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2001-05-02 Council Packet
Kenai City Council Meeting Packet May 2, 2001 AGENDA KENAI CITY COUNCIL- REGULAR MEETING MAY 2, 2001 7:00 P.M. KENAI CITY COUNCIL CHAMBERS http://www.ci.kenai.ak.us ITEM A: , , CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval 4. Consent Agenda *All items listed with an asterisk (*) are considered to be routine and non- controversial by the council and will be approved by one motion. There will be no separate discussion of these items unless a council member so requests, in which case the item will be removed from the consent agenda and considered in its normal sequence on the agenda as part of the General Orders. ITEM B: . SCHEDULED PUBLIC COMMENTS (10 minutes) Dick Metteer -- Alaska Pork Project, Inc. ITEM C: PUBLIC HEARINGS . Ordinance No. 1907-2001 -- Increasing Estimated Revenues and Appropriations by $16,000 in the Senior Citizens Title III Grant Fund for Operating Supplies. , Resolution No. 2001-28 -- Supporting the Cook Inlet Aquaculture Association's Plan for Assistance to the Cook Inlet Fishing Community Through Fisheries Enhancement and Rehabilitation. e . Resolution No. 2001-29 -- Awarding the Bid to Hanson's Roofing for Kenai City Hall Roof Repairs -- 2001 for the Total Amount of $13,620. Resolution No. 2001-30 -- Transferring $7,500 in the Shop Department to Purchase Broom Cores. ITEM D: COMMISSION/COMMITTEE REPORTS . 2. 3. 4. 5. Council on Aging Airport Commission Harbor Commission Library Commission Parks & Recreation Commission -1- . Planning & Zoning Commission Miscellaneous Commissions and Committees a. Beautification Committee b. Kenai Convention & Visitors Bureau Board c. Alaska Municipal League Report ITEM E: MINUTES , 2. 3. 4. *Budget Work Session of April 10,2001. *Work Session of April 11,2001. *Budget Work Session of April 17, 2001. *Regular Meeting of April 18, 2001. ITEM F: CORRESPONDENCE ITEM G: OLD BUSINESS , Discussion -- Appraisal of Five Iron Heights Subdivision, Block 3. . Discussion -- Inlet Woods Subdivision Lot Sale-- 53 Undeveloped Lots. ITEM H: NEW BUSINESS . Bills to be Paid, Bills to be Ratified , Purchase Orders Exceeding $2,500 , *Ordinance No. 1908-2001 -- Increasing Estimated Revenues and Appropriations by $302,000 for Wastewater Planning and Design Including Plant Expansion. . *Ordinance No. 1909-2001 -- Increasing Estimated Revenues and Appropriations by $50,000 in the Water and Sewer Fund and the Gill Street Crossing Capital Project Fund for a New Water Main. , *Ordinance No. 1910-2001 -- Amending the Definition of Hotel and Adding Definitions for "Lodge" and "Guide Service" in the Kenai Zoning Code (14.20.320). e *Ordinance No. 1911-2001 -- Amending the Land Use Table to Add "Lodge" and "Guide Service" to the Listed Uses. , *Ordinance No. 1912-2001 -- Amending KMC 23.50.010 Employee Classifications to Include New Position Titles. ITEM I: ,,, ADMINISTRATION REPORTS , Mayor 2. City Manager 3. Attorney 4. City Clerk 5. Finance Director 6. Public Works Managers 7. Airport Manager ITEM J: DISCUSSION 1. CitiZens (five minutes) 2. Council EXECUTIVE SESSION- To discuss personal characteristics of city manager candidates. ITEM K: ADJOURNMENT -3- MAYOR'S REPORT MAY 2, 2001 REGULAR COUNCIL MEETING CHANGES TO THE AGENDA REOUESTED BY: ADD TO: Item G-2 -- Inlet Woods Subdivision Lot Sale -- Letter from Tim Iverson expressing views on Inlet Woods lots sale. CLERK CONSENT AGENDA . MAYOR'S REPORT City presence at Alliance North Conference (city co-sponsored booth with Kenai Chamber of Commerce) -- anyone interested in attending? May 16, 17, 18 at the Egan Center (setting up on May 16). > <o~~Z~3~o > <o~~~3~o z 0 Alaska Pork Project, Inc. April 26, 2001 Kenai City Council Alaska Pork Project, Inc. is currently seeking support in our efforts of obtaining $396,500.00 for performing a feasibility study/business plan for building a pig meat industry in Alaska. The monies will be used to creme a bankable business plan for a pork production structure in Alaska as explained in the documem entitled the "Study". Alaska Pork Project, Inc. would appreciate any assistance the City of Kenai may offer with this request. At this time several areas of the Kenai Peninsula are being sites for of the Alaska Pork Project including Kenai. considered as~ _ component~ 272 Redwood Court, Soldotna, Alaska 99669 Telephone: 907 260 3075 - Facsimile: 907 260 6653 E-Mail: dick.metteer~acsalaska, net PORK PRODUCTION~,$TRUCTURE, AI..