With commitment from Royal Caribbean, Alaska Railroad advances $137M plan to revamp Seward dock

The Alaska Railroad is making a new push to replace its aging cruise ship dock in Seward with a larger one that can handle much bigger ships.

The $137 million plan also calls for construction of a 60,000-square-foot terminal that is much larger than the current one, railroad officials said. The effort will require the Legislature to approve the railroad’s plans for issuing bonds. If the funding process is approved, the project should be completed before the 2026 cruise season, railroad officials said.

The plan is backed by an unusual 30-year commitment from Royal Caribbean Group, which will essentially act as an anchor tenant while other cruise lines will also use the dock, the railroad said in a statement this month.

The effort comes as Alaska prepares for another big summer of cruise ships.

A record 1.7 million cruise passengers visited Alaska last year, said Jillian Simpson, president of the Alaska Travel Industry Association.

About 190,000 cruise guests last year used Seward as their port of call, she said. The picturesque town of 3,000 sits at the head of Resurrection Bay.

This summer, the number of cruise passengers coming to Seward is expected to fall, the railroad said. Norwegian Cruise Line is transitioning its ships from Seward to Whittier, where a new cruise port is being completed.

[Previously: Tiny Whittier debates an Alaska Native corporation’s proposal for a second cruise ship dock]

The railroad hopes the new dock will attract more cruise lines to Seward, president Bill O’Leary said in a statement from the railroad. He said maintenance is an increasing challenge for the current dock, which was built in the mid-1960s and is nearing the end of its useful life.

Seward Mayor Sue McClure said many people in town seem to support the railroad’s plans and the idea of more tourism in the future. “I don’t hear a lot of outcry that we’ll be overrun with tourists,” she said in an interview.

Many cruise guests already hop on buses or the train to depart Seward for other destinations in Alaska, she said. But if larger ships and new cruise lines arrive, that would mean additional tourists sticking around Seward to visit attractions like the Alaska SeaLife Center and Kenai Fjords National Park.

That would help many businesses, she said.

Also, the larger terminal will better support community events that take place there in winter, she said. And the city hopes to provide electricity to the ships so they no longer run their engines while waiting in port. That will cut emissions and provide revenue to Seward through the local electric utility, she said.

“I can’t speak for the city council, but I feel this is all so far positive,” she said.

Changes to plans

The plans to replace the dock date back to at least 2019.

The railroad secured legislative bonding authority for $60 million in 2022 in an initial effort to pay for a new dock with minor improvements to the existing terminal, railroad officials said.

Sharply rising inflation and labor shortages led to higher construction costs and made project timelines uncertain, said Meghan Clemens, a spokeswoman for the railroad. That caused the railroad to rethink its plans, she said.

Other important changes also came about.

A new business, The Seward Company, provided an unsolicited proposal to the railroad in the fall, offering to build the project and fund construction, the railroad said. The company presented a new design for the large terminal and a new dock. It also secured the commitment from Royal Caribbean Group for the proposal.

Under the plan, the Alaska Railroad will buy the new dock from The Seward Company once it’s complete, issuing bonds to help pay for it. Also, $30 million from “internal funds generated through port improvement fees assessed to current Seward dock customers,” will help pay for it, the railroad statement said.

The railroad is now seeking an additional $75 million in bonding authority from the Legislature for the project, atop the $60 million in authorization it already holds. The project faces extra costs now compared to two years ago because of higher prices and the additional expense of building a much larger, new terminal, Clemens said.

The debt will be “solely an obligation of the railroad and not that of the state,” the railroad said in its statement. Authorizing legislation in both chambers has moved to the Finance committees after clearing the Transportation committees, Clemens said.

Royal Caribbean Group has committed to providing revenue for 30 years based on passenger fees associated with the equivalent of 140,000 guests a year, said Mickey Richardson, chief executive of Port of Tomorrow, which owns The Seward Company.

Royal Caribbean last year brought about 70,000 guests to Seward.

The increase in guests will happen over time after the new dock is built, Richardson said.

Richardson formerly worked on other cruise dock projects in Alaska for Huna Totem Corp., a Southeast Alaska Native corporation, including the new cruise dock and terminal in Whittier that’s being completed.

“Tourism is a bright spot in the Alaska economy, so it makes sense to add infrastructure for tourism,” Richardson said.

Jason Davis, president of Turnagain Marine, an Anchorage-based firm that will build the Seward dock project, said plans calls for construction of a 750-foot floating dock.

It will be the largest floating dock in the state, he said. The old dock would be demolished late next year, with no disruption to service before the new dock is built, he said.

The dock will be able to support Royal Caribbean’s Quantum-class ships, which carry more than 4,000 guests, about double the number of guests many cruise ships bring to Seward.

A floating dock will be safer than a fixed dock for passengers getting on and off ships, Davis said. It will rise and fall in tandem with the ship, eliminating concerns like the need to use steep ramps.

‘The more the merrier’

Preston Carnahan, regional vice president for Royal Caribbean Group, said the 30-year commitment to the cruise port is unprecedented in Alaska.

Royal Caribbean Group “remains strongly committed” to the future of Seward and the state, Carnahan said in the statement from the railroad.

Business owners in Seward said more cruise visitors in the future would be a positive step for the economy, though the level of support for the plans was mixed.

Scott Reierson, who owns Seward Adventure Lodge and a surfing charter business in Seward, said more tourists will generally be good for businesses in town.

But he said there needs to be a responsible plan to ensure Seward receives adequate revenues for the extra strain more visitors will put on city services, such as roads, water and sewer.

“I don’t know if it’s an absolute win-win for the town, but it’s hard to find a win-win in anything,” he said.

Dorothy Urbach, with Urbach’s Clothiers, said the idea of more cruise guests is “wonderful.”

“The more the merrier,” she said.

More summer visitors in Seward can help extend the tourism season, since travelers sometimes decide to return to Seward in winter.

“It means more businesses will be open,” she said of the plan.