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Holland America Group makes initial tidelands lease proposal

 

On Valentine’s Day, a new suitor appeared to try and start talks on a tidelands lease deal with the Municipality of Skagway.

The Holland America Group (HA Group) – which includes Princess Cruises, the Holland America Line and the Seabourn Cruise Line – sent a letter to the borough’s mayor and assembly with a proposal for economic collaboration.

The letter lists out some of the HA Group’s current impacts on the town: accounting for 50 percent of Skagway’s cruise ship passengers and employing 17 people year-round and 205 on a seasonal basis.

It then broaches the possibility of a business arrangement, suggesting Skagway and the HA Group could form a joint venture to lease and manage the Ore and Broadway docks and underlying tidelands, and to invest in the expansion and multi-use improvements to the docks. The joint venture could also invest in waterfront-related improvements in Skagway’s downtown business district to “support and accelerate economic development in Skagway and the surrounding region,” the letter states.

The letter from the HA Group suggests Skagway lease the property to the joint venture for a period of 15 years, and – if required – Holland America is prepared to fund the joint venture with up to $20 million of initial capital at the time the joint venture is formed, with further investments of capital as agreed to by the joint venture to accommodate planned growth and maintenance as needed.

“The proposed structure would allow HA Group and Skagway to mutually benefit from the growth in cruise line visitation to the area,” the letter reads. “Based on our initial projections, we believe that the arrangement would be far superior, in financial terms, to any other lease proposal presented to Skagway, and we would honor this sentiment as we begin to develop the concepts described in this proposal.”

The letter states at the end it’s not intended to be a legally binding proposal, but merely is intended to give Skagway cause to enter into serious discussions with the HA Group.

In terms of comments over the letter, talk was light from the table at the assembly’s Feb. 15 meeting. Only assembly members Dan Henry and Orion Hanson were present, with assembly members Jay Burnham and Steve Burnham Jr., as well as Mayor Monica Carlson, phoning in. Henry suggested the assembly take time to “digest” the HA Group’s letter, and discuss it as a whole assembly.

Former mayors Tom Cochran and Tim Bourcy, in the gallery that evening, did comment briefly on the letter. Cochran called it “rather interesting.”

“I think it’s pretty significant, sounds like some things are moving maybe, to get a letter like that,” Cochran said.

Bourcy said discussing the HA Group’s proposal doesn’t diminish the work that has been accomplished so far at the municipal level with the White Pass & Yukon Route Railroad, but the municipality would be “remiss not to consider other alternatives with regard to the port.”

The assembly recently approved a memorandum of understanding (MOU) between White Pass and the municipality, which laid out a list of agreed-upon ground rules for Ore Terminal Basin remediation, an amendment to the 1968 tidelands lease and details for a new lease past 2023.

“I think this is a positive thing that has been brought to the assembly,” Bourcy said of the letter. “I believe that we are looking at what the future of the port is going to be, the municipality has negotiated in good faith with White Pass an MOU that is going to create a new draft lease. We have another entity that is coming in and suggesting that they would like to be part of that process.

“I think that the municipality needs to consider this, and in my personal belief, has a fiduciary responsibility to consider other offers.”

Bourcy encouraged the assembly to engage with other groups that could also be interested in the port, and said he thinks Skagway’s waters are very important strategically.

“The municipality has desires to do pools and senior centers and all these other things, so I encourage you guys to look at all of this, and see what is best for the municipality and the citizens of this community,” Bourcy said.

White Pass’s Executive Director of Human Resources and Strategic Planning Tyler Rose said the railroad’s attorneys are currently drafting a tidelands lease based off the points from the MOU, with the first draft of that document expected within several weeks.

When asked, Rose did not comment heavily on the letter from Holland America.

“I think obviously it’s interesting to everyone and adds a new dimension, but I think we’ll take some time – similar to what the assembly said – to digest that and figure out what exactly it all means,” Rose said.

Original story: http://skagwaynews.com/2018/02/26/holland-america-group-makes-initial-tidelands-lease-proposal/

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