Local News

Blue Lake funding on table as new Assembly seated

Mayor Mim McConnell takes the oath of office Tuesday night. McConnell will serve a two-year term. (Photo by Ed Ronco/KCAW)

Mim McConnell officially became Sitka’s new mayor last night.

Municipal Clerk Colleen Ingman administered the oath of office to McConnell, along with Assembly members Matt Hunter, Michelle Putz and Phyllis Hackett.

But it didn’t take long before the Assembly was digging into one of the city’s biggest problems: How to pay for the Blue Lake dam expansion.

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The problem is this: Raising the Blue Lake dam by 80+ feet is going to cost more than the City of Sitka had planned. The community has already requested more money from the state Legislature.

“But,” said city Finance Director Jay Sweeney, “we won’t be able to find out what if any of that assistance we will receive until the next calendar year, until springtime.”

And, the bills will start coming in before then. So Sitka is off to the bank, as it were, for a loan.

The Alaska Municipal Bond Bank is an arm of the state’s Department of Commerce. It makes direct loans to municipalities for big projects. And at the end of this month, city officials will ask the bond bank for another $30 million. That part isn’t really a surprise. The city had planned to borrow additional funding for the project anyway. But Sweeney told the Assembly that the bond bank wants more information than that:

“Their board of directors would be very reluctant to want to take on lending more money in stages, unless they knew the total amount of the possible exposure that could come to them,” he said.

In other words, Sitka needs to tell the bank just how much the city could possibly need, if no money comes in from the state. That number is somewhere north of $80 million.

“By doing that, we’re handing ammunition for the people who will not be supporting us,” Assembly member Thor Christianson said. “The more work we do to cover this if the state doesn’t come through, the less likely it is the state’s going to come through.”

Christianson worries that lawmakers from other parts of the state will look at the city’s request to bond the entire cost of the project, and say Sitka doesn’t need any more state funding. He wanted to move the meeting into executive session to discuss strategy.

Both the Daily Sitka Sentinel and KCAW requested the conversation be held in public, and Assembly members decided to stay out in the open.

“We all have seen most of these numbers, and I don’t foresee us coming up with a better strategy in the best half hour,” Assembly member Michelle Putz said. “I think this is what we’re almost stuck with.”

Assembly member Phyllis Hackett agreed, and said the stakes couldn’t be higher.

“You know, what we’re hearing is that this is the only way the bond bank is going to really consider it. If the bond bank says ‘No’ to us, then it’s sort of the end of the project,” Hackett said. “We can’t really put ourselves in that position. We don’t really have a choice about this. We have to have this project go. We have to follow the recommendations of the bond bank.”

The Assembly ultimately put its unanimous support behind going to the bond bank and disclose the $80 million dollar figure on Sitka’s application, knowing that city officials are only going to ask for $30 million.

“I think the only option we have is to pass this as the bond bank wants it, hope to heck they say yes to us as a fallback, and then go to Juneau and speak our case.”

Millions of dollars already spent on the project are riding on that case, and city officials will probably spend the early part of 2013 hoping a check shows up from the Legislature.

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