City ponders offering Goldbelt land as part of new gondola deal, seeks bids for new Eaglecrest business plan
- Mark Sabbatini
- 3 days ago
- 7 min read
Gondola refund to Goldbelt will nearly deplete CBJ’s unrestricted fund balance, although Assembly expected to increase reserve funds via budget cuts, city manager says
By Mark Sabbatini
Juneau Independent
With the original plan for Eaglecrest’s gondola set for an expensive cancellation, city leaders are moving ahead on alternatives for the lift and the long-term future of the city-owned ski area.
Those plans include seeking bids from consultants interested in developing a strategic business plan for Eaglecrest. And while one option is offering Goldbelt Inc. "full operational control of Eaglecrest," the Alaska Native corporation is for now demurring on that possibility.
"Goldbelt is open to negotiating a new deal with the CBJ but does not agree to alter or pause the terms of the existing gondola revenue sharing agreement," Goldbelt President CEO McHugh Pierre stated in an April 6 letter to City Manager Katie Koester.
Assembly members, during a Committee of the Whole meeting Monday, moved ahead on refunding Goldbelt’s $10 million investment in the project — which comes to more than $12 million with interest. The company in 2023 agreed to provide the money in exchange for a share of revenue, but the deal contains a deadline of May of 2028 for the gondola to open which city officials say cannot be met because the estimated $27 million installation cost far exceeds what was anticipated and is affordable.
The Assembly unanimously gave initial approval to using $9.5 million from the city’s unrestricted fund balance to help pay the refund — nearly all of the $10.4 million that account is projected to have in an initial draft of the proposed city budget for the coming fiscal year.
However, Koester noted the Assembly is expected to make reductions in that proposed budget during the next two months that will increase the funds in the account. Furthermore, future discussions with Goldbelt could include transfers of city land worth millions of dollars to the company.
Concern about depleting the city’s unrestricted fund — and overreactions to that scenario — were expressed by Assembly members.
"Wiping out our fund balance does not make me happy at all," Mayor Beth Weldon said. "But as you heard from the city manager there's ways that we can claw it back, but the clawing back is going to take time and I think we should stop paying the interest, stop the bleeding, and then we can fill it back with other creative ways, mainly selling land."
The Assembly still has to give final approval to an ordinance terminating the agreement with Goldbelt during a regular meeting that includes public testimony. City leaders at Monday’s meeting said the plan is to introduce the ordinance during a special meeting April 29 and consider final passage May 18.
City leaders still have to resolve some other pending matters with the original plans for the gondola — such as what to do with cars and parts that are elsewhere at the moment — before moving on the next big question: What are the new plans for the gondola and Eaglecrest?
Step one: Close out the current plan
In addition to cancelling the agreement with Goldbelt, Koester said there are other matters to take care of that will cost the city some money. Also, she noted, interest on the Goldbelt repayment is accumulating "at a cost of $70,000 a month and growing."
An alternative explored by city and Eaglecrest leaders was asking Goldbelt if it was willing to modify the current agreement. Options presented in a March 17 letter from Eaglecrest’s board of directors ranged from having the company provide the extra installation costs in exchange for extra revenue to having Goldbelt take over year-round management of the ski area.
"We understand Goldbelt’s interest in providing additional funding for the gondola may be contingent on assuming full operational control of Eaglecrest," the letter states.
However, Pierre’s letter of response declared "we do not believe Eaglecrest has the standing to renegotiate the CBJ’s existing agreement" since the operating agreement is with the City and Borough of Juneau and was signed by a former city manager.
"We are open to negotiating a new deal that will replace the existing revenue sharing agreement, but until new terms are reached with CBJ, we will continue to operate under the previously agreed-upon contract," he wrote.
That means doing away with the old deal and repaying Goldbelt what would be $12,045,720 as of May 1 — plus roughly $70,000 more for each additional month it takes to cancel the agreement. One plus for the city is it hasn’t spent the entire $10 million Goldbelt provided — there is about $3.3 million left in the gondola’s project account, meaning in theory the city would have to allocate about $8.7 million if payment were made May 1.
But Koester wants to keep at least $500,000 in the gondola account to deal with other remaining costs, which is why she requested and the Assembly tentatively approved the $9.5 million from the city’s fund balance.
Among the other costs are storage for gondola towers and other parts purchased by the city that are still in Austria, Koester said. She said just the storage for that could be $500,000 or more during the next six months. City officials have said getting the parts to Juneau could also well exceed that amount due to tariffs imposed by the Trump administration, but that will be a necessary step to install the gondola as currently designed for Eaglecrest.
Also, the gondola cars are currently being refurbished in Colorado, so that work and shipping them back to Juneau is necessary, Koester said.
