The Alaska Mental Health Trust Authority has sold its subport land along Egan Drive in downtown Juneau to NCL Bahamas Ltd., which does business as Norwegian Cruise Lines, for $20 million. Norwegian Cruise Lines has until Sept. 19 to fulfill all the requirements of the bidding process, which includes paying 10 percent of the purchase price. (Michael Penn | Juneau Empire)

The Alaska Mental Health Trust Authority has sold its subport land along Egan Drive in downtown Juneau to NCL Bahamas Ltd., which does business as Norwegian Cruise Lines, for $20 million. Norwegian Cruise Lines has until Sept. 19 to fulfill all the requirements of the bidding process, which includes paying 10 percent of the purchase price. (Michael Penn | Juneau Empire)

‘We were hoping for a local buyer’: Land sold to cruise line, but what they’ll build remains a mystery

What’s up, dock?

Norwegian Cruise Lines paid $20 million for a plot of land on Juneau’s downtown waterfront last week, but what they intend to do with it remains unknown.

The announcement of the sale only happened Monday, with Norwegian spending $7 million more than the next highest bidder, Royal Caribbean, in the sealed bid process.

Despite spending so much to acquire the land, what the company plans to do with the land is not yet clear, even to Norwegian, according to city officials.

City Manager Rorie Watt said that he spoke recently with Howard Sherman, Norwegian’s executive vice president of onboard revenue and destination services, and discussed the company’s intentions with the land.

“They figured they would get the land first and figure out what was possible,” Watt told the Empire by phone Firday.

Watt said that Sherman was coming to Juneau at the end of this month to “start working on the issue.”

Considering that Norwegian is in the cruise ship business, a likely use of the land would be a cruise ship dock.

Watt said an additional dock had not been previously discussed between the city and Norwegian. But in response to being asked if a new dock was the company’s intention, Watt did say, “they are in the cruise ship business.”

When asked for comment, Norwegian’s head of investor relations, Andrea DeMarco, told the Empire in an email the company, “is thrilled to be the winning bidder. …We look forward to engaging with the city of Juneau to work together on a plan for the land that will greatly benefit both Juneau and our company.”

The Alaska Mental Health Trust, which owns the land and operated the bid process, acquired this land in the 1990s following the settlement of a state Supreme Court case, Weiss v State of Alaska. The finalization of that case saw over a million acres of land transferred to the organization, in addition to $200 million.

“We knew this parcel represented an opportunity to monetize an unique and valuable Trust land asset,” Trust Land Office Executive Director Wyn Menefee said in a statement following the sale. “The apparent proceeds of the Subport sale will go a long way in serving Trust beneficiaries.”

The City and Borough of Juneau was also interested in buying the land but was only able to offer a bid of $4.25 million.

“We were hoping for a local buyer,” Greg Chaney, land and resource manager for the city, said by phone Wednesday. “The Mental Health Trust hadn’t done anything (with it) for a long time.”

The city was interested in developing the land in accordance with the city’s Long Range Waterfront Plan, adopted in 2004. That plan would have extended the existing Seawalk, which begins at the whale statue near Douglas Bridge.

“It would’ve been a nice jumping off point,” Chaney said, adding that because the city purchasing the land was never assured, “this was all very speculative.”

What’s up, dock?

If a new dock is Norwegian’s plan, it won’t be an easy process.

According to Watt, the land would have to be re-zoned and the city’s Waterfront Plan would have to be amended.

“The Assembly would have to agree in several ways,” Watt said. “The best way to look at it, Norwegian wanted to make a statement, they wanted have a seat at the table. I don’t think they’re naive about how much process would go into it.”

The land purchased by Norwegian is currently zoned as “mixed use 2,” which according to the city’s municipal code “is intended to place a greater emphasis on residential development than is the case in the (mixed use) district.”

The code goes on to say that a range of residential types is allowed and that multifamily residences (apartments) are allowed at a density of up to 80 units per acre.

There are, however, a range of uses (see: table of permissible uses) that could be allowed on the land if Norwegian were to obtain permitting from the city.

Depending on what the company would want to build there, they would have to obtain a conditional use permit from the zoning commission.

Conditional use permits allow for exceptions to be made in zoning regulations to say, build an office in a residential neighborhood. But they’re called “conditional” for a reason.

“The (Planning) Commission could put conditions to make sure you’re in harmony with the neighborhood,” said Jill Maclean, the city’s director of the Community Development Department.

Additionally, the water in front of the plot is not currently deep enough to moor a ship of any substantial size, according to Port Director Carl Uchytil.

If Norwegian wanted to dredge in Gastineau Channel to potentially build a cruise ship dock, they would first have to get a tidelands lease from the city and then a permit from the Army Corps of Engineers.

Tidelands leased by the city must be done at a fair market rate, according to Uchytil. That rate would be determined following an appraisal by a company licensed by the state Department of Natural Resources, Uchytil said.

Other permits would be required but those two things would be the biggest hurdles, Uchytil said.

Asked if it were feasible to dock a cruise ship at that location, Uchytil replied, “you can do anything with enough resources.”

The decision to sell the land was the result of a study conducted by the Washington D.C. based Urban Land Institute and paid for the Trust at a cost of $50,000.

Norwegian wasn’t the only cruise line interested in buying the property, the next highest bidder was Royal Caribbean Cruises who offered up $13 million. Royal Caribbean could not be reached for comment by the end of the business day Friday.


• Contact reporter Peter Segall at 523-2228 or psegall@juneauempire.com.


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