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It’s in public’s interest to work together

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Under the Archipelago Project proposal, Juneau would spend $900,000 to purchase a parcel to use as a motor coach staging area.

By Winn Gruening

There was a great deal of speculation about how City and Borough of Juneau officials would react to Federal Judge H. Russell Holland’s recent ruling on the cruise industry (CLIA) lawsuit. CLIA lodged the lawsuit in 2016 in an attempt to clarify the legal and permissible uses of Juneau’s marine-passenger fees and port-development fees.

The suspense is over.

Win Gruening

Win Gruening

In two public presentations last week, Juneau City Manager Rorie Watt laid out the city’s case.

Watt described issues surrounding the lawsuit as “a ball of spaghetti.”  While the city has chosen “not to litigate these issues publicly in the past,” Watt explained that now it’s time to take their case to the public.

The timing seems odd since Judge Holland ruled that many of the proposed projects and services to be funded by passenger fees would be considered unconstitutional under the U. S. Constitution’s Tonnage Clause because they do not provide a service to cruise ship vessels.

Has the city chosen to abandon legal arguments in favor of a public relations campaign, thereby hoping to gain negotiating advantage?

Perhaps.  But is that the best way to encourage a mutually agreeable settlement or does it foment further acrimony between the community and the industry?

Watt claims that not much will change as a result of the ruling because the city “won” the lawsuit on two major points:

  • The ruling reaffirmed the collection of marine-passenger fees and port-development fees is constitutional.
  • The ruling didn’t say the use of past fees was illegal.

Both points, while technically true, ignore that they were not issues CLIA contested.

CLIA has acknowledged the collection of these fees is not necessarily unconstitutional but contends many of Juneau’s uses of revenue generated by the fees are unconstitutional.

Moreover, Judge Holland’s decision concerned prospective uses of the fees and, therefore, did not address the issue of past fees.

Here’s what relevant portions of Judge Holland’s 35-page order did say:

  • “Expenditure of marine passenger fees and port development fees for services to passengers only, such as crossing guards, repair and maintenance of sidewalks” are unconstitutional “because they do not constitute a service to a vessel.”
  • Furthermore, the order states, “… the question … is not whether Juneau’s use of marine passenger fees and port development funds benefits passengers. Passenger benefits are not relevant. The proper question as to each category of expenditure by defendants is: Does the expenditure provide a service to a vessel? If the answer is yes, the expenditure is constitutional. If the answer is no, the expenditure is unconstitutional. …”
  • And finally, “Expenditures or fees imposed upon vessels which enhance the tourist experience of passengers brought to Juneau by plaintiffs’ members’ vessels do not qualify as a service to a vessel, even though the enhancement of passengers’ experience at Juneau may benefit plaintiffs’ members financially.”

Despite the decision’s clear wording, City Manager Watt maintains that expenditures solely serving cruise passengers also benefit the vessel.

Questioned on this point, Watt posits the proposed Archipelago Project on the Juneau wharf and debt-service funding for the new Juneau cruise ship docks as expenditures that could be jeopardized under CLIA’s interpretation. Yet, the docks clearly benefit the vessel and would be certainly constitutional. The Archipelago Project is one that could be a subject of negotiation due to its proximity and connection to the cruise dock.

I have no personal knowledge of the legal strategy of Juneau or the cruise industry. Nor is it my intention to defend the cruise industry. They have plenty of people capable of doing that. My concern is getting the fairest deal for all concerned.

Everyone needs to consider, what are the risks of prolonging this litigation?

With city legal costs approaching $1 million, the longer this lawsuit drags on, the costlier it will be.

Further judicial pronouncements could be more specific and may enforce compliance. How would this affect potential negotiations with CLIA?

With this latest ruling already setting a precedent, further rulings may further cement precedent limiting the uses of similar fees imposed by other ports in Alaska.

How can legitimate concerns about the funding of infrastructure to support the growing numbers of cruise ship visitors be addressed while embroiled in a legal battle with the industry? Public assertions by city officials that don’t square with the facts of the case or Judge Holland’s order complicate opportunities for negotiation.

Mischaracterizing the possible consequences of the judge’s decision do not help encourage elected assembly members to work cooperatively with the cruise industry or to resolve any ambiguities.

It can be a fine line between “spin” and misleading the public.

No one is well served by the latter.

Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.

Juneau moves forward with Archipelago Project

The Juneau Assembly voted 7-2 to approve a $900,000 purchase and sale agreement for the Archipelago Lot, paid for by passenger fees.

The city plans to use the property for motor coach staging.

CLIA Alaska President John Binkley questioned the legality of the transaction in light of a federal court ruling that passenger fees can only be spent to benefit the ships and said CLIA is considering its options.

“As we view 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.

“As our litigation was specifically prospective, forward looking, and as CBJ is proposing this project with already collected fees and as this project does indeed have substantial benefit to seasonal tourism business. We are considering an agreement not to object to this particular project as part of a broader settlement of any continuing dispute between CLIA and the CBJ.”

In a letter to Juneau City Manager Rorie Watt, Binkley stated, “Juneau is the largest and one of the most beautiful ports in Alaska. … Our goal is that both the guests, and the local community, benefit from a cooperative and successful working relationship going forward.”

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