Daily Sitka Sentinel

Harbor Bond Issue, Rate Hike Approved

By SHANNON HAUGLAND
Sentinel Staff Writer
    The Assembly on Tuesday narrowly approved a 6 percent harbor rate increase to help fund capital needs in the harbors in the next few years and beyond.
    The increase passed by resolution, which means only one reading by the Assembly was needed. The Port and Harbors Commission had voted 4-0 in favor of the increase at its last meeting.
    The Assembly vote was 4-3, with Ben Miyasato, Kevin Knox, Bob Potrzuski and Mayor Matthew Hunter in favor, and Aaron Bean, Richard Wein and Steven Eisenbeisz opposed.
    After the Assembly passed the harbor rate hike, it approved an ordinance on first reading that calls for sale of $8.6 million in revenue bonds for renovation of Crescent Harbor. Revenue bonds are paid from user fees, but the proceeds from the bonds will be matched by $5 million from the state.
    Those voting in favor of the harbor rate increase were not enthusiastic about it, but cited its necessity to help fund improvements under the harbor master plan. Those opposed cited rising costs making Sitka less affordable for the fleet and others.
    “This Assembly has agreed (the situation) is unsustainable, but we haven’t gotten together to decide how to do something different,” Eisenbeisz said, in voting against.
    A 6 percent increase on a 40-foot boat will raise annual moorage from $1,584 per year to $1,684.80 per year, an increase of $100.80. Moorage for a 20-foot skiff will increase by $50.42 per year. Daily transient moorage on a 40-foot boat will go from $41.20 to $43.60 per day.
    The recommended 6 percent moorage rate increase per year is based on the 2012 master plan, which projects major capital projects that will be needed, such as harbor replacements.
    “We have trimmed some things from the master plan but really, in the end, we have to look at large items we need to forgo,” Knox said. If moorage rate increases are not approved, the Assembly needs to start talking about removing infrastructure, he said.
    City staff said putting off a rate increase will make it difficult to fund such projects in the distant future such as the replacement of Eliason Harbor, some 15 years from now. Another option is a “spiked” rate increase at some point in the future to fund debt service.
    Bean spoke against the rate increase.
    “It’s important we take care of our harbors but it comes at a cost,” he said. “These are things we can’t afford. This isn’t a sustainable track we’re on. There are other ways to fund this project.”
    Wein said he was concerned about the city adding to its debt, with plans to refinance and not repay the bonds.
    “I’m totally in support of the harbors but there has to be a better way,” he said, adding later, “Why do it? Why do it tonight? We need to figure out alternatives that are more sustainable.” He said he was concerned about the long-term consequences.
    Hunter said the 6 percent annual increases were not sustainable over the length of the 20- to 30-year master plan, but failing to pay to maintain infrastructure may have disastrous consequences.
    “I’m reluctant not to ... pay to have what we have until we find a better way,” he said.
    Knox said he was also open to creative solutions that are “doable, or we have to pay for what we’ve got.”
    Eisenbeisz said he would support the harbor commission’s reviewing and recommending changes to the master plan, and return to the Assembly with its findings.
    From the public, Alexander Allison spoke against the increase and a later item on the agenda, the $8.6 million bond to help fund Crescent Harbor improvements.
    He said the city would do better to support projects that will create jobs, such as a boat haul-out.
    “Rising costs and a lack of services, like a full-service haul-out, are driving boats away from Sitka,” he said. “We are missing out on an economic opportunity now, and for our kids’ futures, by not having a full-service haul-out.”
    The agenda item also included some discussion of “self-financing” capital projects through the Sitka Permanent Fund. The city’s bond adviser, David Thompson, participated by phone to answer questions. Potrzuski and Wein also were present by phone.

Bonds
    The Assembly passed an ordinance on first reading for $4.5 million in revenue bonds for airport improvements, and $8.6 million in revenue bonds to help fund Crescent Harbor upgrades, matched by $5 million from the state.
    The vote on the airport improvements was 5-2, with Wein and Bean opposed.
    The airport terminal project calls for doubling the size of the passenger “holding area,” improving efficiency by separating passengers who are taking off and landing, having a separate area for loading fish boxes, and improving the TSA screening area (funded by TSA).
    The city expects that the collection of a Passenger Facility Charge of $4.50 per enplanement will raise about $400,000 per year, well above the $320,000 a year to meet the debt service. The upgrades fall far short of the $30 million master plan but will address some of the problems, city staff said.
    “They don’t bring the terminal up to current standards,” Public Works Director Michael Harmon said. “We’re making do.”
    Wein and Bean said they didn’t like the city’s being locked into another bond obligation, with no guarantee the passenger numbers will meet projections. They said if PFCs don’t meet the bond requirements, the Assembly will need to find another source of funds.
    Hunter said he felt there was a “healthy margin” between the projection of PFC income and the funds needed to make the bond payments.
    “This is a project that can be entirely funded by PFCs, or we don’t get the PFCs,” he said.
    The item will be up for second and final reading at the Sept. 25 Assembly meeting.
    On the other bond proposal, the vote was 4-3 in favor of the $8.6 million in revenue bonds to replace Floats 1 through 4 in Crescent Harbor. The item will be up for final reading Sept. 25.
    Knox, Hunter, Potrzuski and Miyasato voted in favor; Eisenbeisz, Bean and Wein voted against.
    The cost of the project is estimated at more than $13 million. Some $5 million is expected to come from the state, which ranked Crescent Harbor at the top of all harbor projects statewide.
    Some of those in favor said this was a good opportunity to defray costs by using the $5 million state grant to help pay for a needed project.
    Eisenbeisz was against, saying he was concerned it would lock the city into unsustainable rate increases for the life of the bond, about 20 years.
    Bean said he felt more time was needed to see if there was another way to pay for the project.
    “The community is leveraged,” he said. “The harbors aren’t going anywhere. We can find a way to pay for this project rather than just harbor users.”
    Wein said he was concerned with the high amount of debt the city was taking on, and would prefer the city pursue other options, including self financing.

Other Business
    In other business, the Assembly:
    – approved a liquor license transfer of ownership application from JD and PR Colton and JP and TE Colton, to JPJT dba Nugget Restaurant.
    – approved a marijuana cultivation facility license renewal for Darren H. Phillips dba Fiberflite at 120 Jarvis St., Unit C.
    – approved on final reading supplemental appropriations for fiscal year 2019, from fiscal year 2018.
    – heard a presentation by subdivision developers Scott McArthur and Andrew Friske and voted 6-0 “to instruct the administrator and attorney to continue discussions with the land owners on South Kramer about the possibility of using city land for mitigation at their (the land owners) own cost and hold the city harmless of any accrued cost as a result of any actions taken as a result of those talks or discussions.”