~KA, USA l~r~ ,.,F~i,-'13an~ '?-~:,~. 'i.::"~ ~.~., ~ ~ .,: . ,. ~, ,-,' -" , :- -~ .. ~· ,-~-~. ~ .-" · '::t/~" ' --~-'. -' , ~ i~. ' . ~.~ < , .., _. :,..,,.-~:. - - -~_ ':. '~ ,~ . .~ . -""- B R~ITi 8 H GO LLI~Bt o : ':"' ~- - Prepared by: Agdment International BV P.O. Box 661 7400 AR DEVENTER The Netherlands Phone: 31 570 660910 Fax: 31 570 676047 in co-operation with' Richard J. Metteer Deventer, December 2000 Ref. gO7AOQ/PMROJ19 TABLE OF CONTENTS page TABLE OF CONTENTS. · ...................................................................... 0 , PROJECT BACKGROUND ............................................................................................ 1 1.1 Introductio.n .............................................................................................................. 1 1.2 The Proiect .......................................................................................................... 2 _ o PRESENTATION OF THE CONSORTIUM ..................................................................... 4 2.1 Agdment Intemational BV .................................................................................... 4 2.2 Richard J. Metteer. ................................................................................................ 4 , 4.1 4.2 4.3 4.4 APPROACH AND METHODOLOGY .............................................................................. 5 Analysis of the present situation ........................................................................... 7 Strategic orientation ............................................................................................. 9 Development of business, plan ........................................................................... 10 4.3.1 Investment plan ...................................................................................... 10 4.3.2 Financial plan ......................................................................................... 11 4.3.3 Marketing plan ........................................................................................ 11 4.3.4 Production and Resources Planning ....................................................... 12 Go/No-go and Development of an action plan .................................................... 12 4. TIME SCHEDULE ......................................................................................................... 13 5. TEAM OF EXPERTS .................................................................................................... 14 , 6. BUDGET ....................................................................................................................... 18 Annex I Curricula Vitae Annex II References AgrJment International B V 0 Alaska Pork Project PMROJlg 1. PROJECT BACKGROUND 1.1 Introduction World meat market One of the first areas affected by growing consumer prosperity, is the consumption pattern. This particularly applies to meat consumption, which is one of the fastest growing consumption segments when consumers' buying power is increasing, particularly in rapidly developing countries. A recent market survey shows an expected worldwide increase in meat consumption of 2% in 2000. The global pork market is also very dynamic, charactedsed by significant pdce fluctuations due to shortages or over-supply. Furthermore, the meat business has been subject to gmat changes over the past few years. Due to the collapse of the economies of the former socialistic states, agriculture and livestock production has declined dramatically in Central Europe and the former Soviet Union. The European Union traditionally a large exporter of pork was confronted with animal diseases and environmental restrictions, preventing further expansion of meat production activities. In Asia, Latin Amedca, Canada and the United States pork production has increased enom~usly. On individual country level, the main importing countries are Japan, the former Soviet Union and Hong Kong. The Japanese market is characterised by very high requirements upon meat quality, fat content, cutting specifications and preparations. Hong Kong remains an interesting trade partner, despite the increasing supply from China. it is expected that them is market