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Updated: July 3, 2022 @ 10:08 am
Alaska Salmon Bake, the iconic vendor in Pioneer Park’s mining district, must participate in a competitive bid process, a frustrated Fairbanks North Star Borough Assembly approved Thursday in order to secure a new long-term lease after negotiations with the borough administration ended. The 43-year-old business had been operating on a month-to-month lease since its last one ended Sept. 30, 2021. Gary Black/News-Miner
Gary Black/News-Miner
Halibut and fries from the Alaska Salmon Bake Friday, July 16, 2021, during the inaugural Annual Pioneer Park Wine — and Beer & Cocktails — Mixer and Salmon Jam.
Crowds got to sample beer, wine and cocktails from 27 vendors at the inaugural Annual Pioneer Park Wine — and Beer & Cocktails — Mixer and Salmon Jam in 2021. Gary Black/News-Miner
Alaska Salmon Bake, the iconic vendor in Pioneer Park’s mining district, must participate in a competitive bid process, a frustrated Fairbanks North Star Borough Assembly approved Thursday in order to secure a new long-term lease after negotiations with the borough administration ended. The 43-year-old business had been operating on a month-to-month lease since its last one ended Sept. 30, 2021. Gary Black/News-Miner
Gary Black/News-Miner
Halibut and fries from the Alaska Salmon Bake Friday, July 16, 2021, during the inaugural Annual Pioneer Park Wine — and Beer & Cocktails — Mixer and Salmon Jam.
Crowds got to sample beer, wine and cocktails from 27 vendors at the inaugural Annual Pioneer Park Wine — and Beer & Cocktails — Mixer and Salmon Jam in 2021. Gary Black/News-Miner
A borough request for proposal process approved by a frustrated Assembly places an iconic 43-year-old Fairbanks business on shaky ground while remaining its best chance to remain operating.
The lease for Alaska Salmon Bake in Pioneer Park’s mining district ended in 2021, and shifted to a month-to-month “holdover” clause while its owners and the borough administration attempted to negotiate a new one, itself a two-year affair.
According to Daniel Welch, manager of Division of Natural Resources Development, Salmon Bake operated on a concessions agreement since at least April 1990. The lease ended Sept. 30, 2021, with all of its automatic four-year renewal options exhausted.
‘No choice’
Jeremy and Beth Richards, managers and part-owners of Salmon Bake, said the RFP process, as vexing it is, is the only remotely reliable choice the business has to ensure it continues operating.
Jeremy Richards said he approached the borough administration’s office two years ago to start talks on a new long-term lease, and was informed in July that it would be working with the land management office instead of Parks and Recreation.
“We were told this would be a difficult process and told it would serve as a blueprint for other businesses renting from the borough,” he said.
In December, the company said the lease would be ready by February, but when nothing manifested, Jeremy Richards said he was informed by the administration “they were going in a different direction.” By May, the company was notified the lease was terminated and it would have to go through an RFP process.
“We don’t have a choice, we have contracts we have to sign to do business next year and have to show our tour partners that we will be viable and open next summer,” he said.
Beth Richards, whose father Rick Winther created Alaska Salmon Bake, said she understands the administration has “spent untold hours” trying to find solutions. The RFP process “that allows us to compete for a business we have built may not be easier but definitely less painful.”
“This is an emotional thing because this is a family business we have built,” she said. “”We’ve worked hard over the last 43 years to make it a viable business.”
The RFP proposal
The RFP process, sponsored by Borough Mayor Bryce Ward, solicits competitive bids in order to lease the area for “less than fair market value” while also “capturing the intent of how that area can be used.”
Ward said the RFP will see “how much someone is willing to pay in rent for that property” and how they would operate it.
“We would look at the potential for how it’s been operated, as a salmon bake with an Alaskan experience … that is more desirable for a community from a public purpose perspective than a hot dog stand,” Ward said.
The old lease Salmon Bake had was a four-year period, which automatically renewed up to four times before it ended in 2021.
The area Alaska Salmon Bake operates in serves as an anchor for other vendors and attractions in Pioneer Park.
Other options, including negotiating a new lease, require a fee appraisal to determine fair market rental value. Welch said any amount less than market value requires a “compelling public purpose.”
The ordinance governing the RFP process will allow a real estate professional to provide a baseline market value for when the space is put out to bid. He added a scoring criteria that governs how the administration selects a winning bidder, including operational cost, experience and qualifications, management experience and understanding of the project.
Scoring ensures the goal is “to support the park and not have the maximum dollar value” and justification that the borough can lease at below market value.
Other options?
When asked by assembly members why Salmon Bake can’t continue on a hold-over until a new contract is struck, Borough Attorney Jill Dolan said it’s not a viable option. Hold-over provisions are enacted only to ensure the borough can collect rent from a tenant who doesn’t leave once a lease expires.
