With two cruise ship companies receiving docking fee waivers for the 2015 season, Haines Borough staff say additional waivers might boost the town’s economy through increased sales tax.
The one-year waivers for the 2015 season, authorized by the assembly for Celebrity Cruises and Princess Cruises, amounted to a loss of $13,400 in revenue for the borough. However, Celebrity Cruises has since cut their planned dockings from two to one, bringing the total waivers to about $9,000.
Three borough employees – community and economic development director Bill Mandeville, tourism director Leslie Ross and chief fiscal officer Jila Stuart – have drafted a document outlining five options for how the borough might proceed with issuing waivers to cruise ship companies in the future:
● Option 1: Continue with the Backroads Alaska marketing program, which the assembly approved in 2011. The program waives fees for the first year for the first cruise ship company that accepts the “backroads” itinerary, which visits less-traveled ports.
● Option 2: Issue three-year waivers only to cruise ships more than 900 feet long.
● Option 3: Issue three-year waivers only to cruise ships more than 700 feet long.
● Option 4: Issue a three-year graduate waiver to all ships that return to Haines, starting at a 20 percent waiver the first year and increasing to 60 percent by the third year.
● Option 5: Issue all ships, regardless of size, a waiver, with the net increase in sales tax over the 2015 season going to finance capital improvements at the Small Boat Harbor. The net increase would take into account revenue lost from issuance of the waiver.
According to the draft document, the options were developed using comments and ideas from conversations with the Tourism Advisory Board and “a few representatives of the fishing industry.”
Mandeville, Ross and Stuart ranked the five options on a 1-5 scale based on six criteria, including whether the option makes a “strong enough statement” that the borough is serious about its tourism industry, whether the option will see noticeable and measurable benefits, and whether the option will result in a net increase in sales tax.
(Stuart’s ratings have not yet been incorporated into the draft document.)
“Haines would like to increase the number of cruise ships that visit from 2.7 per week, its rate in year 2015, to an average of three ships per week. In order to achieve this goal, Haines needs to add at least two more cruise ships and preferably four ships to reach an average of three port of calls per week,” the report reads. “Skagway currently has 30 cruise ships that visit it each year. The task facing Haines is to get two to four of these ships to add Haines to their itinerary.”
According to the report, the industry-comprised Tourism Advisory Board wants a waiver “that makes a unique and stronger statement for Haines. A statement that clearly states, ‘Haines Borough is serious about its tourism industry.”
Development director Mandeville has been crunching numbers and working on the report for months, with repeated presentations at TAB meetings. In a March 10 interview following his initial report to the TAB, Mandeville said the waivers don’t so much represent a financial incentive for the cruise ship companies as they convey a message about the town’s openness to the industry.
“Realistically though, the amount of money they are saving on the waiver is probably a drop in the bucket. I mean, it’s not even a drop in the bucket. It probably doesn’t even make a ripple in the total amount of money that they are dealing with,” Mandeville said. “More importantly, it just kind of shows that the borough is really serious about making Haines a good destination place to the point that we are willing to put our money where our mouth is.”
According to the 2011 McDowell Group Passenger Survey, the average cruise ship passenger spends $85 in Haines ($59 on tours, $21 on shopping and $5 on other miscellaneous expenses). According to Mandeville’s calculations, that $85 in 2011 dollars translates to about $90.85 today.
Based on estimated sales tax revenue figures provided by chief fiscal officer Stuart, each cruise ship visitor will generate about $4.86 in sales tax revenue for the borough next year.
The point of the 20-page document’s number crunching is basically to determine whether the benefits of issuing the waivers outweigh the costs.
According to the borough’s budget for next year, which is currently under consideration by the assembly, sales tax revenues are expected to increase by 2 percent in the next fiscal year.
“You don’t want to say that the total increase in sales tax is related to those (three) dockings (of the cruise ships that received waivers). It’s a lot more complicated than that. The drop in the price of gasoline, for example, is going to have a big impact, as well, because more people have more money to go on vacation and travel,” Mandeville said.
“But still, the fact of the matter is, when you put 10,000 more visitors in Haines, you’re going to end up with an uptick in our sales tax receipts and it appears that the uptick is going to be more than the amount that we waived.”
Mandeville’s draft also includes calculation of the “multiplier effect,” or how visitor spending trickles down in a community and impacts other parts of the economy, like job opportunities.
Tourism director Ross said she would like to see the final data and report shared with the community and the assembly, so informed decisions can be made about whether or not to issue additional waivers.
“There needs to be a clear understanding to the community, to fishermen and other dock users, of how this sales tax revenue trickles down and positively affects our entire economy. I will use this data to open up a dialogue with others in the community that are concerned with ship waivers and impacts of ships to Haines,” Ross said.
“As tourism director, and with a goal to increase economic vitality to Haines via tourism, I support measures that would bring ships to a dock that is otherwise sitting empty. We just invested millions into our cruise ship dock and it is not benefitting anyone economically to sit empty,” she added.
Manager David Sosa said he looks forward to using information compiled in the final report to make “data-driven decisions” about cruise ship waivers, though he wouldn’t say whether or not he supported issuing waivers.
“I support data driven decisions and we will continue to collect information that will help us determine what the best course of action is in a particular case. With respect to cruise ship waivers, I am not prepared to say yes or no at this time. Rather, I will stress that we will continue to assess the situation so that when we do make a decision it is informed by fact and not driven by emotion,” Sosa said.
The borough currently charges for use of the Port Chilkoot dock based on the size of the mooring vessel. Ships larger than 700 feet will pay $3.50 per foot per day this year, with the price increasing 25 cents per foot per year each subsequent year.