November 11, 2011 • Vol. XXXIV, No. 20

Halloween March

Leo Lucchetti marches into the gym with his trombone during the annual Skagway School Halloween Parade. See more Halloween photos, both funny and scary, on page 5.

Photo by Katie Emmets

White Pass commits to floating dock Mayor ready to reopen door for tidelands lease negotiations

White Pass has written a letter of support for the borough’s TIGER III federal grant application that includes a commitment to construct a floating dock to accommodate larger voyager class cruise ships. Whether that dock will be ready by 2013 or 2014 is uncertain.
The letter came after a phone call from Mayor Stan Selmer to White Pass president Eugene Hretzay following a joint meeting of the Skagway Borough Assembly and Port Commission last week. The White Pass letter also addressed negotiating a surrender of a portion of the tidelands lease.
At the outset of the Nov. 1 meeting, it was announced that Selwyn Chihong Mining Ltd. is attempting to set up a meeting of Skagway port stakeholders around the end of the month. SCML is in the process of developing a feasibility study for its huge western Yukon mining prospect, which could ship concentrate to Skagway for 30 years starting as early as 2014. Finalizing the feasibility study has been delayed until mid-2012, SCML announced this week, but there remains an urgency to complete a transportation plan that includes the Skagway Ore Terminal.
The meeting will take place in Anchorage, which was chosen because it is the headquarters of the Alaska Industrial Development and Export Authority, which owns the ore terminal. Others invited would be the Municipality of Skagway, White Pass, and Capstone Mining, the terminal’s only current customer.
SCML local liaison Paul Taylor issued the invitation to the municipality on the day the assembly met with the Port Commission to discuss the next steps in dealing with White Pass over port issues. Those present said the Selwyn meeting would be a good opportunity to also restart tidelands lease negotiations with White Pass and resolve immediate concerns about Skagway being able to accommodate larger cruise ships in 2013.
After nearly two hours of discussion, Mayor Stan Selmer outlined a three-pronged approach for dealing with White Pass:
1. As the most urgent matter, find out where the company stands on the issue of constructing a floating dock adjacent to the Ore Dock, which could accommodate the “voyager class” ships.
2. Initiate an audit of White Pass’s books as they relate to sublease revenues on leased property.
3. Work from the last offer by White Pass on Sept. 23 in an attempt to reopen negotiations over the tidelands lease.
Selmer made some progress with White Pass’s Hretzay during the phone call after last week’s meeting, getting a subsequent letter of support for the borough’s most recent TIGER III grant application with an assurance that White Pass would construct the floating dock.
“White Pass is in the process of negotiating a surrender of a portion of its tidelands lease with the MOS that will be satisfactory to both parties, and which would encompass our proposed addition of a $2.5 million floating dock to the Ore Dock in Skagway to accomplish voyager class cruise ships,” Hretzay wrote Nov. 3. “We support the captioned application, which embodies the concept of attracting the new voyager class of cruise ship to the port of Skagway to the benefit of both the MOS and White Pass.”
In an additional e-mail correspondence with the mayor, Hretzay suggested a “signed letter of intent with a due diligence out” prior to an audit.
After a series of negotiating sessions over the summer, the two parties sent “letters of intent” back and forth in September that were meant to set up the parameters for an agreement. White Pass would give up the western portion of the 1968 tidelands lease, which contains the ore terminal and various subleases, in order that the municipality would be able to accept state funds to improve the dock and uplands. White Pass would retain the eastern Broadway Dock section of the lease as well as manage cruise terminal operations on the Ore Dock. But the two parties could not agree on either the length of time for those operations, nor a compensation amount that the municipality would pay for revenues lost by White Pass until the lease’s end date in 2023.
Port Commission Chair John Tronrud said that due to a rushed process, there had been an oversight in not asking White Pass to participate in the recent TIGER III application, but that company president Hretzay had been at a commission meeting when it was discussed. In the borough’s unsuccessful TIGER II application for federal funds for the Gateway Project, White Pass was listed as a partner in the project with a commitment of $2.5 million to build the floating dock extension. Selmer said White Pass should be asked for a similar letter of support, since there is time to include such attachments to the TIGER III application. He said there also should be updated letters of support from AIDEA and the governor.
Tronrud said the upcoming Selwyn meeting would be a good opportunity to open the door with White Pass and also see what Selwyn has to say. Commissioner Steve Hites said Skagway is currently “behind the curve” in addressing the floating dock, which other communities have installed to get ready for the bigger cruise ships.
Selmer said he could not foresee White Pass refusing to deal with the floating dock issue, but lobbyist John Walsh noted that the borough, as landowner, needs to be proactive.
“If it’s not done, can we come in and do it ourselves?” Walsh asked.
Commissioner Gary Hanson said the floating dock is outside Phase I of the Gateway Project, which would use $15 million in state and borough funds on a sheet pile dock and uplands. Another $5 million in federal money has been requested for that phase. AIDEA’s contribution would be a new ship loader and expanded terminal building to accommodate Selwyn and other users. Hanson said the floating dock should be outside the site control negotiations.
