March 9, 2012 • Vol. XXXV, No. 4

False Front Flare-up

Skagway firefighters hit a flare-up behind the false fronts facing Second Avenue with several streams of water as the fire in the 600 wing of the Westmark raged in the strong southerly wind just after midnight on Wednesday, March 7. See story below and more photos on page 7 of our print edition.

Photo by Jeff Brady

Downtown fire contained overnight

Old wing of Westmark Inn destroyed, damage to four businesses


Skagway firefighters battled a downtown fire that destroyed a Westmark Inn building and caused fire damage to the Diamonds International building next door.
Fire Captain Ken Graham said the department received an Emergency Warning System page from the building at about 11 p.m. Tuesday, and when they arrived on the scene, firefighters found the west side of the building in flames.
Located at Spring Street and 2nd Avenue, the 600 wing houses summertime employees, an Avis car rental office, M&M Tours and Skagway Jewelry during summer months.
Along with battling the fire in the 600 wing, firefighters also worked hard to adequately protect surrounding buildings and another Westmark Inn wing across the alley because the fire was spreading rapidly due to the strong southerly wind.
The department strategically placed one pumper truck on Spring Street and aimed the water south of the fire in order to work with the wind. There were periods in which the wind caused the water to blow north over the fire, and not reach the flames at all.
Eventually, the roof over the employee housing area caved in, and every once in a while, fire would shoot out from under the trim of the building.
Once the fire appeared to be subsiding at the north end of the building, it flared up on the south end behind the false front on 2nd Avenue above the offices of Skagway Jewelry Company and M&M Tours.
The firefighter who was operating the hose aimed the water at the electric pole, which split the flow of water and allowed it to hit the fire on either side of the pole.
The flames snapped one of the power lines, which caused it to dangle over three firefighters who were breaking the glass on the doors below. When the glass was broken, the firefighters seemed to get the upper hand on the fire and the size of the flames shrank.
Despite efforts of propping up a hose on the ground that shot water between the 600 wing and Diamonds International, the fire spread to the jewelry store’s east wall, and the building suffered both fire and water damage.
More than 20 Skagway residents ventured out to Spring and 2nd throughout the night to marvel at the bright streaks of the fire and the green streaks of Northern Lights overhead.
Firefighters worked through the night and contained the fire by Wednesday morning. They were packing the last of their equipment into their service vehicles at about 12:30 p.m., more than 12 hours since the start of the fire.
Bruce Bustamonte, Holland America-Princess Alaska spokesman, said the cause of the fire is still unknown, but mentioned renovation taking place inside the building this winter.
HAP Alaska manages the Westmark Inn’s buildings.
“It was severely damaged and more than likely a complete loss,” Bustamonte said.
Mark Jennings, co-owner of M&M Tours said losing his main downtown office is a tough loss for the company because it was such a good location.
“Hopefully we can come up with some kind of solution,” he said. “We’ve already hired a bunch of staff.”
Fire Captain Graham said the State Fire Marshall was set to arrive in Skagway on Wednesday. As of printing time, poor weather prevented him from leaving Juneau.
The fire was the biggest in the downtown core since the Igloo Bar-Sourdough Inn fire at Third and Broadway on July 18, 1979.

