Skagway makes waterfront leases available for public bidding through RFPs

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Posted by Mike Swasey | Apr 13, 2022 | Featured Stories, News | 0
Temsco Helicopters facility in Skagway. (Mike Swasey photo)
Less than a year from now much of Skagway’s waterfront comes back under the town’s control after a 55-year lease with White Pass and Yukon Route expires. That means valuable waterfront property could be up for grabs. Last week, the borough assembly agreed to move forward with a public bidding process, instead of offering leases to the current tenants without competition.
In March of 1968 Skagway signed a 55-year lease with White Pass and Yukon Route. Since then, the railroad company has managed several subleases. Current sub-letters include Alaska Marine Lines, Alaska Industrial Development Export Authority, Petro Marine, and Temsco Helicopters.
The master lease and all subleases expire next March and the municipality not only gains control of the land but assumes ownership of all the improvements made to the land. Last week, the borough assembly voted unanimously to open up bidding for those subleases with a Request for Proposals or RFP process. That means the municipality will get an idea of the true market value of those properties. Assemblymember Orion Hanson told the assembly that it wasn’t about whether or not those companies have been good tenants.
“I want to stress that this is really our fiduciary responsibility as assembly members. And this is actually our code as well. It’s not just about 2022 and 2023. It’s about setting up the right standard, the right process for decades to come,” said Hanson.
The lease with White Pass netted the municipality a little under $130,000 each year. The new revenue streams are projected to dwarf that amount. With individual lease agreements, berthing fees, easements, passenger fares and flow-through fees, the municipality stands to earn millions.
But not all the sub-letters are thrilled about the RFP process. Temsco Helicopters is one of those. Their parent company is Alaska Stevedoring, whose CEO is Bob Berto the current president and part-owner of White Pass. His son Ethan Berto is the CEO of Temsco and last week he wrote a letter to Skagway’s assembly saying that under municipal code his company is entitled to a lease extension partially because of improvements it made to the property, including their building and helipads.
The municipality’s attorney Robin Brena spoke at last Thursday’s assembly meeting and explained that Temsco did not have a binding agreement with the municipality; it had been subletting from White Pass.
“Temsco just sent a letter to Skagway asking to renew the lease, you can’t renew a lease that you’re not a party to,” said Brena.
The sublease held by Temsco will expire a couple of days before White Pass’ master lease. If there are any improvements they become the property of the municipality according to the master lease agreement from 1968.
“The improvements, for example, include all the fill that created the waterfront. Now under the terms of the lease, there is limited rights to remove improvements by the subtenant. And by the master tenant if they elect,” said Brena.
Berto’s letter suggested removing the building wouldn’t be advantageous to either the municipality or Temsco. It also referenced a Memorandum of Understanding that was signed by the municipality last year that made no reference open bids for the property in the future.
Petro Marine Services’ Skagway tank farm. (Photo Mike Swasey)
Petro Marine Services is another sub-letter on Skagway’s waterfront. The fuel company also wrote a letter to the assembly that discussed the improvements it had made to the property it sub-let including the installation of several large fuel tanks. Its letter said that the sublease states they can remove those tanks at the end of the lease.
According to Brena some of those tanks are 40 years old, and if Petro Marine removes the tanks, the new leaseholder would have some options.
“They’ll have to build a tank farm if it’s removed properly, and there’s a process they have to go through. Or if it’s there, they’ll have to lease it from the city. No one has an incentive to remove a tank farm, it costs money and raises a series of issues,” said Brena.
The resolution to adopt the RFP process was approved unanimously by the assembly and was revisited Monday night at Skagway’s Ports and Harbors committee meeting to iron out any remaining details. Borough officials expect to open the request for proposal process within the next two weeks.
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