Cost of Eaglecrest gondola, originally estimated at less than $9M, may reach $37M, officials say
- Mark Sabbatini
- 2 days ago
- 4 min read
New questions about project raised as Assembly confronts preliminary ‘maximum’ installation cost of $27M, ‘existential’ dilemma for ski area if gondola doesn’t proceed
By Mark Sabbatini
Juneau Independent
This is a developing story.
A preliminary "guaranteed maximum" of $27 million to install a gondola at Eaglecrest Ski Area injected new uncertainty into the controversial project during a joint meeting of Juneau Assembly and Eaglecrest board members Wednesday night at City Hall.
The gondola had an initial purchase and installation cost of less than $9 million four years ago, but the total price tag could now reach $37 million, according to ski area leaders. But the city faces $10.9 million in "sunk costs" if the gondola is abandoned and "it’s definitely a question of whether we could continue to operate," Eaglecrest board chair Brandon Cullum told Assembly members.
Eaglecrest’s board of directors is scheduled to meet at 5:30 p.m. Thursday at City Hall. A gondola update and public testimony periods are on the agenda.
Reasons cited Wednesday for the soaring costs include purchasing additional parts that are costing more than the original $2 million spent on the 20-year old gondola acquired from an Austrian ski resort, significantly higher rates for infrastructure work, and unexpected expenses such as tariffs to ship parts from overseas.
Other local projects have also seen big jumps in projected costs. Moving City Hall to a fully remodeled Michael J. Burns Building went from an estimated $18 million last September to about $30 million in January, resulting in city leaders opting to focus on a limited remodel costing $18 million instead of the previous estimated $14 million. A second Juneau-Douglas bridge projected to cost $90 million in 2020 now has a price tag potentially exceeding $500 million.
The preliminary maximum estimated cost of the gondola installation was provided by a contractor to Eaglecrest leaders during the past day, Assembly members were told.
"I know this is a lot to take in," Erin Lupro, Eaglecrest’s acting general manager, told the Assembly members. "It was a lot for us to take in this afternoon as well."
An official estimate of installation costs is scheduled to be presented to the Assembly on April 1. Eaglecrest board member Jim Calvin, who presented the preliminary estimate Wednesday told Assembly members that, while cost-saving measures will be evaluated during the coming weeks, "it's quite unlikely that we're going to get this thing down to the $20 million level."
Options discussed to pay those costs included seeking additional private investment in the project in exchange for a share of long-term profits, similar to an agreement that already exists with Goldbelt Inc. The Juneau-based Native corporation provided $10 million intended for installation in exchange for 10% to 25% of the gondola’s gross revenue for at least 25 years, with a minimum payout of $20 million.
Calvin said approaching Goldbelt to cover the rest of the installation cost in exchange for extending the agreement by a set number of years is a possibility, with Assembly members expressing general agreement about discussing that option with the company.
But there is an additional complication — Goldbelt can back out of the agreement and the city will have to repay the $10 million with interest if the gondola isn’t operating by May of 2028, unless an extension to the deadline is agreed upon. That means Assembly members may be facing a quick decision about whether to proceed with the gondola after getting an official cost estimate April 1.
A report presented to Assembly members Wednesday projects the ski area will be profitable by 2034 if the gondola begins operating in 2028, and forecasts about a $1.5 million surplus (based on about $11.5 million in costs and $13 million in revenue) during the 2038 fiscal year.
Eaglecrest is owned by the city and the Assembly has subsidized its operations for many years. Both city and ski area officials have envisioned a gondola as the cornerstone of expansion into year-round tourism operations that could make the resort profitable.
But the increasing costs of the gondola — and growing deficits at Eaglecrest due to aging equipment and other operational struggles at the ski area celebrating its 50th anniversary this year — have sown doubts among some Assembly members about continuing to provide significant subsidies if profitability isn’t a realistic goal.
"Just because of the size of that number it's hard to imagine a scenario where we can get on a sustainability track," said Assembly Member Christine Woll, who chairs the Assembly’s Finance Committee.
A general agreement among Assembly and Eaglecrest leaders is keeping the ski area operating as a community asset is important and expanding into summer operations is a key aspect of ensuring the mountain’s financial future. Cullum said board members have started considering other ways Eaglecrest can expand its tourism offerings to lure cruise ship passengers if the gondola proves to be too expensive.
"We shouldn't be married to the gondola," he said.
When the gondola was being discussed before the COVID-19 pandemic there were conceptual plans that included a new lift, with $20 million to $50 million in upfront costs, KTOO reported in 2022 when the Assembly approved the purchase of the used gondola.
“The amount of money on the table was astonishing,” then-Assembly Member Maria Gladziszewski said at the time. “And I just thought, the City of Juneau is never going to come up with that kind of money, there’s no way citizens of Juneau are going to spend that kind of money on Eaglecrest.”
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
