PALMER -- Despite a looming deadline, the Matanuska-Susitna Borough Assembly has delayed action on a federal demand that the borough return more than $12 million spent on the never-used ferry Susitna.
The Federal Transit Administration last week gave borough officials 30 days to repay the federal grants or face potentially hefty financial penalties.
Assembly members on Tuesday emerged from a 44-minute executive session and told a small audience they made a decision to take up the FTA demand at a meeting on Aug. 21.
The Assembly needs more information from staff about the "several potential solutions and responses" available, said Assembly member and Deputy Mayor Ron Arvin, who led the meeting while absent Mayor Larry DeVilbiss participated by phone.
The twin-hulled, 195-foot ferry, a U.S. Navy prototype acquired in April 2012, is racking up bills for berthing at a dock in Ward Cove near Ketchikan. The borough never got to the point of building landings at Anchorage or Port MacKenzie at a projected cost of $40 million. Managers have failed to sell the ferry to help pay down the grants, or give it to a government entity, which could help them waive the grant obligation entirely.
FTA last week recalled a little more than $12.3 million in federal grant money spent between 2002 and 2009 on the ferry, a terminal and landing studies, according to the agency's letters.
Assembly member Jim Sykes, who opposed Tuesday's closed-door session, unsuccessfully requested the borough attorney's opinion before it started.
He also asked for a public tally of the potential bill facing the borough, including a calculation of the various penalties if the money isn't paid on time.
If not paid in full within 30 days, the debt becomes delinquent and the borough will need to pay interest at a federal rate or higher, according to the FTA. If not paid within 90 days, the agency will start charging a 6 percent annual late payment penalty.
The Assembly went into executive session under Alaska statutes that allow closed-door meetings for matters that "clearly have an adverse effect" upon borough finances, are required by law, charter or ordinance to be kept confidential, or are subject to attorney-client privilege.
Assembly member Steve Colligan said the intent of the closed-door discussion was to discuss legal actions only.
The Assembly will continue its Tuesday meeting at 3 p.m. on Aug. 21 in Assembly chambers. According to the agenda, another executive session is planned.