The V.I. Port Authority’s decision two years ago to waive half of the fees for cruise ships calling on St. Thomas and St. Croix on the same trip is cutting into the agency’s bottom line while not producing any new port visits, according to Gordon Finch, VIPA’s executive director.
A contract signed by the V.I. government and VIPA in 1998 called for the waiver of the $7.50-per passenger marine fees at either St. Thomas or St. Croix as long as the Big Island was included in a ship’s itinerary. In lieu of collecting the fees VIPA doesn’t have to contribute $500,000 to the V.I. government’s coffers each year.
The idea behind the plan, spurred by business and tourism officials, was to attract more ships to St. Croix. Instead, VIPA has seen a decrease of $723,000 in user fees, resulting in an overall impact to the authority’s bottom line of approximately $236,000, according to an audit done by Roberto Santa Maria of PriceWaterhouse Coopers.
Santa Maria said the overall effect of the waiver means that shortfalls in VIPA’s Aviation Division usually covered by its Marine Division won’t be covered in the future.
"Once you do that for a whole year you’ll see a large decrease" in the bottom line, he said.
At Wednesday’s’s meeting of the VIPA board of directors, Finch said the agreement means everyone but the cruise lines are coming up short. He said that when the contract was signed there were some in government that felt VIPA was "ripping them off" by not making the half-million dollar contribution. Instead, Finch said VIPA is "actually suffering from the deal."
"Here it is the Port Authority went down to zero dollars," Finch said. "We haven’t seen the benefit of us giving away the barn. There has been no increase in visits. The cruise lines are simply adding that to their bottom line."
Based on current passenger arrivals, Finch said the loss in fees is close to $800,000 a year. Even though VIPA would have to contribute its $500,000 to the government if the contract were not in place, the authority would still reap approximately $300,000 in fee revenue.
Finch said projections for the 2000-2001 cruise seasons are for even more passenger arrivals on St. Croix, which under the contract would mean approximately $1.5 million in fees lost. Without the contract, VIPA would pay its $500,000 contribution to the government and pocket the balance.
While he didn’t recommend outright that board members reconsider the contract, Finch said that in light of VIPA’s overall revenue situation it is something they should think about.
"In fiscal 2000 we’re going to see the first impact of waiving those fees. The net effect . . . is going to be a negative number on our bottom line," Finch said, adding that VIPA should collect what’s due and pay its $500,000 contribution to the government. "It would shut (critics) up and we’d end up with a million dollars."
VIPA board member Sydney Lee, however, defended the fee waiver, saying that St. Croix’s beleaguered economy "needs all the help it can get." He said waiving the fees isn’t a permanent arrangement.
"You just can’t cut them off," Lee said. "We have to go easy and at the same time we (VIPA) can’t go bankrupt."
While Lee’s board colleague, Robert O’Connor Jr., said "nobody is suggesting cutting off St. Croix."
He said board members have a duty to operate VIPA in the black.