MOS, White Pass closing in on agreement

Company looking at floating dock on RR Dock side


 After a face-to-face meeting between its lead negotiator and White Pass executives – and another exchange of letters – the Municipality of Skagway appears closer to a tentative agreement on restructuring the tidelands lease so it can go before the voters for approval.
Assemblymember Dan Henry was in Florida at the end of last month for a meeting with ClubLink CEO Rai Sahi and White Pass president Eugene Hretzay. They met for a long lunch after a round of golf on one of ClubLink’s courses. ClubLink is the parent company of White Pass. During that meeting they came to an agreement on a number of issues that the borough had forwarded in a Feb. 8 letter.
That letter had demanded a surrender of the unimproved tidelands and uplands in the ore terminal area of the current lease, or the borough would explore eminent domain options. The borough has been trying to find a way to get site control of a portion of the old 55-year lease, which doesn’t expire until 2023, so it can pour $15 million on hand into dock improvements and free up the Alaska Industrial Development and Export Authority to bond up to $65 million for improvements to its ore terminal facilities.
After the meeting, White Pass sent a letter on Feb. 28 that showed agreement on several points that had previously been under contention:
• The company agreed with the borough’s new approach that only the unimproved lands be given up under the current lease, rather than all of the tidelands on the western section that includes the ore terminal and other subleases like Alaska Marine Lines, Petro Marine, and TEMSCO.
• In exchange for giving up those unimproved lands, White Pass would like an extension of the Broadway Dock lease. It had wanted up to 2063, but borough code now allows leases of 35 years or less, and they agreed to a long-term lease within code restrictions.
• The company would invest up to $4 million into a new floating dock component by 2013 to service large Solstice class ships, either at a public Ore Dock if White Pass remained the cruise terminal operator past 2023, or at their private Railroad Dock. An earlier option to have the borough buy the improvement, after it is constructed at the Ore Dock, was pulled.
• White Pass agreed to drop language in the agreement that would have required Wells Fargo approval and an indemnification of environmental liability.
The one remaining area of contention is White Pass’s desire to have an agreement to be the cruise terminal operator on the Ore Dock post-2023, but the assembly has said they want to put out a Request For Proposals for those services.
In its Feb. 28 letter, White Pass offered the option of moving the floating dock project to the Railroad Dock side, and asked for a “prompt response so that we may advise Royal Caribbean of our intentions regarding the floating dock.
The assembly met in executive session on March 1 and voted to prepare a new letter for municipal attorney Bob Blasco’s signature. That letter was sent on March 6 and released to the media. It agreed to all points except the cruise terminal operator issue.
“The assembly remains firm in its intention to solicit proposals for the cruise terminal operator post-2023,” it said. “This will be done through the RFP process and White Pass and others will be invited to participate in that process.”
It then said the attorneys can work to begin the process of drafting documents for the surrender of the umimproved lands.
“As for the intention of White Pass to construct a floating dock at the Railroad Dock, the assembly requests that White Pass confirm the floating dock will meet Royal Caribbean requirements in 2013.”
In a phone interview from Mayor Stan Selmer’s office on Tuesday, Henry explained that they moved through the agreeable points fairly quickly, and then turned to how White Pass came to look at the Railroad Dock as an option for the floating dock component.
He said they had looked at expanding the Railroad Dock a few years ago, and at one point in the discussion Sahi suggested looking at making the improvements on a dock they own.
“What it came down to was if White Pass constructed the floating dock, then they would get the per head fee,” Henry said. “If the (Municipality) of Skagway opted to, say, use the a portion of the $5 million bonding for the wharf… then we would get the $8.51 a head.”
But if the borough collected that head fee, then it could jeopardize the amount of head tax it gets annually from the state’s cruise vessel passenger fees, Henry said.
“It seems like we would have something to lose,” added Mayor Selmer.
Henry said that even though adding a floating dock to the Railroad Dock may cost more – the estimated price has already jumped from $2.5 million to $4 million – he expects the addition would probably pay for itself in a few years. But he said the decision on where to construct it may come down to how best to move people.
Regarding the unimproved lands, Sahi was agreeable to let them go since the company was not using them, Henry said. Those lands include tidelands south of the heliport, the roadway to the tour staging parking lot, and a right-of-way under that lot for a possible new conveyor system for a new Ore Dock.
Henry said the tone at Coral Springs “was much more amicable” than in past discussions.
“They want to move forward, they want to get something done, they do want to be a responsible and good partner” with the municipality and understand its needs to get things accomplished for the port, he said.
Henry said Sahi was “a reasonable, down to earth, nuts and bolts kind of guy who understands the relationships that have to be grown with communities.”
He added that Sahi had dealt with other communities in longer term leases, and that’s where the original push for longer agreements came from, but he was now agreeable to working within confines of code requirements.
E-mails to Hretzay about the meeting and latest round of letters were not returned for comment. Selmer said later that Hretzay had told him that he would not comment to the newspaper for the time being, so as not to get ahead of what the company might be telling the borough.
Henry, who has been in Florida dealing with personal appointments, said he would be available for another meeting with Sahi and Hretzay this week or later, if one is necessary, but he hopes a letter will come back that can be “taken care or with one more assembly meeting.” He said he should be back in town for the meeting on March 15.
Then, if the assembly agrees, they would produce a document to present to the public to vote up or down.
Henry said Sahi understood the process.
“He conveyed to me that this was certainly very important to him, important to his company and his stockholders, which he has a responsibility to.”
Henry closed by saying they were finally at a point “where we should have been 12-15 months ago.” Basically, they are now at a juncture of just “massaging the points.”
Selmer said that the assembly, while wrapping up what it wants to do on the ore terminal side, may want to address the Broadway Dock side in a new, separate lease, and decide when they want it to start.
He also hopes that negotiations with White Pass are now far enough along that they will see a new tidelands lease proposal from AIDEA for post-2023.

