Former Haines mayor says he did not authorize contested $10M steel purchase

Someone made a $10 million mistake buying steel for a critical dock project in Haines. The dispute about who’s responsible for the bill – Haines taxpayers or the construction contractor – is now almost a year old, and continues to delay the project.

For nearly a year, the municipality has been in a $10 million disagreement with Turnagain Marine Construction, the company contracted to upgrade Lutak Dock for $25 million. The money for the project comes from a grant from the U.S. Department of Transportation – Maritime Administration, or MARAD. To meet grant requirements, purchases must follow federal guidelines and need prior MARAD approval.

In spring of 2023, Turnagain purchased approximately $10 million of steel piping for the project. MARAD deemed that steel ineligible for grant reimbursement.

Last December, Haines Mayor Tom Morphet said the assembly was surprised to learn that Turnagain had already bought the steel. Haines maintains that Turnagain wasn’t authorized yet. Turnagain says the pipe purchase was included in a schedule that the borough approved “upon execution of Phase Two Amendment on March 1, 2023.”

The dispute is headed toward mediation between borough staff and Turnagain. But it came up on Oct. 31 at a Port and Harbor Advisory Committee meeting.

In part, the purpose of the meeting was to allow assembly members to ask questions about the dock design. Assembly member Craig Loomis had questions about who authorized the steel purchase.

Port and Harbor committee member Don Turner, Jr. said that in February 2023, then-Mayor Douglas Olerud suggested Turnagain had permission after the city signed the contract to start that second phase.

“And Mayor Olerud told them at the time when they signed, that we’re signing that contract so you can buy the steel before the price goes up,” Turner said.

“I did not direct Turnagain to buy the steel for Lutak Dock, in either written or verbal form,” Olerud responded in an interview with KHNS.

Olerud said as mayor, he didn’t have unilateral authority to grant such permission. He explained the context of the statement the port member zeroed in on.

“I think the comment that Mr. Turner was referring to was one meeting in February ‘23, at an assembly meeting, where we’re discussing a resolution to authorize moving into phase two of the contract for the dock,” Olerud said. “And by moving into phase two, that would allow Turnagain to purchase this steel, once they had the pre-authorization from MARAD. And so that was still needing MARAD pre-authorization before they could proceed.”

Olerud was not at the Port and Harbor meeting and says anyone with concerns should speak with him directly.

Port and Harbor committee member Shawn Bell redirected the Lutak Dock conversation.

“I don’t know that this particular conversation is helping anything at the moment,” he said. “…I don’t see a benefit in arguing with what’s already occurred.”

Port and Harbor Advisory Committee Chair Jake Eckhardt said the steel issue isn’t his committee’s responsibility to resolve. The committee continues to back its design of an encapsulated dock.

“I’m not sure how much I want to spend trying to unweave some kind of tangled web that happened after that fact,” Eckhardt said. “That’s me personally … Let the weavers of that tangled web figure it out.”

Morphet said mediation is the next step. So far, there are no dates scheduled.

The Lutak Dock was built by the U.S. Army in 1953. Today, it’s Haines’ main off-loading point for fuel and freight. A grant to rebuild the dock was approved in 2021. Lutak Dock has become a political hot point as some citizens are concerned it could eventually be used to ship ore.