Port consultants propose big changes for Skagway’s waterfront

In May, the Municipality of Skagway hired Bermello Ajamil and Partners to help with strategic planning for the future of the port. At a meeting Tuesday, representatives from the Miami-based consulting firm recommended that the municipality convert an existing ferry terminal into a floating pier for cruise ships and reroute state ferry traffic to the industrial side of the port.

White Pass and Yukon Route Railroad controls most of Skagway’s port through a lease with the city. That lease ends in 2023 and the municipality is looking to take more control of its waterfront. 

Over the past 8 months Bermello Ajamil and Partners has been researching the city’s port and trying to figure out the best way to manage it. Mark Ittle, the firm’s VP of Ports and Maritime outlined a plan for the municipality to accommodate more cruise ships while providing for the ports industrial needs. 

“The vision plan really illustrates a path forward that facilitates sustainable and responsible growth into the future,” Ittle said.  

Skagway’s port has four places where cruise ships can dock. One of those berths is next to the port’s ore terminal, which is used for shipping minerals from the Yukon. Barges carrying fuel and other goods also tie up next to the ore terminal to unload cargo. This area of the port has become congested and it’s disrupting both cruise traffic and industrial activities. 

Ittle told municipal leaders that they should convert the state ferry dock into a floating pier that could accommodate two more cruise ships. The consulting firm envisions the ferry terminal moving from the center of the port to the northeast end, between the ore terminal and Yakutania Point.

“What this allows into the future is to provide again for that growth I was talking about in terms of berth demand for cruise. What we believe it also does then it frees up an opportunity for the Ore Dock to become the primary industrial berth into the future and it becomes a secondary cruise birth.”

During the second half of the meeting on Tuesday, the firm’s CEO Luis Ajamil explained how the municipality could execute this plan. 

Ajamil recommended that the municipality take full ownership of the port while contracting out some of the maintenance, freight operations, and security work. He cautioned against drawing up an agreement with a port operator.  

“It looks like the municipality owning and operating its waterfront is the most viable plan. When you enter into a long term agreement with a third party you try to build everything you can into the agreement to protect the interests of the community, but these are long term agreements. How do you protect yourself from future changes and so forth? If you’re running it yourself, you don’t have that worry,” Ajamil said. 

The Municipality of Skagway makes a couple hundred thousand dollars a year from its small boat harbor and its lease with White Pass and Yukon Route Railroad. If the municipality owned and operated multiple cruise ship berths, it could gain millions of dollars of revenue each year. However, there is some risk involved.

“The major question is not so much the skill set to be able to operate the facility later, but it’s the investment,” Ajamil said. 

Without a partner, the municipality would have to finance all the new port development. Ajamil estimates it would cost 100 million dollars to build a floating cruise ship pier and relocate the ferry terminal while completing other smaller improvements to the port. 

Where would that money come from? The consultants suggested revenue bonds and passenger fees.

“A lot more work needs to be done but it is very very conceivable that this could be a revenue bond linked to the revenues of the port that could be mitigated by many different ways, the risk, whether it’s individual agreements with specific cruise lines or the bonds are issued through the state bond bank. There’s many different ways of doing that that mitigate that risk,” Ajamil said. 

Municipal leaders did not support or oppose the plan presented by the consulting firm. However, the municipality has already expressed interest in taking ownership of the state ferry terminal. In October, the assembly directed the manager and mayor to negotiate with the state to acquire the property.