The City and Borough of Juneau Assembly gave its assent Monday evening to an ordinance authorizing a bond issue of up to $29 million to help pay for new cruise ship berths in downtown Juneau, but the vote was not without controversy.
Linnea Osborne, whose family has appealed Planning Commission approval of the cruise ship berth development project often referred to as “16b,” testified against the ordinance and the project.
“The cruise ship industry has publicly stated twice… they do not support this project,” said Osborne, who asserted port development fee revenues to pay down the bond debt would affect fishermen and others.
Osborne added, “In addition to that, we don’t think Juneau can afford this project. … The whole project lacks transparency, and we shouldn’t be on the hook.”
Larry Spencer, president of the Downtown Business Association, argued in favor of the ordinance.
“I understand that there’s still some controversy involved, but no matter what the final project looks like, it’s going to require this $29 million to bring it to completion,” Spencer said.
In reference to the fee slated to be used to pay down the bond debt, Assemblymember Jesse Kiehl asked Finance Director Bob Bartholomew, “Who pays the port development fee?”
“Currently, the port development fee is the fee that’s assessed on the users of the major docks in the port,” Bartholomew replied. “If there’s anybody outside the cruise ship industry that uses the large public docks in the port, they would be subject to the fee.”
Bartholomew said the fee is not assessed on users of Juneau’s harbors.
Kiehl appeared to be satisfied by Bartholomew’s answers.
But Assemblymember Ruth Danner asked Bartholomew whether the city had “exhausted” other potential funding sources.
“We have not specifically gone out to the financial community to determine the interest of sources, that who would be interested possibly in investing in the infrastructure,” Bartholomew answered.
Assemblymember Randy Wanamaker echoed Osborne’s arguments in his brief explanation of why he was voting against the ordinance.
“I’m not able to support 2012-28 for several reasons,” said Wanamaker, referring to the number of the ordinance. “The first is the high cost of the project. The second and third are the lack of support for the project by industry and the public in general. And I have concerns about the uncertainty of the funding mechanism over the long term.”
Assemblymembers Danner and Johan Dybdahl joined Wanamaker in voting against the ordinance, which passed 5-3. Deputy Mayor David G. Stone recused himself due to a conflict.
Debt service on the “private activity bonds,” which is estimated to total nearly $42.4 million, would be paid for by port development fee revenues from Fiscal Year 14 to Fiscal Year 33.
The Assembly also acknowledged at its meeting the retirement this Friday of longtime CBJ employee Cynthia Johnson from the Division of Lands and Resources. The Assembly, staff and members of the public gave Johnson a standing ovation.
Several other ordinances, including an amendment to the Land Use Code allowing more flexibility in considering rezoning requests, also passed.
• Contact reporter Mark D. Miller at 523-2279 or at mark.d.miller@juneauempire.com.
Comments (17)
Add commentMore of the same, from the same!
It’s hard to understand the lack of fiscal responsibility of some members of the assembly, when a project is opposed by the intended users as unnecessary that would seem to suffice as sufficient reason not to carry forward with an obligation of this magnitude. What Juneau needs are a LOT more elected representatives with Mr. Wanamaker’s respect for the peoples right to have their hard earned wages taxed responsibly, I know this is not a direct tax in that respect, but somehow, in the end it will bite the citizenry in the butt!!
Shoved down our throats...
...or rammed up our a$$es. Public approval and industry opinion actually AGREE that this isn't a good idea. That is an anomaly in itself. But, the assembly will railroad this through anyway? I wish more seats were up for election this year.
Clarification
The reason why the "industry" opposes the 16B dock is because they work exclusively with private dock owners, who see the new city docks as competition. This same industry group also opposed the local, $5 head tax in 1999, the state head taxes of 2006, and they strongly pushed to cut state taxes by $25 per passenger in 2009. Now they want yearly funding from head-tax revenue, while opposing longer CBJ docks that allow two 1000' ships to tie up each day. Ridiculous!
These foreign cruise companies also oppose a switch from bunker fuel to burning diesel that is far cleaner. The bad-boy list goes on and on with the wealthy cruise operators, but the bottom line is simple: they want all the money and total control of any laws or regulations, and they will lie, lobby and fight to make that happen.
Chip Thoma, Responsible Cruising in Alaska
Nope,
Sorry Chip, you cannot rationalize your way out of the fact that there exists a finite amount of bonds that can be floated by the City, and when the need arises for one that actually benefits the local population, that door might well be closed. Do YOU really want that?
Regarding Cruise Dock Bonds
Recently, the city of Ketchikan has been extremely successful in getting large state funding amounts directed to pay off their cruise dock bonds. I am confident that the CBJ can do the same in 2013-14, as the largest cruise port in Alaska.
Host port cities should not be burdened with long-term bonds and millions in interest to finance projects for a foreign cruise industry that opposes all local taxes and capital improvements. Surplus oil revenues ($15 Billion) can and should be directed for this noble purpose.
Will Assembly Members Cosign?
I'd like to see the Assembly members who voted for this PERSONALLY co-sign on the bond. If you're going to commit to something unpopular by voters and industry, you should back it up.
???
Why is the amendment to the land use code a footnote to this article? I have serious reservations about buying a house in a town whose leadership has the flexibility to blithely rezone neighborhoods according to their interpretation of the land use code.
Build 'em!
One could quibble about how the cost for these two essential wharfs has escalated and even about the financing mechanism, but Juneau really needs these two wharfs. A huge bonus with the construction will be a greatly improved public seawalk and insured public access to the waterfront.
Naturally some portion of the cruise industry is opposed to building these public wharfs -- they don't gain a financial advantage from the transaction, as they do with other private docks.
Let's just get on with building these needed improvements. The shrill rhetoric from some of the opponents here underscores their lack of comprehension on where the funds to build these public works is derived from and an ideological perspective that misses reality.
