Higher Fees, Taxes Proposed

Posted on: October 1, 2009 | musiclover | 3 Comments | Print Article | Rate Post:

City Fees and Property Tax Increases Proposed to Address Aging Infrastructure
By Heidi Zemach for Seward City News

The Seward City Council has recommended to City Manager Phillip Oates that the city budget he creates for FY 2010, FY 2011 include increases in electric fees, harbor fees, parking fees, and property taxes, and more. They gave him this “comprehensive guidance” at a work session Tuesday, Sept 29, following two previous work sessions on the plight of the city’s six enterprise funds, which are inadequately funded for needed repairs to vital infrastructure, to keep up with ongoing maintenance, or to pay debts for capitol projects. Oates had brought the council a variety of far-reaching funding options to pay for crumbling infrastructure. The guidance he will now implement in the upcoming budget still falls short of the funding needed, but is a beginning, he said.

Two independent comprehensive studies on the city’s infrastructure needs, the first one commissioned 16 years ago, outlined specific needs, their cost to replace, and proposed ways to meet that cost. But none of the study’s recommendations suggesting rate increases were implemented by the council, and now problems are 16 years worse than they were back then.

 Before you scream and wonder if the city has gone completely insane, and doesn’t realize we’re in a recession, read on.
How bad is it? Well, if nothing is done, the heat and the lights could go out more frequently, and for longer periods of time, the sewer won’t flow, the water won’t flow, and numerous boats will be turned away from the harbor, according to Oates and his department heads. “I’m here to tell you that I’m not crying wolf here. It’s not IF these systems are failing—but WHEN,” Oates said.

Electric Systems:
 The electric department has determined that the following assets need replacement, or will fail within the next five years. If not addressed, utility officials say residents can expect multiple failures, long power outage times (as entire systems fail), and higher fuel costs due to running the new diesel backup generators:

Critical Needs: Lowell Point Underground, the going underground by the Lagoon, Transmission Pole TN67, Right of Way Clearing, Broken Guy Wire TN64, Transmission to Fort Raymond, Jesse Lee Underground, Paint/Maintenance Transformers Spring Creek, Camelot Underground, Broken Bells (miles 10-14), Distribution Line to McDonald yard, Right of Way Maintain, Recloser Maintenance, Loadtap Changer at Spring Creek, for a total of $4.3 million.    

“High Risk” or systems likely to fail within 5-10 years:
Old Mill #3, Gateway (Upper), Gateway (Lower), Woodland Hills, Lost Lake Underground, SMIC Underground, Paint Transformers, Transrupter Maintenance, Exhaust Stack Unit #3, new roof over generators #4&6, meter relay and view screen, software for inventory, wire reel, for a total of $1.2 million.

“Moderate Risk” items, or assets that if not regularly maintained, will cost more to maintain or replace later. Estimated cost: $1.96 million.
The electric utility has an outstanding dept of $7.3 million to pay for the 1995 Transmission Line Bond and the 2008 Generator Project.
 
Electric Department changes proposed by council:
•Establish 5% increases in all rates per year for the next 2 years (the 5% increases apply to the Operations and Infrastructure Charges for all rate categories, Energy Charges for all rate categories—to include both the <200KWH and >200KWH for the Large General Service—and Demand Charges for the Large General Service and Industrial Service
•Give all harbor electric operations and infrastructure fees to the harbor (currently $15 but will increase to $15.75 with the 5% increase for 2010 and $16.54 in 2011)
•Stop taking money from the electric fund for other needs (note that we have not done this for the last couple of years)
•Begin a budget repayment plan of funds taken from the Electric Fund ($1,675,263)
•Determine if a Special Rate Structure is possible that would replace the Industrial Service
•*Begin an annual CPI increase effective 1 January 2012
•*Increase the door hanger charge from $10 to $25

* These increases were not part of Council guidance but the administration will add them to the tariff changes that will be introduced in concert with the budget resolutions
 
Water Systems:
The city owns more than 20 miles of underground water mains, most of which were installed 45 years ago. The lines along 3rd Avenue need an extensive replacement job. The existing water tank does not have adequate capacity during times of high use—such as when one or more cruise ships are in the harbor. The ships drain the water tank down so low that there isn’t enough water to go around, and the city fire-fighting capacity is endangered. The city lacks back-up tanks should the existing tank fail. $1.6 million is owed on the existing tank.