Dolan added the borough is already on legally questionable ground after nearly a year without a lease.
Dolan, the borough attorney, said the borough code only allows a lease to be granted at fair market value, by competitive process or at less than market value if it serves a public need. As it is a vendor-based contract to a private entity, the borough could be hard-pressed to justify “a compelling public purpose.”
A longer-term, five-year lease would require the area to be established as a subdivision, requiring a platting process.
Asked why the lease negotiations broke down, both Ward and Welch said they could not find an assessor to conduct an appraisal.
They reached out to multiple agencies, including ones in Anchorage, and were rejected.
Borough code allows the municipality to use its own assessing agency, but Ward said the assessor’s office declined, adding the office was already overwhelmed with work.
Assembly member Tammi Wilson questioned the argument, adding the assessor’s office works for the borough and shouldn’t have been given a choice.
Ward added the process has been compounded by two years of disruption by Covid-19.
“This is not the way I want to treat someone, especially with vendors like [Salmon Bake],” Ward said. “But the reality is the agreement we had expired and whether be by choices of administration or circumstance, we were not able to come up with an agreement.”
Ward said the RFP was the best option at this point “taking into consideration the responsibility to the public and to manage public land and the benefit of folks to put their best proposal forward for this.”
“I think the folks at the Salmon Bake have a darn good shot putting together a really good proposal for this,” Ward said. “But there are requirements in our code that I am obligated to follow.”
An RFP process will require a 30-day bidding process, followed by a two-week review process. Ward estimated it could complete the process by the second week in August.
‘Could lose everything’
If Alaska Salmon Bake fails to secure a long-term lease or another party awarded the contract, it wouldn’t bode well.
“We would lose everything to be honest, except the contents of our buildings,” Jeremy Richards said. “It would honestly ruin us.”
Jeremy Richards estimated Salmon Bake and its parent company invested at least $4 million to develop its area over the last four decades, including a restaurant, gift shop and the Palace Theatre.
Salmon Bake also pays all utility costs, building insurance, maintenance and a property tax on its lease.
A stipulation of the lease requires the buildings renovated or constructed “would stay with the property.” He added the understanding was the provision would be to the benefit of the park if Alaska Salmon Bake ever ceased operation.
Beth Richards added, like many other businesses, it’s been a difficult few years for the Alaska Salmon, no thanks to the pandemic.
“It’s been a struggle to remain open,” she said, adding the company’s proud to have remained open seven days a week and fully staffed during its summer operating season.
The company, prior to the pandemic served upwards of 60,000 people a year. Numbers have fluctuated during the pandemic, as has the ratio of local and tourist customers.
However, she added the company has established ties with tourist companies, spends thousands a year to promote its business and Pioneer Park and operates its own passenger vans from local hotels.
If the business closes down, it takes the name Alaska Salmon Bake with it, since it’s trademarked.
A frustrated Assembly
When the matter turned to debate, assemblymembers voiced frustration about the whole process.
Asked why the lease process doesn’t stay with parks and recreation, Dolan said borough code allows the mayor to transfer land authority to other departments.
“In the past there were several lease agreements with parks and recreation … but there has been a policy shift where the land management division has the expertise with land management agreements,” Dolan said.
Many assembly members felt the scenario cast the borough in a bad light as a landlord.
“I think we’ve left this tenant with a choice among bad choices,” Assemblymember Matt Cooper said. “I love the borough … but the borough in this process has failed this tenant.”
The best option, he said, is simply to improve the process for future contracts.
Assemblymember Kristan Kelly called it a losing situation for everyone.
“It’s a big black eye on the borough that someone who does good faith business and invests money into a park … and yet could lose everything they invested,” Kelly said.
Amendments
Assemblymember Jimi Cash initially called for the RFP process to be voted down, adding the assembly and borough could develop a lease inside Salmon Bake’s required timeline to sign contracts.
“Pioneer Park has greatly benefited from Alaska Salmon Bake,” Cash said. “I don’t see why we can’t do a lease … especially since they spent millions on the structures on the property.”
Cash said while courts can interpret “public benefit” in different ways, “it’s only if someone sues us,” which he personally believed is a far-fetched possibility.
However, he had an amendment prepared adding stipulations to the scoring criteria: any submitted management plan must require a demonstrated knowledge of Pioneer Park’s master plan and local tourism, a relationship with Fairbanks tourism companies and at least five years of experience operating a restaurant in a tourist setting.
“If we put these things in there, it will ensure we get the same product and industry, tenants and plan,” Cash said.
Cooper added amendments allowing a lease to be renewed up to five times; other provisions adjusted the lease time to just under five years.
The amended RFP process was approved unanimously.
Contact reporter Jack Barnwell at 907-459-7587 or jbarnwell@newsminer.com.
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