Hydro options abound down Taiya Inlet, near Haines; Burro Creek feasibility study complete


Though there has been much chatter about the possibility of a hydroelectricity project at West Creek, not much has been said in Skagway about other possibilities for hydro potential in the Upper Lynn Canal.
There are two potential projects with three separate location options, Connelly Lake and Schubee Lake, both Alaska Power and Telephone studies, and Burro Creek, which is privately owned by a Skagway resident.
One of the main reasons AP&T is pushing for the creation of a new hydro project is the rising cost of fuel, said Skagway AP&T Manager Darren Belisle.
Skagway and Haines are on the same power grid, and during peak, cold, winter days, 4.5 megawatts per hour could be needed to power both towns, he said.
Because there are only about 4 megawatts per hour of hydroelectricity produced during the winter months, diesel is being used on occasion to help power the Upper Lynn Canal from November till May.
There are two kinds of hydroelectric projects: run-of-the-river and storage.
Run-of-the-river projects only generate electricity when the river or creek is flowing, which means they do not usually produce output during the winter. A storage project creates power year-round because there is enough water stored up behind a dam to generate electricity at all times.
Right now, there are five hydro projects in the Upper Lynn Canal – Goat Lake, Dewey Lakes, and Kasidaya Creek in the Skagway Borough, and Lutak and 10 Mile in the Haines Borough. Goat Lake and Dewey Lakes are the only storage projects. Goat Lake produces up to 4 megawatts per hour in the winter, and the Dewey Lakes hydro project produces 20 kilowatts per hour. Lutak hydro is a year-round, run-of-the-river project and it also produces about 20 kilowatts per hour.
Belisle said AP&T is looking to add another storage project to the area to completely eliminate the use of diesel in the winter.
Another reason AP&T is pushing for the creation of a hydro project is potential submarine cable failure.
Belisle said it is inevitable that the cable, which runs hydroelectricity to Haines from Skagway, would fail.
Only a few companies in the world could fix it, Belisle said, and it could take from six months up to one year to complete from the time it is looked at.
Belisle also said with 18 miles of cable at $100 a foot, it would be very expensive to fix or replace.
When something goes wrong with the cable, Haines would be running on 100 percent diesel until it is fixed.
“If diesel was run for a long time, rates could substantially increase,” Belisle said.
But AP&T has a solution to both the winter power problem and the chance of cable failure: build another storage project closer to Haines.
In the plan’s infancy, AP&T selected two locations for the proposed project: Connelly Lake and Schubee Lake.
A preliminary feasibility study has already been conducted on Schubee Lake for AP&T. Because of its location, which is on the east side of Taiya Inlet across from Haines, it is only accessible by boat or helicopter. Also, It would require an undersea cable to deliver the power to Haines, which is something that AP&T is trying to avoid because of a potential failure and costly fix.
Because of this, the hydro engineering firm that did the study said it would be too expensive to construct and maintain, and it recommended AP&T find another option.
Which is where Connelly Lake comes in.
Located in the upper Chilkoot River valley at 2,200 foot elevation, Connelly Lake would be easier to reach because of its terrain and an old logging road workers could use to construct the project.
“Right now, Connelly Lake is the best option,” Belisle said.
AP&T has submitted a preliminary permit application to the Federal Energy Regulatory Commission, which would ensure no other companies could build a hydro project in that area.
Although the feasibility study is not yet completed, Belisle said AP&T thinks Connelly Lake has the capacity to produce anywhere from 7 to 12-megwatt hours. That means this project would not only have the capacity to power both Skagway and Haines on their busiest days, but it could also have the potential to power one or two cruise ships, depending on their size, while they are in Skagway’s port.

