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)

Last year, a federal judge ruled that the City and Borough of Juneau can only spend municipal cruise ship passenger funds on projects that directly support cruise ships. Now the Municipality of Skagway is lending financial support to Juneau for its appeal of the decision. 

Cruise Lines International Association, or CLIA, sued the City and Borough of Juneau for improperly spending municipal cruise passenger tax funds.

The city had used the funds for projects that support passengers’ onshore experience, such as sidewalks and public bathrooms. In December, Judge H. Russel Holland ruled that the city could only spend those funds on projects that directly supported the ships.

The decision doesn’t just affect Juneau. Ketchikan has similar municipal cruise ship fees and has pledged $100,000 to support Juneau’s appeal of the decision.

Unlike Juneau and Ketchikan, Skagway does not levy a municipal head tax on ships visiting its port. However, Vice Mayor Tim Cochran said the municipality could implement similar fees in the future. There’s no proposal at the moment, but Cochran says the city needs more revenue.

Assemblyman Dave Brena added that the lawsuit could affect the state’s commercial passenger vessel tax, or CPV, which funds infrastructure projects in Skagway.

“I think it is entirely possible that CLIA could extend their suit or have a new suit that would go after our funds that come from the state,” Brena said.

On Thursday, the Skagway borough assembly voted to pledge $100,000 in support of Juneau’s appeal of the decision.

While most assembly members believed Skagway should support Juneau’s appeal, Assemblyman Orion Hanson was opposed. He said Juneau could have avoided the lawsuit altogether and felt that Skagway was getting dragged into the issue.

“We’re kind of now being strung along and a pandora’s box has been opened up,” Hanson said. “This whole interpretation about how taxes are enforced. We don’t enforce these taxes or have these taxes. We have CPV taxes only, and the ruling does not jeopardize CPV taxes. We might be seen as being insolent here. I don’t know that I support putting $100,000 towards an ongoing indefinite lawsuit.”

The resolution to pledge $100,000 in support of Juneau’s appeal passed in a 5 to 1 vote.