The Haines Borough’s Lutak Dock contractor is again seeking reimbursement for millions of dollars it spent on steel, despite saying months ago that it would find another use for the disputed purchase.
In a letter to the borough and members of the assembly, dated Aug. 21, Turnagain Marine Construction Corporation president Jason Davis said the borough gave the Maritime Administration of the Transportation Department, or MARAD, inaccurate information about the steel purchase and argued that led to the agency denying reimbursement for the purchase.
MARAD is set to fund $20 million of the project with a grant.
The conflict between the borough and its contractor over the steel began in late December of 2023 when emails from Turnagain Marine showed the company had purchased millions in steel for the project before it had approval from MARAD, which requires environmental approvals to be in place before project construction can begin.
The contractor argues that the purchase was not part of “construction work” and that when the borough responded to a list of questions from the federal agency – it inaccurately told the government that it was part of the construction work. And, that the borough had not approved the purchase.
In the letter, Davis argued that the borough knew about the pipe order as it was part of the project schedule in an agreement signed between the company and the borough in March of 2023.
“Haines Borough was specifically alerted to the necessity of the … procurement of the pipe pile [and] the fact that the procurement could begin as soon as March 20, 2023,” he wrote.
Members of the borough, including former manager Annette Kreitzer, dispute that they knew about the steel order. But, it’s not immediately clear why this issue is coming up again because in February, Davis told the assembly in a letter that the company had decided to find another way to use the steel.
Davis has not responded to repeated, detailed requests via email and phone seeking clarification and comment on his communications with the borough.
Assembly member Natalie Dawson pushed back against the assertions Davis made in the letter, saying she hasn’t yet seen sufficient proof the company even has the steel. In January, the company wrote to MARAD saying the “steel has not been received and no payments have been made.”
And Dawson said when revelations of the steel order first came to light – she asked for a purchase order and for proof of the purchase.
“It took nine weeks to get a purchase order,” she said. That purchase order was incomplete, was not watermarked, was easily editable, and contained dates that contradicted the company’s timeline.
Dawson said she has several questions for the company that need to be answered, including sufficient proof of purchase, where the steel is currently located and what stage it’s in.
Meanwhile the company lays out three options for the borough in its letter:
- That Turnagain invoice the borough for just over $9.2 million – which it represents as the cost of the materials as well as the value of storing it to date. The company then delivers that pipe pile to Haines or anywhere else the borough chooses and the borough can then decide when to do with it.
- Turnagain invoice the Haines Borough for $9.2 million and continue to market the pipe pile for sale and when it finally sells the proceeds would go to the borough – though the company would continue invoicing the borough for storage and delivery costs.
- Turnagain invoices the borough for that $9.2 million and then deliver the pile to a steel scrap yard for sale with the proceeds going to the borough
Turnagain, members of the borough administration and its assembly are going into mediation over other issues – including other disputed invoices – and Dawson said the steel question is one that will likely need to be resolved during those meetings.
But, Dawson said there’s another looming question which is how the borough wants to proceed with the project.
The project to rebuild the Cold War-era dock has divided Haines for years. The borough government moved forward with its current plan, a $25 million design that relies on a steel wall to prevent further erosion of the dock. But the current assembly, which took office in October, has consistently questioned the need for such a large project. Critics tblame them for slowing down the project and leading Turnagain to question the process.
But, assembly members note that they have never taken action to abandon the current design.
“There are options,” Dawson said. “I think you hear from people in the community like ‘oh the whole thing – nope, it’s done, it’s over, we failed. Or, it’s all the assembly’s fault – by asking questions, it failed. But there are definitely paths forward.”
Dawson points out that the borough is still up for the $20 million federal grant for the project.
“MARAD hasn’t said ‘you don’t get the money.’ We don’t have the funds in hand, it’s a reimbursable grant, we haven’t signed the agreement but we haven’t been told we don’t have the award,” she said.