Norwegian Cruise Line Holdings will continue operating out of Pier 66 until at least 2030 and split with the Port of Seattle an estimated $30 million in facility upgrades.
The Port of Seattle commissioners Tuesday unanimously voted to sign a long-term lease with Norwegian Cruise Line Holdings to continue operating out of Bell Street Cruise Terminal’s Pier 66 and to split an estimated $30 million in facility upgrades.
The Port said a 15-year lease for a cruise terminal is unprecedented on the West Coast. It also said this is the first time the Port has entered into a direct agreement with a cruise line and a cruise line has agreed to invest in terminal improvements.
“This is a historic deal for the Port of Seattle,” Port CEO Ted Fick said in a statement. “Norwegian Cruise Line is showing real vision by investing in the economic growth of this region.”
After operating its Alaska cruises out of Seattle for the last 15 years, Colin Murphy, senior vice president of destination and strategic development for Norwegian, told the commissioners Tuesday the company is “delighted to put a flag in the ground” and say this is where the cruise line will be until at least 2030.
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In recent years, Norwegian has expressed concern about the aging, 15-year-old facility. With larger cruise ships coming online, Murphy said, Norwegian needed a facility that can handle ships carrying more passengers.
Together the two can create a terminal capable of accommodating modern ships and “it also, of course, locks in our commitment to bring our ships here,” he said.
Seattle serves seven major cruise lines: Carnival, Celebrity Cruises, Holland America Line, Princess Cruises, Royal Caribbean, Norwegian Cruise Line and Oceania Cruises.
Norwegian Cruise Line Holdings is the parent company of both Norwegian Cruise Line and Oceania Cruises, as well as Regent Seven Seas Cruises.
During the 2015 cruise season, the Port expects 192 vessel calls and 895,055 passengers. The Port estimates that with each of these ship calls, $2.5 million is generated for the local economy. Overall the Seattle cruise industry generates 3,647 jobs, $441 million in annual business revenue and $17.2 million in annual state and local taxes, it says.
The Port estimates the expansion of Pier 66 and extended lease will generate another $2.3 billion in business revenue, as well as $66.9 million in state and local taxes and 898 total jobs — direct, indirect and induced.
Norwegian Cruise will pay the Port an estimated $73 million over 15 years with an option to extend the lease through 2035. The agreement also includes language that will establish a project labor agreement between the tenant’s general contractor and the building trades. The Pier 66 renovation will expand space for processing cruise passengers from 44,262 square feet to 151,471 square feet, including the installation of two new passenger-boarding gangways and an automated conveyor system that would move passenger luggage from curbside to ship.
The estimated $30 million investment will include up to $15 million funded through the Port’s property tax levy. And the Port will have priority to use the facilities during the offseason. Norwegian will cover the remainder, which Murphy, Fick and the commissioners agreed is the first time a cruise line has invested in terminal improvements.
Previously, Pier 66 was managed by Cruise Terminals of America, which also manages the cruise operations at Terminal 91. On Tuesday the Port ended that lease and agreed to pay Cruise Terminals $1 million, half of which will be funded by Norwegian.
Expanding the cruise terminal within the footprint of the original building will require repurposing offices and event space as well as the Bell Street Deli.
The Port will terminate its lease with Bell Street Deli and will move Columbia Hospitality Inc., which manages the Pier 66 conference and event centers, to the World Trade Center across the street.
The Port has agreed to provide an estimated $2 million to cover costs of tenant relocation costs, terminating agreements, as well as construction costs.