Waterfront land swap negotiations continue as city reviews passenger fee ruling

The Archipelago Lot sits between the downtown library and Pier 49 on South Franklin Street. The proposed land exchnage would see the tidelands decked over to create a pedestrian plaza and bus staging area. (Photo by Adelyn Baxter/KTOO)
The Archipelago Lot sits between the downtown library and Pier 49 on South Franklin Street. The proposed land exchange would see the tidelands decked over to create a pedestrian plaza and bus staging area. (Photo by Adelyn Baxter/KTOO)

The city hopes a proposed land exchange with the owner of a waterfront property on South Franklin Street will help mitigate the impact of continued growth in the number of cruise ship passengers visiting Juneau each year.

But a recent ruling in the lawsuit brought by the cruise ship industry may complicate how the city pays for the project.

According to City Manager Rorie Watt, the costs are big for waterfront development in Juneau.

The $900,000 land exchange being proposed is no different.

“That’s what it would cost to provide these services, that we would not do but for the need to serve those ships and their growing footprint,” Watt explained at a committee meeting in November.

Juneau expects 1.3 million cruise ship passengers to visit in 2019 — that’s about 1,500 more passengers per day compared to this past year.

“In terms of elbow room, for that number of people, you need a lot of space,” Watt said at the meeting.

That’s why a public-private partnership between the city and former Juneau Empire owner Morris Communications is being billed as an opportunity to address summertime crowding along the cruise ship docks.

Morris owns the vacant lot known as the Archipelago Lot used by seasonal food stands next to the downtown library. The proposed deal would see the city buy the tidelands between the lot and the Seawalk and a parcel just south next door to Pier 49.

In return, Morris would get a section of city property along South Franklin Street.

This visual concept of the Archipelago Lot shows proposed new subdivision line and properties to be sold and purchased by Morris Communications and CBJ. (Image courtesy of the City and Borough of Juneau)
This visual concept of the Archipelago Lot shows the proposed new subdivision line and
properties to be sold and purchased by Morris Communications and CBJ. (Image courtesy of the City and Borough of Juneau)

The city wants to deck over the tidelands to create more space for pedestrian traffic and bus staging. Estimates put the total cost at $23 million with a two-year construction period.

Allen Grinalds, Morris’ real estate director, said the company could have decided to develop its lot independently but wanted to explore a partnership because of the potential benefits to both parties.

“I think the idea, though, is through cooperation and communication between the two developments, we can do something that’s really impactful,” Grinalds said.

Morris plans to build a mix of retail, food and beverage options on their lot with an open concept to allow foot traffic to flow easily from the street to the Seawalk. They will put off construction on the lot for a full year while the city builds its deck.

But before the city can move forward, it has to figure out where the funding for the project will come from. The plan has been to use a combination of local funds and tax revenue collected from cruise ships and passengers.

But earlier this month, a federal judge ruled the city must spend marine passenger fee revenue in a way that directly benefits the cruise ships. That amounts to about $8 million annually which the city has been using to pay for things like crossing guards and public bathrooms.

Watt said the ruling was relatively clear, but now the city needs to figure out exactly how to apply the ruling in a way that allows them to to continue providing needed services for tourists.

“In my mind, it’s a bit of a mechanical problem: How do we fund these services that everybody needs?” Watt said this week. “Nobody’s saying, ‘Don’t do these things that have made us a successful port that we are.’”

Another part of the proposed deal includes an optional “right to object” clause. That would give Morris the ability to block any addition on the city’s portion of the land that directly competes with their businesses.

In exchange, the city would pay almost $200,000 less for the land.

Grinalds said Morris just wants to protect their business interests.

“The takeaway from that is simply that, anything that’s going to be good for the city is probably good for the development, and we’ll probably be the biggest cheerleader for that,” Grinalds said.

At Monday’s meeting, the Juneau Assembly tabled a funding ordinance and a budget transfer related for the project.

The purchase and sale agreement will be introduced at its next meeting on Jan. 7.

They’ll hold a public hearing at the following meeting on Jan. 28, when the Assembly will also review funds transfers.

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