“Critical Needs” (Failure or needed in next 5 years):
A new water storage tank $4 million.
Refurbish #4 Production Well $85,000
Replace Pressure Station $625,000
Gateway Tank Roof $300,000

“High Risk Needs” (Likely to fail within 5-10 years)
Lowell Canyon Water Tanks
Abandon Wells at Fort Raymond
Distribution Piping Upgrades.

(A water study by M.L. Foster& Associates is completed and should provide more information on these needs in the near future.)

“Moderate Risk” or ones with continuous increasing cost to maintain or operate:
Facility Control Upgrades $125,000
GIS, $60,000
Generation for water wells $155,000
New production well #7 $650,000

Water Department Proposed Changes:

Water Department
•Establish a 1 mill increase in property taxes with 70% of the increase to the Water Department and 30% to the Wastewater Department (this mill rate increase would sunset when the Water Department loan to the LTCF is repaid or any low interest loan for infrastructure is repaid)
•Borrow $385K from the Motor (City vehicle) Pool Fund in 2010 (and establish a repayment plan that would begin when the fund is healthy)

Harbor:
The boat harbor that the City of Seward inherited from the State of Alaska had aging docks that have never been replaced since the early sixties. Floats A-D have “significant safety issues,” according to the harbormaster. D-dock is in particularly dangerous condition, and will have to be taken out of service within 5 years if it is not replaced, affecting 40 foot vessels. 96 individuals are on a wait list for this size slip, and the float now has 58 vessels, 13 of them passenger vessels. If the city does not fund the required maintenance dredging for 2010, the vessels drawing more than 10 feet will likely go aground near transient vessel areas, and sailing vessels will often go aground when they are scheduled to use the 50-ton travel lift. The harbor owns $27 in assets, $7.5 million of which need replacement within 10 years, and $4 million of which are completely depreciated.

Harbor Infrastructure:
Critical Needs:
Replace D Float $1.1 million

High Risk:
Replace A, B, C & S. Floats $4.5 million
Replace K&L floats $2.25 million
Replace N& S Launch ramps $1.4 million
Replace Fish Waste Barges, Dumpsters, 70K

Moderate Risk
Harbormaster Restrooms $100,000
Trash Dumpsters replace $40,000

Ongoing Projects:
Security (Z) Float $1.5 million (assumes State Matching Grant)
Construction of Upland utilities (Tie-in) adding 870 feet of moorage to harbor.

Harbor Proposed Changes:
•Give all fish tax to the harbor (approximately $360K per year from the General Fund) for capital requirements
•**$100K Maintenance Fee for all users (this rate would vary depending on the payment period—i.e., $100 per year for annual payers, $55 every six months for semi-annual payers, etc)
•Give all Electric Operations and Infrastructure fees for harbor electric customers  ($15.75 in 2010 and $16.54 in 2011) to the harbor (instead of giving those fees to the Electric Department)
•Increase the Shoreside  Fuel Pumping Agreement to $50K per year

** alternatively develop a variable cost structure for different sizes/types/categories of vessels

Wastewater (Sewer) Systems:
Critical Needs:
Forest Acres L.S. Generator $205,000
Double Wall Fuel Tanks $100,000
SMIC Bypass Valving $155,000
#1 Stand-by Generator $195,000

High Risk:
SMIC Lower Lift Station (engineering only) $50,000
Moderate Risk:
L.P. Sludge Pile Disposal $320,000

Ongoing projects requiring funding to complete
Security $50,000
Manhole Refurbishing $50,000
GIS $70,000

Wastewater Department Proposed Changes:
•Use any excess cash balance at the end of 2009 for critical requirements
•Use the 30% of the 1 mill property tax increase for capital requirements

Parking Department Proposed Changes:
•Return parking fees to $10 per day in 2010

Seward Municipal Industrial Center
•Compute and assess (with PACAB) the impact of the following rate increases
1.Change storage fees to $0.15 per foot per day with an increase to $0.30 per foot per day after 300 consecutive days
2.$20 Service Fee (per month or fraction of a month) for all SMIC users for pollution prevention
 
The budget will be worked on during work sessions that are open to the public throughout October. The council hopes to bring the budget up for final approval at the November 23 meeting, but if not, the city has until Dec 14th to approve it. Any proposed changes in tariffs (i.e. mill rate increase) will come up for public hearing prior to approval, Oates said.

(Much of the above information was obtained at recent city council meetings, worksessions, from city documents, and from City Manager Oates.)

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