Measurements of 7Be and oxygen isotope (18O/16O) ratios from the 1997--1998 SHEBA experiment were used to trace the source of the high heat and freshwater content of the upper ocean observed during the initial occupation of the SHEBA site in October 1997. The evidence suggests that the heating resulted from local input primarily through extended lead coverage in the late spring and summer of 1997 with no requirement of advective input. The freshening was derived from a large ice melt (1.2 m) that was consistent with the thin ice and extensive melt pond coverage (by then frozen) observed at the site. However, a significant contribution to the freshwater budget (0.8 m) included enhanced input from river runoff during the melt season. This obviates the requirement for an unrealistically large ice melt (~2 m) to account for the freshwater content of the mixed layer, and would have increased the stratification stability of the upper ocean that in turn would have promoted local heating. The question then arises, however, as to the fate of the significant upper ocean heat at SHEBA in the fall 1997 which resulted from an active heating season. Similar evaluation of the fall 1998 SHEBA site indicate that the ice melt was comparable to that of 1997, but the riverine input and stored water column heat were less than in the previous year.