Skagway’s Borough Assembly is deliberating on a draft memorandum of understanding (MOU) between the municipality and the White Pass and Yukon Route Railroad, marking another step in the dance between the two organizations regarding a waterfront lease.

At a special meeting on Aug. 9, the assembly discussed the MOU following a span spent in closed executive session to speak to the borough attorney.

While based off the public proposal that the municipality has been discussing over the past few months, the MOU includes several changes, including a $2,750,000 contribution from White Pass towards remediation in the Ore Terminal Basin.

Additionally, wording has been added that – in the case that remediation costs exceed the municipality’s and White Pass’s combined $4.25 million in cleanup funds – White Pass and Skagway would jointly pursue funding from other potentially responsible parties, as identified by the Alaska Department of Environmental Conservation (ADEC).

The draft MOU also states that White Pass would operate the cruise terminal and lays out a definition for what a cruise terminal operator is, though Assembly Member Monica Carlson said she feels that definition could be worked on and made clearer.

While the assembly is still angling for a proposed future lease to appear before Skagway voters, the prospect of it appearing on the Oct. 3 ballot is becoming less likely.

“The time frame to get this on the October ballot is just not realistic,” Assembly Member Tim Cochran said. After the meeting concluded, Cochran said more about the downsides of pushing for a vote too fast.

“We heard that even tonight, and over and over again: don’t rush it, get it right,” Cochran said, referencing comments from the public cautioning the assembly to take its time. “This is a big step, it’s very important for the community, for years to come, and I agree.”

Assembly Member Orion Hanson said that historically, turnouts are not good for special elections. Hanson said he wanted to see the item on the Oct. 3 ballot, but that “it does not seem possible.”

The assembly has been going back and forth with White Pass over a proposed future lease, remediation agreement and current lease amendment for much of the summer. At a meeting on Aug. 3, Mayor Mark Schaefer recapped recent events, in which the municipality received a letter dated May 3 from the Cruise Lines International Association asking about Skagway’s ability to berth larger classes of cruise ships. Skagway’s assembly had then asked White Pass to make a proposal, which the railroad did in June. The assembly has been working on fine-tuning points of that proposal ever since.

“At some point we have to decide if we’re going to send something to the voters, which is what we said,” Schaefer said at the Aug. 3 meeting. “Just to be respectful of their ability to weigh in on it. It might pass the voters’ muster, and that will be our answer. We can’t continue to sit here and think about this because there really is a clock running, and we either need to get the voters something, or just respectfully end the process.”

The assembly spent several hours going over the lease proposal on Aug. 3; Finlayson was present during the talks that evening as well. Several of the assembly members took the chance to publicly clarify points in the current proposal with Finlayson.

“At the end of the 15-year lease in 2038, Skagway would own the Ore Dock and the Broadway Dock without having to pay for it, is that accurate?” Hanson asked.
“That’s correct,” Finlayson replied.

Hanson then said that Port Consultant Moffatt & Nichol estimated the cost of those docks between $40-50 million.

“That is something that is very, very critical here,” Hanson said, stating that when the current lease ends in 2023, White Pass would have 60 days to either sell those docks to the borough or remove them.

Others suggested some changes to what was on the table. Carlson asked Finlayson if White Pass would be amenable to getting a corporate surety bond, to ensure cleanup in the Ore Terminal Basin is completed if it goes over the $4 million already proposed in the document.

Finlayson responded by saying the company could not write a blank check for cleanup.

He added that White Pass will contribute what is necessary for cleanup if there is a “well-founded, reasonable determination by the ADEC.”

“I don’t have a crystal ball, I don’t know what’s going to happen in the future, and to say, leave a blank check on the table in my position would be irresponsible,” Finlayson said.

When he addressed the assembly at the beginning of the conversation, Finlayson said if the municipality and White Pass don’t come to a mutually beneficial agreement, that agreement won’t stand the test of time.

“The only agenda we have is toward a mutually beneficial conclusion, and that’s paramount,” Finlayson said. “If one party benefits, and the other doesn’t, it won’t last.”

Topics covered on Aug. 3 ranged from the cleanup of the Ore Terminal Basin, to whether or not a revenue sharing option would eliminate the municipality’s take of Commercial Passenger Vehicle Excise Tax funds.

During public comments, business owner and resident Jeff Brady said the assembly needs to get a firm answer from the state of Alaska regarding how any revenue sharing – or usage of grant funds for construction costs of a floating addition to the Ore Dock – would impact CPV Excise Tax funds.

“I think that’s very crucial for you to move forward,” Brady said.

Moffatt & Nichol, Skagway’s port consultant, recently stated the municipality receives $5 per head in CPV Excise Taxes from cruise ship passengers. It and sales tax made up approximately 68 percent of the municipality’s revenue in 2016, according to the consultants.

Carlson asked after a revenue sharing option and questioned what would happen to the municipality’s income should something happen at the state level to the CPV Excise Tax.

“We as an assembly have to understand that money might disappear,” Carlson said.

Finlayson suggested putting a clause in the document that would, should the CPV funds be lost to Skagway, alter the revenue model so there would be an “equitable solution.”

“Again, it’s got to be mutually beneficial,” Finlayson said.