American Cruise Lines’ plans for a new dock in Petersburg to accommodate its ships — similar to what it will build in Wrangell — took a step forward when the Petersburg borough assembly this month approved the first reading of an ordinance rezoning waterfront land for the development.

The rezoning, if approved in second reading at the next assembly meeting, would make the site available for a lease agreement under negotiation between American Cruise Lines and the borough. Under the arrangement, the cruise line would build and maintain its own dock, eliminating the need for borough funding that had generated controversy earlier in the project’s evolution.

The project has undergone significant changes since American Cruise Lines first approached the borough nearly a year ago about partnering on a dock extension.

Last June, the borough assembly approved allocating $1 million from harbor reserves for a potential joint venture on the project. That allocation proved controversial, however, with some harbor users objecting to using money generated by the fishing fleet for cruise ship infrastructure.

The discussions also revealed complications with federal wage requirements for a government public works project and disagreements over marine passenger fees.

“A lot of it had to do with the realities of what it takes to build a public facility,” Harbormaster Glorianne Wollen explained to the assembly. “When it’s going to be a public facility … some of the process ends up costing a project a lot of times up, as much as double.”

Borough Manager Steve Giesbrecht confirmed that marine passenger fees remained a sticking point in earlier negotiations. “We were not going to bend on that,” he said.

American Cruise Lines shifted its application to lease the tidelands from the borough and fund the new dock independently.

Under the proposed lease arrangement, the company would pay annual lease payments and be responsible for construction and maintenance costs, and the $1 million from harbor reserves would remain untouched.

According to Wollen, the borough would retain some oversight to ensure any facility meets engineering standards and doesn’t interfere with port operations.

American Cruise Lines’ ships made 16 to 18 stops in Petersburg last season, with vessels often overnighting in town.

Its smaller ships, carrying 170 passengers, represent a much more suitable scale for Petersburg than the massive vessels that visit larger ports, officials said. American Cruise Lines is working on adding a third small ship to its Southeast Alaska operations.

If the company builds a dedicated facility, it would free up space at the port dock for the fishing fleet and reduce scheduling conflicts on the waterfront with Petro Marine, which serves fishing vessels and cruise ships.

If negotiations are successful, the lease agreement could come before the borough assembly in March or April, according to Giesbrecht and Wollen.

The rezone would affect a 22,500-square-foot parcel at the end of Dock Street on Petersburg’s waterfront.

If a lease agreement is finalized and approved, American Cruise Lines would have control over the final dock design, though it would be submitted to the harbormaster for review to ensure compatibility with port operations.

In addition to its recent 40-year tidelands lease with Wrangell, where the company will build a floating dock, American Cruise Lines also has been talking with officials in Haines about dedicated dock space for its ships.

Wollen provided historical context for Petersburg’s cruise ship and independent tourism traffic, noting current visitor numbers remain well below peaks from the 1980s and 1990s.

“In the ’90s, we had better part of 16,000 to 18,000 people, and the last few years we haven’t even hit 10,000,” she said.

A major factor in the decline was cuts to the Alaska Marine Highway System, which previously ran robust service throughout Southeast.

“We used to have five ferries that were coming running buzzing around Southeast Alaska, coming up from Prince Rupert and Washington (state), and they were full of RVs,” Wollen recalled. Independent travelers would disembark with their RVs and stay in Petersburg’s parking lots and RV parks.

“That customer base is completely gone. I don’t even know if we’ve had an RV get off the boat — maybe one or two in recent memory,” she said.