As the discussion turned to the tidelands lease, Assemblyman Mike Korsmo suggested sitting down with White Pass to discuss where they do agree. Then, if they can’t make progress, bring in a mediator. White Pass has agreed to give up the Ore Dock side of the lease, along with subleases, but it wants to still manage cruise operations past the 2023 date for another 40 years.
Assemblyman Dave Hunz said the borough, against its own attorney’s recommendation, approved two estoppel agreements with White Pass, one of which allowed the company to borrow money for the floating dock.
He said the borough had conceded some middle ground in their last tidelands lease offer, but added that he “did not want to give away the farm to get there.” For example, he said White Pass would get to keep cruise revenue to 2023, but the municipality would be assuming the liability to 2023.
“I do have some heartburn over spending our money for this floating dock with somebody else collecting the revenue (from that dock), and the great portion of that revenue is leaving town,” Hunz said.
He added that he could not agree to anything beyond 2023, other than a Broadway Dock lease, and wondered why no audit of White Pass’s books had taken place. He said the audit is needed before they get back to the table to discuss revenue.
Tronrud said the floating dock should be held out as a separate issue because “it is time critical to 2013.” But he added that White Pass needs to “play ball with us” because 2023 is getting closer. The municipality could just wait them out, he said, but they are looking at a decade ahead that is “critical to us to support our neighbors,” and has a great potential for revenues.
Former mayor Tom Cochran, who will be the new municipal liaison to the commission, said White Pass can have a viable post-2023 business. In looking at the revenue picture, he said the company had thrown out a sublease revenue figure of $150,000, but the borough had no way of confirming the figure without an audit. He figured White Pass was making close to a million dollars from cruise ships now at the Ore Dock and would make $150,000 a month from the floating dock alone, with the additional passengers from the larger ships. White Pass collects $8.50 per passenger from each ship.
Mayor Selmer said he would be against putting Skagway money into anything that would not see a return, but he added that “if those ships don’t come in here, the loss of revenue can’t be blamed on the municipality.” Conversely, he said if the railroad puts $2.5 million into the floating dock, then they are entitled to the revenue from it.
Selmer said the last letter of intent could be used to establish a foothold for moving forward on the tidelands lease negotiations.
Hites noted that the historical context had changed. In the past, White Pass was looked to for spending the money on dock improvements. Now, it is Skagway that has access to funds, including bonding and state cruise head tax revenues, for improving infrastructure. But Selmer added that the public’s money can’t go directly to a private company.
Commissioner Tim Bourcy said he sees “a willing partner and a non-willing partner” but hopes that negotiations can be reestablished. Bourcy, who attended the recent Opportunities North conference in Whitehorse, said they have to make the port competitive for Yukon mines that want to come to Skagway. He said the environmental baseline study of the ore basin should also be in hand before negotiations resume, because potential users want to know if the ore basin is going to be a problem. The most recent data suggests the historic ore sediments have moved out, but hydrocarbon levels are a new concern.
Selmer said he wondered where the talks with White Pass had broken down, and said his negotiating approach would have been different. He said the “nuclear option” of waiting 10 years may be viable but is not the preferable way to go.
“I really believe that we need to consider getting a negotiator in here, after we reopen that door,” Selmer said.
In the meantime, he suggested that the floating dock issue is more urgent, and everyone at the table agreed.
Walsh said they need to know from Hretzay if White Pass “is serious about an engagement.” At the end of the month they are meeting with a new customer and there also is uncertainty from the cruise ship industry.
“It’s creating uncertainty with respect to the port of Skagway,” Walsh said. “In between you, the community, and this outside industry is a tenant, so somehow the engagement needs to be established.
“There needs to be a commitment that we’re being reasonable and they’re perceiving us as being reasonable. If that’s not the case, or if there’s an unwillingness, then you need to know that yourself.”
He suggested Selmer go to the company. Selmer noted that he had spent more than an hour with Hretzay before the election on a day when Hretzay was working the letter of intent to the assembly, but did not know if that was long enough to establish a comfort level for negotiations.
“I want to open the door and keep the door open,” Selmer said, adding that it would be a lot cheaper for the borough to send him to Anchorage instead of Toronto, where White Pass’s parent company is headquartered and Hretzay spends the winter.
Discussions between the mayor and the company president have commenced again.
Selmer this week said he talked to Hretzay by phone after last week’s meeting, and the White Pass president “assured me the floating dock will be in place for the voyager class ships,” but that he thought they were coming in 2014, rather than in 2013. Selmer said they will try to get confirmation from the cruise lines.
Hretzay has not returned phone calls from the News for comment or e-mail requests to explain his positions.
At last week’s assembly meeting, the mayor asked Hunz, Bourcy and Tim Cochran to attend the Anchorage meeting with him.
More details about the upcoming meeting will appear in the Nov. 23 issue.

