Port Cities Fret Over Taxpayer-Funded Terminals for Cruise Ships

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There is vocal opposition in Key West to a coming ballot initiative that would authorize spending $3 million to widen the channel that cruise ships use. Some 350 cruise ships stops a year are made in Key West already. A wider channel would allow newer, wider, bigger ships to dock.

Klein says the effect of cruise ship tourism on the economies of U.S. port cities has been mixed.

The case of Mobile, Ala., is cautionary: Mobile wooed Carnival for years, borrowing $20 million to build a terminal Carnival would find acceptable. Carnival eventually agreed to base a ship there, and, in 2007 named Mobile its port of the year. The city spent $2.6 million more, according the Times, on a new gangway. Then, two years later, Carnival left, saying fuel costs had made Mobile a more expensive base than higher-trafficked, more popular New Orleans.

Another cautionary tale, says Klein, is Houston. According to the Houston Business Journal, the city spent $108.4 million in 2008 to build a cruise ship terminal. Klein says that the terminal sat vacant until last year, when the city inked agreements with two cruise lines--but only after having to pony up what Klein says are $8.7 million in incentives over five years.

There's a big difference between the benefits enjoyed by a home port (a city where a ship is permanently based) and a port-of-call (a city where transient ships merely visit).

A 2011 analysis of by economist Brian Scarfe of the economic impact of cruise tourism on Victoria, B.C., and other port cities in the province found that the economic benefit to a home port (Vancouver) was 8.5 times greater than the benefit enjoyed by a port-of-call (Victoria). The home port's extra economic benefits derive from such activities as ship re-provisioning and maintenance as well as hotel stays by tourists before and after their cruises.

Scarfe's study, done for the James Bay Neighborhood Association, argues that cruise ship tourism has had "a zero or negative net socio-economic impact" on Victoria. He writes in part: "The significant costs that burden residents and taxpayers exceed the benefits enjoyed by local cruise ship servicing companies, a small portion of the local business community, and the Harbor Authority."

Though economic benefits indeed were generated by passengers and crew while a ship was in port, the "social and environmental costs resulting from marine effluents, traffic congestion, traffic noise, road repairs, atmospheric emissions and public subsidies" cost, by Scarfe's estimate, $28 million--compared with ship-related revenue of $24 million.

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