Saturday, January 12, 2002 Carnival wants to float bonds   By John W. Cox, Staff writer LONG BEACH Carnival Corp. wants the city to issue $25 million in bonds to help it finance a $45 million cruise ship terminal next to the Queen Mary. The Miami cruise line's request is among two bond sale proposals going before the City Council for preliminary approval Tuesday. The other is a related plan to issue $23 million in bonds to pay for debt refinancing, construction and operations at the Queen Mary. No city money would be used to pay off either set of bonds, city officials said in a report released Friday. Instead, the cruise terminal bonds would be paid off through a new tariff that would be levied against cruise ship passengers. The Queen Mary bonds would be secured solely by revenues of Queens Seaport Development, the company that operates the Queen Mary on the city's behalf. A Carnival executive said Friday that the company first proposed a bond sale in May as a way for the company to finance a 1,100-foot pier that would be home to two 855-foot cruise ships that now dock in San Pedro. Construction is scheduled to begin next month and be complete in April 2003. Carnival vice president Giora Israel emphasized that while the bond sale would provide favorable financial terms to the company, it would have no effect on the city or its taxpayers. "We are not asking the city to put up any money. We are not asking the city to put up any collateral," Israel said. None of the bond sale proceeds would be spent on a proposed $20 million parking garage near the terminal. Carnival plans to pay for the 1,300-space garage independently. Cruise tariff If the council approves the bond sale request, as city staff members have recommended, then the city would ask the Port of Long Beach's Harbor Commission to levy a tariff on cruise passengers, which a Carnival executive estimated at $13 per trip. A similar tax at San Pedro's cruise ship center stands at about $18 per trip. Carnival would be expected to cover any shortfall if the tariff revenues are insufficient to make bond payments. A spokesman for the Port of Long Beach said officials there had no information on the proposed tariff. No cruise lines currently operate in Long Beach. The proposed Queens Seaport Development bond sale would pay for a number of expenses including $3 million of work required of the Queen Mary operator under its development agreement with Carnival. In addition, the bond sale proceeds would cover $14.5 million in Queens Seaport debt that now carries interest of about 12 percent, as well as $4 million in hotel renovation work and $1.5 million in operating costs. "It makes us have more cash flow so we can continue to redevelop the property next to us, finish (renovating) the rooms on the Queen Mary and move forward," said Joseph Prevratil, president and CEO of Queens Seaport Development. The city's staff report said the Queen Mary bond sale amount could be greater than $23 million, and that the actual sum would depend on a review of Queens Seaport cash flow. The city estimates that both bond sales would carry interest of 7 percent to 8 percent, and would be paid off over 20 to 30 years. Both would be industrial development bond sales, which carry federally subsidized interest rates intended to help private industry meet capital needs for expansion.