Revenue projections show that city taxpayers could take a fiscal bath on the new Pier 27, but Port of San Francisco officials insisted Monday that those losses can be offset through passenger spending at local businesses.
Built with $53.7 million in bond money, the Justin Herman Cruise Ship Terminal is scheduled to take its first boatload of visitors in August 2014, according to Elaine Forbes, the Port’s deputy director of finance.
The terminal’s current occupant is the America’s Cup Event Authority, which is using the area rent-free to put on concerts at a temporary venue as part of the package of perks offered by The City to lure the high-profile yacht race to San Francisco Bay. The 60,000-square-foot building will be made cruise-ready beginning in November, when the authority sets sail following the regatta.
Once open for business, the cruise terminal could lose The City $611,000 a year — or it could make about $528,000, according to estimates presented to the Port Commission last month.
Whether The City loses or makes money will depend on how often the cruise building can be rented for weddings and parties, and how much revenue can be gleaned by using Pier 27 as a parking lot when ships are not in port. Revenue also will increase if the to-be-determined operator can ready ships for departure in two and a half days instead of the usual three.
And profits could depend on whether the “facility charge” — the passenger fee for the right to leave port — is raised from $12 to $18.
The initial estimates are “very conservative,” Forbes said. If the rental and parking income are realized, “it is very likely we will make money,” she said.
Fixed costs for the terminal, including debt payments, will run a combined $4.77 million per year.
If 66 ships visit annually, that would generate about $4.3 million in revenue. If 80 ships visit, at the increased per-passenger fee, the terminal would take in about $5.5 million, according to Port documents.
About 80 percent of the luxury liners that visit The City are slated to go through the terminal. This year, 66 cruise ships are scheduled to visit San Francisco; in 2014, it’s 74.
Currently, cruise ships are docking at Pier 35.
Under the rosiest scenario — if Pier 27 is used for special events 65 percent of the time when a ship is not in port, and if more events can be booked thanks to a quicker turnaround time — the terminal could generate $1.1 million, according to Forbes.
Each time a cruise ship docks in San Francisco Bay, about $1 million in “economic activity” is generated, according to the Port. Cruise visits also generate $175,000 in annual tax revenue for The City, the Port estimates.