Opponents question proposed savings of move

Posted: Thursday, March 25, 2004

Gov. Frank Murkowski says moving the ferry system headquarters to Ketchikan will save the state hundreds of thousands of dollars, but opponents of the move question the numbers.

In February, the Department of Transportation contracted an 11-page study that said the state would save $561,725 in reduced lease costs over 10 years by moving the offices to the largely vacant Ketchikan Pulp Co. administration building at Ward Cove. The report also said there is potential annual savings of $240,000 in administrative costs and $39,000 in travel costs.

The report's author, Greg Dronkert of Pacific Marine Technical Services in Bainbridge Island, Wash., is a former vice president of Alaska Ship and Dry Dock in Ketchikan, where state vessels are renovated. He also served as system director for the Alaska Marine Highway System in the early 1990s.

"I believe that Mr. Dronkert makes a compelling argument for the merits of relocating the headquarters of the AMHS in Ketchikan," said Deputy Commissioner Tom Briggs of the Alaska Department of Transportation in a Feb. 22 recommendation.

Last week, however, Briggs acknowledged that the move might not save any money but would benefit the system through better administration of the fleet.

Dronkert said shortly after the move was announced that the study was simply a discussion paper and should act as a starting point for further studies. He said his report wasn't conclusive.

"One wouldn't base a final decision just on a discussion paper," Dronkert told KTOO-FM and TV. "The next thing to do is to put together your relocation team and actually dig into the absolute details of all aspects of the move. You treat it like any other project. You define the scope, the schedule and the budget and you assign tasks and you determine what resources you have and you put together a timeline and you refine your budget."

After the broadcast interview, Dronkert told the Empire: "Our view was that our document was one of any number of pieces a decision-maker would use to make their decision."

Ferry system employees were not allowed to participate in the study by Dronkert and were not told of its existence until the decision to move ferry offices was announced March 8.

When asked last week if the move was driven more by cost savings to the state or better administration of the fleet, Commissioner Briggs said he believed it was based more on better administration.

"(The move is) so close to breaking even that I don't think it's a factor," Briggs told the House State Affairs Committee. "I would never suggest that we move people in order to save the amount of money that they're proposing."

But when asked about specifics on the administrative advantages, he said: "I can't make the case right now. I know that the consultant has listed what he considers to be a whole lot of reasons for better opportunities for managing the system. I don't question those. I think there are more than what he suggested, but I don't know what they are right now."

Briggs was asked later for examples of how offices in Ketchikan would better serve the fleet.

"A specific time I remember was when the Kennicott hit the rock in Wrangell Narrows (last year) and there was an issue of bringing the vessel all the way up to Juneau instead of Ketchikan," he said.

Marine Transportation Services Manager Jack Meyers said engineers determined the Kennicott was safe then and there was no need to turn around before delivering passengers to Petersburg and Juneau.

The discussion paper said the state would save about $562,000 in reduced lease costs by moving offices to the Ward Cove facility.

But Pat Davidson with the Division of Legislative Audit said last week that the proposed savings from the discussion paper are speculative.

Under the lease proposal by the Ketchikan Gateway Borough, the state would be reimbursed up to $420,000 for moving costs through reduced rent payments over 10 years.

Davidson said that a dollar today is worth more than a dollar in 10 years and that the lease proposal does not reimburse the state for the interest that otherwise would be earned on the $420,000 if the money stayed in the state treasury.

"When you do that, some of the proposed savings are reduced," she said.

Rep. Bruce Weyhrauch, R-Juneau, said the lost interest would drop the savings by more than $110,000.

Davidson also told the House State Affairs Committee last week that unless workers are moved into the vacated space in Juneau then the state is incurring an additional lease payment.

"The actual analysis should be on what lease space is given up (to fill the Juneau office space)," she said. "Those are unknowns right now."

Dronkert's paper said the marine highway system could save up to $240,000 a year in logistical and operational savings by moving the offices to Ketchikan, noting: "This amount is not being advanced as an absolute, but rather an opportunity for savings."

The paper said the marine highway system spent more than $4.8 million on costs associated with annual lay-up and overhaul of the fleet.

It gives no specifics on savings.

In 1997, former Sen. Robin Taylor, of Wrangell, proposed moving the ferry system to Ketchikan, but a study by Fairbanks consulting firm Information Insights recommended against it.

"The absence of (or reduction in) formal and informal day-to-day contact between AMHS leadership and the commissioner's office will reduce the quality of communication and restrict the opportunities to work together to solve problems," the study said. "It is not unlikely that a future commissioner, separated from AMHS by distance, will need to focus his or her efforts on roads, airports and ports rather than the marine highway system."

The Pacific Marine Technical Services paper also cites an internal ferry system analysis in saying the move could save $39,000 a year in travel.

It gives no details of the savings.

Bob Doll, former transportation commissioner and current executive director of the group Better Ferries for Alaska, said $31,000 of the potential savings was paid with federal funds.

Briggs said he doesn't know how much of the travel costs were paid by the federal government.

"I'm sure he's right that a percentage of that is federal dollars," Briggs said, noting that the federal money could be redirected to other projects if it were not spent on travel.

• Timothy Inklebarger can be reached at timothy.inklebarger@juneauempire.com.



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