Assembly approves operating agreement with Highmark Marine for Sitka haul-out; fishermen raise revenue and renewal concerns

The Sitka City and Borough Assembly voted 5–1 on Aug. 12 to approve an operating agreement with Highmark Marine Fabrication for the operation of the municipal marine vessel haul-out and shipyard at the Gary PaX Industrial Park (GPIP). The agreement sets fees, operational responsibilities and a multi-year term with potential administrative renewals.

Gary White, GPIP director, summarized the packet materials and exhibits for the assembly: a scope of services, facility-use rules, a negotiated fee schedule and a lease for warehouse space. White said the city successfully negotiated lower daily haul-out rates, generally reducing proposed fees by about $3 per foot across most boat-size bands, and arranged a modest payment back to the city's GPIP enterprise fund. "We were successful in getting lower fees from what Highmark originally proposed," White said.

Public commenters included commercial fishermen and local vessel owners who urged changes before final approval. Linda Behnken of the Alaska Long Line Fishermen's Association said the community-built facility represents a major public investment and urged clarification on renewals and whether Highmark would automatically gain rights to future expanded yard (phase 2) without a larger revenue share to the city. "I would expect that if that is open, that would not automatically go to Highmark without any increase in what they're paying to you," Behnken said.

Local trollers and vessel owners expressed similar concerns. Mary Magnuson asked the assembly to remove language that would allow automatic five-year renewals without a public review; she recommended the city review performance and hold a public hearing before extending the contract. Prospective vendors and community members also asked for clearer explanations of fee line items and whether additional yard phases would be competitively bid.

Several speakers and assembly members defended the agreement as a pragmatic way to get the long-awaited haul-out operational this season. Jonathan Wolf, a Sitka resident and boat owner, urged the assembly to renegotiate for a percentage-based return to the city or municipal operation, but others noted the difficulty and delay of running the facility in-house. Assembly members emphasized that the haul-out had been a multi-year public priority and that getting boats hauled locally would retain economic activity in Sitka.

Key contract terms and fiscal notes raised at the meeting: - Annual payment to the city: the assembly packet states Highmark will pay $84,000 per year to the city's GPIP enterprise fund as part of the agreement. - Fee schedule: negotiated reductions averaged about $3 per foot in several dry-dock rate bands compared with Highmark's initial proposal; the packet lists tiered rates by vessel length and service type. - Renewals: the contract allows the administrator discretion to authorize successive one-year renewals (up to five additional years total); some public commenters objected to automatic renewals without an assembly review. - Phase 2/expansion: speakers asked whether future upland/phase-2 development and associated revenue opportunities would automatically belong to Highmark; administration staff said other local vendors could lease upland space and that the contract grants Highmark a first right of refusal but does not eliminate other commercial leasing.

Assembly debate reflected both relief that the facility would open and continuing wariness about long-term fiscal consequences. Supporters said the negotiated rates make Sitka competitive with other Southeast Alaska yards and that local sales tax on on-site work will produce additional revenue. Opponents said the city's return on roughly $10–12 million in public investment would be small relative to the asset's cost; one speaker calculated an illustrative payback period in the hundreds of years under current terms and urged renegotiation for a share of gross receipts or municipal operation.

The final motion to approve the operating agreement passed 5–1; one member voted no. The administration will monitor performance and provide reports as the contract moves into operation. The assembly also heard a construction update: the planned heated concrete washdown pad will not be installed this season because material lead times would delay opening by approximately 12 weeks; the city will complete an unheated pad to meet the goal of establishing haul-out operations this season.

Clarifying details - City revenue under the agreement: $84,000 per year to the GPIP enterprise fund (source: draft operating agreement, exhibit c and staff presentation). - Fee changes: staff negotiated a $3-per-foot reduction from Highmark's initial rates on most size bands and a lower long-term-working rate for local vendors. - Renewal mechanism: administrator discretion to authorize up to five one-year renewals; assembly requested an annual report on performance and use. - Heated washdown pad: materials delays will push installation by about 12 weeks, so the city will install a non-heated pad to allow operations to start this season.

Next steps Highmark plans to begin hauling boats once the non-heated washdown pad and remaining operational items are complete; administration will require periodic reporting on usage, incidents and finances and the GPIP enterprise fund will receive the contract payments and associated sales tax revenue.