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Port approves $40M+ additional contract authorizations for Pier 27 cruise terminal; Phase 2 funding shortfall remains
Summary
The Port Commission approved contract amendments and budget changes for the James R. Herman Cruise Terminal (Pier 27), increasing Phase 1 and Phase 2 authorizations; staff said Phase 1 is funded but Phase 2 still has an approximate $4.2 million shortfall and proposed financing options including passenger facility charges and bonded debt.
Port Project Director Kim Von Blahn and Elaine Forbes, the Port’s CFO, told commissioners that Phase 1 construction of the James R. Herman Cruise Terminal is roughly 80% complete and on schedule for turnover to the America's Cup Authority on March 1, 2013. Staff requested and the commission approved contract and budget amendments to fund remaining Phase 1 work and to move Phase 2 into construction.
"Phase 1 construction of the core shell is about 80 percent complete and is on schedule for handover to the America's Cup Authority on 03/01/2013," Von Blahn said. She described Phase 2 work to finish U.S. Customs and Border Protection facilities, a 2.7‑acre Northeast Wharf Plaza and required marine and security equipment.
Forbes told the commission that Phase 1 is fully funded after recent adjustments, but Phase 2’s estimate rose during detailed pricing and now shows a funding gap. Staff identified approximately $39.42 million in sources (including the 2012 geo bond, FEMA grants, port funds and proposed debt), leaving an estimated shortfall of about $4.2 million. The Port proposed repaying a portion of Phase 2 through a passenger facility charge (per‑head fee) and additional debt issuance and grant applications.
Commissioners approved the requested contract increases and budget authorizations (recorded as Resolutions 1296, 1297 and 1298). Staff said the Phase 2 budget increase reflected several factors: more detailed construction pricing as design moved from concept to construction documents, additional finishes for the Northeast Wharf Plaza, maritime improvements and required security measures.
What was approved
- Amendments to architectural/engineering and construction manager contracts to increase authorized amounts (contract totals updated in the staff report). - Staff authorization to proceed with Phase 2 procurement and to pursue identified financing strategies, with further review prior to final debt issuance.
Next steps and risks
Staff will continue to seek grants and value engineering to close the remaining shortfall; commissioners requested additional detail before the Port issues long‑term debt or finalizes passenger facility charge levels. Funding options discussed included a passenger facility charge (estimated $2–$6 per head depending on repayment term), $15.3 million of potential debt issuance and continued pursuit of FEMA and other grant funds.
Why it matters
The Pier 27 cruise terminal is intended to increase the Port’s capacity for international and domestic cruise operations and provide a large event venue; the project’s cost increases and the remaining shortfall will determine whether the Port must increase borrowing, adjust scope, or identify new grant funds.