UPDATE: The meeting will be held on November 29 in Anchorage.

West Creek hydro feasibility discussed
Environmental concerns on both sides of issue

Mayor Stan Selmer discussed a proposal for a West Creek Hydro project at a Dyea Community Advisory Board meeting Nov. 1.
In a preliminary design submitted with a state grant request to fund a feasibility study, the project’s dam would be constructed 3,500 to 4,000 feet beyond the end of West Creek Road.
The reason for constructing the dam there would be to avoid negatively impacting the Klondike Gold Rush National Historical Park.
The lake would be about five times bigger than Lower Dewey Lake and would have a 200-foot tall dam.
The powerhouse location envisioned at this stage would be near the entrance to the Dyea Flats, just outside the park boundary. A tunnel from the dam would come out at the powerhouse near Nelson Slough, between private property to the north and southwest, Selmer told residents at the meeting.
If the feasibility study results allow for the project to be built to its maximum strength of 25 megawatts, the powerhouse would hold four turbines in a 75’ x 150’ building. Selmer said it would be built with metal and be in a color scheme that would blend with the surrounding area.
Selmer envisions selling the power to the Yukon in order for them to accommodate the influx of people that are expected in Whitehorse over the next few years. During summer months, the Yukon could sell back the power to Skagway to be sold to power cruise ships.
In the Renewable Energy Fund Grant Application, the primary purpose for constructing the hydro project would be to offset diesel generations from docking cruise ships each day.
“The continuous stack emissions spread a blue haze at about the 1,500 foot elevation where vegetation has been noticeably affected,” the application states.
Mavis Henricksen said the tree pollution issue was first brought to her attention a few years ago when her son, Thor, who was working on the Upper Lake trail, told her that all the hemlock trees were dying.
“Hemlocks are susceptible to air quality,” she said insinuating the ship emissions were resulting in the tree deaths. “These trees don’t just die overnight, and we can’t afford to lose them.”
On the other side of preserving the environment, Skagway resident Kim Burnham said she hopes there will be an Environmental Protection Agency assessment along with the feasibility study to determine what effect the construction would have on the land, and Selmer assured her that there are not many i’s that won’t be dotted and not many t’s that won’t be crossed.

