Up the river without a paddlewheel

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February 2, 2004 // UPDATED 2:48 pm - April 24, 2007
By: Scott Russell
Scott Russell

Park Board scrambles to find new excursion boat deal

A Downtown-area excursion boat deal is in stormy waters.

For the first time in a decade, the public may not be able to enjoy a Mississippi River tour on a paddlewheeler that embarks from Boom Island.

The Padelford Packet Boat Company -- which had provided the excursion boats for over a decade -- unexpectedly pulled out of a competitive bidding process. Padelford executives call the Minneapolis Park and Recreation Board greedy and indifferent to the significant investment the company has made to the riverfront's success.

The implosion of the long-standing deal has led to charges and recriminations.

City leaders -- keen on preserving Downtown's attractions while adding new ones -- had harsh words for the Park Board and Padleford.

Greg Ortale, president and CEO of the Greater Minneapolis Convention and Visitors Bureau (GMCVA), called events "sad," "unfortunate," "embarrassing" and "just plain stupid."

"It is an amenity that was popular up here; it was an important part of our product," he said, noting he only found out about the Padelford problems after the fact. "To a certain extent, it is on both parties' part. I don't know why people can't sit down and work out a deal."

He said he planned to call the Park Board members he knew to get more details.

Mayor R.T. Rybak said he has known the Padelford owners for years, and he called them to offer what help he could to patch things up with the Park Board.

"I met them when they first came to Minneapolis and I was with the Downtown Council," the mayor said. "We made a big deal out of them coming. I have pointed to it with great pride over the years. ... It is clear to me the community wants them here. They are an important part of the river."

For their part, Park Board staff sees itself as being a good steward of a public resource, using a competitive process to maximize revenue in tight budget times. They are negotiating with LaCrosse-based SkipperLiner to provide charter-boat service and perhaps a daily excursion boat -- if SkipperLiner can find a paddlewheeler short enough to fit under Minneapolis' low bridges.

Don Siggelkow, assistant superintendent of administration and finance, will report to the Park Board on negotiations Wednesday, Feb. 4 and is upbeat on SkipperLiner, which he said has the financial horsepower to bring new amenities to the river. He said he was confident the SkipperLiner could get a paddleboat this season, but details weren't worked out.

SkipperLiner officials did not return a phone call. The company Web site said it has built almost 1,000 boats since 1971. The longest is 141 feet; the fastest cruises at 29 mph, and the most expensive is the $5 million, 124-foot Liberty Belle, a paddleboat that takes 12,000 passengers a day around Tom Sawyer Island in Disney's Magical Kingdom.

Down the road, its owners are talking about adding a 1,000-person showboat here, Siggelkow said.

Bad blood

If, for some reason, SkipperLiner cannot come up with an excursion boat this year, it could be a bit embarrassing.

The Park Board and city are planning events to celebrate the 150-year anniversary of the Grand Excursion of 1854. That year, more than 1,200 visitors -- including President Millard Fillmore -- came to St. Anthony Falls by steamboat, train and horseback for Independence Day festivities.

The Park Board has had an excursion and charter boat contract with St. Paul-based Padelford since 1988 through a series of non-competitive five-year contracts. Residents and guests could go to Boom Island, pay $12 (less for seniors or kids) and take a boat ride at noon or 2 p.m.

The Padelford paid the Park Board 5 percent of its ticket sales. Between 1999 and 2003, that amounted to between $25,384 and $36,278 a year, according to an Oct. 29 Park Board memo.

At the end of the most recent contract, the Park Board decided to open the process to see if it could get a better deal. It planned to seek a bigger slice of ticket sales and a percentage of the boat's food and beverage sales, something it did not get in the past.

Commissioner Walt Dziedzic said other for-profit ventures using park property pay a 10 percent sales fee. "One of the reasons we are always a buck short, we don't charge enough," he said of the boat contract.

The Park Board sought proposals late last year and received two -- from SkipperLiner and from locally based Sea Note Cruises -- both offering charter service. Neither proposed daily excursions, assuming, Siggelkow suggested, that Padelford would continue to provide them.

Padelford didn't apply.

