City, cruise lines grapple with fees

Passenger fees bring in more than $3 million a year

Posted: Friday, May 16, 2003

Members of the Juneau Assembly made recommendations at a Wednesday night Finance Committee meeting about how cruise ship passenger fees should be spent, but their suggestions raised a few eyebrows among industry representatives.

"Some of (the recommendations) are questionable relative to the original ordinance," John Hansen, spokesman for the North West CruiseShip Association, said in a phone interview.

Since Juneau voters passed a marine passenger fee initiative in 1999, cruise ship passengers have been paying $5 each, contributing more than $3 million per year to city capital and operating costs related to tourism. The ordinance states the fees must be used to pay for "services and infrastructure" used by the cruise industry or "to mitigate the impacts" of cruise tourism on Juneau.

The majority of Assem-bly members and industry representatives are sometimes at cross-purposes on how the ordinance should be interpreted, in part because the ordinance is not the only thing that dictates how cruise ships can be taxed. The new federal Port Security Act, passed after the Sept. 11 attacks, states fees collected from ships must be used for service to those ships.

Cruise industry representatives say they prefer to see a direct benefit in exchange for the fee passengers pay. Assembly members argue "services" are sometimes hard to quantify and include increased use of city infrastructure, such as the water and sewer systems.

Often during the meeting, Assembly members referred to a "red-face" test, meaning a funding proposal must have enough obvious connection to the cruise ship industry to not be embarrassing.

"In the reading from our own attorney it is very clear as long as we stay close to the dock and pass the red-face test and connect the dots that the money we spend benefits the industry, we're OK," said Assembly member Jim Powell.

Among the less controversial recommended uses for marine passenger fees are funding for Princess Tours' shoreside power project, half-hour bus service, various tourism management projects, crossing guards, a park ranger, flightseeing noise abatement, waterfront land acquisition and downtown public restrooms.

Members debated whether it would be appropriate to cover one-quarter of the cost of replacing major parts of a city incinerator, which is used to burn the sludge that settles out during the treatment of wastewater.

"As a red-face test, it seems like we are charging visitors to go to the bathroom here," said Assembly member Ken Koelsch.

Mayor Sally Smith responded that it costs money to dispose of visitors' waste, and providing the incineration was a service to the cruise industry.

"I see the visitors as charging us when they go to the bathroom," she said.

According to City Manager Rod Swope, the volume of sludge the city incinerates at the treatment plant nearest the cruise ship docks increases by an average of 210,284 pounds per month May through September, compared to an average of 112,000 pounds per month October to through April.

None of the cruise ships transfers sewage shoreside for treatment. All of the increase is attributed to more people being downtown. In dispute is how many of the additional people are cruise ship passengers.

"Is it really only cruise ship passengers, or is there more sludge and sewage because kids are home from college, and more independent people coming in?" asked Kirby Day, director of operations in Southeast Alaska for Princess Tours.

"The industry has always been willing to pay for services it uses, but the question is: Is all of that (incinerator) maintenance needed due to cruise ship passengers, or is it ... just basically deterioration of a facility" over time, Day asked.

The finance committee decided to include the incinerator part in appropriating the passenger fees.

"The red-face test for me is the red-face test to my neighbors," said Assembly member Stan Ridgeway. "It's when my neighbors find out that we had the money to address these things that are obviously affected by the industry and we didn't, but we had to raise their water and sewer rates."

Representatives of the industry also have heartburn with the largest recommended appropriation of marine passenger fee money, about $900,000, to "general support." Powell said the money goes to cover a bevy of miscellaneous, hard-to-quantify costs.

"I think it is very reasonable to expect that there are impacts that are very difficulty to measure, wear and tear on roads, for example," said Powell.

Hansen said the industry would be more comfortable if the general support funds were accounted for more precisely.

"We haven't seen any detail of how that is being applied and what it's used for. It isn't easy to say it is being applied appropriately," he said. "That would be the question mark: whether what is being applied is consistent to the original ordinance."

The finance committee recommendation must go before the marine passenger fee committee, and then the full Assembly for approval.

• Julia O'Malley can be reached

How passenger fees might be spent

Some Finance Committee recommendations

General support: $942,000.

Noise abatement: $635,000.

Steamship Wharf/Marine Park debt: $322,200.

Shoreside power: $300,000.

Public restrooms: $250,000.

Half-hour bus service: $205,000.

Buying waterfront land: $350,000.

Incinerator: $195,000.

Juneau Convention and Visitors Bureau: $97,000.

Tourism impacts: $68,000.

City museum: $62,000.

City lights downtown: $50,000.

Tourism plan: $25,000.

Park ranger: $25,000.

Waterfront planning: $25,000.

Downtown foot/bike patrol: $14,000.

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