LCC prefers Schubee
But Lynn Canal Conservation views the options differently.
“Hydroelectric power is a great asset around here,” said Eric Holle, vice president of LCC. “It’s a lot better than burning fossil fuels.”
Holle said that most Haines residents are on board with hydroelectric projects — just not one at Connelly Lake.
Chilkoot Lake produces about 47 percent of the Upper Lynn Canal’s sockeye salmon, and any drastic changes to the area could upset that number.
Most of the old logging road that leads to Connelly Lake is not passible, Holle said, and in several spots along the Chilkoot lakeshore it is underwater.
If the road were to be rebuilt, Holle said it would negatively effect sockeye spawning.
The road, in its current state, provides an area of highly oxygenated water, which is important to sockeye alevin — the first stage of the salmon life cycle.
The road could smother sediments along the lakeshore and further up the Chilkoot River where salmon spawn for at least nine miles, and suspended solids from the creation of the road could block sunlight in the water, reducing plankton production, which would affect sockeye nutrition, Holle said.
In order to create a Connelly Lake Hydro Project, it would require a dam, Holle said, adding that all dams eventually fail.
If the dam failed, several billion cubic feet of water could flow over the side of Connelly Lake and down 2,000 feet to Chilkoot Lake, bringing with it trees and topsoil, which Holle said is not good for the fish.
If Schubee Lake could generate as many megawatts as Connelly Lake could, Holle said LCC would prefer AP&T to create its hydro project there.
“One of the big criticisms of having a hydro project at Schubee Lake is the underwater cable that would transfer power from Schubee to Haines,” Holle said. “But if Haines were to transfer power to Skagway from Connelly Lake to power cruise ships, they would have to have an underwater cable anyway.”
Holly also said that LCC doesn’t believe there is a real hydroelectric power demand in Haines.
“There doesn’t really seem to me to be a justification of building an overly large hydro project yet,” he said, adding that the studies for both projects have not yet been completed, so all facts are not yet known.
“Until we have all the facts, it is difficult to make an accurate decision,” he said. “If it is anywhere in the ball park of Connelly, Schubee could produce as much power without putting the fish at risk.”

