Seward’s finances in great shape

By Heidi Zemach for SCN-

The City of Seward is in better financial shape than it has been for years, and its individual enterprise funds, those designated for use by each department have healthy balances, with the exception of the wastewater fund. That summarizes the results of an audit of city finances by BDO, an Anchorage-based auditing firm that the city hires each year. Michelle Drew, CPA, from BDO presented the 2013 Comprehensive Annual Financial Report, or “CAFR” at Monday night’s June 23rd City Council meeting and at a council work session.

The CAFR is the document that shows what the city actually owns, while the city’s annual, or two-year budget, which gets much more attention, public discussion and debate, reflects Seward leader’s plans and dreams for where and how they intend to spend the money. It’s a fluid document, and some numbers are based on estimated income from fees and taxes.

The 170-page CAFR document shows the city owned $210 million in capital assets, meaning the value of all its land, buildings and city infrastructure at the end of 2013. It had $23.5 million in cash and investments. The city’s fund balance was $8.6 million, but much of that sum was in “committed funds.” Seward received $4.5 million in sales tax revenues in FY 2013, and $1.2 million in property tax revenues.

“This year is the first as Finance Director that I was able to sit back and breathe a sigh of relief that we’re over the hump we were in five years ago when the enterprise funds were tapped out,” said City Finance Director Kris Erchinger. She told the council they had made several difficult budget decisions over the past few years to raise enterprise fund rates (for water, harbor, parking, electricity)  that they had taken a lot of heat for. “But now we’re talking about replacing infrastructure in the harbor!” she said. “We weren’t able to do that before.”

The 2013 CAFR shows that Seward is such a good financial position that the city can become pro-active in terms of getting things it wants done, rather than just responding to emergencies, as in previous years, said City Finance Director Kris Erchinger. The city has enough fund balance now available to qualify for federal or state loans for projects.

The only fund that concerns her, and the city’s auditing firm, is the sewer fund, which has been steadily falling behind the others. But the council has already approved a 5.2 percent CPI increase for that fund, which should put the city back on a path toward greater sustainability, Erchinger said.



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Last summer’s crisis, the city waste-water lagoon at Lowell Point that began stinking intolerably after more than two decades of not being dredged or maintained, is finally about to be addressed, with help from the state’s capital project fund, and city contributions. After more than a year of complaints, and State Department of Environmental Conservation Letters of Violation, the lagoon is to receive new floating aerators to help oxygenate the sludge this summer. That’s a temporary fix, but the city will soon issue a Request For Proposals for a company to dredge it, along with the sludge in the wastewater lagoon near Spring Creek Correctional Center.

Monday night some council members urged the city not to install the aerators now, at the height of the tourist season, as the lagoon wasn’t currently stinking, and they had heard their installation might create a stink for a few days.

Another financial area formerly of concern—Providence Seward Medical & Care Facility and  Seward Mountain Haven Facility, are also  headed in the right direction financially, Drew told the council. That fund has $21.8 million in assets (in its buildings), and a settlement over past reimbursements with the State of Alaska has brought in additional money that the state owed the city. Another $3.2 million of the settlement is due this year. The local hospital’s outpatient clinic, which had been losing money, was closed this winter, and a new, federally-funded community health clinic was established its place. The new clinic is expected to bring in a higher level of reimbursements for patients while helping the hospital’s finances. Lately, use has been growing there, Erchinger said, although they have not been able to recruit permanent physicians.

In Council Business:

-Council unanimously approved a resolution approving a five year contract with the State of Alaska for nearly $671,000 for operating the Seward Community Jail on its behalf.

-Council postponed until next month approval of an agreement with Harmon Properties, LLC, in partnership with Tom Tougas, to purchase city land at SMIC.

-Council unanimously agreed to write a letter to the Kenai Peninsula Borough Assembly in support of Kenai Peninsula Tourism Marketing Council’s effort to establish a four-percent borough-wide “transient accommodations” tax, or “Bed Tax” to promote destination marketing throughout the peninsula. If approved by the assembly, the bed tax issue would be placed on the ballot in the October general election. Seward already has its own four percent bed tax inside city limits, plus a seven-percent sales tax, totaling 11 percent. It has its own destination marketing agent, the Seward Chamber of Commerce. The city could therefore choose to opt out of the bed tax.

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