Over the weekend, Haines Borough staff and officials received a letter from U.S. Maritime Administration, one they had been waiting on for several weeks as the assembly considers how to move forward with the Lutak Dock project.
The letter from MARAD concerned almost $10 million of steel purchased by Turnagain Marine Construction, the company the borough contracted to rebuild the dock. Funds for the project come from a federal grant. All purchases with the grant must follow specific federal guidelines and require prior MARAD approval.
MARAD determined that the steel was purchased before a National Environmental Policy Act review had been completed and was purchased without the federal agency’s approval.
“We will not be able to count the cost of the steel towards the project,” the review stated. “This means that the Haines Borough will not be reimbursed for the cost of the steel…nor can it use this cost towards its cost share.”
RELATED: Unauthorized $10M steel purchase for Haines dock provokes borough political crisis
MARAD told the borough it has two options moving forward.
In the first option, the borough could accept a reduced grant that would exclude the cost of the steel. This would lower the original federal money from $20 million to $10.2 million.
In the second option, MARAD said the borough could keep the full $20 million, but it would have to obtain new steel. The purchased steel could not be used because it was an unauthorized purchase.
The purchase of the steel before MARAD authorization has been a point of contention, with fingers pointing in multiple directions.
Borough Manager Annette Kreitzer told KHNS in December that she did not authorize the steel purchase. She said Turnagain was concerned about the price of steel going up, so they went ahead and bought the steel at “their own risk” in October.
But in a Dec. 22 special Assembly meeting held to address the steel purchase Turnagain’s president, Jason Davis, said his company did nothing wrong. He said the only reason the project was in question was because some members of the Assembly wanted to terminate the project.
Several of the newly elected officials had been critical of the dock. Some have questioned the maintenance costs of the dock design. And other opponents are concerned the borough will use the large dock to ship ore.
MARAD’s review did not answer the issue of blame, whether the borough or Turnagain was at fault for the unauthorized purchase, only that quote “the steel occurred without the required MARAD approval.”
MARAD also warned that the obligation deadline of Sept. 30 is fast approaching, and that the deadline would not be extended for any reason. An obligation deadline is the last day of a grant award period.
The letter brought up other areas of concern as well. It said that the borough has yet to give MARAD an environmental assessment draft for the project. MARAD stated that time is running out for the agency to properly review an environmental assessment by the Sept. 30 deadline. The letter said that quote “MARAD is extremely concerned that it may not be possible to complete the NEPA review in time to execute the grant agreement by the statutory deadline.”
The next Haines Borough Assembly meeting is Tuesday, where the Assembly is expected to discuss its options.
