Aug. 6, 2001 – Private- and public-sector parties concerned say they are happy that an agreement between V.I. government entities and the cruise ship industry that has been three years in the making is finally seeing the light of day. But there are undercurrents of surprise at how it has been presented to the public by the executive branch.
A Cruise Ship Task Force of V.I. public- and private-sector members and representatives of the Florida-Caribbean Cruise Association and its 13 member cruise lines worked for more than two years to come up with the agreement.
The task force was created by the 23rd Legislature and co-chaired by John de Jongh Jr., in his capacity as president of the St. Thomas-St. John Chamber of Commerce, and Sen. Vargrave Richards, in his capacity as then-president of the Legislature.
Other public sector members included Edward Thomas, West Indian Co. president; Gordon Finch, V.I. Port Authority executive director; and Sen. Lorraine Berry. The other local business members were William Dowling, owner of Cardow Jewelers; Filippo Cassinelli, president of A.H. Riise Shops; Noel Loftus, past president of the St. Croix Chamber of Commerce; and, as a non-voting member, Joe Aubain, executive director of the St. Thomas-St. John Chamber.
The F-CCA president, Michele Paige, described the task force as having been "jointly created by the U.S.V.I. and the cruise industry."
On Friday night, one of several releases faxed to the news media from Government House was titled "Cruise ship agreement executed by three agencies." The release stated that VIPA, WICO and the Tourism Department had "executed the Long-Term Operating Agreement" with the FCCA and its member lines.
It added that the document, consisting of 13 articles, had been signed once by Edward Thomas, as chief executive of WICO, and twice by Pamela Richards, as chair of the Port Authority board and as commissioner of Tourism; that it would be forwarded to the cruise lines and the F-CCA; and that "Upon the document's return, it will be reviewed for execution by Gov. Charles W. Turnbull."
The release did not mention the task force.
Government House did not make the agreement available to the local private-sector members of the task force or to the cruise industry representatives before putting out the release.
The Virgin Islands Daily News carried a story in its Saturday issue based on the press release. On Monday, the St. Thomas-St. John Chamber of Commerce issued a release that began:
"Having read the recent Daily News article announcing the signing of the Long-Term Operating Agreement negotiated by the Cruise Ship Task Force, the St. Thomas-St. John Chamber of Commerce wishes to thank the signatories of the long-awaited agreement."
It then quoted de Jongh: "While we have not seen the final agreement signed by the government officials, we are pleased that their response to the recent announcement on anticipated ship calls [see the July 31 Source report "Coming cruise season not kind to St. Croix"], especially the bad news on St. Croix ship visits, results in the agreement finally being moved forward."
The number of scheduled calls at St. Croix will drop in the coming winter season to 103 from 154 last winter.
Cruise lines have assumed it's a go
Meantime, the F-CCA's Paige said Monday that she had not received a copy of the agreement but understood that "the governor has approved the agreement basically the way it was" when the Legislature approved it last December.
"We're elated," she said. "We put three years into working with the task force, and there's a lot of basis for this to move forward. And we're very proud of the work of the task force."
She said the F-CCA in a leap of faith ran a two-page article in its second quarter 2001 newsletter, Caribbean Cruising, describing the task force, the agreement and their background.
"This is going to sound ignorant or arrogant, and I guess I would rather be considered ignorant," she said. "Based on the three years we put into it and based on information we had last year that it was approved, that's how the cruise lines have been operating, and that's the way that decisions have been made in the board rooms of each cruise line. So, in our last quarterly newsletter, we featured the agreement — and we would not have done that if we hadn't felt that we were in agreement."
In the newsletter article, Mike Ronan, Royal Caribbean International director of destination development and chair of the FCCA Operations Committee, was quoted as saying "The benefit to the cruise industry is a stable growth platform … We can focus more on growth and development of a better product mix for the passenger without having to worry about tax increases for infrastructure along the way."
The task force was created in 1999 in response to moves within the 23rd Legislature to raise per-passenger dock fees to $10 from $7.50. The FCCA newsletter quoted Cassinelli as saying that private-sector owners and workers, believing that to "slap down a tax without sitting down with the cruise lines was not a wise or prudent course of action," organized a protest of 500 people representing Main Street businesses. "We wanted to work out a partnership that would benefit both sides," he was quoted as saying.
The Legislature created the task force about a month later. In its report to the body on July 24, 2000, it recommended forgoing a head-tax increase in favor of an agreement by the cruise industry to bring more passengers to the Virgin Islands over the next five years and to stabilize St. Thomas summer traffic to avoid "no-cruise-ship days."
According to Government House, the agreement was "finalized" in September 2000. It was approved by the 23rd Legislature in its closing hours last December as part of the massive 2001 Omnibus Act and forwarded to the governor.
13 points of agreement
The task force continued to be involved in fine tuning the measure this year, submitting its final draft version to the governor in March. It provided that:
– The agreement would run from May 2001 through April 2006.
– It would utilize 1998 figures as the baseline for calculating increases.
– Summer traffic to St. Croix would increase 15 percent annually, with an effort to achieve a 25 percent increase, starting from 2001. And the government would within six months of signing the agreement initiate a plan to market St. Croix "to grow the demand" for more cruise ship calls.
– Summer traffic to St. Thomas would increase by an average of 10 percent annually.
– The cruise lines would target three to four calls per week to St. Croix during the winter.
– The cruise line or lines selected by the Port Authority "to undertake seaside and land-based projects would commit to the incremental passenger flow" to enable VIPA to finance the Crown Bay project.
