By DAN FOX
With a 6-0 vote on Nov. 30, the Borough Assembly overturned Mayor Monica Carlson’s recent veto, which had temporarily blocked sending a memorandum of understanding (MOU) to the White Pass & Yukon Route Railroad.
On Nov. 21, following a multi-hour review of the MOU, the assembly approved presenting 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 may 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. 30 meeting, Carlson explained the purpose behind the veto, saying one reason was the lack of clarity on who would be responsible for the Ore Terminal and any cleanup of that property, should the terms in the MOU come to pass.
Carlson said her second reason for the veto was that she had not been informed of a meeting between the municipality’s negotiating team and White Pass, which had been scheduled for the Monday following the Nov. 21 meeting.
Assembly Member Orion Hanson, one of the members of the negotiating team, pushed back on Carlson’s second point, contesting that both the assembly and community had been made aware of the time and date of that meeting.
“That absolutely was stated, it was stated crystal clear, in fact,” Hanson said.
On the veto itself, Hanson said it would only make sense to veto if White Pass had gone ahead and “rubber-stamped” the document as presented.
“Which I find beyond improbable that they wouldn’t have any change at all,” Hanson said. “Therefore, I’m just going to be honest with you, I think this was a delay tactic, and I don’t know why, because I really think in the spirit of what we’re trying to do, you essentially just stalled negotiations.”
Sitting still and doing nothing is the worst thing the assembly could do, Hanson said, and if a lease proposal with White Pass can’t be agreed upon and put before the voters, then the municipality needs to go in a different direction. Much talk has been made in recent months about the need to build up Skagway’s port to accommodate larger classes of cruise ships in 2019 and beyond.
Assembly Member David Brena said he supported the mayor’s intentions for the veto, and that the veto would focus attention on an issue that “seemed to be kind of skipped over.”
“And that is, what exactly does happen to AIDEA in 2023?” Brena said. “I think the veto was a good way to focus attention on what might happen to those facilities, the building and the [ship] loader.”
Assembly Member Dan Henry made a motion to overturn the veto, which was unanimously supported. Hanson said the negotiating committee would try to schedule a meeting between the committee, the borough attorney and White Pass for the following week.
The MOU has received numerous facelifts throughout its life on the assembly table, but many of its tenants have remained fairly constant. As of the Nov. 21 draft sent to White Pass, the term for a new lease beginning in 2023 would be for fifteen years. Annual lease payments would start at $250,000, and increase 3.5 percent each year for a final payment of $418,837.21 in 2038, and a total income of $5,242,757.44.
The MOU includes a reimbursement plan for capital improvements, defend and indemnity language and a stipulation that the municipality receive all the tidelands assets, including the Ore and Broadway docks, at the end of the 2038 lease term.
It also has amendments to the current 1968 tidelands lease, among which include raising the current rent payment to $250,000 per year, language to facilitate the construction of a floating component to the Ore Dock – needed for the port to accommodate multiple larger classes of cruise ships – as well as stipulations on remediation in the Ore Terminal Basin.
The MOU states that remediation will be funded with a $2,750,000 contribution from White Pass, and a $1,500,000 contribution from Skagway. Skagway’s contribution would be capped at that amount.
In the event that White Pass has not completed the remediation to a degree that the Alaska Department of Environmental Conservation has removed the Ore Basin from a list of contaminated sites, the MOU mandates White Pass pay Skagway $10,000,000 as reasonable liquidated damages.
It remains to be seen what White Pass’s response to the document will be. At the Nov. 30 meeting, Henry pointed out that the language in the MOU is not binding, and that an official lease would still need to be drawn up and approved by a vote of the people in Skagway.
“An MOU is nothing more than conversation, there’s nothing material to it, there’s nothing binding, there’s nothing legal to it,” Henry said.