Alaska Railroad begins initial financing expansion of marine facilities in Seward; $100 million to be invested over five years

The Alaska Railroad Corp. has selected Bank of America Securities, Inc., as the underwriter for issuing $60 million in railroad revenue bonds for the Seward cruise terminal expansion project, the railroad said July 20 in a statement.

A Bank of America team visited Seward this week with railroad officials to get acquainted with the project, and will now move forward with next steps in the underwriting process, the railroad said.

The bonds were approved by the Legislature this spring in House Bill 127, which was sponsored by Gov. Mike Dunleavy. The entire project will cost an estimated $80 million and other sources of funding will supplement the railroad bonds.

The construction timeline calls for the new passenger terminal to be operational for the 2025 season. The upgrades are needed to handle larger cruise ships.Seward provides a critical connection to thousands of cruise passengers who arrive in Alaska each summer and then go on to travel in the state, bringing tourism dollars to Alaska businesses and communities.

“We appreciate the governor’s strong support for the railroad and our ability to finance critical Alaska infrastructure,” said railroad President and CEO Bill O’Leary. “Seward has been an essential gateway for the Alaska Railroad for decades. Replacing the dock and enhancing our passenger terminal will ensure this important connection remains intact for all Railbelt communities for many more decades to come. We are on the cusp of celebrating the Railroad’s centennial, 100 years as a critical transportation link. It is fitting to mark the occasion by starting a project that will offer profound benefit to communities all along our rails.”

Because ARRC has its own bonding powers, none of the project costs will be paid by state dollars. The railroad plans to issue bonds totaling $60 million and the remaining costs will be paid through existing dock fees and capital funds.

There is already interest in using the upgraded dock from Royal Caribbean Group, which is negotiating for a multi-year berthing agreement that features an annual revenue guarantee.

“Our cruise brands have enjoyed operating out of Seward for more than 20 years and with this investment, our guests will continue building memories that last a lifetime,” said Wendy Lindskoog, Royal Caribbean Group’s regional vice president of government relations for Alaska and the West Coast.

“Our aligned vision to support this new dock with the governor, legislators and ARRC means long-term economic benefit to the region and the ability for Royal Caribbean Group to bring our newer, more energy-efficient ships to the market.”

“We are thankful for the strong return of the cruise ship industry after a two-year hiatus,” said Seward City Manager Janette Bower. “We appreciate the support from Gov. Dunleavy, Senate President Peter Micciche (R), House Transportation Committee Chair Rep. Grier Hopkins (D) and Rep. Bart LeBon (R), allowing the Alaska Railroad to move forward with this valuable project and the economic benefit it provides through cruise ship tourism dollars for our local businesses, including commercial passenger vessel funds for both the city and borough, the marine industry in Seward and throughout the state.”

The railroad also has a project in the works expanding the freight dock and rail corridor improvements in Seward. In total, the railroad is on track to invest more than $100 million in the community of Seward over the next five years.