The Sitka Assembly will look to the state bond bank to help renovate Crescent Harbor and the Rocky Gutierrez Airport. Approved on first and final reading, the pair of resolutions raised ire with those worried about deepening Sitka’s debt load during the Assembly’s meeting last night (7-24-18).
Sitka needs good harbors. Everyone on the Assembly agrees and the safety and functionality of Crescent Harbor, built in 1965 by the state, is deteriorating to the point where in-house repairs are not enough. While the topside looks fine, the underside is a ticking maintenance time bomb.
Ron Pratt, the Harbor Maintenance Supervisor, told the Assembly that after five decades underwater, metal fixtures are corroding and wooden beams decaying. “It’s only the uplift of the Styrofoam that is holding that dock together. If you could see underneath the dock, you would know why we need to replace it. It’s had a great life, but that life is over,” Pratt said.
The state has promised Sitka $5 million to replace Floats 1 through 4 of Crescent Harbor, but there’s not enough working capital in the Harbor Fund to cover the estimated $14 million project. That’s because Sitka did not raise moorage rates for many decades.
On Tuesday night (7-24-18), the Sitka Assembly approved applying for $8 million from the Alaska Municipal Bond Bank to take Phase 1 of the Crescent Harbor project across the finish line.
But not everyone on the Assembly liked that plan. Richard Wein and Aaron Bean balked at the notion of Sitka taking on further debt. Citing a 2017 financial report, Wein pointed out that Sitka already owed the Alaska Municipal Bond Bank $139 million dollars. As a point of comparison, the City and Borough of Juneau and City of Ketchikan and Gateway Borough have bonded debt of approximately $133 million.
Wein didn’t want to see Sitka’s debt load go up any higher. “I think that should hold you pause because within the next several ordinances, we’re talking about going into the revenue market – the bond market – and borrowing more,” he told his fellow Assembly members.
Wein then suggested the city borrow money from it’s own permanent fund, thus avoiding lending fees from the state. Chief Finance and Administrative Officer Jay Sweeney countered that that course of action – Sitka borrowing from itself – was not legal.
“It’s not a legal investment by the Sitka General Code at the present time. Unless the Assembly were to change the Sitka General Code and make it a legal investment, I can’t consider it,” Sweeney said.
Wein said if he can find a co-sponsor, he wants to put forward an ordinance to change Sitka General Code to enable self-investment.
As for the harbor at hand, the Assembly chose to borrow more money from the state. The voting majority – Mayor Matthew Hunter, Assembly members Bob Potrzuski, Kevin Knox, and Ben Miyasato – approved the resolution due rapidly deteriorating condition of Crescent Harbor and the fact that the $5 million written into the state budget must be expended by the end of next year.
By a 4-2 vote, the Assembly approved – on first and final reading – seeking $8 million in state bonds to complete Phase 1 of the Crescent Harbor project and $4 million in airport terminal revenue bonds for renovations to Sitka’s Rocky Gutierrez Airport.
These are bond applications only, so it’s unknown how much money Sitka will borrow in the end. Aaron Bean and Richard Wein voted against both measures. Assembly member Steven Eisenbeisz was absent.
Renovations to Sitka’s Rocky Gutierrez Airport will also be funded through revenue from Passenger Facility Charges (an estimated total of $6.8 million) through 2038. The TSA is also putting forward $158,570 to install new inline baggage screening equipment.
Tuesday night, the Sitka Assembly also:
–Advanced a pair of proposals to restructure bed taxes (now called “transient lodging taxes”). One ordinance (Motion and Ord 2018-33), approved on final reading, would exempt those renting a hotel room from paying sales taxes on that room. That would only happen if voters ratify raising bed taxes to 12%. Another ordinance (Motion and Ord 2018-34A) to put that question on the ballot passed on first reading Tuesday night. At the last meeting, members of the visitor industry criticized this idea. Mayor Matthew Hunter reiterated how this maneuver paves the way for a future Assembly to one day impose an alcohol tax. “Alcohol is the only commodity that cannot be taxed higher than any other sales tax. That was a statute passed in response to lobbying by the alcohol beverage industry to keep communities from passing targeted alcohol taxes. So, should a future Assembly decide that they wish to raise alcohol taxes, this would allow that to happen,” Hunter said
—Authorized an application for $1.5 million in state grant funds to replace aging electrical equipment at Eliason Harbor and $200,000 for corrosion protection at Thomsen Harbor. Harbor users would bear the rest of the cost of those projects through rate increases. Assembly member Aaron Bean voted against the resolution for that reason
–Postponed a decision on extending a five-year lease agreement with the Seafood Producers Coop for continued use of the city’s Marine Services Center
–Entered executive session to discuss a forbearance agreement with the Baranof Island Brewing Company and a sublease extension with the Nugget Restaurant
–Appointed Dr. Paul Bahna to an unexpired term on the Library Commission
–Recognized August 4th as “U.S. Coast Guard Day” and honored Sitka-based personnel of the U.S. Coast Guard. The 600+ active duty and auxiliary personnel serve Air Station Sitka, Cutter Kukui, Aids to Navigation Team Sitka, Marine Safety Detachment Sitka, and Electronic Support Detachment Detail Sitka