BoatShop baffled as city delays long-approved funding of marine rails

Supporters of the Gig Harbor BoatShop are puzzled and angry over the city administration’s sudden reluctance to fund a key final step in the restoration of the city-owned Eddon boatyard.

Mayor Kit Kuhn has said approval of $150,000 to make one of the boatyard’s two marine railway operational must wait until “questions are answered” about whether it is a public benefit or an illegal “gift of public funds.”

Built in the 1940s and original known as the Anderson boatyard, the yard at the foot of Stinson Street was the home of the Eddon Boat company from 1950 through 1978, after which it fell into disrepair.

The city acquired the Eddon boatyard in 2004, after voters approved a $3.5 million bond issue. It is operated by the nonprofit BoatShop under a $1-a-year lease. The aim of the nonprofit, which offers classes on boatbuilding and other maritime skills, is to make the site a fully-operational boatyard, specializing in the restoration of wooden boats..

The marine railway, a system of rails leading from the water to the repair facilities, is used to haul larger boats out of the water. The rails have already been laid, mostly by volunteer labor, but they need wheeled carriages to carry the boats. There are two sets of rails, one leading into the boat shed, the other alongside.

“Marine railways are the most important component of historic boatyard infrastructure,” the BoatShop’s executive director, Guy Hoppen, said in a letter to council. “Marine railways allow a boatyard to function as a boatyard as they allow larger boats to be hauled and worked on. That is the primary purpose of all boatyards.”

The City Council has allocated $297,500 for the two carriages, but Hoppen recently told the council they could make do with one to start with, recognizing that the COVID-19 pandemic has made budgets tight. The council has twice approved the expenditure, but the money has not been spent.

Mayor’s objections

Mayor Kuhn’s explanations have varied. At first, he said he was concerned that the Boatshop would compete with the privately-owned Gig Harbor Marina. But Ron Roark, the marina’s owner, said in a letter to council that his yard worked primarily on fiberglass boats, and he “does not see the BoatShop and its educational mission as competition.”

More recently, the mayor has focused on the BoatShop’s plans to charge a fee for use of the railway.

“Where is that money going?” Kuhn asked in an interview with The Gateway last week. “We have to know that. Are they using it actually to pay salaries? Is that gifting them with public funds? Where is the public benefit?”

City Administrator Bob Larson added yet another explanation last week, saying in an email to the Gateway: “Due to COVID-19 pandemic and the uncertainty it’s caused with the economy and the city’s revenues, we are delaying or deferring several capital expenditures like the Eddon Boat Shop marine rails project for the time being.”

Kuhn has questioned the amount of public money that has been spent on the project, alleging that the city has spent more than $7 million on it to date, including infrastructure improvements.

“If we are going to dump new money into it, there should be a full accounting,” he said. “Nothing in our current agreement with the BoatShop mentions the rails. Nothing has ever been written out.”

Kuhn said he wants to see a new written agreement spelling out exactly who will use the railways, what fees will be charged users, who will receive the money and what it will be used for. And he said any such agreement must be approved by both himself and the City Council.

“I was elected to be responsible to the taxpayers,” Kuhn said. “We can’t just be giving money to special interests without some kind of structure.”

“I’m really supportive of the boatyard,” Kuhn said several times during the interview. But, he said, “I think we’ve got to do a little better job of making sure that the money we give to nonprofits is actually used for the public benefit. The mechanism needs to be established a little clearer than it was in the past.”

BoatShop response

Supporters and board members of the BoatShop were reluctant to be quoted directly for fear of angering the mayor. But the board sent The Gateway a detailed rebuttal pointing out that the railways have always been in the boatyard plans and the city has been aware of them for all 16 years of the project.

“The city administration appears, due to a notion that the lessee’s intended use of the marine railways is illegitimate, to be holding up the most critical portion and last piece of the ‘bricks and mortar’ historic Eddon Boatyard restoration,” the board said.

It noted that the railway accounts for only 3 to 4 percent of the project’s total budget, and is the last piece needed to make it functional.

The board also disputed the mayor’s assertion that “the city” has spent $7 million on the Eddon Boatyard restoration. The bulk of the money came from the taxpayer-approved bond measure, they noted, and most of the rest from state or federal grants or the BoatShop’s own fundraising.

Those included a total of about $1.9 million in federal and state cleanup funds, a $1 million grant and several supplemental grants from the Washington State Historical Society Heritage Capital Fund, and many smaller grants, included $7,500 from Tote Maritime Alaska and $25,000 from the Port of Tacoma, earmarked specifically for the maritime railway.

“It might also be noted,” the board said, “that Gig Harbor BoatShop did the vast majority of the marine railway design work; paid for the installation of all the necessary 68 pilings for the marine railways; installed the outside marine railway rails; planned, paid for and authentically rebuilt the steam shed; and completed the design, installation and financing of the dock’s mast and boom winch project.”

‘Gift of funds’ issue

The issue of “gift of public funds” is based on two sections of the Washington state constitution that were written in the 1890s, when people were worried about towns and cities giving away property or assuming debt to attract railroads. Many early railroads failed, or went elsewhere, and towns ended up burdened with debt.

But subsequent court decisions have allowed cities to fund some nonprofit projects, and even for-profit projects like sports stadiums, provided there is a clear public benefit. Kuhn has questioned whether there is a public benefit to the marine railway, other than “people on the shore getting to watch” boats being hauled out.

The BoatShop board questioned that premise, pointing out that the city owns the boatyard, and will own the rails.

“Who is receiving the gift of public funds?” they asked. “Can the city be accused of gifting funds to itself...? This question is confusing, and doesn’t seem to apply.”

Supporters of the BoatShop, including some council members, say the public benefit is obvious.

“The operation of the marine railway is tied to their mission,” said Council Member Robyn Denson. “And that mission is all a part of preserving our working waterfront.” Voters understood that when they approved the bond issue in 2004, she said.

Denson and other council members have pointed out that the city already funds nonprofits, including the Harbor History Museum and Harbor Wildwatch, that charge fees for various services and use those fees to offset expenses.

“You’d think the city would be happy that the BoatShop wants to be a self-sustaining nonprofit,” said Council Member Jeni Woock. She said the council is losing patience with the administration’s foot-dragging on the issue.

Even if the city were to move ahead immediately, she noted, it would be next spring before even a request for bids could be issued.

“A month ago, we expressed a strong desire to see the rails funded, and we asked for the administration to come back with a report,” she said. “And the report was that nothing has been done.”

Reach Kerry Webster at editor@gateline.com

This story was originally published October 7, 2020 at 5:30 AM.