By DAN FOX
EDITOR

As the municipality looks at a proposal from the White Pass & Yukon Route Railroad – which includes details on a potential new tidelands lease – Port Consultant Moffatt & Nichol has returned to present findings on an expanded scope of work regarding Skagway’s most valuable asset.

The findings were broken up into three separate fields of research: an economic analysis, an environmental and regulatory compliance analysis and a port governance analysis.

Moffatt & Nichol held two back-to-back public presentations over these three studies on Wednesday, July 19. Each analysis was presented as a separate subject, with time given after each of the three for public comment and feedback. Shaun McFarlane of Moffatt & Nichol said they’d hoped to break it down into smaller, digestible portions.

Economic probabilities

The preliminary economic analysis included an overview of the economic value to the community of all waterfront activities and provided various modeled scenarios regarding the port’s future.

Lorraine Cordova, a subcontractor for Moffatt & Nichol, laid out the potential boons the municipality could reap should it be able to accommodate the incoming larger classes of cruise ships in 2019 and beyond.

Currently, Cordova said data indicates that Skagway receives an average of $5.73 in sales tax per cruise ship passenger and $5 in Commercial Passenger Vehicle Excise Tax per passenger.

Together, sales tax and CPV Excise Tax made up 68 percent of the municipality’s revenue in 2016. 

If Skagway can accommodate more than one of the larger cruise ships in 2019, the municipality can expect to see an additional 1,100 passengers per week in 2019, a number that grows exponentially as time goes on. Cordova said the consulting team expects there will be increased deployments of those larger vessels over time, which will increase the amount of incoming passengers as time moves forward.

As the cruise market grows, the municipality would be looking at an estimated increase from $16.4 million in 2017 to approximately $22.6 million in 2037.  In addition, the sizable hunk of passengers from the larger classes of cruise ships would result in an additional $14.8 million in revenues – if the municipality could accommodate more than one of the big ships at a time.

Cordova also presented two other scenarios regarding the larger ships: one in which the big ships don’t come to port, but smaller cruise vessels can come fill the space, and a scenario where losing the bigger ships means Skagway just has an empty hole in its ship schedule.

Assuming no smaller ships exist to fill the void, if the larger classes of cruise ships – which can have a passenger capacity of approximately 4,000 people – cannot be accommodated in the port, Skagway stands to miss out on 80,000 cruise passengers and 33,000 crew members in the first year.

Over a 20-year forecast this could potentially result in $29.6 million in lost revenues, according to the Moffatt & Nichol report.

In addition to that worst-case scenario, Moffatt & Nichol also included figures covering a future where the big ships don’t come, but smaller cruise ships can fill the holes in the schedule. This effectively cuts all the worst-case projection numbers in half: A potential loss of $14.8 million in revenue over 20 years and 40,000 fewer passengers in 2019.

In this scenario, however, revenues for the borough would still increase over time – about $5.1 million over a 20-year period.

At a Borough Assembly meeting the following day, Moffatt & Nichol received a little pushback on this second case.

Tyler Rose, White Pass executive director of human resources and strategic planning, said it does not appear that there will be any ships to fill gaps in the schedule should Skagway not be able to accommodate the big vessels.

“There is another large ship that appears to be able to come in 2020, as well as in the 2019 itinerary,” Rose said.

McFarlane said that the numbers in that second case may be understated rather than over-dramatized, but what “comes through loud and clear” is an acute need to move forward with a short-term project that would see a floating component installed at the Ore Dock. That expansion, part of Moffatt & Nichol’s short-term plan proposal, would allow the municipality to accommodate multiple larger ships.

“There’s a significant loss of millions of dollars to the municipality if that project isn’t built,” McFarlane said.

McFarlane said the present is a key time for Skagway, as the municipality does not have the luxury of time to consider the path forward.

“As we’ve indicated previously, we really need to be into planning and design and permitting for this facility if we’re going to make May of 2019, and have it open for larger cruise ships, that needs to get underway this fall,” McFarlane said.

Environmental evaluation

The environmental analysis had the objective of exploring environmental regulations for current and anticipated operations within the port area, including the cruise ship industry; cargo, fuel and ore hauling and others.

Provided by the study are several long-term and short-term goals. Some of the short-term goals include: work with White Pass to address legacy contamination in the Ore Terminal Basin; work with all waterfront property owners and tenants to ensure ongoing environmental compliance; consider a study that would document vehicle, pedestrian and rail movements within the port area to support long-range waterfront development and consider a baseline study to estimate current air emission rates from various sources.

Among the long-term goals, Moffatt & Nichol recommends the municipality continue to assess and ensure the capacity of all utilities, including stormwater, energy and wastewater facilities.

Waterfront control

The port governance analysis looked at other ports on the west coast of Canada and the United States, and then focused in on four ports within Alaska itself.

Anne Landstrom from Moffatt & Nichol said one of the key takeaways from the governance report is that the path forward for the municipality and its key stakeholders should allow for control over the waterfront while retaining cruise revenues. Landstrom also said the municipality should consider setting up a governance structure that would incorporate some expertise in running ports.

“Any of the new leases that are looked at should really include the priorities of the community,” Landstrom said, adding that could include improving the upland areas, creating a revenue sharing mechanism and/or maintaining the areas for industrial activities.

In an interview the week following Moffatt & Nichol’s presentation, Mayor Mark Schaefer said he thinks that information is valuable, and added that he hopes it helps the community.

“I think we now owe it to the community, by our own action, to deliver something to the voters to decide on,” Schaefer said. At an assembly meeting the day after the presentation, resident Wayne Selmer shared a similar sentiment as he thanked McFarlane for the presentations.

“I thought that was very informative, you guys have done very good work with the presentation, I really enjoyed that,” Selmer said. “I hope that everybody else has a chance to see or at least look at some of that stuff to make a proper decision when it comes time to vote.”