Burro Creek a smaller option
Another possibility for hydroelectric power in the Upper Lynn Canal is Burro Creek.
Owned by Skagway resident Jan Wrentmore, the old fish hatchery is located across the bay from Skagway to the southwest.
A recently completed feasibility study concluded that, if created, a Burro Creek hydro project would generate electricity.
According to the study, if Wrentmore created a project on the 120 acres she owns, it could generate up to two megawatts per hour, but it could generate up to seven megawatts per hour if the project was continued higher in elevation up the mountain on federal land. Wrentmore said she would have to jump through a lot of hoops, which would include getting the Federal Energy Regulatory Commission’s approval, in order to construct the project on federal land.
Wrentmore said the study concluded that the market for Burro Creek hydroelectricity is unclear at this time.
“The amount and seasonal availability of energy from Burro Creek does not mesh well with the needs of existing markets in the Upper Lynn Canal region,” the report stated. “Existing markets include Haines and Skagway, served by Alaska Power Company (APC), a subsidiary of Alaska Power and Telephone, Inc. (AP&T), and the Chilkat Valley communities served by Inside Passage Electric Cooperative, Inc. (IPEC).”
According to the report, if a hydro project was built at Burro Creek, it would cost Wrentmore about $1.2 million for the construction of a submarine cable that would transmit the energy from the project to Skagway.
“The cost of the cable is the tipping point to see if the project is economically feasible,” she said.
Wrentmore said she doesn’t think it would be worth it to pay for the cable if the proposed project was generating only two megawatts per hour because she would not be earning enough from the electricity sale to justify the cost of the cable, and right now, there is no market for a seven-megawatt project out of Burro Creek. But Wrentmore said with talk of potentially powering cruise ships in the summer and possibly selling power to Canada in the winter, Burro Creek might be more marketable in the future.
“The expense of the submarine cable from Burro Creek to Skagway, combined with uncertainty regarding markets for Burro Creek energy, creates questions about the economic viability of the project,” she said.
Wrentmore said she would wait to see if a market develops for a Burro Creek hydro project before she decides whether or not to move forward with the project.

Robotics team just misses state finals

Team Sprocketoids, Skagway’s rookie high school robotics team, scored the second highest number of points during competition at the FIRST Technical Challenge State Tournament in Fairbanks March 3, but they came up just short of winning their division and advancing to the championship round.
Coach Vivian Meyer said they won second place for Alliance Captain and second place in the Blue Division.
After 10 hours of competing, the Skagway team lost a best-of-three match to a team from Lathrop High School in Fairbanks that took third place at World Festival last year, she said. That team went on to face the Red Division winner in the finals, and both teams advanced to Worlds in St. Louis in May.
This was just the beginning for this Skagway group comprised of junior Riley Westfall, freshman Rosalie Westfall, and eighth graders Trevor Cox and Alexandra Weber. Team Sprocketoids won the champions Inspire Award at the Southeast Tournament last month to advance to State.
“They did an amazing job and worked very hard putting in many countless hours to get ready,” Meyer said. “Thanks to all who have supported the robotics programs.” — JB

BOROUGH DIGEST (complete digest in print edition)

