By Gretchen Wehmhoff
The Skagway Assembly, at the Sept. 1 regular meeting, agreed unanimously to direct the municipal manager to negotiate with White Pass & Yukon Route (WP&YR) in conjunction with legal counsel to address any issues as the 55-year lease between the two entities expires in March 2023.
The instructions for Manager Brad Ryan followed public discussion of the most recent letter from WP&YR to the municipality.
The letter, signed by president of WP&YR, Bob Berto, mentioned the multi-agency cooperation and response to the recent rock slides, then addressed the company’s plan to take advantage of a lease term that “require that we remove any improvements we need within 60 days of the end of the lease, or we lose them.”
In a July 18 correspondence, Ryan stated removing assets could close the Ore and Broadway docks for 2023.
“If WP&YR does remove the pilings and catwalks from the Broadway and Ore Docks as Mr. Korn stated in our meeting, MOS will not be able to berth ships at those facilities in 2023 until the improvements are replaced … With the long lead times on materials and permitting (we anticipate permits for pile driving to take nearly a year), it does not seem possible to complete the necessary upgrades prior to the 2023 season,”
Berto referred to possibly using removed materials in another White Pass location.
“Several weeks ago, we provided Manager Ryan with a list of existing improvements at the Ore and Broadway docks which our company believes it can utilize elsewhere to benefit our business after transition of docks to the municipality.”
Ryan told the assembly that he had requested more specific information and value of the assets being removed from WP&YR over a year ago. He said recently the company passed along linear feet numbers, but no indication where that was located. Ryan requested and received photos, but there was no price associated with the photos.
“It’s hard to identify from the pictures exactly what’s being taken,” Ryan said.
Assemblymember Reba Hylton addressed White Pass’ involvement in ore contamination remediation.
“There’s been no remediation, there was an early action removal, 3,700 yards, that they conducted this winter. And I don’t know what the plan is for the remediation,” Ryan said.
“… if the port is still contaminated, doesn’t that put White Pass in breach of the lease itself?” asked Hylton.
“I think we’ve had a lot of discussions about whether they’re in breach of contract and whether we should declare that or not for sure, if it’s not cleaned up by the end of it,” Ryan said.
Mayor Andrew Cremata was hesitant to follow that direction and suggested that trying to work with White Pass would be better for the community in the long run.
“We’re trying to convince the community to support a $65 million revenue bond to build a dock that is going to have rail and an easement for railroad tracks to go right up to the cruise ship. The biggest beneficiary of that $65 million project is going to be White Pass. The biggest beneficiary of working out an easement is going to be White Pass. I mean, we are doing a lot of things that prove that we’re cooperating,” Cremata said.
“… the municipality is doing everything, bending over backward, to do what it can to support White Pass’ financial future in this community between remediations, investigating environmental concerns, building new docks, supplying easements. Man, and what a huge benefit to Carnival Cruise Lines and White Pass and to Holland America and to Princess.” Cremata said.
“ … add to your list the tens of millions of dollars we’re considering for rockslide mitigation to protect the White Pass dock.That’s a private dock,” Assemblymember Orion Hanson said.
The open discussion turned to negotiation strategies.
Hylton was not in favor of negotiation.
“…. If we aren’t able to berth those ships here next year, or the year after, because we won’t be able to replace that infrastructure, it just can’t happen. We’re all going to lose. This town will fail if White Pass fails.”
“…We need to work together on this. And I think leaving those assets in place — they’ve more than paid for themselves throughout time. Our community has paid for it in its own way by only receiving very little funds for the revenue generated off of that happening. And so I don’t really feel like we should negotiate and we should all just kind of call it a wash and work together and continue to bring tourists into this community so we can all survive,” Hylton said.
Assemblymember Jay Burnam agreed.
“I don’t think they’re gonna shoot themselves in the foot. And if they did start to disable infrastructure in the municipality, I’m sure there would be some sort of legal recourse that we could engage in. I get upset about it, too. But I can’t see them doing it,” Assemblymember Jay Burnham said.
“I just don’t know what negotiation would hurt,” said Bass
Assemblymember Orion Hanson asked Tyler Rose from White Pass what the point would be to remove assets.
“Would you agree that if you took away the pilings, the catwalks, effectively everything that you need to tie up a ship — that it would cause harm to Skagway’s economy including White Pass’s ability to have passengers on the railroad?” Hanson asked.
“Absolutely, it would. And I think we’re trying to avoid that which is the reason to try to engage in this discussion,” Rose said.
“I guess the one thing I would say is that we’ve asked for this negotiation for well over a year and haven’t gotten it. That letter could have had a number on it — it didn’t have it. They could say what it is they’re going to take out. Manager Ryan has just made it clear that he’s asked for this information over and over and over. [Why] wait till September, six months before it expires you want to negotiate?” Hanson said.
The conversation then turned to a sum zero loss possibility.
“I think the best high road we can take is to just agree,” Hanson said. Leave the docks in place, and we’ll accept the condition that they’re in and recognize the 55 years of successful partnership we’ve had. There’s so many tenuous, perilous things coming up here in the next winter. We don’t need to overcomplicate this. This is actually fairly straightforward. March 23’ – those docks belong to the municipality.”
Hylton and Cremata agreed. Assemblymember Jay Burnham didn’t.
“I would say absolutely not. I think he should talk to legal counsel, I think we should talk to people who know a lot more than we do. Just because we think that we’re taking the high road. We don’t know what we’re doing to say a zero sum game,” Burnham said.
“I agree 100% with Jay,” Assemblymember Dustin Stone said.
Cremata offered a compromise.
“What if there was some direction to talk to legal counsel about that possibility so that we can have it on the next agenda? Would there be any objection to directing manager Ryan to seeking legal counsel in regards to a potential walk away scenario with White Pass over assets and remediation issues?” Cremata said.
The body, including Burnham, Stone and Bass agreed without objection.
The status of any current or scheduled meetings for negotiation between Skagway and White Pass was unknown at press time.