With CLIAA lawsuit at an end, city considers proposals for marine passenger fee revenue

By January 26, 2019 January 31st, 2019 Business, Juneau, Local Government, Tourism
A pair of Panamax cruise ships docked in downtown Juneau on Aug. 30, 2017. The floating berths have eliminated the need for yellow security fencing and opened up a wide promenade for pedestrians. (Photo by Jacob Resneck/KTOO)

A pair of Panamax cruise ships docked in downtown Juneau on Aug. 30, 2017. The Archipelago Lot is to the left of the Seawalk. Under the current proposal, the city hopes to deck over the tidelands and build bus staging. (Photo by Jacob Resneck/KTOO)

On Friday, a federal judge issued a final decision in a three-year-old case between the cruise industry and the City and Borough of Juneau over its $8 per person fee on cruise passengers.

After Judge H. Russel Holland ruled Juneau’s collection of passenger fees was constitutional in December, the industry asked him to specify how the city is allowed to spend the funds.

But in Friday’s ruling, he declined to go further. That could pose problems down the line.

The city uses the money collected from marine passenger and port development fees for projects like building bigger docks for cruise ships.

But it also spends that money on things like public bathrooms, a Seawalk and crossing guards around the cruise ship wharf — things that cruise passengers use, but arguably aren’t services to the vessels themselves.

And it’s those kinds of things that Cruise Lines International Association Alaska, or CLIAA, wants to see reigned in. That’s the group that brought the lawsuit.

In his December order, Judge Holland specifically referred to sidewalk maintenance and crossing guards as two things that would not be an OK use of the fees.

And the industry was happy with that.

“I think it’s crystal clear with his decision that any expenditure of these fees have to be used as a service to the vessel,” said CLIAA President John Binkley. “Hopefully we can continue to work with the CBJ as we go forward to make certain that all the expenditures are within the bounds of the law.”

Either party may now appeal to a higher court. But both sides say they have no plans to do that — yet.

Juneau City Manager Rorie Watt says the city is happy with the outcome.

“This appears to be a workable ruling from the judge that we think the parties can manage within the constraints that he’s imposed and we can do it productively,” Watt said. “I think the question is does CLIAA want to join us in that approach?”

The ruling allows the city to move forward on its annual budget process and figure out how it will use roughly $5 million in passenger fees next fiscal year.

On Monday night, the Juneau Assembly will consider multiple agenda items dealing with the spending of passenger fees.

One of them is a $900,000 purchase and sale agreement for the Archipelago Lot, a property along the cruise ship wharf that the city plans to use for bus staging.

The city says the project will help mitigate the impact of 1.3 million cruise passengers expected to visit this year.

Last week, Binkley sent Watt a letter saying the cruise industry is concerned the city wants to use passenger fees to pay for that project.

“As we viewed the Archipelago project — although it’s a great project — it seems to fall outside the bounds of what the judge’s rulings were,” Binkley said by phone Friday.

Watt replied Friday with a letter citing federal case law from the 90s, Barber v. State of Hawaii. That case held that charging fees to provide things like public restrooms, trash service and security doesn’t violate the constitution.

He invited Binkley to re-evaluate his stance.

“It is my opinion that John’s letter from Wednesday unnecessarily takes an excessively narrow reading of the judge’s order and that that narrow reading is detrimental to the interests of CLIAA,” Watt said over the phone Friday.

An appeal would be costly. The city spent more than $800,000 for its legal defense.

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