City delays decision on cruise fees

Industry favors passenger fee for port projects

Posted: Tuesday, April 30, 2002

The Norwegian Sky didn't face a tonnage fee when it became the first cruise ship of the season to pull into Juneau today. But it might pay a new passenger fee for port projects.

The Juneau Assembly failed to reach agreement Monday on how to charge cruise ships for port projects. Resolutions reimposing a tonnage fee and establishing a project-based funding agreement with the industry will go before the Assembly on May 6.

The city has been working with the cruise industry for the past several months to find a way to pay for port projects. Over the past decade, the city has charged cruise ships a tonnage fee for capital improvements, collecting about $1.7 million in revenue last year. A 23-cent-per-net-ton fee expired Jan. 1, and the industry has asked the city to set up project-based funding agreements instead.

City Manager Dave Palmer, Deputy City Manager Donna Pierce and cruise line representatives met in Seattle on Thursday to discuss the details of a project-based agreement to pay for improvements to the Marine Park-Steamship Wharf area downtown. The first phase of the project should cost about $5.4 million, according to the city.

The North West CruiseShip Association offered to pay $3.6 million of the total through advance funding or a per-passenger, per-day fee, Palmer said.

Don Habeger, Juneau port manager for Cruise Line Agencies of Alaska, said a new passenger fee could be apportioned by the industry. The cruise lines haven't attached a dollar amount to the passenger fee idea, he said.

"Let's suppose on a project-based fee we wanted a dolphin or a bollard or something out there that didn't have interest to the entire industry. Then we could just assess that fee to just the users of that facility," he said. "It may cover the entire industry. That's why we came up with a concept that gave us the flexibility."

Cruise lines pay a separate, city-imposed passenger fee of $5 a person in Juneau to cover industry impacts.

In a series of votes over two hours, the Assembly twice tabled a resolution imposing port dues of 16 cents per net ton and voted down a $2 passenger fee for port projects. Amendments that would have set up temporary port dues or applied port dues to a future project agreement also failed.

In the middle of the meeting, the Assembly voted 5-4 to go into a closed-door session to discuss financial issues, a move that was protested by reporters in the audience. After a break, the Assembly decided keep the meeting open to the public.

City Attorney John Corso earlier cautioned the Assembly to limit its discussion to the port dues resolution, as advertised. The Assembly would need to advertise separately to discuss the merits of an alternative, he said. A similar standard applied an executive session, he said.

"The merits of (an alternative) and ordering it to be done would not be appropriate" for closed-door discussions, he said. "Anything that's not on the agenda should not be discussed at a special meeting."

At the end of the meeting, Deputy Mayor Ken Koelsch asked the city to prepare a resolution that establishes a project-based agreement to pay for the Marine Park-Steamship Wharf project. Under Koelsch's proposal, the North West CruiseShip Association would pay $3.6 million and the city would pay $1.5 million for the project.

"I think it's important that the project is done for our downtown growth," he said. "There are lots of ways of collecting money from the cruise lines, but I think this is one that benefits both of us."

Assembly member Marc Wheeler said he was disappointed the Assembly didn't put some funding mechanism in place to pay for port improvements before the first cruise ship arrived.

"We could end up talking to the cruise lines until October and still not have a mechanism in place," he said. "My big concern is we have to look after the city's bottom line. That's our duty."

Assembly member Dale Anderson said the cruise lines would pay if a project agreement was approved.

"I have more faith in our partners that that," he said. "They will pay in a week, 10 days. Let's take a week and work this out, rather than be forced."

Mayor Sally Smith said she believes the city can have a collaborative relationship with the cruise lines, but said a tonnage tax is needed for bargaining purposes.

"It helps us move toward that way of doing business," she said.

Two separate amendments establishing a 16-cent-per-net-ton fee were tabled unanimously. An amendment that would have established a $2 passenger fee for port projects failed in 5-4 vote. Jeannie Johnson, Randy Wanamaker, Don Etheridge, Koelsch and Anderson voted no. Frankie Pillifant, Jim Powell, Wheeler and Smith voted yes.

Joanna Markell can be reached at

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