Skagway's city hall and museum. (Greta Mart)

Skagway’s city hall and museum. (Greta Mart)

Skagway’s Borough Manager is asking the assembly for direction about how to pay for construction of a new water well and tank. The municipality is applying for about $1.5 million in low-interest loans for the well and the water tank projects.

Manager Scott Hahn says if the borough were to rely on user fees to make payments on the loans, water rates would need to increase 20 percent.

Hahn says alternatively, the borough could lean on cruise ship passenger head taxes to fund the projects. In a memo to the assembly, he says the reason there’s even a need for a new well and tank is because of the increase in demand from cruise ships.

Still, Hahn says that relying so heavily on passenger taxes may not be wise. He suggests increasing utility rates by five to 10 percent each year to make Skagway more self-sufficient. The assembly will discuss his recommendations at a meeting this Thursday.

The assembly will also talk about another passenger-tax-related matter: whether to commission a new study on how the money is spent in Skagway. The last study was done in 2008 and helps justify Skagway using cruise ship visitor taxes for basic utilities, like water expenses. The study would cost up to $7,000.

Also at Thursday’s meeting, the borough budget will be back up for a fourth reading and adoption.

The assembly will have a second reading and public hearing of an ordinance that would relax standards for accessory housing. The changes were recommended by the planning commission as a way to make tiny houses a more viable option in Skagway.

The assembly meeting is scheduled for 7 p.m. Thursday in assembly chambers.

Full agenda here.