Haines Borough staff and local tour operators turned out this week at an assembly Commerce Committee meeting to lobby for a proposed program that would grant docking fee waivers to cruise ship companies in the hopes of boosting sales tax revenue.
Community and economic development director Bill Mandeville on Tuesday presented two options for the program.
The first option would offer 50 percent waivers to all cruise ships, including those that already visit Haines. Ships coming to Haines for the first time would get a 100 percent waiver, then receive the 50 percent waiver if they returned in subsequent years.
The second option would also offer 100 percent waivers to first-time cruise ships, but would establish an incremental waiver of 20, 40 and 60 percent over three years. Ships that already come to Haines, like Holland America, would also receive the incremental waiver for three years.
Both options would end after three years, Mandeville said. “At the end of three years the idea is we’ll check to see if this targeted incentive is working. If it is, then the borough can consider continuing it, they can revise it, or if it’s not working, we pull the plug on it and think about trying something else,” he said.
Chilkat River Adventures owner Karen Hess and Alaska Mountain Guides owner Sean Gaffney – both members of the borough’s Tourism Advisory Board – spoke out at the meeting in favor of the borough moving forward with one of the options.
Gaffney claimed the borough’s existing waiver program – which offers a 100 percent fee waiver for the first year to the first company of the season that agrees to come – proves that the incentive works, as this season Princess Cruises agreed to two dockings and Celebrity Cruises to one.
(Cruise ship companies are charged per docking on a per-foot basis. The waivers for the three Princess and Celebrity dockings this season amounted to about $9,000).
“Those ships came because of that waiver. And other than that, we have not had other ships coming here. So I would argue that it is effective and it does bring additional business to town,” Gaffney said.
Haines needs to remain competitive with other small cruise ship ports like Sitka and Icy Strait Point (Hoonah), Gaffney said, and holds a special advantage due to its location between the major ports of Juneau and Skagway and its proximity to Glacier Bay National Park. Waivers make those selling points more salient, he said.
“I think that these sorts of incentives are huge in getting us leverage and an advantage and being more competitive,” Gaffney said.
Hess gave kudos to the borough for getting Celebrity Cruises, operated by Royal Caribbean, to come back to Haines after the company abruptly pulled out in 2000. “We all know what happened back in 2000 when they left,” she said. “It’s huge for Celebrity to actually have accepted Haines again that well.”
Royal Caribbean cited rising fuel costs as the reason for its decision to leave town, though tension arose between the Royal Caribbean and the community of Haines when the company pleaded guilty in 1998 to several felony violations of dumping dry-cleaning and photo-processing chemicals in coastal waters, including between Haines and Skagway.
Tourism director Leslie Ross on Tuesday alluded to old issues Haines has to “overcome” in order to convince cruise ships to come here.
“It is putting out a welcome mat,” Ross said of the waivers. “With our past in Haines, we do have things to overcome and this is one more way of saying we are open for business and we want cruise ships in our town.”
In contrast to the strong support the program received from some tour operators at the meeting, other residents turned out to express skepticism about the program, including whether waivers would actually make a difference to multi-billion dollar companies like Royal Caribbean.
“Haines has always had and continues to have the lowest fees and we still haven’t gotten cruise ships,” Carol Tuynman told the Commerce Committee Tuesday. “I don’t understand how not having fees in itself is really going to increase that. That just doesn’t make sense.”
Tuynman said after the meeting she’d rather see Haines change its image to attract cruise ships rather than blame the past for why they aren’t coming. “It’s time to stop dredging up the past as an excuse for making decisions today,” she said.
Heather Shade told the committee she didn’t have an opinion on the program yet, but had questions about Mandeville’s report, which she called “lacking.”
The report oversimplified the cause-and-effect relationship between cruise ship dockings and sales tax revenue, Shade said, and also didn’t establish a plan for measuring the success of the program if the assembly does eventually approve it.
“My concern is that we are talking about what is (the cruise ship companies) risk and incentive going to be when, in fact, this policy should be looking at what our risks and incentives are going to be in the long term in a clear and measurable way. I read this and analyzed it and I couldn’t figure it out,” Shade said.
Chamber of Commerce executive director Debra Schnabel also questioned the program’s proposal to reimburse the Port Chilkoot Dock enterprise fund for the lost docking fee revenue with the tourism and economic development fund’s share of sales tax. (The program is based on the theory that increased number of dockings, and therefore visitors, will lead to increased sales tax receipts that will outweigh the waiver totals.)
Schnabel said she was concerned that the borough would be using sales tax – which the public votes on how to use – to reimburse revenue of an enterprise funds, as enterprise funds by definition are intended to be self-sustaining and paid for by user fees, not general tax dollars.
“Right now our structure is to have dock moorage fees be the revenue stream for the (Port Chilkoot Dock) fund and we’re just saying, ‘No, let’s not do that anymore,’” Schnabel said.
Manager David Sosa clarified that it’s “technically” legal for the borough to collect sales tax, put it into the tourism and economic development fund, and transfer it into the Port Chilkoot Dock fund with assembly approval.
“There is not a legal issue with that, although there could be an issue in terms of how it is presented. So I do think we have to take a hard look at that,” Sosa said.
The Commerce Committee and Tourism Advisory Board will hold a joint meeting at 6:30 p.m. Thursday, June 4, to further discuss the proposal. The public is encouraged to attend and give their thoughts.