Board of Directors Regular Meeting Agenda


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Meeting Date: 07/16/2015  

SUBJECT MATTER:
Receive, consider and act upon an update and report on the Waterway Cruisers;
FISCAL IMPACT:
BACKGROUND:
The item was placed on the July Board agenda per a request from Director Bass.  This item will also be considered as a budget initiative.

The Woodlands Convention and Visitors Bureau (CVB) owns six Waterway Cruisers that provide publicly-available transportation cruises on The Woodlands Town Center Waterway Corridor. The Cruisers are operated by The Brazos Transit District (BTD). Waterway Cruiser service was implemented in July 2004.
 
The Waterway Cruisers travel along The Woodlands Waterway providing riders a transportation method with access to businesses, restaurants, office buildings, hotels and urban residential uses along the Waterway corridor. The east end of the corridor is anchored by The Woodlands Mall and the west end is anchored by the Marriott Hotel and Convention Center and The Cynthia Woods Mitchell Pavilion.
 
Cruisers riders must purchase a ticket to board. This fee recovers a portion of the operating costs of the boats. The CVB funds a portion of the operating cost of Cruiser operations, and prior to 2015, federal grant funds provided by BTD were used for a portion of the costs.
 
In addition to the waterway services provided through the Cruiser service, the CVB has implemented the Waterway Cruiser Catering Program in conjunction with Landry’s Restaurant.
 
The CVB entered into a five year agreement with the Brazos Transit District for the operation of the Waterway Cruisers and this existing agreement will end on December 31, 2015. The six Waterway Cruisers are currently owned by the CVB and operated by BTD at an hourly cost to the CVB of $58 per hour. The cruisers are scheduled to operate for 3,800 operating hours per year. BTD’s hourly rate includes operations, fleet/marina maintenance, associated utilities, and other overhead costs.
 
In late 2014, the CVB Board authorized BTD to proceed with the Passenger Ferry Grant for the replacement of Waterway Cruiser motors and generators. This grant provides 80% of the cost of replacing the motors and generators. Brazos is moving forward with the procurement process and the motors and generators should be replaced in late 2015. Another eligible line-item within the grant program is a ticket kiosk system. However, a recent analysis of the installation costs necessary to repower the Cruisers lead BTD to believe that the equipment purchase and installation may require the majority of the grant budget, which may not allow additional funds for the implementation of the kiosk system The potential increased cost is due to the significant weight of the replacement  generator equipment  used in the WW Cruisers that may not be possible to install from the existing docking facilities. 
 
The use of the Passenger Ferry Grant funds requires that the boats continue to be used over the useful life of the federalized capital equipment for public transportation services.  The total amount of funding provided by the passenger ferry grant program was $317,305 with 80% ($253,844) coming from federal funds and 20% ($63,641) coming from local funds, provided by the CVB.
 
The CVB total budget for the Waterway Cruiser operation (less capital) is approximately $266,900 annually, with approximately $127,000 being supported by user fees and $20,000 coming from catering and sponsorships. The Township Board removed the Waterway Cruisers from FTA grant funding reimbursement for operations beginning with the 2015 year. The net Waterway cruiser operating deficit is projected at approximately $120,000 for 2015. This deficit is funded through hotel occupancy taxes (HOT) designated to the CVB.  When considering the amount of HOT tax collection used for funding the Waterway Cruisers, the $120,000 annual cost of the Waterway Cruisers is about 1.8% of the total room tax collections. 
 
The question has been raised about the community benefits of continuing the Waterway Cruiser agreement beyond the current contract term of 12/31/15.  It is staff opinion that the Waterway Cruisers add to the vibrancy of the businesses operating in the Woodlands Waterway area.  The cruisers are also an attraction that draw visitors and provide a strong branding and marketing component for The Woodlands.
 
With the current Waterway Cruiser operating agreement with BTD ending on 12/31/ 2015, one of the issues to be discussed in the 2016 Budget work session is whether the existing agreement with BTD should be continued or should other operating options or scenarios for the Waterway Cruisers be considered? These options potentially include the following:
 
Scenario Service Operator/Ownership Funding   Source
1 Continue existing service Contract with BTD,
CVB retains ownership of cruisers
Fund through HOT tax
2 Continue existing service Township assume operating contract from  CVB,
CVB retains ownership of cruisers
Fund through HOT tax
3 Continue existing service Township assumes operations and ownership Fund through HOT tax
4 Continue existing service Seek a third party operator (may be complicated as the facility and improvements are federalized) Fund through HOT tax
5 Cease operations Sell cruisers/equipment (may be complicated as the facility and any implemented improvements are federalized) n/a
  
 
RECOMMENDATION:
If the Board desires to continue the Waterway Cruiser service beyond December 31, 2015,  it is  staff’s  recommendation that the Township lease the Waterway Cruiser facility directly from BTD and that the Township assume the maintenance and operations for the Waterway Cruisers using Township staff and contracted  services.  The operating support for the Waterway Cruiser operation is proposed to be funded entirely from room tax proceeds.  The CVB would continue to provide catering and  marketing functions.
 
If the Board determines that Waterway Cruiser operations will not continue beyond December 31, 2015, the following actions will need to be considered:
 
  • Notify BTD of the planned operating change and minimize the planned use of Passenger Ferry grant funding for motor and generator replacements.
  • Notify Woodlands Waterway partners and businesses of the pending service change for 2016.
  • Consider potential disposition of the Waterway Cruisers
 
 
 

    

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