 a month for insurance, mooring fees and other costs.
M/V Malaspina LLC lists its line of business as “arts, entertainment and recreation … historical sites.”
An owner of another bidder, Cannery Row, told public radio that he and his wife own a waterfront restaurant in Cordova, and the Malaspina could be set on tidelands that are part of a former cannery property they own and its staterooms used as a floating hotel.
“Cordova has a housing shortage,” Greg Meyer told CoastAlaska. “And we have seasonal workers that can never get housing in the summer.”
Meridian Global Consulting, a Mobile, Alabama-based firm, said in its letter to the state that it owns three vessels of similar size and would use the Malaspina as a floating hotel and restaurant in Alaska, according to the CoastAlaska report.
Meridian Global last year offered the state $625,000 for the ship, before the Transportation Department set up a public bidding process, planning to use the old ferry to house security contractors working to protect international shipping off the Horn of Africa.
— Wrangell Sentinel Writer Larry Persily contributed to this story.