Whittier drops head tax to lure Princess back

Posted: Friday, April 25, 2003

ANCHORAGE - Princess Cruises is returning to Whittier in the 2004 season following a city council decision to repeal a $1 per passenger head tax on cruise passengers.

The council voted unanimously this week to eliminate the head tax and discourage any similar taxes in the future.

The council also exempted Princess from a seasonal sales tax and a passenger transport fee paid by smaller day-cruise operators, and it paved the way for a private cruise ship dock to be built this summer, city manager Rick Hohnbaum said.

"Princess made it very clear that they would not be interested in investing in our community if there was a head tax or the potential for a head tax," Hohnbaum told the Anchorage Daily News.

"It was an ultimatum," said Arnie Arneson, a vice mayor and city council member who said he reluctantly voted to repeal the tax.

Details still need to be worked out, but Princess will probably redeploy to Whittier its vessels that currently visit Seward, said Tom Dow, a company vice president. A couple of ships per week would likely stop in Whittier beginning in May 2004.

Princess and the city would work out a 10-year deal with an option to renew, Dow said.

Princess and Holland America - the two largest cruise-ship companies sailing in Alaska - abandoned the Prince William Sound community 10 years ago after the city council voted to charge cruise passengers a $1 tax. The cruise lines took their business to Seward, which doesn't charge a passenger fee.

Whittier officials and cruise line executives have long had informal talks.

But talks got more serious when Whittier's train and passenger vehicle tunnel opened three years ago, Dow said. The tunnel connects the community of 300 to the road system.

Whittier's closer proximity to Anchorage played a big factor in the decision, Dow said. And a newly constructed rail station at the Anchorage airport should make it easier to shuttle cruise passengers between aircraft and vessels.

Jim Barnett of Passage Canal Development said even without the tax, Whittier will benefit. Barnett and a new company, Whittier Dock Enterprise, plan to build a private cruise dock and marina. The city will collect a percentage of the property taxes and gross revenue.

Hohnbaum estimates the city will collect $350,000 to $400,000 a year after the dock and marina are built.



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