A July 2017 deadline for construction of a planned expansion of the Small Boat Harbor isn’t as hard and fast as some supporters have suggested, according to the state’s grants administration manager.

Most of the money the municipality has received for the project – $15 million of $19.5 million total – also can’t be taken away through reappropriation in the event the project is delayed, said Janet Davis, grants manager for the Department of Commerce, Community and Economic Development.

Davis said the agency routinely grants extensions on projects that are still being worked on. That work does not necessarily mean construction; the municipality can be preparing designs, working on engineering or altering existing plans as well.

“If they have ongoing and substantial work and they have a plan as to how to accomplish the work, the extension is generally granted,” Davis said.

Specifically concerning the harbor expansion project, Davis said the borough has been reporting regularly and shows adequate activity. “They seem to be spending at a regular rate. I think this would be a case where they would ask for an extension and we would say yes. We can see there is ongoing work and an extension would be granted.”

Borough officials and expansion supporters have repeatedly cited the grant’s deadline as reason for not reconsidering or delaying the project, despite concerns and questions from residents, including a 100-signature petition asking the borough to suspend engineering work pending a review of the project’s design and economics.

Officials have warned that funding would be taken away if construction isn’t completed by July 2017. In an email chain following last week’s town hall meeting held by harbor critic Joe Parnell, assembly member George Campbell pointed to the July 2017 “drop dead date of having a project complete.”

“The state has shown that any unused money will be taken back and used elsewhere,” Campbell said, referencing the legislature’s recent decision to reappropriate unspent money from capital projects approved in previous years.

That can’t happen with the $15 million general obligation bond money, Davis said. The funding was approved by voters statewide in 2012, part of a larger $453 millon package for transportation projects around Alaska. “Those funds are not from the general fund, so they can’t be reappropriated for another purpose,” Davis said.

General obligation bonds serve as a way for the government to “loan” money from investors: the government sells the bonds to investors, and pays the bond amount plus interest back over time.

Because of how that financing mechanism works, the GO bond money can’t be taken back by the legislature, Davis said.

(The other kind of bond typically relied on by municipalities is called a revenue bond, where the bond is backed by the specific project being financed. Ratepayers pay back the bond’s principal and interest. For example, the Sitka City and Borough Assembly in 2013 approved issuing $4.6 million in revenue bonds for replacement of its ANB Harbor. Those bonds are being repaid to bondholders with increased harbor moorage rates, Sitka harbormaster Stan Eliason said this week.)

Before receiving the $15 million in GO bond money, the borough also received $4.5 million from the Alaska Legislature for the harbor expansion. Davis said according to the borough’s grant reports, it has spent about half of the $4.5 million so far. Those funds are being spent first, she said.

The legislature could theoretically take back that remaining $2.25 million, because it came out of the state’s general fund, Davis said.

Port and Harbor Advisory Committee chair Norman Hughes said this week the possibility for an extension was news to him.

“I’m using the (July 2017) deadline because I was told that was the deadline. That was my understanding, that we needed to spend the money by then,” Hughes said. “That is what I have been basing this on.”

Hughes said the borough may have been unaware of the ability to request an extension because of recent turnover in the manager, economic development director, public facilities director and harbormaster positions.

“People are coming and going and stuff doesn’t follow through,” Hughes said.

Planning Commissioner Heather Lende said hearing about the flexible deadline was the best news she’s received in a while. “With a little time and putting everybody’s heads together with this, I think we can make sure the fishermen get what they want and residents and those of us who are concerned about the waterfront can also weigh in,” Lende said. “I think all we really needed was time.”

The Lynn Canal Gillnetters Association recently submitted a letter to the assembly supporting the project. The letter was signed by association president Ryan Cook, vice president Will Prisciandaro, secretary Cynthia Adams and three dozen fishermen.   

 “We appreciate the time and efforts of the Harbor Committee in seeing this project through to its current phase and agree with the plans as they stand today,” the letter said.

The Tourism Advisory Board also recently voted to support the expansion. The TAB supports moving Lookout Park to the southeast corner of the project’s footprint.

The borough expects to receive the project’s 95 percent design from PND Engineers by mid-August. The project’s timeline was recently delayed by two months due to issues with the mitigation plan and relocated sewer outfall. Construction is set to begin next spring.

The total project cost is estimated at $30 million, including $10 million that is unfunded.