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City-cruise line funding compacts on track

Posted: Tuesday, April 16, 2002

The Juneau Assembly will pursue an agreement with the cruise industry to fund the Marine Park-Steamship Wharf project, but is keeping its options open.

The Assembly on Monday decided to ask the city manager's office to negotiate a funding agreement with the North West CruiseShip Association for the wharf-park project and report back in a week. A resolution imposing a fee of 20 cents per net ton on cruise ships was tabled until April 29 on a 6-3 vote.

The city has charged cruise ships tonnage fees to pay for port projects for the last decade, but they expired Jan. 1. In an effort to improve relations with the cruise industry, the Assembly has been discussing whether to replace the tonnage fee with project-based funding agreements.

At this point, Deputy Mayor Ken Koelsch said the city hasn't ruled out any type of port funding arrangements. A tonnage fee could be used within a project-based agreement, or the industry could make a direct contribution to a project, he said.

"I think there are a lot of aspects to work out," he said. "There's the amount of time to pay for it, the total value of the project now that we added some things, and the vehicle - whether it's the tonnage tax or other option."

The cruise association proposed last week to pay $3.1 million for the Marine Park-Steamship Wharf project, with the Assembly chipping in $1.5 million in cruise ship passenger fees over two years. The basic project - which includes bus staging, green space and a pedestrian plaza - is expected to cost roughly $5 million.

Mayor Sally Smith, who earlier supported project-based agreements with the cruise lines, voted against them on Monday. She also voted to table the tonnage fee.

"I'm still wrestling really hard with it," Smith said. "I think we can negotiate project agreements, but we're not going to have real (cost) figures on that marine wharf project until at least August, probably not until September.

"It seems to me to be a little difficult to negotiate project-based funding when you don't know what the bottom line is. And that's really what caused my shift."

A letter from former mayors Dennis Egan and Bruce Botelho expressing alarm about project-based funding agreements also influenced her decision, Smith said.

"It's pretty hard to lose staff at the same time, too," she said, referring to the resignations of the city manager and deputy manager, effective in July. "As the costs unfold, our negotiating team will be gone."

Assembly member Dale Anderson asked his colleagues to pursue a project-based funding agreement and hold off on a tonnage fee.

A tonnage fee "sends a horrible message to those who we're negotiating with," he said. "It's our ace in the hole; it's our card up the sleeve. ... But to do it ahead of time is not good."

Assembly member Marc Wheeler said tonnage fees would put the Assembly in a position of strength to negotiate. The city can collaborate with the industry on port projects with a fee structure in place, he said.

Don Habeger, Juneau port manager for Cruise Line Agencies of Alaska, said the cruise industry met its obligations in an agreement with the Assembly to rebuild the dock downtown more than 10 years ago. The industry paid $12.5 million in tonnage fees for the $4.6 million project, he said.

Local attorney Joe Geldhof recommended that the city impose a tonnage fee. The basic Marine Park-Steamship Wharf deck-over structure should be paid for by the industry, while the city should pay for the amenities with cruise ship passenger fees, he said.

"If you're going to try to negotiate a project agreement, be in a secure position," he said.

The motion to pursue a funding agreement for the Marine Park-Steamship Wharf project passed 5-to-4. Anderson, Koelsch, Randy Wanamaker, Don Etheridge and Jeannie Johnson voted yes. Smith, Wheeler, Frankie Pillifant and Jim Powell voted no.

A proposal from Koelsch to authorize the use of $750,000 in passenger fees in 2003, and to propose the use of another $750,000 in passenger fees in 2004, for the park-wharf project failed by a 4-to-5 vote. Anderson, Etheridge, Koelsch and Wanamaker voted yes.

Joanna Markell can be reached at joannam@juneauempire.com.



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