The Ketchikan City Council, during its regular meeting on Nov. 4, discussed ways to reduce costs to taxpayers incurred by the salvage of boats that sink while tied to city-owned docks.
The issue was brought up by an item on the council’s agenda that asked the council to approve a total budget transfer of $28,333 within the Ketchikan Harbors Division for the costs related to salvaging the 46-foot wooden fishing vessel.
The boat sank on Sept. 21 while tied to a dock in Bar Harbor North, according to a memo written by Acting Port and Harbors Director Mark Hilson.
Hilson described the vessel as “severely deteriorated” and the owner as “severely in arrears with moorage payments.” He also pointed out that earlier the vessel had failed the Ketchikan Municipal Code requirement that requires all vessels to be maneuverable and up to date on moorage payments.
He explained that, “despite numerous attempts to motivate the owner, and after proper legal notification, the harbormaster was forced to impound the vessel after a 30-day redemption period. During that period, the owner may regain possession of the vessel if they pay the debt and prove that the vessel is maneuverable.”
Hilson added, “Despite placing our own pumps in the boat and checking on it frequently,” the boat sank on day 23 of the mandatory 30-day redemption period.
“Due to the urgent nature of the sinking,” Hilson explained, Harbors Division staff had to contract the services of Alaska Commercial Divers to raise the vessel. While the remaining week of the redemption period played out, ACD placed inflatable lift bags under the vessel to keep it afloat.
When the redemption period ended with no response from the vessel’s owner, ACD removed environmental pollutants from the boat and disposed of it.
The total cost of the operation was $28,433, Hilson wrote, and the department’s account for towing and salvage of abandoned property held a balance of only $100. He said that the account historically did hold more funds for such events, but it was reduced several years ago because it was infrequently used.
Hilson noted that city staff is seeking money from the owner of the vessel to reimburse the city for the costs.
Council Member Judy Zenge began the discussion about the issue during the meeting by asking who ultimately would end up paying for the operation, and whether it would be possible to require harbor users to buy insurance plans for their vessels or to pay extra fees to cover such potential emergencies.
Hilson took to the podium to address the council, and told Zenge that the idea to require insurance on vessels had been considered in earlier years by previous councils. Other changes were made to city ordinances in 2011 through 2014, he said.
“At first blush, it seemed like a good idea,” he said. “Then it quickly was realized that a lot of these boats can’t be insured, so depending on the hull, the age, other factors, (some) boats that are in the harbor today would never be able to get insurance.”
He explained that those initial discussions then turned to the idea mentioned by Zenge, of adding special fees onto harbor use costs.
That idea finally was rejected, Hilson said, because the act of charging special fees for potential emergency salvage or towing costs would put the city in a “de facto insurer position.”
It was realized, Hilson said, that the implication would be that if people didn’t buy insurance plans, they could simply pay that fee and be covered for incidents.
He added that if a special fee was added on top of every user’s bill, it would simply be the same result as the city having to foot the bill for a salvage operation — everyone would be sharing the cost.
Zenge asserted that those costs should be borne by the vessel’s owner.
“I think there has to be a better way to do this,” she said. “I mean, we shouldn’t be responsible for this. It should be the boat owner’s responsibility.”
Council Member Mark Flora, who also serves on the Port and Harbors Advisory Board, offered the idea that boat owners who can secure insurance on their vessels should be required to do so, and those who can’t, should provide a surety bond or pay a premium to the city to moor their boats in city harbors.
Flora said he agreed with Zenge’s assessment of the issue.
“We’re leveraging these expenses on the back of the folks who are paying harbor fees,” he said, adding that he is in support of revisiting the issue.
Council Member Janalee Gage asked Hilson how many times the city has had to salvage a sunken boat over the years, and Hilson answered that it has happened three times since 2009.
City of Ketchikan Mayor Dave Kiffer said it might be prudent to research the approach to the issue that other municipalities have taken and follow successful models.
“Or, we just have to accept the fact that, frankly, this always has been a problem and it always will be a problem, someone’s always going to stick us with cleaning up their bill,” he said.
Hilson said there are two other harbors in Alaska that have some sort of insurance requirement, but neither model seem to be a good fit for Ketchikan. He added that Juneau is one of those cities, but they were required to hire a full-time dedicated staff member to administer the program.
He said his recommendation would be to balance the cost of dealing with emergency salvage operations periodically versus running a full program.
Zenge asked whether the city ever had received repayment from owners in prior similar salvage situations. Hilson said he was unsure of the answer.
Gage asked whether it would be a good solution to add a small percentage of the fees people pay to use the harbors directly to the salvage account, which would help to spread funding for emergency salvage operations over a large block of time, as they are such infrequent incidents.
Hilson said that the council could consider an amendment to municipal code that would allow that policy.
Acting Ketchikan City Manager Lacey Simpson pointed out that one possible drawback to that approach could be that owners of derelict boats might be less motivated to pay for the salvage of their vessel if they knew there was a special city fund waiting to cover the costs.
Gage said the situation with broken down vessels in the harbor could be solved in a similar way as the Ketchikan Gateway Borough approaches derelict vehicles.
“Every year you can have one dead car removed by the borough,” she said, pointing out that the free service is paid for by tax payers.
She also said that sometimes the owner of a boat in a rundown condition might be a situation that was unavoidable, due to the loss of a job or other financial stressors where they literally cannot afford to deal with the costs to maintain or moor the vessel.
Hilson said his advice would be to not set up a program or approach that would be more burdensome and expensive than simply dealing with the very infrequent salvage expenses when they occur.
The bottom line however, Hilson said, is that “the cost causer should be the cost payer.”
The motion to transfer the $28,333 to the Harbor Division's “salvage and disposal of impounded property” for the work to raise and remove the fishing vessel was unanimously approved by the council.
The Port and Harbors Advisory Board met on Tuesday and discussion was held concerning the issues surrounding derelict vessels in the harbors.
In a phone conversation with the Daily News Friday, Hilson said that he also cautioned the members of that board during the meeting against setting up a program that would be more expensive and unwieldy than the current program, urging them to be “deliberate and thoughtful.”
Hilson also said that there are many boats salvaged less expensively by the Port and Harbors department staff each year, and those that sink before the redemption period is over are the rare ones.
Hilson said a program that would include an insurance requirement for boat owners would likely be “more involved to implement that one would imagine.”
The Port and Harbors Advisory Board, Hilson said, are focusing on finding a solution that is fair to all.
The issues are scheduled to again be discussed at the next advisory board meeting, which is scheduled for 7 p.m., Dec. 14. Members of the public are welcome to attend, and there is time scheduled near the start of the meetings for public comment. The location has yet to be determined, Hilson said.