"We have to finish refurbishing the cars because right now they're in pieces at the shop to be refurbished and they have zero value to us," she said. "So even if we want to sell them we're going to have to finish refurbishing them."
Step two: Figure out a new plan
Eaglecrest officials and some city leaders still believe year-round tourism at the ski area with a gondola as the centerpiece is both an appealing and profitable long-term prospect. So the questions looking ahead include 1) what to do with the gondola and extra parts the city has purchased, 2) if the plan remains to install it at Eaglecrest who will pay for and do the work, and 3) who will operate the gondola and/or other facilities at Eaglecrest in the years to come?
One option is simply to sell the gondola to any willing buyer, including one outside Juneau, but the city won’t recover much of its losses, according to Koester.
"If we end up selling the gondola, estimates are it could take years and we could recoup anywhere from $1.5M-$2.75M," she wrote in a memo to the Assembly before Monday’s meeting. The Assembly in 2022 bought the used gondola for $1.9 million and then subsequently purchased a second gondola for the extra parts.
As for proceeding with the gondola at Eaglecrest, the significant costs, challenges and potential rewards are summarized in a request for proposals for an "Updated Strategic Business Plan for the Eaglecrest Ski Area" published April 6 by the City and Borough of Juneau. The deadline for bidders to submit proposals for a 10-year plan is April 30.
Eaglecrest's annual operating budget of about $6 million has significantly increased in recent years due to maintenance and payroll costs, while revenue has dropped due to "poor weather conditions, mechanical challenges, and other issues," according to the bid document. As a result, Eaglecrest’s cost recovery is only 40%-50% — meaning deficits of millions of dollars a year — compared to historical recovery levels of 60%-70%.
Hopes for a turnaround are that year-round operations involving a gondola will appeal to a large segment of the 1.7 million cruise ship passengers and 200,000 independent visitors annually in Juneau.
"Pro forma financial analysis indicates that within a five-to-seven-year period, net revenues from summer gondola ridership would be sufficient to cover winter operations costs and begin building capital reserves for reinvestment in new lifts and other facilities at Eaglecrest," the document notes.
Bidders are asked to submit proposals for how they would craft a business plan that maximizes winter and summer activity, modernize the resort’s aging lifts and other installations, and assess staffing and management models.
Assembly and Eaglecrest board members have both endorsed approaching potential partners/investors for gondola and ski area operations, with Goldbelt being the first asked due to the existing agreement. Koester on Monday said land transfers could be a key part of a new deal with the company.
"There are a couple pieces of property that Goldbelt has definitely expressed an interest in," she said, adding the Assembly hasn’t yet authorized discussions for any such transfers and thus it’s unknown how that interest might factor into a new gondola agreement.
Among the parcels is 10,000 square feet of property at the Goldbelt Tram worth about $3 million that the company is leasing from CBJ Docks and Harbors for about $272,000 a year, Koester said. Another is a small section of Docks and Harbors property near the Goldbelt Seadrome Marina assessed at about $630,000. Finally, she noted, CBJ owns about 2,020 acres in North Douglas adjacent to where Goldbelt is planning to build a private two-pier cruise ship berth along the west coast of the island.
But there’s lots of unknowns for any of those options, Koester added. It’s unknown if Goldbelt is interested in the North Douglas land, for instance, and "I think the Docks and Harbors board would have a very strong opinion on a land transfer for any of these properties."
Assembly members will tackle one other key question during the next couple of months: What to do with Eaglecrest’s budget during the coming fiscal year that starts July 1. The city has traditionally subsidized operations, but as the deficits have grown Assembly members have said their support to cover gaps was based on the assumption the gondola as originally envisioned would allow the ski area to operate profitably and thus return money to the city.
Wrapping up Eaglecrest’s 50th season
Eaglecrest ended its 50th year of operation on Sunday with what the ski area’s Facebook page called a "Hawaiian-themed and 50-Year themed party." The season got off to a rough start after opening in December, including mechanical issues that kept the mountaintop Ptarmigan lift from opening until mid-January and a water main break that disrupted lodge operations for more than a month until late January.
Adding to the disruption was the sudden resignation of General Manager Craig Cimmons in early January, with board chair Hannah Shively stepping down from the leadership spot on the same date.
But record winter snowfall allowed Eaglecrest to finish on a celebratory note. Interim General Manager Erin Lupro, during an April 2 board meeting, said the ski area had its most profitable March since at least 2014.
"The beginning of the season, it was a rough start and, yes, we kind of felt like ‘OK we’ve got to survive this’ after the beginning," she said. "But March felt vastly different, just because there were a lot of people on the mountain enjoying what we all love to do."
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
