Leigh Armstrong

The borough assembly has requested an update of the 2018 valuation conducted by a national appraisal firm of the White Pass & Yukon Route waterfront property, as the municipality continues to debate how much to charge for the tidelands lease.

The assembly voted 5-1 at its April 4 meeting to request the update by Denver-based Integra after deciding at its March 21 meeting to delay action on the lease to allow interim borough manager Tom Healy time to review the issue. 

The borough last year received two appraisals of the municipally owned tidelands, declining to accept either valuation due to varying issues coming from the borough and White Pass. In addition to the Integra appraisal, the other came from longtime borough contractor Horan & Co., of Sitka.

Horan appraised the property at $2.2 million, which would set the railroad’s annual lease payment to the borough at $127,000 — the same as it is now. The Integra appraisal came in at $14.7 million, for a lease payment of $882,000 a year.

Assemblymember Dan Henry brought up the idea April 4 of updating the Horan appraisal at the same time as the Integra valuation, but Mayor Andrew Cremata said the assembly agenda only called for discussion of the Integra appraisal. 

“The current rent that White Pass pays to Skagway is $127,200, that works out to a little more than $1,900 per acre per year,” Assemblymember Dave Brena said. The Integra valuation would boost the annual lease payment more than sixfold, to about $13,000 an acre, he said. 

After the assembly last month voted down accepting the Integra appraisal, the borough sent a letter March 8 to White Pass, discussing options to resolve the issue. White Pass responded on March 15 but didn’t specifically choose any of the options put forth by the municipality. Rather, the company attached a letter from Equivest Realty Advisors in Anchorage, stating that the lease issue was a legal one because of different interpretations of the tidelands. 

Assemblymember Orion Hanson suggested the municipality negotiate in person with White Pass, with Brena acting as Skagway’s representative. Brena as White Pass had not responded to the municipality’s previous offer in their letter  

“We offered an alternative negotiation technique, basically an arbitration, that was not accepted by White Pass,” Brena said 

Assemblymember Tim Cochran attempted to recuse himself from the vote on the Integra appraisal, as his employer, Petro Marine, subleases from White Pass on the tidelands. Cremata refused the request on the grounds that Cochran is not a direct tenant of the lease. 

Because the assembly had earlier voted down the Integra appraisal, it needs the update if it wants to consider the company’s valuation a second time.

The assembly voted in favor of updating the Integra appraisal 5-1, with Hanson against.