Cruise ship visitors gather for their tours on the Seawalk on Wednesday, Sept. 13, 2017. (Michael Penn | Juneau Empire)

Cruise ship visitors gather for their tours on the Seawalk on Wednesday, Sept. 13, 2017. (Michael Penn | Juneau Empire)

As cruise ship lawsuit comes to an end, what’s next?

City might continue to spend head taxes in similar way as before

The city’s lawsuit with the cruise industry came to an end this week, and City and Borough of Juneau officials are pleased with the outcome.

Federal District Court Judge H. Russel Holland issued an order Thursday granting the city’s request to issue a final order in the case. The litigation dates back to 2016, when Cruise Lines International Association (CLIA) of Alaska sued the CBJ.

The case was to determine how cities can spend the money they collect from marine passenger fees and port development fees, also known as head taxes, which are fees collected from each cruise ship passenger. CLIA alleged that CBJ had misused these funds. CLIA wasn’t looking for the city to pay, but was merely to establish a set of rules moving forward as to how these funds can be spent, as CLIA attorney Jonathan Benner has previously explained.

Holland’s ruling Friday stated that it’s difficult to make a ruling for the future without knowing exactly how the city will spend those funds.

“Looking to the future, the court has no way of knowing what projects and/or expenses defendants will approve for the 2019 tourist season,” Holland wrote.

This follows Holland’s main ruling Dec. 6, which stated that head tax revenue must be used on expenditures that benefit the cruise ships, regardless how the expenditures benefit passengers. Benner and CLIA officials were initially happy with this ruling, interpreting it as saying the city had to spend money on projects that benefit the physical cruise ship vessels.

City Manager Rorie Watt said at the time that he and others at the city were optimistic about the ruling, because Holland ruled that it was constitutional for the city to collect head taxes. Watt also said at the time (and repeated during a Chamber luncheon this month) that the definition of “a service to a vessel” was still not firmly established. A cruise ship’s whole purpose is to bring people on vacation, Watt argued throughout December and January.

[Number of cruise visitors expected to leap in 2019]

In a CBJ news release Friday, Watt said city officials are ecstatic to put this lawsuit behind them.

“Judge Holland’s ruling gives both parties the room to navigate their differences. We invite CLIA to join us productively in planning for the future,” Watt said in the release.

CLIA Alaska President John Binkley said in an interview Friday that it appears the two sides are still reading the Dec. 6 decision differently.

“I guess people can see the same words and come to different conclusions,” Binkley said.

Binkley said he’s still happy about the Dec. 6 decision and thinks Holland’s ruling was clear. It might have been more helpful to the CBJ if Holland had provided a list of expenses that are acceptable and expenses that aren’t, Binkley said.

One line stood out to Binkley in Holland’s ruling Thursday, where Holland wrote, “the court trusts that defendants will not invite further litigation by collecting and expending fees during 2019 in ways inconsistent with the Dec. 6, 2018 order.” Binkley wouldn’t say whether CLIA would consider taking the city to court again, but said he’s “eternally optimistic” that the two sides can work it out.

“I’m still hopeful that we can work with the CBJ that we can come to an agreement that’s acceptable to both parties,” Binkley said.

In letters back and forth this week, Binkley and Watt sparred congenially about a project the city is planning on pursuing.

The CBJ is working with a private company (Morris Communications, the Empire’s former owner) to develop a stretch of downtown waterfront next to the downtown library. This development is known as the Archipelago project. The city’s interpretation of this project is that it will “provide necessary services to the vessel, to the passengers, and will advance the marine enterprise of the cruise ship industry,” Watt wrote in his manager’s report for this coming Monday’s CBJ Assembly meeting.

Binkley wrote in a letter dated Jan. 23 that in his interpretation of Holland’s ruling, the Archipelago project — which will include retail spaces, parking and a paved plaza among other developments — doesn’t serve the vessel. In a response dated Jan. 25, Watt pointed to a court case in the Ninth Circuit Court of appeals, Barber v. State of Hawaii, where the Court of Appeals ruled that on-shore projects including parking, restrooms and trash disposal in exchange for mooring fees were admissible.

Both Binkley and Watt expressed in their letters that they hope the two sides can work together in the future to do what’s best for the port, the cruise industry and Juneau. The number of cruise ship visitors to Juneau continues to rise, as 1.3 million people are expected to come through the capital city on cruise ships in 2019, according to CLIA projections.

• Contact reporter Alex McCarthy at 523-2271 or Follow him on Twitter at @akmccarthy.

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