The generally profit-making Cayman Islands Port Authority has projected a $1 million loss in its upcoming budget, largely due to expenditures on research and environmental studies for the planned cruise ship pier in George Town harbor.
North Side MLA Ezzard Miller questioned lawmakers last week over why the port had suddenly started losing money since it had “always been able to look after” its spending in the past.
“The port authority is not losing money [on operations],” Tourism Minister Moses Kirkconnell said. “Because of the expenditure for the studies that have to be done for the new [cruise] piers, the government had to provide more than they had available for the cost.
“They’re spending their profits for the studies that are being done on the piers.”
Mr. Kirkconnell listed the costs for the various reviews being done as $2.5 million for a coastal engineering study, $696,000 for finance consultancy handled by PwC, and legal consultancy costs of $222,000. The total cost of the various studies will come to just more than $3.4 million.
Mr. Miller asked if increased administration costs at the port led to the inability to make up the cost overruns from the study, but Mr. Kirkconnell said operating expenses weren’t the issue.
“The peak of revenue for the port was after Hurricane Ivan,” the minister said. “If you look at the financials since then you will see that less cargo has come into the country so the revenue has been less.”
Opposition Leader McKeeva Bush also queried whether the ministry had met with specific cruise lines about the potential for developing the piers over the course of the last several months.
Mr. Kirkconnell said more general discussions had been conducted indicating that the cruise lines were interested and supported Cayman building a new berthing facility that could accommodate larger Oasis and Genesis-class ships.
“There cannot be any discussion of any particular [cruise line] … until we finish the studies,” he said.
“So, no discussion about either of those lines, Carnival or Royal Caribbean [building the pier]?” Mr. Bush asked.
“There have been public utterances … there were statements made before I became minister that Royal Caribbean was interested in building a pier in Cayman,” Mr. Kirkconnell said. “There has been conversations with Carnival that they would have an interest under certain conditions.”
Mr. Kirkconnell said the business case for the construction of two new piers included financing models for how much in additional revenue would have to be charged to cruise passengers to make up the building costs. He also said government had decided that there would be no “upland development” associated with the cruise facility because of the chance that any development nearer the pier would be controlled by whoever built the dock.
“George Town itself and the revitalization of it would form the upland development,” Mr. Kirkconnell said. “The pedestrianization of George Town will empower the movement of people through George Town. It increases the value of those properties as you go further into George Town.”
Mr. Bush raised concerns that only the current owners of the downtown properties would be able to benefit if no new upland construction was done as part of the cruise pier development. “There will be no opportunities for any Caymanians to get any kind of shop, business or otherwise down at the port,” he said.
Minister Kirkconnell said the issue had to be considered in the context of what is happening in George Town now. Moreover, he warned about what had occurred in other jurisdictions when one cruise line was able to take ownership of the pier and associated upland development.
“George Town over the last five to ten years is a dying city,” he said. “If George Town was booming, vital and [with] no storefronts for anybody to rent … market forces would dictate more stores. “[In Falmouth, Jamaica] there’s a catchment basin that is owned by Royal Caribbean,” the minister continued.
“If people are brought there on a cruise ship, they have an opportunity to take land tours they book on board … the catchment area offers a source of shopping, entertainment, all the different things that [visitors] don’t have to leave the catchment area for. The actual percentage of guests that come to Jamaica and go outside that area … is very small when you talk about percentage wise.”