White Pass and Yukon Route Railroad controls much of the tidelands the municipality needs access to for port improvements. (Greta Mart)
After a close to two-year impasse, Skagway and the company that controls much of the town’s waterfront have re-started negotiations.
According to one Skagway official, White Pass and Yukon Route Railroad is proposing a 20-year tidelands lease extension that would make way for urgent port improvements. Some of the broad strokes of the agreement were discussed publicly at a meeting Wednesday night. Despite that, the municipality and White Pass are not releasing the full proposal to the public yet.
The meeting started with a tie vote.
“I’m just trying to see a way we can do this without excluding the public,” said Assemblyman Steve Burnham Jr.
He did not want to go into a closed-door meeting to discuss White Pass’s new tidelands lease proposal.
“Because I feel that if we go into executive session to discuss this, we might as well not even bother,” Burnham said.
He didn’t want to repeat history. In 2015, voters shot down a proposed lease extension between the city and White Pass. Many were distrustful due to what they said was a lack of transparency.
The assembly voted 3-3 to go in to executive session. Mayor Mark Schaefer broke the tie in support of executive session.
Assembly member Tim Cochran said the purpose of the private meeting was to talk with the borough attorney.
“I’d like to go in just to discuss and then we can make everything public when we come out,’ Cochran said.
Did everything become public after the hour-long closed-door meeting? No.
But Assemblyman Orion Hanson did reveal some of the details as he made amendment suggestions.
“Under 2, ‘new lease agreement,’ this would be 15 years and not 20 years,” Hanson said.
According to Hanson, White Pass is proposing a 20-year lease extension in order for improvements on the port to progress.
Hanson suggests the city negotiate the time period down to 15 years. Since White Pass’s current lease ends in 2023, a 15-year extension would take it to 2038. That makes the commitment ten years shorter than the previous lease proposal.
Hanson also seemed to refer to the proposed annual lease payments White Pass would provide the city. It’s not clear if the numbers are his suggestion or the railroad’s.
“In terms of the number values, years one through five would be $250,000, six through 10 would be $300,000 and 11 through 15 $325,000,” he said.
Hanson said with some tweaking, he thinks the proposal isn’t a ‘slam dunk,’ but it is a ‘palatable deal.’
“From my perspective, and I voted against the lease before, there were three things I didn’t like,” Hanson said. “I thought White Pass wasn’t owning up to the remediation [of ore basin contamination] enough, I thought the terms of the lease were too long, and I thought the city wasn’t getting a good enough deal.”
There was some confusion about whether Hanson revealing certain aspects of the proposal meant the document was public.
“This document is not public,” Steve Burnham said.
“Well it is now ‘cause we’re talking about it,” Schaefer responded.
“Well then are we releasing it so the public can review it?” Burnham asked.
They didn’t.
White Pass President John Finlayson said he would like the document to remain private until the two parties come to a final agreement.
“You release it to the public as a unified document, not one to be negotiated,” Finlayson said. “That was my intention.”
The assembly agreed not to release the full proposal yet, despite the fact that some of the details are already out in the open.
KHNS tried to confirm the details with White Pass officials. They did not return calls by deadline for this story.
So, one question remaining is at what stage the new lease proposal will be released to the public. A municipal negotiating team plans to meet with White Pass again July 6.
Another question is whether it will go to a public vote, like the last proposal. Hanson said he thought it should. But Finlayson said that could slow down progress.
“I can’t stress enough how important the timing is,” Finlayson said. “You’re so close that I wake up in the middle of the night worrying about it.”
Skagway is working with a very tight deadline. It needs to renovate its port to accommodate bigger cruise ships due to arrive in 2019. If it doesn’t meet that deadline, city officials say they could lose out on millions of dollars in revenue.
Almost two years ago our Assembly (many of whom are White Pass employees) voted to extend the lease with the White Pass for an additional 35 years. The original lease signed in 1968 was a massive give away to White Pass. To date the Assembly has not done their proper due diligence and ordered an economic study to determine what appropriate market rent should be.
In addition the Ore Terminal Basin has been polluted by White Pass and others and the Ore Terminal Dock left to deteriorate. White Pass has not only refused to clean-up the contamination but, in fact, has obstructed the Municipality from doing the clean-up themselves.
As the proposed 2015 lease extension was valued at more than $5 million dollars, it was placed on the ballot for public approval. The citizens overwhelmingly voted, by a margin 2 to 1, against the lease.
Now the Assembly is meeting with White Pass behind closed doors for a 20 year extension. Even though the Assembly has no idea of what market rent should be, they are evidently able to determine that they could put together a lease that would mysteriously be valued under the $5 million limit that necessitates a public vote.
Some consternate over what could be done. If we do not approve a lease extension the White Pass will not allow access to facilitate the clean-up. Similarly if we do not approve a lease extension, White Pass will not allow access for the construction on the necessary floating docks. Maybe its time the Assembly step up and represent the citizens. Here is a suggestion.
The White Pass could currently be in breach of the existing lease for contaminating the Ore Terminal Basin and for not maintaining the Ore Terminal Dock. A law firm with some teeth should be consulted. If the White Pass is in breach of contract, the Municipality could take control of the Ore Terminal Basin, clean up the contamination and build the floating dock.
What would we do with a clean harbor and new docks. Possibilities include entering into negotiations with all interested parties. Or the Municipality could hire a Stevedoring Company and run the dock itself. The only question after that would be what to do with the extra money obtained by getting fair market value.
We may never get to vote on this but it would be really disingenuous for the Assembly to shove this lease extension down our throats without doing their due diligence and placing the issue before the citizens. The Assembly need to represent the citizens not the White Pass. I urge everyone to become familiar with each Assembly member’s voting record and ask yourself if you are being represented appropriately. This is the most important issue of our time.
This is the most ridiculous and one sighted deal I have ever heard of!! $250,000 a year for the first 5 years? This is basically what you can get for renting to a diamond dealer down town!! Whitepass is making over $400,000 a day on their train tours!! This town needs to wake up and take over our waterfront and manage it ourselves. Then we could actually afford a senior center, a new rec. center etc. etc.
I agree with Gary- we need to be litigating and knock off this backroom negotiating. Mr Orion Hanson is in way over his head and we need to call in some big dogs if necessary.Obviously Mr. Finlayson doesn’t want this to go to a vote- why would he it would be shot down.
I for one hope everyone would vote against this. This is a very important time in the history of Skagway and we all need to step up to the plate and say no thank you!! We can and will take back and run our waterfront not Whitepass.
This is VERY disheartening to me. While I appreciate the Skagway Assembly is trying to be more transparent, the fact that they would even consider a lease extension with a tenant that has polluted our land is beyond belief. We should be litigating rather than negotiating. Also, the lease numbers are so low they are laughable. If there is to be a lease extension, annual payments should start at at least a million dollars a year which is not even 25% of the gross those two docks bring in.
Here is the most telling line in the attached article:
“Another question is whether it will go to a public vote, like the last proposal. Hanson said he thought it should. But Finlayson said that could slow down progress.”
Beware Skagway voters! The numbers presented in this article as I add them shows a lease worth $4.375 million on a 15 year term. A lease needs to be worth at least $5 million to trigger a public vote!!