MILWAUKEE (AP) - When a proposal for a high-speed ferry between Milwaukee and Muskegon, Mich., was floated several years ago, the folks who operate the Manitowoc-Ludington, Mich., ferry cried foul over the new boat's government-backed loan guarantees.
Now that the SS Badger is attempting to use federal stimulus money to replace its coal-burning engines and switch to diesel, Lake Express owners are fuming.
The Lake Michigan ferry fracas turned up a notch this week after Ludington applied for a $14 million stimulus funding grant that, combined with $2 million from SS Badger owner Lake Michigan Carferry Inc., would pay to repower the historic ferry.
Lake Michigan Carferry is under a 2012 deadline imposed by the Environmental Protection Agency to end its dumping of coal ash into Lake Michigan. For that reason, the SS Badger must convert to diesel power.
Verbally firing a shot across the SS Badger's bow, officials from Milwaukee and Muskegon, as well as Lake Express, are sharply criticizing the application for stimulus funding. They say it gives the SS Badger an unfair advantage on a lake that now supports two passenger/car ferries.
Visit Milwaukee and the Metropolitan Milwaukee Association of Commerce sent letters to the U.S. Department of Transportation requesting denial of the stimulus funding request. So have the City of Muskegon and the Muskegon County Board of Commissioners.
Lake Michigan Carferry "has traditionally been against subsidies. They opposed the loans given to Lake Express and opposed the Lake Express project pretty aggressively," said Aaron Schultz, director of marketing for Lake Express LLC.
Schultz pointed out that Lake Express LLC is paying back its loan and received a federal loan guarantee similar to mortgage insurance. In contrast, Schultz said, Lake Michigan Carferry would not have to pay back the $14 million stimulus grant.
"You've got a company here that worked a lot of loopholes to avoid coming up to environmental compliance for years and years, and now they're looking for a cash reward for doing nothing," Schultz said.
The SS Badger accounts for $35 million in economic impact as well as 200 direct and 500 indirect jobs to the cities of Manitowoc and Ludington, according to company spokeswoman Lynda Matson.
"We are being mandated by the EPA to change our engine operation and this is the best and greenest option available," Matson wrote in an e-mail.
The City of Ludington submitted the application Monday for a Transportation Investment Generating Economic Recovery grant - known as TIGER II funds - on behalf of Lake Michigan Carferry Inc.
The SS Badger is intrinsically linked to Ludington, a year-round community of 8,300 that swells significantly in the summer. Close to 140,000 ferry passengers pass through the western Michigan city during the five months the ferry operates, spending money at hotels, restaurants, gas stations and shops, City Manager John Shay said.
"It is our identity," Shay said of the ferry.
The City of Manitowoc, which owns the land where the SS Badger docks and sells the company the coal it burns to steam across Lake Michigan on two daily round trips, is supporting the car ferry's bid for stimulus money. Last week the City Council unanimously passed a resolution in favor of the funding application and urging congressional leaders to throw their weight behind it.
"We're aware that they're willing to put their own $2 million into the project," Manitowoc Mayor Justin Nickels said. "The economic impact to Manitowoc is $15 million for the five months they're here, so of course we're going to try and keep them."
Roiling the waters is a contentious debate between the two ferry companies over government subsidies.
Though each ferry attracts its own clientele on separate sections of the lake, Ludington-based Lake Michigan Carferry vigorously opposed Milwaukee-based Lake Express LLC when it started. In 2003 Robert Manglitz, president of Lake Michigan Carferry, maintained that there was only enough business on Lake Michigan for one ferry.
Manglitz also criticized $17.5 million in government-backed loan guarantees for Lake Express LLC and said, "We don't believe that we should be forced to compete with the U.S. taxpayer," in a May 23, 2003, Journal Sentinel story.
By e-mail Matson declined to respond to questions about the company's stance on government subsidies, how much coal it purchases from the City of Manitowoc, how much coal ash it deposits in Lake Michigan or where in the lake it's deposited.
"The Tiger II grant does not give the Badger an unfair competitive advantage. Actual operating costs may increase with the conversion to diesel power," Matson wrote.
Shay was surprised to hear of the criticism toward SS Badger's funding request. He doesn't think it would be an unfair advantage and noted that officials in Milwaukee and Muskegon would want environmental concerns addressed on Lake Michigan.
"The health of Lake Michigan affects all of our communities. I would struggle