Ketchikan Council to review port proposals — a look back

Decision-makers will get their first look at three proposals to revamp Ketchikan’s city-owned cruise ship docks when the City Council meets behind closed doors Tuesday evening. At this point, the contents of the proposals remain under wraps.

Ketchikan city manager Karl Amylon said in a Friday interview that senior city staffers will be the first to see the proposals. The city manager, assistant manager and attorney will evaluate the proposals and present summaries to the council during Tuesday’s executive session.

All three proposals come from port operating companies: Survey Point Holdings, Global Ports Holding and SSA Marine. And that’s about all we know. The meat of the three bids remains a question mark.

So how did we get here? Let’s back up.

Why revamp the docks?

In recent years, cruise ships have been getting bigger. Here’s consultant Luis Ajamil speaking at a City Council meeting last July.

“The thought always (is), we go into a lot of these communities: ‘Just the smaller, mid-sized ships will come into our communities.’ But the reality is the industry is building the bigger ships,” he said. “That’s what’s driving the industry.”

Some of the megaships that visit Alaska include include Norwegian’s Joy and Bliss, Royal Caribbean’s Ovation of the Seas and Princess’s Royal Princess.

Ketchikan’s downtown docks, though, can only handle one of these behemoth ships at a time. In a May 2019 memo to the council, manager Amylon said that berths that can’t handle megaships risk becoming obsolete.

Beyond that, Ketchikan has seen an ever-increasing number of tourists visiting the city on cruise ships. The million-plus visitors every year strain local infrastructure.

Early estimates to expand the downtown docks cited in the May memo totaled between $100 million and $150 million, including improvements to infrastructure surrounding the docks.

Ward Cove: A complicating factor

But last summer, private developers announced plans for a second cruise ship dock in the Ketchikan area at Ward Cove. The T-shaped floating dock would be purpose-built to handle megaships.

Norwegian Cruise Line — which, remember, operates two Alaska megaships — has invested an undisclosed amount of capital into the Ward Cove dock project in exchange for preferential berthing rights.

The new 2-berth dock at Ward Cove would triple the area’s megaship capacity. Here’s Ward Cove project spokesman Trevor Shaw speaking to KRBD in June of 2019.

“The goal was to be able to make this move as quickly as possible and take advantage as soon as possible of solving the capacity issue,” he said.

The Army Corps of Engineers issued a permit to the developers this month. Developer John Binkley says he hopes to see the first ships at the new dock this summer.

How to pay for improvements

Developers’ aggressive timeline for the Ward Cove dock took some pressure off of the city’s downtown docks. In July, cruise industry consultant Ajamil told the City Council that the area’s increased megaship capacity would mean that a port redevelopment plan could focus more attention on the uplands: infrastructure not related to the actual docking of ships.

“One of the big costs that we discussed is to put a sizeable number there that would go as part of the project that would allow the town to deal with growth issues, town improvements, quality of life issues,” he said.

But even a scaled-down port improvement plan could strain city finances.

One tool in the city’s toolbox is bonding: it can pay for improvements over time by borrowing money on the bond market. But Ketchikan already owes more than $100 million in bond debt, and officials think voters are unlikely to approve more.

Another potential tool is a public-private partnership. The city could enter into an agreement with a private company to finance improvements in exchange for an opportunity for that business to make money.

Ketchikan officials have largely considered two categories of options for a public-private partnership. One of those is a preferential berthing agreement similar to the arrangement between Norwegian and the Ward Cove developers.

The other form a deal could take is called a “concession” agreement. That would turn over dock operations to a private company. The concessionaire would handle things like scheduling, loading and unloading ships. The concessionaire would charge cruise ships a fee beyond the city’s $7 head tax.

What the final RFP asks for

Ketchikan’s City Council approved the public-private partnership approach last July. In October, it issued a formal request for proposals, or RFP, asking cruise lines, stevedoring companies and port operators for their ideas. An eventual deal could last as long as 30 years.

In the RFP, the city outlines several parameters that an ideal proposal would follow, including a $35 million budget for uplands improvements. That money would be available for the City Council to appropriate for infrastructure projects.

The city also asked bidders to include a plan for a $15 million anti-corrosion system designed to prevent infrastructure from degrading in saltwater.

Though the city acknowledges that the Ward Cove dock diminishes the docks’ immediate need for more capacity, the RFP also asks proponents to submit plans for lengthening at least one of Ketchikan’s current berths.

The RFP also stipulates that the docks remain open to residents and vendors, and bidders wouldn’t be allowed to set up retail operations.

But the city leaves the proposal open-ended, to an extent. It says it’s open to both concession and preferential berthing agreements. At this point, it’s tough to tell what form the three proposals follow because the details haven’t been released.

Bidders submitted their final proposals Jan. 21. From here, the city will negotiate with the proponents before choosing its best option. That process gets underway Tuesday during a closed-door session.

But if none of the proposals gives the city what it’s asking for, and negotiations go nowhere, the City Council could reject all three bids and start the process over again.

The proposals won’t become fully public until the city announces its intent to award a contract, according to a spokesperson for the Alaska Department of Law.

Opposition

The city has encountered considerable opposition to the public-private partnership approach. A group of local residents united under the name OURPORT asks that the city reject any proposed partnerships and maintain management of the downtown docks. The group delivered a petition with more than 200 signatures when the City Council met in October to approve the final RFP.

Opponents may have some recourse. Any final deal will take the form of an ordinance. It’ll take at least two meetings before the City Council gives the deal final approval.

Within 30 days, opponents could call for a city-wide vote on the deal. That’s possible through a mechanism called a referendum petition.

So — to sum up, many unknowns remain. But residents may start to find out what a potential deal could look like as soon as this week. The council may vote to open parts of the proposals to the public.

The City Council meets at 6 p.m. Tuesday in Ketchikan’s City Council chambers for its initial review of the three proposals in executive session. Public comment will be heard before the closed-door portion of the meeting.