Smith might dump Horluck early
June 12, 2008 · Updated 11:02 AM
Hilton Smith may opt to pull out early from his foot ferry contract with Kitsap Transit.
Although Smith said has not yet seriously entertained the idea of terminating the agreement ahead of schedule, he said there may not be much financial incentive for him to finish it out as planned.
According to the agreement drafted when Kitsap Transit bought Horluck Trans-portation from Smith in late 2002, Smith would run the foot ferry on its current route between Port Orchard and Bremerton until the end of December 2003.
In the meantime, Kitsap Transit would accept bids for a new contractor a process Smith was prohibited from participating in.
The contract also allowed for early termination, so long as Smith gave Kitsap Transit 90 days notice.
This is the clause Smith said he is currently looking at.
Our revenues drop pretty substantially in November and December from other months in the year, he said.
The cause of the sudden drop, Smith explained, is mostly tied the the holiday closures at Puget Sound Naval Shipyard. Thanks to government-subsidized passes, most of the morning Horluck commuters are Port Orchard residents bound for their jobs at the shipyard. Smith said when the shipyard closes, the reduction in passengers is so substantial,the ferry might actually end up running at a loss during those times.
If finishing out the contract means losing money, he concluded, it makes more sense to get out early.
What I have to do is look at my costs, which I havent done lately, Smith said.
Kitsap Transit spokeswoman Kathy Knox-Browning said Smith is certainly free to take the early-out option if he wants Kitsap Transit has had a back-up plan in place almost since the day the contract was signed.
She also said Kitsap Transit was prepared for the second part of the contract ending early giving Smith his final payment for the Carlisle II.
According to the contract, final payment for the Carlisle is due when the contract ends, whether early or as scheduled. Knox-Browning said the $340,000 price tag for the Carlisle payable directly to Smith might be further incentive to break the deal off early.
Its a negotiated part of the contract, she said. Were prepared for it.
Bids to take over Horluck Service were due back last Wednesday. However, Knox-Browning said the formal opening of the bids might not take place until next month.