Amid controversy, Skagway Assembly passes final lease understanding with White Pass

A Disney cruise ship is tied up at Skagway’s ore dock. (Photo by Emily Files/KHNS)

After months of work, the Skagway Assembly passed a final memorandum of understanding last week with White Pass Yukon Route Railroad, setting the stage for a new lease to extend the company’s control of the city’s waterfront.

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Though the meeting ended in a signed agreement, the road to get there was not smooth.

The memorandum with White Pass was a controversial item for the Skagway Assembly last week when it was added late to the agenda.

Mayor Monica Carlson said it was because she hadn’t heard back from the railroad company before the time the agenda was issued.

Assembly member Orion Hansen took issue with that. He said he had initially tried to get the memorandum on for discussion before that.

“I didn’t want to have it on the agenda if we didn’t have anything to talk about, and we had not heard from White Pass at that time,” Carlson said.

“Mayor, the protocol is that if two Assembly members request something be on the agenda, that’s all that’s needed to put it on the agenda,” Hanson said.

The Assembly passed the final memorandum 5-1, with member Dave Brena voting against it.

The last detail to fall into place was a vote to remove the city’s “right of first refusal” to buy White Pass.

In two separate rounds of negotiations, White Pass refused to sign a memorandum, which included giving Skagway the first shot to buy the company if it goes up for sale.

Last week, the Assembly decided they could live with that.

They agreed to remove the provision with a 4-2 vote.

But that wasn’t the end of the controversy.

Two other agenda items were also added late: a discussion about White Pass being in default on its current lease, and “eminent domain.”

Member Dave Brena requested the two items be put on the agenda.

“I don’t think there’s any doubt in my mind that White Pass is in default of their lease,” Brena said. “They only reason they’re not technically in default is because they haven’t been given proper notice. They’ve made the clean-up of the contamination a condition of the MOU. But cleaning the contamination is their responsibility. We do not need an MOU for that.”

The Skagway cruise dock also is an operating ore dock, which has stored and shipped raw gold, silver, copper and other metallic material from mines in Canada for decades.

White Pass’s current lease says it’s their responsibility to deal with the legacy contamination on the property they control.

But Borough Manager Scott Hahn notes that lease was signed in 1968 — before the Environmental Protection Agency was even formed.

Hahn said a new lease that has stronger provisions about what’s required for clean-up is in the city’s best interest.

White Pass also needs a new lease to maintain control of the waterfront: the current lease is set to expire in 2023.

White Pass tried to get an extension in 2015, but it failed when it went before voters.

Two years later, there’s more urgency: a new generation of huge cruise ships are set to arrive in Skagway this summer. But the port needs modifications in order to accommodate those ships.

Since White Pass controls the property, the city and the company have been negotiating throughout the last year over a new lease that will give White Pass the continuity they want to invest in remodeling the dock.

This all leads back to the issue of contamination.

White Pass needs to know the full scope of the ore dock’s environmental issues and how to mitigate them before they can do any construction.

Tyler Rose, with White Pass, said they’ve been working with the Department of Environmental Conservation to commission a risk assessment of the area. It was supposed to be finished late last year but has been delayed. The first draft is expected this week.

In the meantime, those delays fueled tension over the agreement.

Brena pointed to them as evidence that White Pass was in breach of contract to clean up contaminants.

He also asked for discussion about the city’s power to seize property from White Pass through eminent domain.

Rose, who attended the meeting representing White Pass, was dismayed by those additions to the agenda.

“I’m flummoxed by this, and disappointed quite frankly, as far as the concept of bargaining in good faith,” Rose said.

Rose said it was especially frustrating to be discussing default and eminent domain unexpectedly while on the precipice of an understanding.

“Is the community eager for litigation? Are we eager to fight with a major stakeholder? Is that what we’d like to do? Or would we actually like to engage in a productive process where we can work together for mutual success?” Rose said. “These are the things that are just very troubling not only to myself as a citizen, but for White Pass.”

Member Orion Hanson, who was on the negotiating team between the Assembly and White Pass, took the unexpected additions to the agenda personally.

“That this was inserted here tonight on this agenda, I was appalled,” Hanson said. “What message are we sending? Are we going to be contentious and just starting flinging around that we’re going to have lawsuits? Or are we going to try to find solutions to stabilize our town? I mean, I’m a little emotional about this because I’ve really poured my life into it.”

Despite the rancor of the discussion, the passage of the memorandum means a new lease will now be drafted by lawyers.

But, Skagway voters will have the final say at the ballot box.