TAXPAYERS STUCK WITH UNSOLD SUPERFERRIES

Ferries In Default Rust On Taxpayer Dime














Hawai`iʻs two former Superferries sit at a dock in Norfolk, Virginia, waiting for someone to take them off the government’s hands.

The US Maritime Administration has taken bids for them in an attempt to recover some of the $138 million in taxpayer money paid to cover defaults on loans it guaranteed for the owners, Hawai`i Superferry Inc.

The company sought bankruptcy protection and defaulted in 2009.

Hawai`i Superferry, chaired by former Navy Secretary John Lehman, spent up to $20,000 a year lobbying Congress, the maritime agency, the Environmental Protection Agency and other agencies on Title XI and “vessel financing issues” between 2004 and 2006, according to federal lobbying disclosures.

The loan guarantees helped the firm finance the ferry purchases from shipbuilder Austal USA, based in Mobile, Alabama.

The Superferry’s default occurred because a Hawaii court ruled the state shouldn’t have let the company skip an environmental impact study, said William Schubert, maritime administrator from December 2001 to February 2005.

FORMER HAWAI`I SUPERFERRY SHIPS FOR SALE

The US Federal Maritime Administration has put up for public sale the two high-speed vessels formerly owned by the bankrupt Hawai`i Superferry LLC.

The 321-foot Alakai and 338-foot Huakai are being sold "as is" but free and clear of all liens.

The Maritime Administration bought both vessels for $25 million each and was owed more than $135.7 million.

The vessels, built by Austal USA in Mobile, Ala., are now berthed at Lambert's Point Dock in Norfolk, Va.

The Superferry was shut down on March 16, 2009, after the Hawai`i Supreme Court struck down a law, ruling it was intended to benefit a specific party, in violation of the state Constitution.

SECRET DEBT SUNK HAWAI`I SUPERFERRY

The Hawai`i Superferry was sailing under a facade of success in the summer of 2008 — boasting of record ridership — but it had already begun to shortchange the state on its monthly fees, according to an Associated Press review of Department of Transportation records.

The company's inability to pay fully in July indicates it was in troubled waters nine months before the Hawai`i Supreme Court decision widely blamed for the ferry's closure came in March, 2009. The court overturned a state law that allowed the Superferry to operate while an environmental impact statement was being conducted.

Two months later, the $300 million Superferry — which had as its large ambition changing the way residents and visitors traveled between the state's four major islands — filed for bankruptcy.

Following months of low booking numbers, extensive legal wranglings and Kaua`i protesters who rode kayaks and surfboards to prevent the Superferry from landing, the ferry company ran out of money.

Neither the company nor the state had disclosed that the ferry service couldn't make its required payments until the the DOT released the Superferry's payment records at the AP's request.

US MOVES TO ARREST HAWAI`I SUPERFERRY

Lloyd's List - May 24, 2010

The US government has taken the first step towards an eventual court-ordered auction of two catamarans formerly owned by the bankrupt Hawai`i Superferry, by securing arrest warrants against the two ships in Virginia to recoup amounts due.

The move comes one year after Hawaii Superferry entered Chapter 11 protection.

HAWAI`I SUPERFERRY STUDY SINKS

Maui News - April 7, 2010

HONOLULU - The Hawai`i Senate sunk an idea Tuesday that would have studied the creation of a state-sponsored ferry service between the islands.

After the failure of the short-lived Hawai`i Superferry, senators weren't eager to try again. The full Senate killed the bill on a 17-8 vote....

...Senator Sam Slom said a government ferry service wouldn't stand a chance of succeeding after the privately run Superferry went bankrupt a year ago....

...The Hawai`i Superferry, the state's first interisland car and passenger service, shut down last year after the state Supreme Court ruled the company couldn't operate until an environmental review was completed. Without revenues, the Superferry said the expenses of maintaining its two vessels forced the company into bankruptcy....