First you need to open up the Pirate Ship area. Then go to the wood pile at the right door's entrance. Then go to the right side of the woodpile and skate up the slope into the crack of the 2 planks. You will fall down into the crack under the wood pile. Now adjust a low view and you will see a plank extending down into the ground.
Now skate around into the plank and around that area, and you will soon fall through the level. Then you'll be bouncing around under Skater Island. If you do this with more than one person, its an all out slapfest :).
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