Jim Kosmo, Padelford's senior vice president, said he didn't think the Park Board had treated his company fairly. Padelford decided to up anchor and move its two Minneapolis boats to St. Paul's Harriet Island, where they join the Harriet Bishop and the Jonathan Padelford.

"Rather than looking for the service that we provided, all they are looking for is more money," Kosmo said. "I guess greed and politics seem to be their guiding principals. We decided it is not worth the struggle. It is not a very profitable venture up there to begin with, and now there just isn't more money to give."

Widening rift

It appears the Padelford-Park Board rift had been building for months.

Kosmo said problems started with parking disputes and accelerated with poor communication. The Park Board installed a new pay box parking system at Boom Island last year, and it constantly malfunctioned.

"They have the park police sitting there waiting until the boat leaves and then they go and start writing tickets," he said. "To be constantly harassed by people when you are trying to provide a service is not worth the bother."

Siggelkow said the new parking system had growing pains. "We communicated and worked extensively with them to try to make it work for them," he said. "If they don't recognize that -- I guess it sounds like they really want to get out of here."

Kosmo said the Park Board's timeline also created business risks. Padelford had already booked 50 percent of its Minneapolis charter business and would not know until the Park Board's vote if it had a contract or not. The company is now contacting its pre-booked customers and informing them of the St. Paul move. (The Padelford plans to continue Minneapolis tours from St. Paul, Kosmo said.)

Kosmo added that the Paddleford paid top dollar for Minneapolis docking fees, compared to cities such as Stillwater, and spent millions to build the 21-foot-tall paddleboats to fit under river low spots, such as the railroad bridge above Nicollet Island, and on Boom Island advertising.

"We didn't feel it was necessary for them to be going out to bid on this project to begin with," Kosmo said.

Siggelkow said that as a public entity, the Park Board needs to seek competitive proposals. It didn't matter if Minneapolis charged more than Stillwater for docking. "We have the market," he said. "We are not here to give deals to Jim Kosmo.

"They had a 15-year nonbid contract. What did he want, a lifetime contract? I think in 15 years, he probably got his money back," Siggelkow said.

The SkipperLiner's Dec. 22 proposal offered a $25,000 fixed annual fee to dock a 150-passenger charter yacht for 2004 and 2005 at Bohemian Flats, located near the Washington Avenue Bridge. (The Park Board's RFP included Bohemian Flats as a new docking option.)

SkipperLiner sought three two-year options, with the fee increasing to $35,000 in the final years. The SkipperLiner offer did not mention paying the Park Board a percentage of any catering sales.

Siggelkow said he met with SkipperLiner representatives Jan. 22 and said he believes the Park Board could get $45,000 a year on the charter boats, including new catering revenue.

"We will make more money off the charter boats than we were making off the Padelford," he said. "If we get an excursion boat, I would expect that number to be comparable to the charter boat."

Padelford's Kosmo is particularly irked that the Park Board application allowed firms to offer charter boat service separate from paddlewheel excursion boats.

The Padelford at best broke even on the excursion service and school field trips and made up for it on the charter service, he said. The company couldn't afford to continue excursions without the charter business.

"Anybody is going to want to come in and take the cream. That is what they [Park Board staff] don't seem to understand," Kosmo said.

Compared to $12 a person for excursions, Padelford charges a minimum of $1,050 for the first 75 people on the 360-person capacity Betsey Northrup. On a Saturday night, it costs $2,100 for the 150 people on the 350-person capacity Anson Northrup. The costs increase from there, depending on added guests, food and entertainment.

The argument made sense to Ortale, who said splitting the charter and excursion business is "extremely risky."

"For 10 years, my office overlooked the Mississippi," he said. "I'd see those [excursion] boats go back and forth, and a lot of time there weren't a lot of cars in the parking lot."

Despite offers to help mediate the excursion boat dispute, it appears the two sides are far apart.

"With the lack of respect we have been shown, we have no desire to work with the Park Board," Kosmo said.

Siggelkow said he is not worried about losing the business. "I think it is a Minneapolis market. They just happen to be the operator. I don't think there is any specific loyalty to their operation," he said.