A conceptual overview of a “maximum” West Creek Hydro project that would generate 25 megawatts of electricity from a lake in the upper creek valley and a penstock tunnel that would send water down to powerhouse generators near the Dyea Flats. AP&T

At the meeting, Dimitra Lavarakas reminded Selmer about a town meeting that was held a few years ago to gain a better understanding as to what residents wanted to see in that area. Seventy-six percent said they wanted recreation where seven percent said they wanted a hydro project, she said.
Selmer said the project and recreation are like apples and oranges and can happen simultaneously, but admits that construction might halt recreation if and when the project is being built.
Dyea Advisory Board Chair Wayne Greenstreet said he he’s had a handful of people approach him with questions about the West Creek feasibility study, but that he has not had any answers to give them, as he didn’t know anything about it himself.
“I heard a lot of rumors about selling power to Canada and selling power to cruise ships, but it was good to find out real information,” he said. “I also didn’t know the power house would be located near my house.”
Greenstreet also added that the research team has obviously done a lot of work in figuring out the tentative plan for the hydro system like the height of the dam and how far away the powerhouse must be from the lake in order to obtain the maximum power.
Selmer said the West Creek Hydro project has been discussed for quite some time, but wasn’t brought to light until recently when the municipality decided to pass a resolution to apply for a feasibility study grant from the state.
Selmer said studies have been done in the past, which included one in the 1950s for a project, which, if constructed, would have reversed the flow of the Yukon River and sent it down the Chilkoot Pass. The project, Selmer said, would have put 3,200 cubic feet of water per second into the Taiya River.
But this is the first time the municipality is considering a hydropower source in West Creek. The borough acquired the land from the state over the past decade through the municipal entitlement program.
Selmer, before his retirement, was a regional manager for AP&T, but he said this would be Skagway’s project. AP&T was brought in to help Skagway with the application, and could end up being contracted to operate the facility, but Skagway would get the revenues from it.
The borough expects an answer from the state in February on the grant request for the feasibility study.

‘Bar Wars’ over? Red Onion permit upheld

Acting as the Board of Adjustment, Skagway’s Borough Assembly voted to uphold The Red Onion Saloon’s conditional use permit to operate a bar downtown.
In a November 3 meeting, the board heard an appeal from Beth Smith, owner of Skagway’s Pizza Station, of the Planning and Zoning Commission’s recent approval of the Red Onion permit, one of several that came before the commission at summer’s end.
Smith approached the board, stating she does not think the Red Onion satisfies two of the four mandatory areas to obtain the permit. The two areas Smith said the business did not comply with pertain to the safety, health and welfare of residents surrounding the establishment, and a decrease in value of property in the area.
“The incessant nights of live music devalues the surrounding businesses,” Smith said, adding that having live music as much as the Red Onion does takes away from other bar owners’ businesses.
Putting a cap on the nights per week a bar can hold musical acts is something Smith said might alleviate this issue.
Smith also told the Board of Adjustment that the loud music has made Red Onion neighbor Doug Hulk upset and causes he and his wife to lose sleep because of it, adding that the bar continues to ignore concerns from its neighbors.
But Red Onion owner Jan Wrentmore said noise complaints are only coming from the Hulk residence, and only two noise complaints were filed this summer. Both were filed by JoAnne Hulk, and both times the Red Onion was within the decibel level of the noise ordinance, which was passed in May, Wrentmore said.
Wrentmore said she has had many neighbors in the past, none of whom have ever complained to her about the music being too loud.
“The Hulks chose to live in the Historic District, but they are in the commercial district,” she said.
But in order to accommodate them, Wrentmore said she has moved the subwoofers out of the building, closed the shades, and hired a music director to oversee some of the issues that come along with having live music.
“I don’t think we devalue the neighborhood,” Wrentmore said adding the Red Onion was featured on the Travel Channel and the Discovery Channel and Princess Cruises has the establishment on their list of the top eight things to do in the Upper Lynn Canal area.
Steve Burnham Jr. was at the appeal representing the Planning and Zoning Commission, and said that while P&Z was reviewing Wrentmore’s application for a conditional use permit, the commission did not find the establishment to be out of compliance with any of the four criteria.
The four criteria include:
• Protecting the public health, safety and welfare.
• Not permanently or substantially injuring the lawful use of neighboring properties or uses.
• Generally be in harmony with the comprehensive plan, coastal management plan and other officially adopted plans.
• Not substantially decrease the value of or be out of harmony with property in the neighboring area.
Burnham said P&Z also looked at Skagway Police records and found nothing that merited not granting the permit.
Wrentmore said the Red Onion has received 12 noise complaints since 2005, and that she has never had a mark against her liquor license in the 32 years she has operated a bar out of the Red Onion.
By looking at only evidence presented in the appeal, Assemblyman Tim Cochran said he did not see any evidence to support the Red Onion not meeting two of the four criteria, adding that he agreed with P&Z’s decision to grant the bar a conditional use permit.
Assemblyman Mark Schaefer said a conditional use permit is used to mitigate the concern of people in the area, and that he would support upholding P&Z’s decision if the assembly could find some way to mitigate Doug and JoAnn Hulk’s concerns.
“I don’t know what the measures would be, but I think it’s only fair,” Schaefer said. “That family was in that house before the business was, and was completely ignored.”
He said Doug Hulk’s comments were ignored entirely by P&Z when it chose to grant Wrentmore the conditional use permit.
“I kind of wondered how they got to the conclusion that it doesn’t affect somebody’s health and welfare,” he said. “It does.”
The Red Onion is a good business for the community, he said, but it should address the issue with the Hulks so “he can get some rest and his wife could get to work the next day.”
Assemblyman Dan Henry said he understands that there is no buffer between the business Historic District and the residential district, but that is why a noise ordinance was put in place. Henry said the Red Onion has been in compliance with the noise ordinance and said that he is satisfied with P&Z’s action.
Assemblyman Mike Korsmo agreed, saying he did not find any fault with the commission’s findings.
Though some may think the Red Onion is devaluing other businesses and residential houses, Mayor Stan Selmer said the evidence for the appeal pointed in the direction of upholding P&Z’s decision.
“The way the appeal was presented, the code doesn’t simply require the business devalue property,” he said. “It required that it substantially devalue the property.”
The Board of Adjustment upheld P&Z’s decision to award a conditional use permit to the Red Onion with a 4-1 vote, with Schaefer voting no. The Red Onion and other existing bars downtown were required to apply for conditional use permits this year, after the requirement in code had been overlooked for several years. All other permits were approved.