Cruise Line Agencies asks municipality for money to fund RR Dock security renovations
Cruise Line Agencies Alaska is asking for about $450,000 to match grants it has received for renovations to the Railroad Dock approach that would allow for more pedestrian control and more safety.
Drew Green and Stew Stephens from Cruise Line gave a PowerPoint presentation to the Skagway Borough Assembly at a Feb 16 meeting regarding the proposed plan.
“When I visit Skagway in the summer the first thing I notice is that people are everywhere at the head of the dock, and they don’t know where to go,” Green said.
Though the visitors’ immediate interest should be walking on the seawalk, Green said they are not doing it and he believes it to be a signage and organization issue.
Green said Cruise Line Agencies has tried to make the area safer in the past for both visitors and employees, but it hasn’t worked and something needs to be done soon to fix the problem.
Before coming up with ideas, Green and Stephens met with dock stakeholders such as White Pass and Yukon Route, Skagway Police Chief Ray Leggett, Stuart Brown of SMART Bus and other tour bus companies.
As of now, the plan includes a security booth, which is required at all ports; control barriers, which would ease and direct the flow of foot traffic; and signage, which would tell people where to go and where not to park.
Green said Cruise Line Agencies is proposing that the municipality help to fund the matches for the grants with state excise tax proceeds and give them $144,845.
They are asking for $40,000 to match a 50/50 grant for the portable security booth, $79,210 to match a 30/60 grant they received in the amount of $24,148 for Access Control Barriers and $6,000 to match a 50/50 Directional Signage and Street Striping grant.
In addition to the security booth and barriers, the plan calls for an explosives detector.
Cruise Line Agencies has secured a federal matching grant for the detector and is asking the municipality to put up the match in the form of $19,635.
“The way I see it, explosive detectors and gates have nothing to do with the congestion problem they are trying to fix,” said Public Safety Committee chair Tim Cochran.
Cochran said he thinks funding for a detector is something Cruise Line Agencies should be asking the Department of Homeland Security for.
“A lot of people think the municipality has an endless supply of money,” Cochran said. “But it doesn’t.”
Cochran agreed that congestion can be bad on the Railroad Dock, but he said it was worse before the municipality spent millions of dollars to create the relatively new seawalk.
Cochran said he thinks the congestion problem could be fixed by Cruise Line Agencies by hiring people to direct foot traffic with signs and information. This option could also save the municipality a lot of money, he said.
“One hundred and forty-four million is a little bit steep,” he said.
Former Mayor Tom Cochran wrote a letter to the assembly that urged against using municipality money for the proposed project.
According to a tariff published in 2011, White Pass levies an $8.51 fee per cruise ship passenger, and that fee is split by White Pass and Cruise Line Agencies. White Pass receives $7.86 and Cruise Line Agencies receives $0.65.
Cochran wrote in the letter that Skagway Convention and Visitors Bureau reported 713,733 cruise ship visitors in 2010, which means Cruise Line Agencies received $463,000 in 2010 just from passengers alone.
“Both companies collect many other revenue streams from the Skagway cruise industry,” he wrote. “I find it quite perplexing that Cruise Line Agencies would need financial assistance from the borough with this type of revenue stream.”
He also pointed out that the Ore Dock, which is located on municipal land, has been neglected for years and is in serious need of repair.
“I would be quite surprised if it could pass even a cursory inspection from a marine engineer,” he wrote about the dock. “I believe that any municipal cruise ship head tax monies (from the state) allocated for port infrastructure improvements should be spent on municipally owned port property.”
On Monday, borough clerk Emily Deach found a grant that could potentially fund up to 75 percent of the amount Cruise Line Agencies is asking from the municipality.
With the Federal Emergency Management Agency’s 2012 Port Security Grant Program, money will be awarded to ports based on the height of their security risk.
Selmer said he thinks the volume of visitors Skagway experiences each day might make it a high-risk port.
The grant awards would be 50 percent funding for a private entities, such as Cruise Line Agencies or White Pass & Yukon Route, that apply, and 75 percent funding for a public entity such as the Municipality of Skagway.
The deadline to apply for this grant is April 27, and applicants will get results on or before September 30.
Though Selmer said he isn’t sure the municipality, Cruise Line Agencies or White Pass would want to apply for the grant, he said that the municipality might be more inclined to help with the cost of funding the project if funding is received from the grant.
“This would be the fiscally responsible thing to do,” Selmer said about applying for the grant.
Selmer said the municipality would be talking to Cruise Line Agencies and White Pass about the grant and other planning discussions.

Change in switch causes fire dialer issue
 The Municipality temporarily repaired the Silent Knight fire dialers after a change in equipment left them unable to properly communicate with the new Alaska Power & Telephone switchboard.
On December 14, AP&T changed its phone switch equipment, and during the transition, 47 of the 105 dialers experienced difficulty adjusting.
If a structure in Skagway experiences a fire, the dialers send a message to the AP&T switch, which sends the information to the Skagway Police Department.
According to a Municipality of Skagway release, 26 of the dialers were able to self-adjust to the switch after initially experiencing problems.
Since the switch, AP&T has temporarily repaired the remaining 21 dialers, and currently all Silent Knight dialers are working, with the exception of two that have unrelated problems.
The repair is only temporary because AP&T connected the problem dialers to an emulated AFC cabinet, which will be eliminated as facilities are upgraded.
AP&T employees believe all the dialers that were unable to make the switch themselves are the older version Silent Knight alarm panels, and that version must be replaced by October 1.
According to the release, AP&T discovered the new phone switch system may not meet the manufacturer’s requirement for a communication system, and the manufacturer may not guarantee the dialers now that the change has been made.
The municipality is adamant about AP&T communicating with Silent Knight/Honeywell, the manufacturer, to get a better understanding. – KE