Mayor Andrew Cremata said the borough assembly is planning a town hall meeting for some time in December to discuss the White Pass & Yukon Route’s assertion that Skagway should stop consideration of leasing its waterfront property to anyone other than the railroad after the company’s lease expires in 2023.
Under the 55-year contract signed in 1968, the borough has to negotiate with WP&YR to renew the lease, the company’s attorney said in a Nov. 8 letter to Borough Manager Brad Ryan. Failure to undertake good-faith renewal negotiations with WP&YR could expose the borough to financial liability, the letter said.
The lease, according to the attorney, provides that WP&YR has the right to request a new lease and, assuming the borough and the company can reach terms on a deal, no bids from other potential renters are required.
The assembly last month passed a resolution, stating its intent that the municipality take over management of all port property after 2023, going out for proposals for development and use of the acreage.
WP&YR’s attorney said Section 33 of the lease gives the “right and the opportunity” to the company to request renewal of the lease “primarily because of the significant improvements WP&YR has made to the tidelands since 1968.”
If the borough does not renew the lease with the railroad, WP&YR “has important rights to compensation” for the value of the improvements it has made to the property, the company attorney said.
The municipality needs to end its consideration of a request for proposals from other parties to lease the property, the letter said. “The municipality cannot fairly discuss/negotiate a lease renewal with WP&YR under Section 33 while simultaneously moving forward with plans to seek what it believes to be more lucrative opportunities with third-parties,” Keene & Currall said.
The municipality has not been considering a renewal of its lease with WP&YR after a 2015 referendum in which residents voted by a 2-to-1 margin against a new lease.
Some residents, including Tom Cochran, are not waiting for a town hall to express their views. In a letter written to the assembly as a Skagway resident, not in his position as port commissioner, Cochran said he expected something similar to the attorney’s letter.
“I have stated publicly over the past several years that in my opinion White Pass would not sit idly by and let the Tidelands lease expire without a fight,” Cochran said in his Nov. 20 letter.
Cochran advised the assembly to look into hiring a public relations firm to help with any potential backlash in its future dealings with WP&YR.
“We all know that White Pass and Survey Point are the curtain in front of Carnival Corporation. We are dealing with the BIG DOGS!” Cochran wrote. “This is serious business and they mean it. It is time for the Municipality to get busy, get serious, and hire top-notch professionals because this is going to get ugly.”
Ketchikan-based Survey Point Holdings is a partner with Holland America Princess Alaska Tours in managing WP&YR, which Holland America’s parent company, Carnival Corp., purchased in 2018.
The Skagway News reached out to WP&YR for comment and had not received a response as of Nov. 25.
Though the long-term lease allows the municipality to set a value on the property and adjust the rent every five years, the borough assembly has been deadlocked since it received two very different appraisals in 2018 for the final five years of the lease.
The current annual lease on the property is $127,000. One appraisal for the borough last year said the value has not changed, while a different appraisal set the annual lease at $882,000 a year. The assembly has not accepted either appraisal. At its Nov. 7 meeting, the assembly asked the borough manager to get a legal review of the issue.