Garbage bears shot: Chief recommends bear-proof cans

After several months of knocked over garbage cans and upset residents, Skagway’s problem with garbage bears has been dealt with. A local hunter legally shot both of Skagway’s repeat bear visitors, reported Skagway Police.
The smaller bear was shot on Oct. 21, and the larger bear was shot eight days later on Oct. 29.
SPD received 121 bear sighting calls from Skagway and Dyea residents this year starting in March.
According to police statistics, the bulk of the calling began in late summer.
Forty-four sightings were reported in August, 31 in September, and 23 in October prior to the shooting of the second bear on Oct. 29.
Police Chief Ray Leggett said members of the community have asked if garbage bears could be transported to areas with no human populations when they become a hazard as an alternative to killing them.
“I have been told repeatedly by Fish and Game that they are not going to trap and move black bears,” he said. “They’ve moved one bear in the time since I’ve been here, and it was because it was still a cub.”
Leggett said killing bears in town could be alleviated if a bear-proof garbage system was implemented, adding that he hopes the trash situation could be bear-proof by spring when the animals come out of hibernation.
There are a lot of residents who have good ideas on how to make bear-proof garbage cans available and affordable for everyone in Skagway, Leggett said, and the municipality could use their help.
Although there has been no bear attacks on humans in Leggett’s seven years as Skagway’s police chief, he said there still needs to be measures put in place to prevent any future attack incidents.
“Keeping bears out of town is a two-pronged approach,” he said. “First, we need to have a plan in place from the municipality for trash, then we need to figure out how many times we will allow a bear in town before we dispatch it.”
Leggett mentioned that shooting the bears with paintballs instead of rubber bullets might be good for tracking their visits into town.
He said there is still speculation about additional bears in town, but there is no concrete evidence or reported sightings. He suspects loose dogs.
“There was a knocked over garbage can at the north end of town,” he said.
Leggett said he knows of several residents at the north end who let their dogs out without a leash, which he said is illegal.

