The borough assembly on June 9 unanimously approved a 40-year property lease for a new marine freight terminal.

Alaska Marine Lines intends to construct and operate a barge ramp and shipping yard at the 6-Mile Mill waterfront. The project would establish a permanent replacement for the aging borough-owned ramp that previously handled the community’s cargo.

The development follows the closure of the nearly 50-year-old barge ramp near the downtown dock. Inspections conducted more than a year ago revealed extensive corrosion and warped steel, forcing officials to shut down the structure due to safety hazards.

Since then, shipping companies have relied on a temporary, less desirable arrangement at the Marine Service Center.

To resolve the freight loading and unloading issue, the borough entered into a preliminary agreement with AML in August to explore the 6-Mile deepwater industrial site as a long-term maritime hub. The shipping company applied for the lease last fall, proposing a 120-foot-long ramp and four mooring dolphins on roughly 1.25 acres of tidelands and adjacent uplands.

At the time of the initial application, company officials estimated the construction cost at $8 million.

“We currently expect to have designs ready this fall so we can apply for the U.S. Army Corps of Engineers’ permit,” Ryan Dixon, media director for Lynden, the parent company of AML, said in an email on Monday, June 15.

“After we apply, permits will likely take a year for approval. Once the design and cost estimates have been determined, we will be able to make a final decision on moving ahead with the project and what the timeline would look like.”

The company’s tidelands lease application advanced steadily through borough approval channels over the winter. The economic development board, port commission and planning and zoning commission all endorsed the concept. The borough received no formal protests.

However, the barge ramp relocation drew questions from the public, expressing anxieties at assembly meetings of increased truck traffic on Zimovia Highway and the potential for higher freight charges.

During the June 9 public hearing, resident Bruce Smith repeated those concerns to the assembly.

“It seems like we keep moving forward with this change without knowing the numbers of what will be the increase in the cost of freight,” Smith said. “It’s been over a year and we haven’t got an answer.”

Assembly Member Phillip Mach addressed the concern by reading from the lease agreement, which stated that AML and the borough “shall work cooperatively and in good faith throughout the life of this lease to maintain commercially reasonable and regionally competitive freight rates for the benefit of the shipping public and the long-term success of freight operations.”

Mach defended the provision at the meeting.

“I know that doesn’t give out a number, but I think that in good faith it says we’re going to work together,” he said. “We’re not going to try to gouge and take advantage of each other.”

Under the terms of the 40-year lease, which will begin July 1, AML will pay a base rent of $1 annually. Though the direct rental revenue is minimal, officials highlighted that the shipping company assumes all financial responsibility for building, maintaining and operating the facility.

The company will cover utilities and insurance and pay property taxes.

The $1 lease “recognizes that AML will be making the private investment necessary to construct and maintain freight facilities that provide a substantial public benefit to the community,” Villarma said in his report to the assembly.