LUTHERAN QUILTERS – Members of the Quilts for Comfort Group stand between pews draped with some of the 205 quilts they made, in the Sitka Lutheran Church Tuesday. The group made the quilts for five local non-profits and one in Anchorage. The remaining quilts are sent to Lutheran World Relief which distributes them to places around the world in need, such as Ukraine, as part of Personal Care Kits. Pictured are, from left, Helen Cunningham, Kathleen Brandt,Vicki Swanson, Paulla Hardy, Kim Hunter, Linda Swanson and Sue Fleming. (Sentinel Photo by James Poulson)
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Daily Sitka Sentinel
Assembly Holds Off On Electric Incentive
By SHANNON HAUGLAND
Sentinel Staff Writer
The Assembly deferred action Tuesday on an ordinance that would offer new large enterprises a temporary discount on electric rates.
Assembly members said they generally were in favor but felt changes were needed, and assigned it to a committee for further review.
Richard Wein, Kevin Knox and Aaron Bean volunteered to serve on a committee that would work with city staff to revise the ordinance.
The ordinance, co-sponsored by Knox and Mayor Matthew Hunter, proposes giving the city administrator the authority to offer a temporary incentive electric rate to new large commercial ventures for up to three years. In order to qualify the customer would have to be a new commercial business with an estimated $125,000 in electric billings a year, under the existing electric rate.
The stated purpose of the ordinance is to attract new business and employment in Sitka, and reduce electric rates for the overall customer base. The rate reduction for all users would be possible because the new users would be adding income to the electric fund while not increasing costs, since the utility has excess capacity that is not being used.
Assembly member Bob Potrzuski spoke in favor of the ordinance at the outset of the discussion.
“This is extraordinarily business-friendly with the idea of trying to grow the economy,” he said.
Those speaking against said they didn’t object to the concept of offering a discounted rate on a temporary basis to attract new electric customers and businesses, but said the ordinance still needs work. They said they had a problem with giving the administrator that level of authority without oversight or advising the Assembly, and that the discounted rate would be offered to large commercial customers only. They also said the ordinance lacked detail.
“While I believe it’s a good starting point, we’re a long ways away from an ordinance I could support,” said Steven Eisenbeisz. He wondered whether the larger customers actually needed an incentive, more than the smaller enterprises did.
Aaron Bean said he was also in favor, but wanted to propose a few changes.
The co-sponsors said the idea was to give the administrator some leeway to work with potential customers, using direction provided by the Assembly.
“I would rather it be more simple,” Knox said.
Electric Utility Director Bryan Bertacchi, who worked on the ordinance, said the electric department does not have many options for cutting costs, given the fixed cost of labor and running the electric system. About half of the budget is paying off the bonds on the Blue Lake dam expansion. The one area where there is some flexibility is in increasing sales, he said. Attracting a new customer with a discounted rate would pay off with increased sales in the future, benefiting all residential and commercial customers in Sitka.
“Everyone will benefit” through attracting a new business, Bertacchi said. “It’s good for all of us to have additional people in the community.”
He pointed out that the top 10 customers pay 30 percent of all electric costs in Sitka, and the top 100 customers pay 50 percent of all costs. At present only 16 utility customers pay $125,000 or more per year for electricity. Bertacchi said he sees some flexibility in the ordinance in terms of who is eligible.
To decide whether a customer qualifies for the discount, the administrator must determine whether the temporary rate is “in the best interests of the city and borough and that the rate does not create an unreasonable competitive advantage over existing commercial customers.”
Hunter, the other co-sponsor, said there are many businesses out there with no local competitors. Any new sales – even at a discounted rate – would help cover the electric department’s costs.
“In three years, they’ll be paying the regular rate,” he said. He’s comfortable giving leeway to city staff to negotiate with a potential new electric customer, he said. Such a concept is not unique, he said, citing the huge incentives being offered by big cities to attract Amazon.
“This is one of the few things we can do to attract new businesses,” the mayor said of the proposed policy.
When asked about potential new customers that might be eligible, Bertacchi said the U.S. Coast Guard is looking at Sitka and other communities as possible homes for two new Cutters, and the discounted electric rate here may be an incentive to attract them here.
“This may help break the logjam,” he said.
On a few related matters, Bertacchi reported higher than expected electric sales between April and the end of the fiscal year June 30. The extra income eliminated the need to spend the $400,000 from the general fund that the Assembly had set aside to keep the electric fund solvent.
Persons to Be Heard
At the end of the meeting, Jerry Jacobs, Sitka manager for fuel distributor Petro Marine Inc. who said he was speaking as a private citizen, said he objected to what he saw as “city interference” with a private company’s contract to provide heating fuel for a new enterprise. He said the city offered electricity at a rate that would be 10 percent less than the low-bidding fuel company and also to provide the electric boiler. If the city was interested in the project, it should have “participated on equal footing with private business,” he said.
At the end of the meeting, the Assembly met in executive session to discuss lawsuits filed against the city related to the Aug. 18, 2015, landslides. Also attending were the city’s outside lawyers, David Bruce and Jim Wilkens.
Administrator’s Report
City Administrator Keith Brady said the city successfully appealed the recent FEMA floodplain mapping, reducing the flood plain area near Swan Lake. Alice Loop property owners were also successful in their appeal.
He also reminded residents to submit their comments on the Alaska Marine Highway System summer schedule before Nov. 9.
Brady also noted that the city’s waste contractor will no longer be accepting some recyclables including mixed paper and plastic Nos. 3-7.
St. Michael’s Funding
An ordinance providing $5,000 from the Visitors Enhancement Fund for the St. Michael’s Cathedral renovation project was approved 6-1 on first reading. Those speaking in favor said the iconic building is a National Historic Landmark and important to tourism in Sitka.
Funds will come out of the city’s 6 percent bed tax, which is dedicated to tourism projects. Aaron Bean voted against, saying he didn’t think spending public funds on a church was appropriate.
“While I agree with it, a lot of people will not,” he said, adding later, “Not everyone is religious.”
Wein noted only half of the funds needed have been raised for the project, and private donations will be needed. He said he planned to make a personal donation as well.
Other Business
On other items, the Assembly:
– read proclamations for Native American Heritage Month, and honoring Veterans Day.
– gave a Service Award to Clara Gray for her two years volunteering for the Health Needs and Human Services Commission.
- appointed Loyd E. Platson and Martha Pearson to the Health Needs and Community Services Commission. The city clerk said other vacancies need to be filled for the Animal Hearing Board, Building Appeals Board, Gary Paxton Industrial Park board, Library Commission, Port and Harbors, Parks and Recreation and Tree and Landscape.
- approved on final reading an ordinance appropriating $75,000 from the electric fund for the harbor meter replacement project.
- approved on final reading an ordinance to allocate $50,000 in Commercial Passenger Excise Tax funds to help complete the Sitka History Museum interior.
- passed on first reading an ordinance recognizing a $15,000 grant from the Rasmuson Foundation to acquire lighted display cabinets for the William Stortz Gallery at city hall.
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20 YEARS AGO
March 2004
Advertisement: Tea-Licious Tea House & Bakery 315 Lincoln Street Grand Opening! Freshly Baked Scones, Cakes & Pastries Innovative Salads, Soups & Sandwiches Harney & Sons Tea. Lunch * Afternoon Tea * Supper.
50 YEARS AGO
March 1974
Photo caption: National Republican Chairman George Bush takes a drink of water offered by Jan Craddick, Sitka delegate, during the Republican convention held here. Mrs. Craddick explained to Bush that the water was from Indian River, which means, according to local legend, that he will return.