The morning after the Skagway Borough Assembly unanimously approved presenting a memorandum of understanding (MOU) to the White Pass & Yukon Route Railroad over a proposed tidelands lease amendment and new lease agreement, Mayor Monica Carlson exercised her right to veto the assembly’s action.

On Nov. 21, following a multi-hour review of the MOU, the assembly approved sending the document to the railroad – seemingly pushing forward in a process that has been ongoing since early summer.

However, citing new information regarding the Alaska Industrial Development and Export Authority’s (AIDEA) sublease from the municipality through White Pass, Carlson vetoed that successful vote early on Nov. 22.

Carlson said AIDEA will be leaving at the end of its lease, which concludes near the 2023 deadline for the current 1968 lease with White Pass. Should the terms of the MOU become a reality, that land would revert back to the control of the municipality, Carlson said.

At the Nov. 21 meeting, Carlson said the assembly needs to consider who will be responsible for the Ore Terminal and the cleanup should that happen.

“And are we ready to assume this liability, or should we include language that the Ore Terminal and grounds be remediated, torn down, or what are discussions going to be about that?” Carlson asked.

Carlson said the revelation about AIDEA has become a “big concern” of hers.

In her veto email to the municipal clerk, Carlson said that the information regarding AIDEA’s lease has not been addressed in the MOU, and has financial and potential immediate impacts to the citizens of Skagway.

“It is our responsibility that due diligence be complete,” Carlson wrote. “It is not prudent to proceed into further negotiations without additional legal counsel.”

By municipal code, the assembly needs a vote of two-thirds within 21 days to override the veto.

Prior to the Nov. 21 discussion, the assembly had made a laundry list of changes to the MOU, then sent the document to Borough Attorney Bob Blasco at a Nov. 8 special session meeting.

One of the major changes made to the opening of the MOU on Nov. 8 was a revision to the portion centered around the construction of a “3B Option” floating expansion to the Ore Dock.

Formerly, the MOU read that the municipality and White Pass would split costs of the 3B expansion 50/50.

Assembly Member Orion Hanson made the motion to change that, so it instead reads that White Pass will wholly fund and construct the expansion – costing approximately $15 million – with the exception that any additional costs needed to fortify the expansion to accommodate vessels transporting wheeled cargo would be paid for by the municipality. Additionally, the municipality will contribute $7.5 million towards improvements for roll-on/roll-off usage or other improvement to the Ore Dock Basin.

This would, according to Hanson, allow the 3B expansion to be built much quicker, and possibly more cheaply.

“It probably puts us in a position where 2019 could possibly happen,” Hanson said, in reference to a concern by some that the municipality will not be able to accommodate multiple larger classes of cruise ships in coming years. “If it goes through the municipal bidding process, it’s going to take a lot longer. Federal grant money has a lot of strings attached that private corporations don’t have to do, jump through all the same hoops.”

Another alteration was related to contamination remediation in the Ore Terminal Basin. Previously the MOU had made reference to getting a closure letter from the Alaska Department of Environmental Conservation regarding cleanup in the basin. Hanson moved to change all references to such a letter to, “ADEC has removed the Ore Basin from the list of contaminated sites.”

According to Hanson and Assembly Member Tim Cochran, there are several reasons for the change. A closure letter means the case is closed with ADEC, Hanson said, whereas it wouldn’t be removed from a list of contaminated sites until the necessary work has been completed.

“The reason for this is that a governmental agency could drag this on for decades, and while we all want this to be done and concluded and wrapped up and the contamination is resolved, I find it unlikely that a governmental agency will take this on and wash their hands of it in a short amount of time,” Hanson said. “That’s just not the way governmental agencies tend to operate.”

Cochran said that ADEC could return and say to leave the contamination alone, something he said would be unacceptable.

“It’s going to come out, it needs to be dredged, it needs to be deepened, and we don’t want DEC saying ‘just leave it there,’” Cochran said. “And this ensures that. It will not be removed from a contaminated site list if it’s [the contamination] still in the ground.”

Assembly Member Steve Burnham Jr. said Cochran’s point made “good sense,” while Assembly Member Jay Burnham said he didn’t see a downside to leaving the language as it was, and that it didn’t bother him if it took ADEC a while to do something.

The assembly moved through the document on Nov. 8, with most of the individual members making motions to change wording or to adopt language previously suggested by the attorney. When Assembly Member David Brena was asked if he had any changes to suggest, he said he is not in favor of moving forward with the MOU.

Near the end of the Nov. 8 meeting, Brena – who campaigned successfully as a write-in candidate on an anti-lease platform – also said the assembly should spend some time thinking about alternative paths forward, should a new lease with White Pass fail in a vote of the people.

“I believe that two-thirds of the people in town voted no on this, and I think they are going to vote no again,” Brena said. “And we should spend some time thinking about what it is we’re going to do when that happens.”

Carlson had opened the Nov. 8 MOU discussion by reading a statement in which she talked about Skagway’s status as a cruise ship port and the recent announcement that the Royal Caribbean International Ovation of the Seas will be coming to Alaska in 2019.

Carlson also said that there is a “sense of urgency” for Skagway, but said that urgency is not in planning a new lease with White Pass, but in planning for impacts that the larger cruise vessels will be bringing to the municipality’s infrastructure.

The Commercial Passenger Vehicle Excise Tax was also mentioned by the mayor, as she pointed out the amounts of those funds used by Skagway in recent years to absorb costs from cruise ship impacts.

“Some at this table say they are for the lease because it brings stability to our economy,” Carlson said. “I believe stability comes with control, control of our port and control of our future.”

During his turn, Cochran said he was frustrated by some of the split direction at the assembly table, and that the assembly needs to be “together, cohesive and focused on a direction to go forward.”

“I don’t want to sit up here and waste everybody’s time arguing and going in different directions,” Cochran said. “Are we going to go forward with this attorney’s language, adopt it, go back to White Pass, or are we going to go in a different direction? I need to know what we can agree upon up at this table, otherwise it’s a moot point, in my opinion.”