SNOWY HARBOR – The first snowflakes of winter fall softly on boats and floats at the Small Boat Harbor on Nov. 4. See a report on the design for harbor improvements in Borough Digest. Jeff Brady

BOROUGH DIGEST (complete digest in print edition)

Small Boat Harbor Improvement plan continues
 The Skagway Small Boat Harbor improvement plan is continuing to mature now that it has hit 65 percent progress of detail.
The higher the percentage completed, the more detailed the plans get, said Harbormaster Matt O’Boyle.
In the beginning of the process the Skagway Harbor Advisory Board started with three separate conceptual plans, which melded down to one.
In the first stage of the plan, at 35 percent progress of detail, an overall layout and a rough cost was estimated.
Now, at 65 percent progress of detail, the advisory board has made sure the specifications, such as 220-foot gangways are feasible within the plan.
The first part of the improvement plan will include dredging the harbor and replacing the dock floats.
O’Boyle said the floats, which were constructed in the early 80s, need to be replaced because they have outlived their lifespan and some are falling apart.
Because of the isostatic rebound and glacial silt, the floor beneath the harbor has built up so high that some of the floats and boats are touching the ground at low tides.
The dredging would be the immediate concern, however it can’t happen until the floats are replaced because the harbor must not contain anything when the dredging occurs.
In the Nov. 1 meeting, the commission discussed making cable and Internet available to those docking in the harbor, O’Boyle said, adding that if this technology is implemented it would be separate from the original improvement plan.
“We’re looking into cost estimate for wiring each electronic pedestal with cable and making the WiFi hotspot from AP&T better,” he said.
Though O’Boyle said the board is hoping to get the design plan completed this winter with it going out for bid in the fall, the time frame is mainly dependent upon the state’s capital budget. The Skagway Small Boat Harbor scored second in Alaska’s Harbor Matching Grant Program. The borough asked for $5 million with a promise to match that if awarded the grant money. The project is estimated to cost $11,322,000.
The borough has $1 million approved by voters in last May’s bond referendum, along with a $4 million legislative appropriation in 2010 and a previous $400,000 appropriation from the borough. It also is applying for a $1 million grant from the Denali Commission.
O’Boyle said it is not a given that the state grant program would fund the Skagway project. The board won’t find out if or how much money they will be receiving until January.
O’Boyle said the next step in the planning process is to get the project to the 95 percent progress of detail near the end of the December.
– KE

SCHOOL REPORT (complete report in print edition)

School Board works to achieve new goals
In an Oct. 25 meeting, the Skagway School Board updated its Obtainable Measures for Implementing the Goals to fit its current needs.
The first measure is to look at ways to promote Skagway School through local, state and national media, the school website and social media.
Superintendent Jeff Thielbar said the school board has already started working on promoting the school this year in several ways.
Over the summer, Thielbar went to Washington D.C. to talk to representatives there as spokesman for the Skagway district, which constitutes as national promotion, and the board has chosen Stuart Brown and Cara Cosgrove as liaisons to the Alaska Department of Education, which will promote Skagway School at a state level.
The school also has a new website which promotes it at a local level. The website has a wealth of information posted to it, including the student bell schedule, lunch menus, school board minutes, and also shows pictures of Skagway students participating in different activities.
At the meeting, Andy Miller, who has been chosen to chair the school’s Vocational/Technical Advisory board, suggested the board consider adding a Facebook or other forms of social media to their online presence. Thielbar said it might be a good idea because information from the school would spread quickly to those who are interested.
The second measure is to establish data-driven student achievement monitoring in order to see where Skagway students rank in terms of national achievement.
Until this school year, Skagway School staff has only been able to monitor how students compare to other students in Alaska.
Now, with the Measures of Academic Progress testing, students are able to see how they compare to students throughout the United States.
One of the great things about the MAP test, Thielbar said, is that it’s online and students can see their results the next day.
The test results will also help the board and the committees to restructure the teaching curriculum.
The third measure is to review and implement curriculum and technology plans.
To his knowledge, Thielbar said, the last subject that was reviewed for a curriculum change was science, which was reviewed about three years ago.
Thielbar said he has wanted to update the school’s curriculum since the day he arrived at Skagway School.
Curriculum drives both budget and technology, he said, adding that updating the school’s technology could allow for iPads or other technological advances that would better the welfare of students.
“I weighed Jade (Cook)’s backpack at the airport today, and she had a five-pound book that was copyrighted in 2004,” he said. “In two years, that book will be 10 years old. And just think how much weight she would be carrying on her back if each class she is taking had a five-pound book.”
Thielbar, staff member Mary Thole and board member Cosgrove will be attending a curriculum alignment meeting in Anchorage in preparation of developing the budget in January. – KE