Cruise Ship Operator Commits To 20-Year Lease

Milwaukee’s cruise shop boom will continue for at least the next decade.

Port Milwaukee negotiated a 20-year lease with Pearl Seas Management to solidify the company’s use of one of the city’s docks for its turnaround service. It’s also purchasing a new X-ray scanner to comply with security requirements.

The company’s Great Lakes cruise routes either start or end in Milwaukee, with passengers spending extra time, and money, in the city as a result. The Milwaukee Cruise Collaborative, a marketing partnership, promotes weekend stay packages to retain passengers in advance of or after their cruise.

Port director Adam Tindall-Schlicht, first appointed in 2018, made securing the highly-desirable turnaround service one of his first targets.

Pearl Seas has used the city’s dock at Pier Wisconsin for such service in the past two years with its Pearl Mist ship, and a new agreement will have that continue for at least the next decade with a company option for an additional 10 years. The lease calls for at least five turnarounds per year.

“Pearl Seas is the company that has put Milwaukee on the map from an international cruise perspective,” said Tindall-Schlicht when the Board of Harbor Commissioners reviewed the lease Thursday morning.

The agreement provides the company guaranteed rates for docking and passenger loading, giving the city a guaranteed revenue stream. The lease calls for a minimum annual rate payment of $42,100 starting in 2021 and growing to $60,000 in 2036.

The first decade of the lease will net the port at least $423,921 in minimum lease payments. The second decade would add at least $513,425.

The company will pay $7.50 per passenger starting in 2021, a rate that would grow to $10.95 in 2036. Tindall-Schlicht said other Great Lakes cities have raised their rates to finance new facilities. He previously reported Cleveland hiked its rate to $30 per passenger.

“Our rates remain some of the most competitive on the Great Lakes,” he said. Much of that is because of the turn-around service. The new facilities on other ports are for customs clearance related to US-Canada travel. Milwaukee doesn’t need such a facility because passengers will have either cleared customs through their airport upon starting their journey or previously cleared customs on their cruise.

The Pearl Mist cruise ship has a capacity of 210 passengers and 70 crew members. It made its maiden voyage in 2014 and spends the summers in the Great Lakes and winters in the Carribean.

The lease calls for Pearl Seas to make a one-time $50,000 payment to the port by the end of 2020.

Board president Timothy Hoelter said he didn’t want people to think the agreement was the end of the city’s cruise marketing.  Viking Cruises announced its intent in January to use Milwaukee’s port when it enters the Great Lakes market in 2022. An additional dock would accommodate its ships. Tindall-Schlicht said having multiple passenger facilities was an asset that many other ports lack.

“I think this is a great plan,” said Commissioner Claude Krawczyk, an attorney. But he was unsuccessful in convincing his fellow commissioners to strike a small provision of the lease that would allow “any lawful use” in addition to signage of a 100-square-foot area just north of Discovery World. “I wouldn’t want to see a 10-by-10 fenced storage area,” he said.

Tindall-Schlicht said he was confident it would only be for signage. Pearl Seas can install permanent signage on the space, located between Discovery World and Harbor House.

“I am looking at this from the perspective of a guy that drafts and negotiates leases,” said Krawczyk, noting that the end of the agreement would fall on a board with likely entirely new members.

Hoelter and others said they were comfortable moving forward. The board unanimously adopted the lease.

Tindall-Schlicht said he anticipated cruise ship business would return in 2021. No cruise ships arrived in 2020 because of the pandemic. A provision in the new lease includes a clause to halt payments in such an event and includes a termination clause option for Pearl Seas.

Security Expense

The growth of Milwaukee’s cruise business is imposing at least one new cost on the city.

“Much like the airport has the TSA, the port has the U.S. Coast Guard,” said port development representative Jazmine Jurkiewicz. “The model we have used to date will no longer be effective with the growth we are expecting.”

Port security officials, on the dock in open air, have opened every bag and conducted a visual security search.

Given the lack of a permanent structure near the Pier Wisconsin dock, and the desire to use multiple docks, the city is pursuing a portable X-ray scanner.

“It’s pretty clear if we don’t do anything like this we are not going to have any cruise ships,” said Commissioner Ron San Felippo, citing guidance from the Coast Guard.

Harbormaster Wayne Johnson said the current process has been embarrassing for some passengers and uncomfortable for the security team during inclement weather.

The port will spend $183,930 on a custom-built scanner from Astrophysics Inc. with a five-year warranty. The port, according to a report, expects XPD Security to staff the generator-powered machine.

Jurkiewicz and Tindall-Schlicht said the port could recoup a portion of its costs by renting it to other city departments or private events, including triathlons that already get a permit from the port.