By DAN FOX
The initial proposal from the White Pass & Yukon Route Railroad is slowly morphing as the municipality and the company continue to engage in the negotiation process.
Skagway received a proposal from the railroad in late June, and has been embroiled in talks about the subject on a near-weekly basis since. The draft document outlined three proposed transactions: an amendment to the 1968 lease (which is in effect until 2023), a new lease agreement and an environmental remediation agreement.
At a July 12 special session, the assembly went line-by-line down the proposal and came up with several changes to bring back to White Pass.
In response to this set of proposed changes to the initial document, White Pass returned with a counter-offer that tweaks some of the wording and raises lease payments for both the current and proposed future leases.
Regarding the 1968 lease amendment, the counter-proposal from White Pass offers that lease payments would be raised to $250,000 annually. For a new lease, a 15-year period is proposed, with annual payments of $300,000 for years 1-5, $325,000 for years 6-10 and $350,000 for years 11-15.
Assembly Member Monica Carlson said the assembly needs to come together and bring something before voters that they will accept.
In case the citizens don’t accept the proposal, the municipality needs to have a plan B on hand, Carlson said.
Carlson also said she felt the lease should be five years shorter than currently proposed, for a total of 10.
The 10-year term idea was supported by Assembly Member Spencer Morgan as well; Morgan added that he was concerned following that July 12 meeting, and felt there had been a lot of “shooting from the hip” at the assembly table.
“I kind of feel like when you negotiate, you’ve got to negotiate on opposite sides and work your way towards the middle, and I don’t think we did that,” Morgan said. “I was very, very concerned after that meeting at the speed at which we’re trying to get this done, because my concern is, when you do things as fast as you possibly can, you’re liable to miss a lot of things.”
Morgan said there were several things the assembly had discussed on July 12 – like adding a revenue sharing clause and a termination clause should White Pass be purchased – that were not included in what went to White Pass following that meeting.
According to Assembly Member Orion Hanson – who is on the negotiating team along with Assembly Member Tim Cochran and Municipal Attorney Bob Blasco – White Pass won’t go for a 10-year term.
“I think 15 years is kind of their bottom line, in terms of what they will finance and what they can amortize,” Hanson said, referring to White Pass’s ability to pay off the loans the company could potentially seek to assist with building a floating component at the Ore Dock.
In terms of a revenue sharing option, there was a lack of clarity as to whether the municipality could engage in revenue sharing and still continue to collect Commercial Passenger Vehicle Excise Taxes.
Tim Cochran said he’d asked Blasco to look into the matter, but as of a July 20 meeting, the issue had not been cleared up. Hanson pointed out that the port is operated as an enterprise fund, meaning that revenues accrued in the port would need to be spent on the port.
“It’s not like we could take money from there and put it into the police department,” Hanson said.
Mayor Mark Schaefer said the municipality needs to get something delivered to the people for a vote, saying the assembly will never totally agree on all the details of a lease proposal.
“That’s the whole point of sending it to the voters,” Schaefer said.
At another special session meeting on July 26, Carlson made a proposal that would drastically change what is on the table. Carlson proposed entering into an agreement with White Pass to let the lease go as currently written until 2023 and build the dock expansion with a 50/50 split of costs. In this idea, White Pass would receive all the revenue from the new dock expansion until 2023. After 2023, the revenues would be split between the municipality and railroad. Carlson’s suggestion contained a great many points, and while the assembly members held a discussion over her proposal, they eventually came to the consensus that they would like to see all the points in writing to clearly understand it.
Carlson said she would write up her proposal and have it before the assembly at its regular Aug. 3 meeting.
With that discussion put off for the time being, Assembly Member Steve Burnham Jr. motioned that the assembly find a way to combine parts one and three in the White Pass proposal (the 1968 lease amendment and the Ore Terminal Basin cleanup). Hanson said he liked the idea because it would tie the remediation agreement into the current lease. That motion passed 6-0.
Following this, Hanson motioned to cap the municipality’s contributions for remediation in the Ore Terminal Basin at $1.5 million. This motion passed 6-0 on July 26 as well.
From the moment the proposal was dropped onto the municipality’s website, many Skagway residents and business owners have given their own takes on the proposal from White Pass regarding the borough’s port.
Wayne Selmer thanked the assembly for their efforts to make the process an open one. Former harbormaster Ken Russo also thanked the assembly, particularly regarding a motion from a previous meeting that stated any new waterfront lease agreed to with White Pass must pass the muster of the majority of the qualified voters of Skagway.
The spoken word isn’t the only medium through which the assembly is receiving feedback. Letters are also coming in to City Hall on the matter.
Former mayor Tom Cochran citied the drastic change to Skagway’s economy since 1968, and wrote that it is incumbent on the municipality to take control of its economic future.
“The 1968 waterfront lease (tidelands and uplands) has become an obstacle to municipal efforts at adapting and nurturing this new economy,” Tom Cochran wrote in the letter. “It has inhibited efforts to diversify the economy as well.”
Resident Jaime Bricker wrote in support of moving forward with this latest proposal. Bricker is a White Pass official, but stated she was writing in her personal opinion as a life-long resident, a property owner and community member. She said the new proposal would afford Skagway the time it needs to assess and prepare a strategy for operating the port and would serve as a vehicle with which the municipality could purchase the docks, “thereby owning the infrastructure needed to operate the port by the end of the term; if they so choose.”
“And it is a way to finally clean up ore basin contamination starting now instead of letting it linger indefinitely,” Bricker wrote. “It is an opportunity that you cannot afford to waste. Doing anything else would be reckless.”