City staff saw a golden opportunity to get out of managing river cruise boats when American Cruise Lines offered to lease the 17th Street Dock and invest in improvements.
The city and the company negotiated a lease and presented it to the Astoria City Council on Tuesday for consideration. But after American Queen Steamboat Co. learned of its competitor’s offer and called foul, city councilors kept the discussion open and offered a chance for a competing proposal.
The 17th Street Dock primarily hosts the U.S. Coast Guard cutters Alert and Steadfast, along with the Columbia River Maritime Museum’s Lightship Columbia. The city rents the eastern side of the dock to visiting river cruise ships.
American Cruise Lines operates the American Pride and the Queen of the West along the Columbia River and recently added a new vessel, the American Song. American Queen Steamboat Co. operates the American Empress.
American Cruise Lines approached the city and offered to take the management of the dock off its hands. In exchange, the company would receive the nearly 12 years remaining on the city’s lease with the Department of State Lands and possible 15-year renewals based on investments.
The agreement would bring the city $80,000 a year for the first three years. Afterward, the city would receive $80,000 a year plus $400 for each vessel docking beyond 140 a year. The figures were based on the city’s average business at the dock over the past four years, said Public Works Director Jeff Harrington.
The agreement would allow American Cruise Lines priority docking rights for its vessels, while making reasonable accommodations and setting rates for other river cruise ships.
Eric Denley, an attorney for American Queen Steamboat Co.’s parent company HMS Global Maritime, said the company was notified Tuesday of the proposed lease with its competitor. The lease would essentially create a monopoly at the 17th Street Dock, he said.
Denley asked that the City Council delay a vote and open the lease to a public proposal process.
“We would really just ask for a seat at the table,” he said.
Alan Laster, an attorney for American Cruise Lines, argued that Denley was being disingenuous in calling the lease a monopoly.
“American Cruise Lines is undertaking a big investment here and needs the time to recoup that investment” Laster said. “But it’s still accommodating other users.”
City Attorney Blair Henningsgaard said American Cruise Lines would be accepting the risk of dock maintenance and a potential economic downturn effecting the cruise industry, while providing the city an amount of lease revenue approximate to what it already makes at the dock.
“I personally think it’s fair to all concerned, and it’s a good deal for the city,” he said.
The city would have to take on more debt to improve the ailing mooring dolphins and might have to close them down if something failed, Harrington said. The city owes Business Oregon more than $1 million for the improvement of the docks.
“It just seemed to make a lot of sense,” Harrington said. “This is a great place for the private sector to step in and take the risk instead of the residents of Astoria, and to make the investments for their own benefit and the benefit of the other users.”
Harrington and Mayor Bruce Jones dismissed concerns of a monopoly, arguing that American Cruise Lines wants to keep the dock full and earning revenue, and that boats can also dock at the Port of Astoria. Pushing out American Queen Steamboat Co. would cost American Cruise Lines $30,000 in revenue, Harrington said.
Other city councilors agreed with the need to relieve an overtaxed Public Works Department of managing cruise ships. But they raised concerns about American Cruise Lines’ control, the city’s lack of recourse for nonperformance and American Queen Steamboat Co.’s right as a primary competitor to submit a proposal.
The City Council voted to continue discussion of a lease at its Oct. 7 meeting, allowing American Cruise Lines and American Queen Steamboat Co. to see each other’s lease proposals.