State plans to use bonds to finance harbor projects
By Kelly Yamanouchi
Advertiser Staff Writer
The state collects about $4 million in tax revenues from cruise ships each year, but has $31 million in projects planned to improve harbors over the next few years as the industry grows.
Many projects are financed through state programs or federal grants, but to finance the broad array of improvements needed, the state Department of Transportation has "a number of bond projects in mind," said harbors deputy director Linden Joesting.
Tax revenues from cruise vessels are expected to grow as the cruise lines bring more passengers here.
Norwegian Cruise Line is introducing two U.S-flagged ships to Hawai'i next year, in addition to a foreign-flagged ship sailing around Hawai'i and to Fanning Island. The company plans to add another U.S.-flagged vessel to Hawai'i in 2006.
The harbor improvements are needed before the cruise ships arrive, and tourism officials and businesses are concerned about getting the work done in time with limited resources.
The state collects a port entry fee, a berthing fee and a per-passenger fee from the cruise lines. The fees go into a harbor special fund to pay for construction.
Planning for the harbor improvements began after 1996, when American Classic Voyages prepared to increase the number of U.S cruise ships plying Hawaiian waters. But those plans were halted after American Classic filed for bankruptcy protection and shut down in 2001 after the Sept. 11 attacks.
The experience left some state officials and business leaders wary of investing in the industry.
And now, the state's harbors need even more improvements.
The state is paying about $650,000 for Nawiliwili harbor improvements, with a feasibility phase to be completed in 2007. An extension of the harbor by 2005 will cost about $5.8 million.
Construction of a Pier 2 cruise terminal at Honolulu Harbor will cost $11 million. A ferry terminal at Pier 19 at Honolulu Harbor will cost about $4.3 million. Kahului Harbor needs $2.3 million for waterline, sewer line and restroom improvements.
Other harbors around the state also require upgrades. The ports not only need to be expanded and updated to accommodate more and larger cruise ships, but they also require improved security.
"These harbors were built in a more innocent time," Joesting said.
Security an issue
Port security improvements include surveillance cameras, security boats, fencing, barriers, screening equipment and a maritime workers identification program are being paid for by almost $2.3 million in federal port security grants.
Other security projects including electromagnetic locks and additional personnel are being paid for with more than $1.7 million in state money approved in 2001. Additional capital improvement money will cover further improvements.
The state eventually wants to upgrade Honolulu Harbor fencing, improve lighting, expand video surveillance to Neighbor Island ports and train security personnel.
Hoteliers concerned
Some in the hotel industry have expressed concern that Norwegian Cruise Line could have an advantage over hoteliers because it may not be subjected to the same taxes, such as the transient accommodations tax.
"Right now, the hotel operators on the outer islands, at least on Maui, feel it's an unfair advantage," said Barry Lewin, general manager of the Hyatt Regency Maui Resort and Spa and chairman of the Maui Hotel Association.
Lewin is concerned that the hotels could lose business to the cruise lines.
Rex Johnson, executive director of the Hawai'i Tourism Authority, urged the cruise lines to calculate how their tax expenses compare with those of hotels before the start of the legislative session.
"We need to say they're on a level playing field with a land-based operator or they are not," Johnson said.
Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.
