The borough has been looking for a developer or long-term tenant after paying $2.5 million for the former 6-Mile sawmill property in June 2022, but now is turning its attention to short-term leases to generate income and jobs until something bigger and more permanent comes along.
“The borough would like to consider making the mill property as productive as possible in the short term,” Interim Borough Manager Mason Villarma told the assembly earlier this month, asking for direction on negotiating leases for the waterfront property.
His preference is short-term leases for the next five to 10 years while the borough looks for a long-term development plan.
The assembly was clearly supportive of short-term leases, with Assembly Member David Powell adding he would back anything that puts the property to use.
Mayor Patty Gilbert concurred with Powell, with one additional comment: “The public does not want a cruise ship port” at 6-Mile.
“From a series of town halls, work sessions and surveys, it is clear that the community would like to see the deepwater port have an industrial concentration,” Villarma said in his report to the assembly. “The community seemingly does not want mass cruise line investment at the deepwater port.”
Currently, the borough’s only tenant on the almost 40 acres is Juneau-based Channel Construction, which has operated a scrap metal recycling operation at the site the past few years. Channel has a month-to-month lease with the borough, Villarma said in an interview Feb. 16.
The company leases two acres at the site but would like to expand that to six acres, perhaps adding a building and construction equipment storage, Villarma said.
Channel Construction, owned by William “Shorty” Tonsgard Jr., lost use of its waterfront shop in Juneau when the building suffered a partial roof collapse under a heavy snow load on Jan. 23.
Tonsgard would want something longer than month-to-month to make an investment in Wrangell, Villarma said, adding that a five-year lease could be possible.
The goal is to make the property as profitable for the borough as possible while waiting for a long-term user, Villarma said. “We’re not in the business of passing up an opportunity.”
In his report to the assembly three weeks ago, the manager explained the proposal could include work at the property on behalf of the borough in exchange for the lease.
The bulkhead and barge landing at the south end of the property are usable, Villarma said, but extensive repairs are needed on the rest of the bulkhead that extends across the front of the water side.
Another issue is that two submerged barges and a sunken tug are on the state tidelands in front of the property, the manager said.
Eventually, the borough will need to deal with those leftover relics from the operating days of the mill. “We want a clean site,” Villarma said.
At the time it purchased the property from the former sawmill owners, the borough signed an agreement with the Alaska Department of Environmental Conservation, providing that the state would hold Wrangell harmless if any contamination from past activities is discovered at the site.
In 2014, the Department of Environmental Conservation determined “that the contamination concentrations remaining on site do not pose an unacceptable risk to human health or the environment.”
In exchange for the hold-harmless agreement, the borough needs to pay for a second assessment and monitoring of the property. If any soil contamination is found during excavation or construction on the property, the borough’s liability would be limited to $50,000, Villarma explained.
He did not have an estimate for the cost of further assessing the property.
That assessment “will test specific areas of concern at the 6-Mile mill property and scope potential remediation efforts,” the manager told the assembly.
Long-term, the borough is hoping that maybe the U.S. Coast Guard or Navy would decide to establish a base at the site, Villarma said.
“It is worth noting that no federal investment will be made into a property that is not fully remediated (cleaned up),” he said.
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