Private port operator’s proposal for Ketchikan dock management could mean $40M+ for city general fund

The Norwegian Joy visits Ketchikan on May 13, 2019. (Leila Kheiry/KRBD)

International cruise port operator Global Ports Holding is asking the city of Ketchikan to give up its port fees — including a $7 head tax paid by each cruise passenger that visits Ketchikan.

That’s according to newly-released documents detailing the proposal. The documents shine a light on one of two bids currently in front of the Ketchikan City Council over who would manage and operate the city-owned cruise ship docks for the next two or three decades.

The really eye-popping number is the up-front fee Global Ports Holding and partner ConRAC Solutions would pay the city: Between $40 million and $45 million paid over seven years. In exchange, Global Ports and ConRAC Solutions would gradually raise the fee paid by cruise passengers visiting Ketchikan to $15 by 2029. After that, it’d be tied to inflation.

It’s not clear whether that $15 charge would legally qualify as a passenger vessel fee under state law. Cruise ports currently split shares of a $34.50 head tax paid to the state by cruise lines.

As part of the deal, Global Ports Holding would also take over expenses currently paid by the city to operate the docks. That includes the Berth IV lease, which cost $2.7 million last year, and interest on port bonds — another $2.2 million last year.

Ketchikan Port Solutions would be the name of the entity created by the partnership. It’s promised an additional $20 million in maintenance and another $19 million in other upgrades.

The city would still be paid on a per cruise passenger basis. Global Ports Holding proposed paying between 50 cents and $1.25 per visitor, depending on whether the docks are leased for 20 or 30 years.

Representatives for each company told the city council last month that in their minds, the city could spend the $40 to $45 million fee on whatever it wanted to, as long as it’s for the good of the public. So, parks, water mains, fire trucks — whatever.

That’s notable because right now, port fees can’t be spent on anything that doesn’t directly benefit ships. That was reaffirmed in a federal court after the cruise industry sued the City and Borough of Juneau over its $8 head tax.

So a deal with Global Ports Holding could, in theory, mean more money in the city’s general fund.

But Ketchikan’s city attorney hasn’t commented or released a legal opinion of whether that’d be the case.

Altogether, the company says its investment over 30 years would be at least $204 million. There is language to protect the city in case cruise passenger numbers drop off. But not in the case of a pandemic. The city has yet to comment on what it sees as its likely risks in the deal.

As of Monday afternoon, competing bidder Survey Point Holdings has not released its bid to take over management at Ketchikan’s city-owned cruise ship docks.