The Municipality of Skagway has not yet decided how much rent White Pass and Yukon Route Railroad should pay to lease the waterfront property. A third appraisal of the Tidelands lease did not help the Assembly reach a decision at Thursday’s meeting.
Every five years the tidelands lease rate is adjusted based on the appraised value of the property. That adjustment is written in to a 55-year lease. Last year, two appraisers calculated dramatically different values for the waterfront. The municipality and the railroad are at a stalemate over which value is correct.
The assembly approved Borough Manager Brad Ryan’s request to seek outside counsel before it takes action.
“I want some time to go out, ask the right questions, and come back to a proposal with them,” Ryan said.
“Because there seems to be a lot of back and forth between the two appraisers, the methodology and the interpretation of the lease.”
Different appraisal methodologies are the reason Horan and Company’s appraisal is 12 million dollars less than real estate firm Integra’s appraisal.
Horan and Company has been appraising the land for decades. It says the waterfront is worth $2.4 million. Integra Real Estate says it is worth almost $14.7 million.
Integra’s valuation would raise rent by about 700%. The six month old appraisal is no longer valid after this week and would need to be updated if the assembly decided to adopt it.
At Thursday’s meeting assembly member Orion Hanson called the current rent a terrible deal for the municipality. The railroad pays about $127,000 a year for nearly 67 acres of waterfront property. But he said the municipality should honor the commitment it made in the 1960s.
“I think everybody in this room thinks $127,000 is a laughable sum, however I’m going to give an analogy here: I built a beautiful house three years ago. I made a bad bid and I lost money. I think we’re at the end of a 55-year contract here,” he said.
He said a change to that contract is likely to involve litigation. He was the sole vote against outside counsel.
Manager Ryan says he wants to learn which appraisal is defensible before the municipality enters into negotiations. The municipality has been trying to adjust the lease rate since mid-2018. White Pass is still paying the lease rate established in 2013.