Insurance settlement leaves Mat-Su on the hook for most of a $3 million fix to an empty dock

PALMER –The only recent action at the Mat-Su port's 550-foot barge dock is almost $3 million in repairs since 2015.

The dock was built 16 years ago using the same unusual design as one at Anchorage's port that failed before an expansion project was even finished.

Adding insult to injury, Matanuska-Susitna Borough officials just announced they settled an insurance claim on their barge dock repairs — for $150,000, an amount that will only cover a fraction of the $2.9 million spent on repairs so far.

But even as the borough's struggling port weathers that bad news, officials here say they're wooing numerous potential industry partners and are closer than ever to a financial turnaround.

Grim present

The Mat-Su port sits at the end of Point MacKenzie – it's called Port MacKenzie — across Knik Arm from Anchorage's bustling docks where most of the state's goods arrive. Port MacKenzie, built in 1999, runs an average annual $600,000 net loss instead of generating revenue for a borough that relies mostly on property taxes.

A $300 million rail extension considered to be the port's biggest shot at major industry stalled during Alaska's budget crisis, with $184 million already spent and at least $125 million still needed.

[New Alaska rail line just ends in a forest after consuming $184 million]

No ships call at a deep-draft dock. The barge dock, used for project-by-project cargo like concrete-coated pipe, in recent years had few calls even before repairs started.

Two of the three companies listed on the port's website as businesses operating in the port district no longer do.

The last active tenant on the port's upland facilities, Alutiiq Manufacturing Contractors, is expected to leave, according to John Moosey, the borough manager. Efforts to reach Alutiiq were unsuccessful.

Tank farm in limbo

The port website still says Vitus Energy subsidiary Clean Energy LLC "is developing a 4.8 million gallon fuel terminal" at the port. That's not exactly true, apparently.

The project is on hold amid oil industry slowdowns and Alaska's sluggish economy, said Justin Charon, president of Vitus Energy, Clean Energy's parent company.

"The economy has not been helpful in getting the project completed, particularly on the financing side," Charon said in an email.

The company is waiting to see what the departure of North Pole refinery operator Flint Hills will do to the market, Charon said. Terminal storage at Anchorage's port is "still in flux," so Vitus is still evaluating the best time to build a facility.

Still, he called Port MacKenzie "an excellent location."

"There are no issues working around residential areas, roads are excellent, rail service is planned, and there is almost unlimited space for expansion," Charon wrote.

Barge dock: Empty but essential?

The $150,000 insurance settlement is another blow.

Moosey in the interview last week said the decision to accept the payment allows the borough and port to move on and look for better ways to permanently fix the dock, maybe even using a different design this time. The decision came at the advice of a consultant hired by the borough to oversee insurance decisions.

Borough officials say they can't afford to ignore the barge dock even if it's got no traffic now.

Built along the shoreline, the dock protects the port's waterfront from the swirling currents of Knik Arm.

The dock was built in 2001 using the same technology — a design called "Open Cell Sheet Pile" instead of traditional dock on piling — as a dock expansion at Anchorage's port that became the center of a lawsuit and stopped in 2010 after inspections found it was already defunct before it was done.

[Port of Anchorage: A billion-dollar mess?]

Workers at the Mat-Su port in 2015 discovered a hole in the dock, triggering the Mat-Su Assembly's approval of $2.3 million in emergency repair funding. Therese Dolan, who was promoted from an administrative position to port operations manager upon the retirement of longtime port director Marc Van Dongen, said the damage probably started when the dock was built and a pile hit a rock.

The same area of the dock failed the next year. So far, the borough has spent about $600,000 shoring up the damage, she said.

[Mat-Su to spend $500K on failing barge dock at largely unused port]

Borough officials say they don't yet know how much it will cost to permanently fix the dock.

'Not failing'

A longstanding critic of the port's environmental and public spending record said it's time for the port to close.

"This facility makes no sense," said Bob Shavelson, advocacy director for Cook Inletkeeper, a nonprofit that sued the rail extension project five years ago. "Even the rosiest scenarios don't show this facility paying for itself. At a time when we're strapped for public dollars, it makes more sense to cut our losses."

But borough officials bristle at any mention of mothballing or closing the port or even stopping work on the dock.

The port is young, they say, but it's not failing.

Instead, they point to several possible new industries that could materialize at Port MacKenzie, one as soon as next month.

The most immediate prospect is an international timber company with markets in China that would use trees logged in Mat-Su borough and state timber sales. Officials who met with Anchorage Daily News last week declined to name the company on the record. They say an announcement regarding a decision is expected in January.

If that pans out, another company from Montana has expressed interest in a timber biomass pellet operation to make use of the waste, Dolan said.

The borough is also talking to numerous other prospects including several mining companies, a Canadian oil sands producer and the backers of a massive Canada to Alaska rail, officials say.

The port could actually start making money, Dolan said. "If any one of these things that we've mentioned happened, any one of them would turn it around."

Most of those projects, however, hinge on the completion of the mothballed rail extension. Borough officials expressed confidence in the chances for approval of a $75 million federal grant request but others say resuming the rail is a long shot.

Asked about the potential wood products operation, Shavelson wasn't optimistic.

"It's no different than the parade of wishful projects we've seen for the last decade," he said. "There's always some golden promise around the corner that never materializes. It's kind of like Charlie Brown and the football."