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Kitsap Transit moves to buy Horluck

Horluck Transportation has signed a historic agreement with Kitsap Transit, setting the stage for Kitsap County’s major mass transit operator to possibly purchase Horluck’s entire holdings, including Sidney Dock.

The 44-page dpcument, signed May 14, painstakingly lays out the means by which the Horluck business and property will be appraised, the lease under which Horluck could possibly rent its land holdings back, and the process by which Kitsap Transit would take control of its purchases.

In essence, it will be largely Kitsap Transit’s call what it buys and what it allows Horluck to keep.

“It’s pretty much up to us,” said agency spokesman John Clauson.

The agreement carves Horluck Transportation into three portions: the dock, the business and the boats. Kitsap Transit can exercise its option to buy any one of those elements, all of them or nothing at all with no penalties. If Kitsap does make an offer for any of those three options, per the agreement, Horluck must sell or be saddled with numerous fees.

These fees range from the cost of applying for lease transfer permission for the land under Sidney Dock to the fees charged by the firm appraising the properties.

Horluck owner Hilton Smith and Kitsap Transit officials have long disagreed over the value of the Horluck holdings. In order to level the field and create a place from which to move forward, both parties have agreed to retain an independent consulting firm — Seattle-based Ian T. Coffer and Associates — to determine the value of the properties in question. By signing the agreement, both Kitsap Transit and Smith have pledged to accept the findings of the consultant as accurate and binding.

So far, the firm has established the value of Sidney Dock and associate property, the Carlisle II, the Retsil II and the Eagle. The major portion that has yet to be valued is the ferry business itself — an item that has been at the center of most price wrangling in the past.

The price set for the business may be the major deciding factor in whether Kitsap Transit adds ferry service to its current system.

“As we’ve always said, this link between Port Orchard and Bremerton is an important part of the transportation network in Kitsap County,” Clauson said. “It’s always been in our overall view.”

Presently, there are no Kitsap Transit buses connecting South Kitsap to the rest of the county. Horluck Transportation, although independently owned, has filled the missing link in Kitsap Transit’s service chain since transit service was first established.

Clauson said, out of all the options, the most attractive one so far is the one for the Sidney Dock. For the established $475,00 price, Kitsap Transit would get the dock — and the lease on the underlying property — the property Horluck owns just adjacent to the Port Orchard Library and the dock’s accessory buildings, floats and moorage.

The property under the dock is owned by the Department of Natural Resources, although the lease allowing Horluck use of it was offered more or less in perpetuity.

For some time, Kitsap Transit has expressed interest in buying the dock and constructing an inter-modal terminal on the site. Option 1 would give Kitsap Transit the means to do that, while at the same time permitting Horluck to lease the dock space and moorage it needs to keep operating. Kitsap Transit, as part of the agreement, has already offered Horluck a five-year lease for 65 linear feet of moorage at $260 a month.

Clauson said Kitsap Transit has not yet established how it would pay for the options it wants, but said grants are available and the transit budget could likely provide the balance.

Smith has expressed interest in the possibility of renting space he now must pay to maintain, pointing out the minimal space required to operate a ferry service.

“I only need 65 feet of the dock to operate,” Smith said. “I have a dock there that’s expensive to maintain and I don’t need the whole thing.”

Smith, however, is not as enthusiastic over the idea of selling his business and boats. He pointed out the agreement was not a contract to sell, but rather a contract to agree on a potential selling price. Smith said he would ideally like to sell Kitsap Transit just the dock property and use the money from the sale to upgrade his boats.

Two boats, the Mary L and the Retsil II, are not currently seaworthy and Smith expressed an earlier interest in rebuilding both of them sometime this summer. Although the work on the Mary L may go forward, the agreement bars Smith from doing any work on the Retsil II until Kitsap Transit decides what, if anything, it wants to buy.

A third non-functional boat, the Eagle, need serious work before it can return to service. The agreement established its value at $1.

“The dock makes good sense (to sell),” Smith said. “I don’t know about the rest of it.”

He added: “They have some options and I have some options. I don’t have to go through with it if I don’t like what I see.”

Whatever is decided, the matter appears likely to be decided in the next few months, as soon as the consultant makes its final assessments. Kitsap Transit, for one, hopes this agreement does lead to a resolution of terms — something both parties have been waiting for a long time.

“I would hope to have this thing resolved within the year,” Clauson said. “It isn’t anyone’s intention to drag this out. We’ve been dealing with this for quite a while.”

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