Shipyard pitches bringing back retired state ferries to bolster strained service

The proposed arrangement would involve selling, refurbishing and then leasing back two vessels that are both more than 50 years old.

Washington State Ferries is taking a hard look at a pitch from a shipyard owner to refurbish two of the state’s deteriorated retired ferries and return them to service under a long-term lease.

The novel idea is bound to intrigue ferry riders who have endured a rash of trip cancellations to begin this year, caused by vessel breakdowns and the absence of any reserve ferryboats. But the sorry condition of the decommissioned ferries brings a raft of uncertainties, both practical and financial.

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Seattle-based Stabbert Maritime first approached ferry system leaders in October with this proposal. Emails obtained by the Washington State Standard through a public records request outlined the basic idea and ongoing consideration.

Stabbert wants to acquire the retired 144-car ferry Hyak as well as the 87-car ferry Klahowya. The owner of shipyards in Seattle and Anacortes would refurbish those diesel ferries on its own dime and then recoup its investment by leasing the vessels back to the ferry system for perhaps 15 years.

Vice president for business development for Stabbert Maritime, Bryan Nichols, told the ferry system that adding leased vessels could bring relief in the near to medium term before the state’s newly-ordered hybrid electric ferries launch beginning in 2030.

“This extra capacity would help ensure reliable service for the public while supporting needed fleet preservation until all of the WSF’s new 160 auto ferries can be delivered,” Nichols wrote in his introductory letter to the head of the ferry system, Steve Nevey.

Nevey’s deputy, John Vezina, said agency representatives would meet with Stabbert’s team in the coming days to dive into the tricky details of how this could work.

“It’s an interesting proposal,” Vezina said in an interview Monday. “We have to do due diligence.”

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Vezina said around three or four years ago, the ferry system itself looked at bringing one of its decommissioned ferries out of retirement, but decided against it. The Super-class ferry Hyak is now 59 years old. The Evergreen State-class Klahowya is nearly a decade older. It was built in 1958.

Stabbert’s folks have toured the old boats at their moorings in Eagle Harbor on Bainbridge Island. The prospective buyers also received inspection reports by an independent marine surveyor that rated both vessels as structurally sound, but in “fair to poor” overall condition.

Dollars, sense and seaworthiness

The two retired ferries are presently inoperable. Over the years, ferry system mechanics have stripped key parts for re-use on other boats. The navigation gear, radars, radios and lifeboats are all gone. Even the Hyak’s horn was removed and reinstalled in Climate Pledge Arena as the goal horn for Seattle Kraken hockey games.

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Stabbert Maritime CEO Dan Stabbert said the missing equipment needed to be modernized anyway. He said his company’s long experience doing “life renewals” of large workboats used, for example, in the offshore oil and gas industry gives him confidence the state’s castoff ferries could be revived.

“When we walked on the vessels, we saw tremendous potential,” Stabbert said in an interview Wednesday. “With new technology installations, you could have a very reliable 20-plus year life renewal.”

Vezina estimated it would be extremely costly — “tens of millions of dollars,” he gauged — to make either retired ferry seaworthy again. Stabbert said his team needs to do more in-depth investigation to arrive at its own estimate of restoration costs and how that would translate into a leaseback price to the ferry system.

“There may be a blend where we can provide an asset for a reasonable price point that is compatible with their newbuild program and the additional needs that exist,” Dan Stabbert said.

If the restoration-leaseback proposal proves to be unworkable or unaffordable, Stabbert said his shipyards are prepared to recycle both vessels for the state at cost.

Scrapper alternative

The state ferry system formalized the disposition process for the Hyak and Klahowya in December after a word-of-mouth sales campaign over the past four years failed to secure a successful buyer. The new plan entailed an open solicitation of proposals to repurpose, recycle or refurbish and lease back one or both of the retired ferries.

Besides Stabbert Maritime, one other company responded to the solicitation. Global Diving & Salvage of Seattle said it could responsibly recycle the decommissioned ferries for a to-be-determined price. This was an unexpected local alternative that Vezina said the ferry system was excited to receive. Until now, the operating assumption was that scrapping a surplus ferry would necessitate a million-dollar tow to a faraway shipbreaking yard in Texas or beyond.

Vezina said whichever course the ferry system favors will just be a recommendation to the ultimate decisionmakers: Gov. Bob Ferguson and the state Legislature. That is because lawmakers would need to scrape together money not presently budgeted.

Stabbert said his firm’s proposed ferry refurbishments could take less than two years to complete once contracts were in place.

Decisionmakers harbor skepticism

Legislators will have to be convinced to undo the deliberate decisions in 2017 and 2019 to retire the aging Klahowya and Hyak, respectively.

Back in 2019, the ferry system and then-Gov. Jay Inslee proposed what now looks like a relatively modest sum of $6.3 million to maintain the Hyak in operable condition. But legislators took a position that will sound familiar to many owners of old cars. They foresaw ever-rising repair bills for a deteriorating jalopy and figured the taxpayers’ money would be better spent on a downpayment for a new vehicle.

Then as now, state Rep. Jake Fey, D-Tacoma, chaired the House Transportation Committee. Fey said he is open to taking another look while at the same time considering other ideas to make ferry service more reliable.

“I look forward to hearing if that is feasible,” Fey said regarding the leaseback idea, which was new to him.

Fey’s Senate counterpart is treating the leaseback pitch with caution.

“I have concerns that there is not an ROI on that,” Senate Transportation Chair Marko Liias, D-Edmonds, said in a brief interview, using shorthand for return on investment.

Interestingly, Stabbert Maritime is not the only company pitching a ferry lease to Washington state policymakers. A San Francisco-based startup named Switch Maritime recently hired an Olympia lobbyist to promote its line of zero-emission hydrogen-powered ferries and to ask lawmakers to authorize leasing for new vessel acquisition.

“The lease structure is a capital efficient means for WSF to introduce new vessels without allocating the full capital expense upfront,” said Switch’s director of commercial and government affairs, Seamus Nolan, via email. “Leasing also allows WSF to partner with an experienced builder/developer to design, build, commission, and bring novel technologies into operation, enabling WSF to focus on delivering quality, reliable ferry service.”

Fey said the Switch pitch is focused on serving the San Juan Islands. The ferry leasing company was also in line for a grant to support vessel construction through the Pacific Northwest Hydrogen Hub, but that went away last year when the Trump administration canceled the clean energy program’s federal funding.

A frequent ferry rider who follows policy developments closely from Orcas Island said the leasing proposals raised his eyebrows “in a positive way.”

“I’m all for giving it a really good hearing,” San Juan County Councilmember Justin Paulsen said.

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Paulsen said just last month he personally experienced the “acute” impacts of ferry schedule unreliability. He was nearly stranded on the mainland when the ferry system canceled his evening reservation to travel home. This happened after the aging ferry Kaleetan was abruptly sidelined by a blown engine cylinder. That left the final departure of the day to Orcas on another vessel overbooked. Paulsen said he left his car behind in Anacortes and walked on the late ferry to get home.

“We are at a point where we have to really do some creative thinking,” was Paulsen’s takeaway. “We need to progress forward in a faster way.”

This story was originally published by the Washington State Standard.