Global Ports Holding
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November 01, 2018 Ms. Emily Deach Acting Borough Manager Municipality of Skagway PO Box 415 Skagway, AL 99840 Dear Ms. Deach, In accordance with the Request for Information (“RFI”) published by the Municipality of Skagway (the “Municipality”) on August 29, 2018, we as Global Ports Holding, the largest cruise port operator in the world, are pleased to submit our Expression of Interest to partner with the Municipality with the planning and development of the cruise berths and assets including assisting the Municipality with other necessary improvements to make Skagway a more enjoyable place for its citizens and guests Skagway, like other Alaska cities greatly relies on the cruise industry. The growth must be carefully managed to achieve the best balance between the impact that overcrowding has on the quality of life of its citizens along with the need to generate economic impact. Finding that balance is key to a successful plan for all parties. Global Ports Holding is a company that was created to operate and develop cruise and cargo ports, always keeping the needs of the community in mind and in partnership with local authorities. Global Ports Holding works in a cooperative way with municipalities, port authorities, communities and the cruise industry to achieve this balance. Global Ports Holding also has cargo ports in its portfolio where cruise vessels also berth. We have extensive expertise on the separation of cruise and cargo operations to be able to achieve high passenger experience. Global Ports Holding serves over 8 million passengers at its cruise ports and handles over 300k TEUs and about 5m tons of total cargo at its commercial ports. Today, the management of the cruise industry in Skagway is in transition. With the acquisition of the White Pass Railway by a consortium controlled by one of the major cruise lines, it is particularly important for the Municipality to maintain these cruise facilities separate as a matter of policy, for many reasons. Among these reasons is for Skagway to retain the ability to control its own destiny as well as the ability to serve the needs of all cruise lines. This will become increasingly important over time as more and bigger ships from various cruise lines will want to explore Alaska's wild nature and beauty. GPH was extremely interested in the White Pass acquisition, and we had the opportunity to spend significant amount of time and effort in evaluating the set up in Skagway. This experience will serve us well in assisting the Municipality with a forward looking, independent approach. Enclosed you will find a brief introduction on Global Ports Holdings along with our portfolio of projects under our control. In your RFI document, you requested that the respondent provide information as to how: “an interested party would contribute to the long-term development of the Skagway waterfront, including: structure of profit sharing; financial commitment; dock management; dock and infrastructure development; accommodated berthing arrangement suggestions; early lease termination ideas; environmental remediation and future environmental protection of the harbor; and related uplands and supporting infrastructure concepts.” Below you will find ideas that we would consider along with the Municipality as part of a negotiated deal. Contribute to the long-term development of the Skagway waterfront GPH would work with the Municipality to first fund and prepare a mutually acceptable master plan for the port facilities (for cruise and cargo) and for the entire waterfront. Such Master Plan will be done in a collaborative way, with the necessary public input and community participation. The Plan would be a component of the agreement between GPH and the Municipality and for the GPH funding commitment to the Municipality. The Plan will include not only the docks, harbor and infrastructure, but also the public promenades, open space and elements that will contribute to Skagway. Structure of profit sharing GPH takes pride in individualizing each port’s business structure based on a negotiated process to make sure it reflects the desires of the community. In many cases, GPH will fund the entire capital program defined in the Master Plan and make annual payments to the Municipality. In other cases, up-front payments may be included in the structure. This form of profit sharing provides a cash flow to the Municipality as it determines to be in your interest. Our understanding is that the municipality would prefer a partnership and we would support that approach. GPH is open to discuss this in detail as part of a comprehensive package. Financial commitment GPH has the financial resources to commit the funding of any improvements and or initial payments as a condition to the execution of the agreement thus eliminating the risk that the Municipality might take if it selected a company without resources that would need to seek funds. Dock management GPH’s core business is the management of cruise ports and as such has the know-how and infrastructure to bring to Skagway world class best management practices that focus on guest and community satisfaction. The docks will be managed to an agreed program that should provide a win-win for the Municipality and GPH. Berth management software, maintenance protocols, safety and security procedures will be performed to world class standards. Dock and infrastructure development All the dock and infrastructure needs agreed in the Master Plan will be planned, designed, funded and contracted by GPH. Facilities will be approved by the Municipality and GPH commits to provide as much opportunities to local businesses as possible in this phase of the work. Accommodated berthing arrangement suggestions Berthing arrangements are essential in Skagway due to the high demand as well as the traffic that is being served at the adjacent White Pass docks. GPH will work with the Municipality to develop a clear, transparent and fair berthing policy that maximizes cruise traffic in a sensible way. It is particularly important that since the other berths are now owned directly or indirectly in a large part by a major cruise company, that the Municipal berths be used to serve all customers in a transparent and arm’s length basis. Early lease termination ideas Although this may be premature to discuss, the existing concession documents may include termination clauses as long as they are financially sensible and protect the investors and GPH once an investment is made. Development of a termination strategy will need to be discussed with the municipality and carefully negotiated. Environmental remediation and future environmental protection of the harbor Any remediation needs would need to be identified by the Municipality in advance of a final negotiations in order to properly account for any costs. GPH will work with the Municipality on this, but any remediation costs should a finite cost which would need to be included in the investment and must be supported in the business plan. The key here is to work this out from the on-set and avoid surprises later. In the future, GPH will bring its internal resources, people and policies to manage the cruise facilities, in concert with the municipality, to the highest environmental standards which would be required and expected. GPH will focus on all aspects of the environmental footprint of the operation and look for new and innovative solutions, including using electric vehicles, promoting and enforcing no-discharge rules and working with the Municipality as a partner on a yearly basis to plan each cruise season operation. Related uplands and supporting infrastructure concepts This is where GPH really shines. As opposed to a cruise line or traditional port, GPH believes that in a cruise port the plan has to include significant upland and off-site components to be able to manage the guest experience and reduce impacts on residents. All these components will be studied as part of the initial Master Plan, and this might include, new sidewalks, paths, bikeways, greenways, open space, intermodal areas, beautification projects. Commitment and next steps It is important for the Municipality to be aware of the level of commitment Global Ports Holding is willing to make should they be given the opportunity to be your partner in the management of your cruise facilities. To move forward, we commit to the following steps: 1. To create a special entity in partnership with the municipality to manage and operate the cruise facilities and surrounding area as desired. Details to be discussed. 2. Develop a Master Plan with the Municipality that is balanced and respects the needs of the community. 3. The Master Plan will contain the ways of expanding the berthing capacity of the Municipal docks to meet the needs of newer vessels coming into the market. 4. GPH will fund the creation the master plan based on a sound business plan, in concert with the Municipality. 5. We will work with all cruise companies to develop both a berthing strategy and usage strategy to maximize the use of the facilities but that also meets the community’s interest and supports the business plan that allow the investment strategy. 6. Our priority will be to hire local businesses to maximize the economic footprint of the Municipality and greatly impact the community in a positive way. We recognize that success comes only with the support and engagement of the community, local vendors and the Municipality. 7. All the above will be accomplished in an environmental and ecologically friendly manner. Should this be of interest to the Municipality, our approach moving ahead is very straight forward. 1. We would be pleased to visit and make a presentation of our capabilities and approach, 2. Depending on local legal requirements, a typical approach would be to first sign a Memorandum of Understanding to allow the parties to negotiate in good faith and work to reach an agreement.