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HomeNewsArchives10-Year Agreement Reached between Port Authority, Princess Cruise Line

10-Year Agreement Reached between Port Authority, Princess Cruise Line

July 7, 2006 – An agreement between the Virgin Islands Port Authority and Princess Cruise Line will bring visitors to the Crown Bay port all year round, VIPA officials Friday.
The agreement also includes the Cunard Cruise Line and P&O Cruises.
The agreement, which was signed Wednesday, runs for a period of 10 years and hinges upon the cruise line bringing in a minimum of 230,000 passengers annually.
"This is something that they pledged to do," said Darlan Brin, VIPA executive director. "In fact, after reviewing the schedule, it's estimated that 300,000 passengers will be arriving at the Crown Bay facility this year, with a total of 110 ship calls."
Brin said that in return, the cruise line would get year-round "preferential" berthing – meaning it has first dibs on a spot at the dock – and fixed fee rates for the first five years of the agreement. After that, fees can only increase by up to $2.50, he added.
Incentives such as lower fee rates and insurance to protect both the Port Authority and the cruise line have also been negotiated.
However, if the cruise line does not achieve the annual passenger minimum, it is subject to penalties, according to VIPA legal counsel Don C. Mills.
Mills said the passenger minimum at the end of the first year should yield approximately $2.3 million worth of revenues for the port. "If at the end of the agreement, they don't bring in those revenues, then the cruise line would have to pay the shortfall," he said.
The fee revenues – which break down to $9.35 per passenger – would go toward paying off a $35 million bond issue.
After the meeting, Brin said the bonds were floated through the Public Finance Authority in 2003 so VIPA could develop the Crown Bay commercial center, scheduled to open in late October or early November. During the meeting, he said the bonds would have to be repaid by 2023.
"We have to repay that debt," he said. "And we have to rely in part on the cruise revenues to do that."
Brin said the development of the commercial center – which would serve both locals and visitors – would also bring in revenues. The center will house a variety of native shops and restaurants, along with providing various other entertainment opportunities.
Furthermore, the facility would keep the Virgin Islands in line with competitors in the eastern and western Caribbean, Brin said. "More vessels are being directed to those ports," he said, adding that Princess Cruise Line has a "global itinerary," which includes stops in foreign ports from Bangkok to Brazil. "So we're no longer the only game in town. And while we still are considered a premier port, we can't afford to sit on our laurels either."
Brin said it was "necessary" for the Crown Bay dock to expand to accommodate larger vessels, such as the Queen Elizabeth II, which will berth on St. Thomas in December. "And the commercial center at the dock will be developed to provide the necessary amenities supplied at other ports out there today," he said.
Additionally, the Authority has sent out requests for proposals for vendors to rehabilitate the surrounding area, including two parcels of land near the facility that once housed Caribbean Steel and Kline Electrical.
An agreement between the Port Authority and Public Works would also seek to alleviate the traffic in the area, Brin said. "We've gotten concerns from the Florida-Caribbean Cruise Association about traffic coming form the eastern end of town when the larger ships come in to berth. Some days there's even gridlocks, where no one can get through."
Brin said that passengers docking at Crown Bay would have the advantage, however, since "there are other ways" to get to locations throughout the island without having to go downtown. Additionally, he said Public Works would be looking to construct a sidewalk that runs from Crown Bay to the Motor Vehicle Bureau, and another traffic lane adjacent to Nisky Center.
The Authority will also be dredging the northern side of the dock to accommodate larger ships from other cruise lines, such as the Queen Mary, a premiere vessel on the Cunard Line. Brin said currently, VIPA could accommodate Princess' line of ships on the southern side of the dock.
"I believe that the Crown Bay center is exactly what the industry needs," said Robert O'Connor, VIPA board chairman. "It will serve both the cruise ship passengers and our community as a whole."
O'Connor said the first ship is scheduled to come in on Oct. 1.

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