Interesting
Ms. Danner tried several times to take on Docks & Harbors, as documented in the Empire, because of the lack of transparency on projects such as this and was crucified each and every time.
Interesting.
I'm glad that she is too tenacious to give up, even on her way out the door. Thank you Randy, Ruth, and Johan for taking a second look.
@ Joe
I completely understand where the money comes from for this project. What I don't understand, and has never been clearly articulated that I am aware of, is what happens if the Cruise industry takes a dive and we aren't collecting enough in head tax to cover this project?
Do you know? I'm not trying to be confrontational, I am genuinely curious.
This is truly stunning and my
This is truly stunning and my thanks go out to Ruth Danner, Johan Dybdahl and Randy Wanamaker for listening to concerns voiced by the Juneau public!
http://www.juneau.org/assembl
http://www.juneau.org/assembly/agendas/2012/2012-08-13/2012-08-13.php
a. Ordinance 2012-28
An Ordinance Providing For The Issuance And Sale Of A Port Revenue Bond In The Aggregate Principal Amount Of Not To Exceed $29,000,000; Providing For The Form And Terms Of The Bond; Providing A Method Of Payment Therefor; And Reserving The Right To Issue Revenue Bonds On A Parity With The Bond Upon Compliance With Certain Conditions.
This ordinance would authorize the issuance and sale of up to $29 million in Port Revenue bonds. The bond funding is a portion of total revenues needed to complete the cruise ship berth enhancement project and related uplands improvements.
The bonds would be issued for a 19-year term. The terms of the bond require CBJ to pledge the local Port Development Fee (PDF) revenue to fund the debt service. Debt service would be paid from FY14 to FY33 revenues. The estimated total cost of the debt service, based on an average interest rate of 4.37%, is $42.37 million.
The Port Revenue Bonds will be classified as “private activity bonds” (PAB) under federal tax law, TEFRA. This is determined based on the primary user of the port facility being private cruise line corporations. PABs require a public hearing to permit the public to comment on the proposed bond issue. This hearing is currently schedule for August 24, 2012.
An update of the project costs and revenues was presented to the Finance Committee at its August 1, 2012 meeting. Total project cost is estimated at $88.1 million. The total grant, PDF, and State Marine Passenger Fee revenues allocated to the project are $59.1 million (plus bond funds). To date, including the FY13 budget, $42.6 million has been appropriated to the project.
I recommend this ordinance be introduced and set for public hearing at the next regular Assembly meeting.
the Finance Committee August
the Finance Committee August 1, 2012 meeting:
http://www.juneau.org/clerk/ASC/FC/2012/2012-08-01_afcagenda.htm
Daffy
I take your point on what would happen if cruising tanks and there are fewer cruise ships calling on Juneau with a corresponding decrease in revenue from which the bonds will be retired.
Your observation underscores a problem with financing the wharfs instead of paying for out of pocket. The CBJ has not been particularly prudent with cruise passenger funds since 1999 when the local passenger fee was first levied. There has been a near constant demand to spend the funds for ancillary purposes instead of concentrating on projects like these docks which are clearly needed and totally justifiable under applicable law.
But the issue of spending by our elected officials is just another chapter in what is now a long book on the routine mis-allocation of public funds by politicians. It turns out that spending money in a manner that obtains significant value is difficult for many people, particularly politicians, who are more attuned to addressing whatever faction is shouting the loudest or gins up a clever lobbying campaign. The end result here is that the CBJ pretty much blew an opportunity to construct the needed wharfs out-of-pocket by frittering away a bunch of funding over the years on fun but not critical marine waterfront needs. It doesn't help that the concept of the docks has ballooned, gone on for a long time and has been held hostage by wacky arguments related to the Fisherman's Memorial, etc., etc.
Anyway, here we are ready to start beating down the necessary pilings, build the floating wharfs and also build another big chunk of the Sea Walk. What happens if the economy tanks and let's say a third of the cruise vessels stop coming to Juneau?
Even with a huge reduction in vessel traffic coming to Juneau, the new wharfs would still get plenty of use and the revenues would be sufficient to pay for the revenue bonds. Why, you might ask? The CBJ wharfs are in the best location and highly desirable. On a two or three cruise ship day, wouldn't most tourists prefer to disembark downtown? Who wants to get stuck out on the rock dump cruise dock anyway? Of course this assumes the CBJ Port Director actually takes charge of allocating berthing in Juneau, which is a problem right now given that the cruise lines have wrested control of Juneau's berthing allocation from the CBJ. Whether the CBJ will have the political will to actually make berthing allocations is unknown -- this issue could go either way.
Would there be some hard choices required if cruising drops by a lot and revenues from the cruise passengers is diminished by a third? Sure. The CBJ might have to stop giving the private docks free funding or ramp back on nice but not essential ancillary services supposedly related to cruise chip passenger use, e.g., more cops downtown or paying for the unreimbursed costs of passengers who are medivaced out of Juneau and are not covered by insurance. There would be some belt tightening but there are no conceivable circumstances likely where the CBJ will not have sufficient revenue to complete the financial obligations associated with the bonding proposal.
Option D
How about we lease the public land to the cruise lines and let them build their own docks to use as they please. Then it does not matter if the boats come or go; CBJ is tied into a payment through a long-term lease, all construction costs are on the users, and the head tax can be filtered down to things that help Juneau.
Johan Dybdahl has a conflict of interest
Laffy, Dybdahl works for a competing cruiseship destination in Hoonah - Icy Strait Point. It will be harmed by the compeition of the larger Juneau docks. He should've recused himself as David Stone did. The idea that he is looking out for the best interest of Juneau on this is a joke. He is looking out his own wallet.
double
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