– The cruise lines would "acknowledge the policy objective" of the V.I. government to promote Cruzan Rum and "make every effort" to increase their purchases thereof.
– The cruise lines would set up a V.I. scholarship program to be funded at $100,000 over four years.
– The cruise lines would "entertain funding participation in charitable programs" within the territory and "special events" targeted to passengers.
– The Tourism Department would host the visit of cruise line sales and marketing executives to St. Croix to provide input toward "enhanced marketing of the destination, developing a list of passenger activities and events, and required infrastructure improvements."
– Tourism would monitor compliance, assisted by VIPA and WICO.
– Penalties would be assessed the FCCA at $3.75 per passenger shortfall from the agree-upon increases for St. Croix annually
and for St. Thomas in the summer, provided the shortfalls were not due to circumstances beyond the cruise lines' control.
– WICO and VIPA would agree not to increase the per-passenger wharfage fee from the current $3.50, or the per-passenger ship's dues from the current $4. Nor would the government increase tonnage-related taxes without infrastructure improvements to justify them; nor would it impose any other new taxes.
With minor changes in wording, the current document is virtually the same as this final draft version submitted in March. A notable difference: who is to sign the agreement. The draft measure included the co-chairs of the task force, who are excluded in the Government House version. And the draft version had executive director Gordon Finch, not board chair Pamela Richards, signing for VIPA.
"I'm not sure why that is," Vargrave Richards said Monday. "I will submit that it is still the work of all the people that were involved in what we did." He added, "I am pleased that the governor has endorsed it. I think it is critical that it is put in place immediately so that we can begin to reap the benefits."
"I don't know if I ended up being a signatory," Finch said Monday, not having seen the current document. But, he added, "If the chairman of the board signs any agreement as a result of a formal action made by the board, and that is what this was, then that agreement is binding. I'm happy with it." The boards of both VIPA and WICO approved the agreement.
Agreement not to disagree
Between March and July, some skirmishes developed. De Jongh suggested a meeting of the task force to the governor's legal counsel, Paul Gimenez, in mid-May to discuss issues raised by the F-CCA concerning whether it should sign on behalf of its member lines. He did so again in mid-June, to resolve issues raised by VIPA and WICO concerning the Crown Bay item, noting that the proposed start date of the agreement by then had passed. Gimenez replied the same day with a terse "Thank you for your ongoing interest in this matter; however, at this juncture it is unlikely that any further involvement of the task force will be necessary."
Gimenez, however, asked Paige to meet with government officials on July 18 to discuss the matter involving VIPA and WICO. She replied that what was being proposed was not acceptable to the F-CCA and that it was "only appropriate that the governor's office discuss the outcome of the agreement with the key members of the task force." On Monday Paige said, "We felt it was in everybody's best interest to have all members of the task force brought back and express their opinion. We felt at this stage of the game it would not be in anybody's best interest if we just met with the governor's representative."
No task force meeting was called. Ultimately, the two V.I. agencies agreed to leave the language as it was. "The Port Authority raised an issue with regard to Crown Bay and we responded," WICO's Thomas said Monday without getting into specifics. "We sat down and came up with what we thought was in the best interests of everybody. The Port Authority dropped its objections and we dropped our response."
The important thing, Thomas added, is "the sooner we do it, the better."
What happens next?
Getting the agreement signed earlier this year would not have affected the cruise lines' scheduling for this summer or the coming year, Thomas noted. But the changes should "absolutely" be reflected in the 2003-04 season, he said, and "it's not impossible that adjustments could be made for 2002-03."
The cutback in St. Croix cruise ship calls this summer does not violate the spirit of the agreement, according to Paige, aside from the fact that summer schedules were finalized months ago. "One of the key ingredients we had required was a very substantial marketing of St. Croix by the V.I. That has never taken place. A meeting was bandied about some months ago and then it fell apart. On our part, our executives were ready to do it."
She added that member cruise lines "need to get information, they need to be encouraged by what St. Croix is doing and what St. Croix is willing to do. St. Croix needs to have a marketing marquee for themselves and not just be in the shadow of St. Thomas."
Monday's release from the St. Thomas-St. John Chamber quoted de Jongh as saying "the issue of consistent and growing cruise calls and greater customer traffic for St. Croix was a goal of Gordon Finch, the Virgin Islands Port Authority and the task force members unanimously. While some may surmise that the government's delay in timely executing the agreement may not have affected future traffic, there is no ignoring that an executed agreement can strengthen our relationship and allow for better planning."
He continued: "The success that was achieved with the Cruise Ship Task Force serves as a reminder that meaningful private-public negotiations can lead to win-win results for the community. We in the chamber urge the governor to discuss with us the structure of a Tourism Authority and to appoint the members to the public-private Tax Reform Commission which he approved last year in the same legislation authorizing the cruise ship agreement" — a reference to the 2001 Omnibus Act. The act also provided for creation of a private-public Tourism Authority to take the place of the Tourism Department.
Two and a half years ago, de Jongh also chaired the governor's Economic Recovery Task Force, which developed the Five-Year Operating and Strategic Financial Plan that also calls for a Tourism Authority.
Early this year, the chamber release noted, the governor approved the tax commission and vetoed the tourism body.
The F-CCA newsletter article concluded with this comment by Paige: "This agreement was very much orchestrated by the private sector, and because of the success of the negotiations that have preceded the signing of this contract, we have a better relationship in the U.S. Virgin Islands."
