The price has rung up for the costs of transporting the capital city’s recently purchased gondola from Galsterberg Ski Area in Austria to its new home at the City and Borough of Juneau’s municipal-owned EagleCrest Ski Area — and it’s come up more than initially anticipated.
Though the estimated freight cost for transporting the gondola was expected to be around $845,00, after all fees and fuel surcharges were applied, the transportation of the Eaglecrest Gondola came in to cost around $1.1 million — nearly $262,000 over budget, according to a memo sent to the city by Dave Scanlan, Eaglecrest general manager.
“It’s unfortunate but also understandable,” said Rorie Watt, City and Borough of Juneau city manager.
The news was made public at the CBJ Public Works and Facilities Committee meeting Monday afternoon before the Committee of the Whole workshop in which the committee advanced an ordinance which if passed, would authorize a city revenue sharing agreement with Goldbelt, Inc. for a $10 million investment on the corporation’s behalf to go toward funding the gondola project.
“It could have been a lot worse,” said Wade Bryson, chair of the Public Works and Facilities Committee, about the cost overrun for shipping. “The fact that it’s only $200,000 or so above — it could have been substantially more, and for us to have a 20% increase at a very volatile time, I feel we got the best results in the environment that we are in.”
As recently in May, shipping costs were estimated to come in more than twice as much as estimated.
To make up for the over-budget expenses, Scanlan requested Eaglecrest have the authority to transfer $221,000 of its funds from its deferred maintenance account — which pays for things like general maintenance and updating infrastructure — to go toward the gondola capital improvement project. The request passed the committee and will be decided on by the Assembly in the coming weeks, according to Watt.
“We were not able to anticipate the steep increase in fuel prices in the spring or the global port congestion that would impact this project,” Scanlan stated in the memo.
Scanlan explained if the agreement with Goldbelt is made the remaining shipping costs associated with the project are effectuated, and the account would be paid back and made whole again.
Under the proposed agreement, as outlined in a memo, the corporation would contribute $10 million to the project in exchange for a share in the gondola’s future revenue over the next 25 years — or possibly more — until paid a minimum of $20 million in compensation.
Jeff Rogers, city finance director emphasized the agreement is very early on in its development and said there will be much more discussion on the topic and possible changes as well.
“I think it’s a pretty good deal all around — I think it’s a good deal for Goldbelt, I think it’s a good deal for CBJ and certainly if it’s successful it could be a really good deal for Goldbelt,” he said.
Goldbelt, an urban Alaska Native corporation, has a history of being integrated into Juneau’s local tourism operations, known most for its Goldbelt Mount Roberts Tramway which has been a Juneau staple for more than 25 years. According to Goldbelt President and CEO McHugh Pierre, Gold belt is excited to work with CBJ on this project and noted “our decision is the same as yours” in wanting to make the gondola a reality.
Rogers explained that an RSA works similarly to a loan, but has some notable differences.
“It’s not exactly like a loan, because we don’t just pay back the amount we borrow with some added amount of interest,” Rogers said. “We pay the amount we borrow via an agreement that we share future revenues with them.”
Watt said during the meeting the $10 million would go toward constructing towers and foundations for the gondola, Installing cabling, building a gravel road that follows the gondola alignment and along with infrastructure for the gondola itself including bottom and top terminals.
Watt said if the agreement is made, the $10 million would be sufficient to fund the road and gondola, but said depending on construction costs the terminal at the top may be economized to fit the budget.
“I’d say there is plenty of money to build the road and the gondola,” Watt said. “Those estimates are going to be just that until we get a contractor to put a dollar price on that.”
He said the project will continue to be a moving target until a contractor is signed, but said he is comfortable that the “basic necessities” are guaranteed to be affordable. He said he’d like to see movement made and construction begin this summer and said he thinks the agreement would be beneficial for both parties involved.
“If we can bring this home, it’s a really good deal for everyone,” he said.
• Contact reporter Clarise Larson at email@example.com or (651)-528-1807. Follow her on Twitter at @clariselarson.