INTRO: A meeting Thursday, Skagway Assembly members disagreed on many aspects of a proposed waterfront lease. The assembly does agree that a new contract with White Pass and Yukon Route Railroad should go to a public vote. But what that document will look like depends on whether the six assembly members can work through their differences. KHNS’s Emily Files reports. _____ TRACK: The issue driving the lease discussion is Skagway’s need to install a floating dock for larger cruise ships by 2019. White Pass manages the cruise ship docks. In order to make renovations, the railroad wants a 20-year tidelands lease extension. In an economic analysis, port consultants said that if bigger ships aren’t able to dock in Skagway, the town will still see an increase in cruise revenue. It’ll just be much less of an increase than it could get with the larger vessels. That prompted resident Ken Russo to question whether it would really be that bad for the city to lose those ships. ACT 2: Could you live with not as much of an increase for a year to give yourself some time to negotiate a real and effective and more fair win-situation for city? Rather than being pressured into we gotta do this lease right now, I’m under the gun, gotta do it, gotta do it. ACT 1: I do respect what is being said, that, is it the end of the world if we miss the boat one year? TRACK: That’s Assemblyman Orion Hanson. He said maybe Skagway could sustain the loss in cruise revenue. But he worried about the negative affect that would have on local families. He related it to his childhood, when his father couldn’t find work in Skagway. ACT 2: And so he went to Hoonah. And for a couple years, he built houses in Hoonah. And I was 5,6 years old when that was happening. And it wasn’t very fun. I really don’t want to see us lose business to Hoonah again. And I think we do have a crystal ball, we can see that’s coming. TRACK: Hanson said he wasn’t ‘head-over-heels’ for the lease proposal. But he said it could be a palatable deal if the city negotiated it down to a 15-year term, with higher rent payments and more control over the land. Mayor Mark Schaefer echoed something that’s been said a few times. The lease extension could give Skagway time to work on its plan to take over management of the port. ACT 4: So to me, this is sort of like an exit strategy where we regain control of the port, which is one of the things that people are asking for. TRACK: But the fact that the exit strategy wouldn’t happen for another couple decades is a sticking point for some assembly members, including Spencer Morgan. Previously, the assembly said a 15-year lease might be OK. But Morgan said the city should try for an even shorter timeframe of 10 years. Hanson is one of two assembly members on the negotiating team. He responded to Morgan. ACT 5: Ten years – White Pass is not going to go for it. Spencer: My point is put that proposal forward and let them work with it. Orion: Well it was 20 years, we came with 10 years and settled for 15. Spencer: maybe we don’t. TRACK: Assembly members continued to butt heads as they talked about the lease issue. Hanson asked his peers for specific direction that he and Tim Cochran could take to their next negotiation meeting. Instead, the assembly decided to schedule a special meeting on Wednesday, July 26 to work on the details of the city’s counterproposal. Jay Burnham said maybe the city shouldn’t acquiesce to White Pass’s request for a new lease. He said the cruise ship floating dock shouldn’t be contingent on a new, 15-or-20-year contract. ACT 6: If they don’t want to just look at a floating dock, that’s on them, they’re the ones stopping the municipality from moving forward with a floating dock there. And I’m not playing chicken, I’m not waiting for them to blink. I want a floating dock. TRACK: If the city does want to install a floating dock by the time bigger cruise ships get to Alaska, consultants say engineering work needs to start by this fall at the latest.

Skagway’s Broadway Street on a busy cruise ship day. (Emily Files)

The Municipality of Skagway is trying to figure out the value of its port. Every five years the borough solicits an appraisal for the tidelands, uplands and submerged property it leases to White Pass and Yukon Route Railroad. 

Borough Clerk Emily Deach said that White Pass’s lease of municipal land is based on a percentage of the property value. The more that land is worth, the more the borough gets paid in rent.

“Once that appraisal is done every 5 years, the assembly looks at it and if they agree with it, they approve it.  Once that appraisal is approved, the rent is adjusted,” Deach said.

White Pass’s rent is set at 6% of the appraised value of the land. Currently, the company pays $127,200 a year to lease the tidelands from the municipality.

In the last year, the borough has had its property appraised twice.

“In this case, the first appraisal, [the assembly] did not vote to approve it. The second appraisal they also have not voted to approve. So we have two unapproved appraisals,” Deach said.

First, the municipality approached Horan & Company to carry out an appraisal of the tidelands. The appraiser listed the value at $2.2 million. But according to a review by real estate firm Integra, the appraisal did not accurately assess the land’s market value.

The Integra review states that Horan & Company did not account for the value added by improvements that have been made to the land over the years.

Since then, the municipality paid Integra $25,000 to carry out its own appraisal of the tidelands. Deach said there has been no third-party review of the Integra appraisal, and it is still unapproved.

“Until the assembly or the municipality through the assembly agrees on what the fair market value is, we can’t determine the rental rate,” Deach said.

Integra’s appraisal lists the value of the municipal property at $14.7 million, substantially higher than the Horan and Co. appraisal.

The last time an appraisal of the tidelands was carried out was in 2017. The appraisal was carried out for an analysis of the port rather than an adjustment of rent. Appraiser Julie Dineen listed the value of the tidelands as a range between $11.9 million and $14.6 million.