By Margaret Friedenauer

Skagway Ore Terminal and ship loader. Photo courtesy AIDEA.

Skagway Ore Terminal and ship loader. Photo courtesy AIDEA.

One of two major leases the Skagway assembly has been negotiating in anticipation of the Gateway Port Expansion Project was released last week.

The draft 35-year-lease is with the Alaska Industrial Development and Export Authority, or AIDEA, for about six acres that includes the Skagway Ore Terminal and nearby tidelands. It would start in 2023 after White Pass Yukon Railroad’s lease of the property ends.

Read the complete draft lease here.

In 1990, AIDEA purchased the ore terminal and ship loader and started subleasing the land from White Pass. Those lands will revert back to the city in 2023. AIDEA asked the municipality for the future lease to offer some certainty to prospective mining companies and investors that might want to transport ore through the terminal.

The first go-round of lease negotiations in 2012 did not go well. AIDEA was not happy with some of terms proposed by the city, including restrictions on the number of ore hauling trucks traveling through Skagway. In those early negotiations trucks would have been allowed to deliver ore at the terminal only between 7 a.m. and 7 p.m.  and between May and October.

The new lease draft does not limit truck traffic or times of day they can travel through town. The new lease does encourage AIDEA to employ local truck drivers when possible.

The new lease allows up to three-quarter million tons of ore and concentrations be shipped through the facility annually. That’s up from 650,000 tons in the first lease draft.

The costs associated with the new lease are a little more complicated. AIDEA previously objected to a $15.65 per ton surcharge plus 35 cents a ton for an environmental fee. Under the new lease, AIDEA’s monthly rent will be based on fair market value appraisals of the property every five years. As a state agency, AIDEA is exempt from property or sales tax. But AIDEA can charge commodities surcharges to the companies shipping ore through the terminal. That surcharge will be in the $3 per ton-range and also based on ore’s market price. The municipality will get 85 percent of those fees and AIDEA will get 15 percent. The city will use fifty percent of its portion to maintain the property or the port in general.

Other details of the new lease include requiring AIDEA to conduct occasional environmental assessments of the ore terminal property and tidelands. The state can remodel the terminal at its own expense, with approval from the assembly. The dock remains the responsibility of the city, which is currently leased to White Pass.

AIDEA is responsible for the maintenance, repair and replacement of the ship loader or a future ship loader if they chose to install a new one. They must provide an annual report and meet with the municipalities’ port commission every six month. The lease also includes an option for AIDEA to renew the lease for one additional 10-year-period. And, if White Pass vacates the property before 2023, AIDEA could take it over sooner.

The city is still negotiating details with White Pass for a tidelands lease. That’s necessary to allow the city access to areas of the port for the Gateway Project. While some specifics of that lease were released last January, a formal lease has yet to be finalized.

The assembly postponed a hearing on the lease but it should come up at the next assembly meeting. It does NOT have to be approved by Skagway voters because leases with state agencies are exempt from the public vote requirement.