Berth 3 of Ketchikan’s downtown cruise ship docks is shown on April 30, 2022. (Eric Stone/KRBD)

A shakeup could be coming to Ketchikan’s waterfront. City officials are considering a change to the way tour operators and food vendors compete for space on the city-owned cruise ship docks. 

As it stands, vendors bid for a spot. But Ketchikan’s City Council is scheduled to vote Thursday on a plan to move to a lottery system. City officials say it’s an effort to allow newer and smaller businesses to capitalize on publicly-owned infrastructure.

When passengers walk off cruise ships in downtown Ketchikan, among the crowds and buses are six small booths bearing the names of various tour companies. Two more sell food — fish and chips and the like.

Every three years, the city holds an auction for those booths. Vendors list the maximum price they’re willing to pay in a sealed-bid auction, and the top bidders get the chance to hock their tours to disembarking tourists on Ketchikan’s cruise ship docks. This past year, the program brought in roughly $370,000 in rent for the city’s port fund. 

But it’s not meant to be a significant revenue stream for the city, according to Ketchikan’s port and harbors director, Darryl Verfaillie, who joined the city staff last year.

“From its inception, it appears that the program was created to generate opportunities for local businesses to maximize the use of community-owned infrastructure, rather than focusing the program on generating a revenue stream for the Port,” Verfaillie said in a memo to Ketchikan’s city manager.

But those opportunities have been limited to a select few tour operators. Over the past ten years, Verfaillie says “essentially” the same six vendors have been the top bidders for dock leases. He says some of those operators have held leases since 2004.

And he says the system provides essentially the same service to the companies at vastly different costs. In some cases, the top bidder paid nearly $40,000 more than the lowest successful bidder over the course of a season.

Making things worse, says the port and harbors director, the system appears to be unfair. Though he doesn’t name names, Verfaillie says the disparities were exacerbated by “the appearance of collusionary practices among some past lease holders that had the potential to secure an advantage over other bidders.”

So he’s proposing what he calls a “hard reset” of the program to allow small businesses a fairer shot at the leases. It would be a lottery: essentially, anyone who wants one of the six tour vendor leases or two food vendor leases would submit an application, and they’d be drawn at random to determine who gets a spot. The cost of the lease would be up to the City Council, and the specifics of the lottery would be up to the city manager.

“The use of a lottery system will unquestionably level the playing field for all (independent tour operators), eliminate perceived bias in the award process, provide an equitable fiscal environment for all applicants, and provide an opportunity for 1st-time (independent tour operators) to benefit from the City’s largest economic driver – the Port of Ketchikan,” Verfaillie wrote.

But the proposal is likely to face pushback from existing vendors. John Malouf of Ketchikan Duck Tour and Alaska Hummer Adventures says he’s not convinced the system is excluding businesses.

“Last time, we had six bidders, so there were six booths. … If there were some kind of, 24 bidders and six booths, maybe there’d be some ground stand on there, but the year before that, we had seven bidders and six booths,” he said in a phone interview. “I think there’s opportunity for people to get in if they want to bid.”

Steve McDonald of Dolly’s Enterprises called the plan “ridiculous,” “bizarre” and “asinine.” He says businesses that run dock booths have invested heavily in their operations and could face an uncertain future if the council adopts a lottery system.

“Would you want the success of your business to depend on a lottery system?” he said by phone.

He estimated that the city’s existing dock vendors employ roughly 300 people.

Ketchikan’s City Council is scheduled to consider the changes at its next meeting at 7 p.m. Thursday. Members of the public have a chance to comment at the beginning of the meeting. It’s livestreamed at the city’s website and broadcast on local cable channels.