potential for specific cuts, organs and intestines. Export to the former Soviet Union collapsed after the Rouble-crisis in August 1998. Before that, the former Soviet Union used to be the wodd's largest pork importer. In 1999 and 2000, trade relations have been gradually restored and meat import volumes are still increasing. Beadng in mind the expected increasing meat consumption at global level, the latest developments in the meat market and the difficulties the traditional meat producing countries are currently experiencing, it is interesting to look for alternative meat producing locations. One of the sedous options in this respect is Alaska. Alaska Historically, Alaska's most important economic sectors are the petroleum industn/, mining, forest products and the fishing industry (salmon). The toudsm sector is one of the State's fastest growing sectors and is expected to further expand, as a result of the growing demand for tourism in the US and abroad, and the increasing market sham being drawn to Alaska. For many years, the high unemployment rate throughout Alaska's native communities had been Alaska's main economic problem. For years, the number of working age natives has been growing much faster than the number of jobs. Following the tight job market in all of the USA, however, Alaska's unemployment rate (August 2000) is now the second lowest since 1978. Taking into account that seasonal industries (fishing, toudsm and construction) largely Ag#ment International BV I Alaska Pork Project PMROJ l g contributed to this favourable unemployment rate, it remains a sedous point of attention in the state's economy. Alaska plays no role on the world's meat market. Alaska has no tradition in livestock and meat production, mainly because of its cold climate, sparse infrastructure and distance from markets. Nevertheless, a Consortium formed by Dutch and Alaskan companies has become very enthusiastic about the idea to develop an integrated high quality pork production chain in Alaska. This enthusiasm is raised by vadous reasons: 1. Alaska's location and climate minimise the dsk for an outbreak of contagious animal diseases (Alaska has a disease free status for swine) 2. Alaska's ability to ship by air and sea presents export opportunities for national and international markets 3. Alaska is located relatively near to the attractive though demanding import markets in the Far East (e.g. fresh meat can be transported from Alaska to Japan by boat within one week) 4. Alaska's ability to import by sea places it in a favoumble competitive position conceming the purchase of grains world wide at competitive pdces 5. Taiwan and South Korea, traditionally one of the major pork suppliers in the Pacific Rim, are suffedng from MFD 6. Presently, them is no slaughter facility in Alaska and all meat has to be supplied from other regions in the USA. 7. The climate in Alaska is reasonably mild, allowing livestock production. 8. The opportunity to use by-products of the fish industry as input for the production of pig feed. 1.2 The Pro, ject The idea is to establish an integrated pork production chain in the southeast of Alaska (near Valdez). The project is to include the following elements: · Breeding pyramid for pigs · Reproduction and fattening structure with private farmers to produce 660,000 pigs with excellent meat quality and high lean meat content on a yeady basis . Feed production plant to produce well formulated compound feed for sows, piglets and pigs · Slaughterhouse en meat processing plant for quality pork, ready for the important export markets for fresh, frozen and/or processed pork The development of the project is estimated to take four years, based on a carefully planned cash flow position and financing scheme. Bankable report The first step in the development of the project is to prepare a bankable report, reflecting a complete description of the project as well as an objective and realistic analysis of the project's feasibility, including the success and dsk factors. This bankable report will include the necessary financial (i.e. cost price comparisons) and investment calculations (cash flow analysis, ROI, sensitivity analysis, etc.). Once the bankable report is ready, additional investors can be found and loan/credit facilities can be applied for. Ag~ment International BV 2 Alaska Pork Project PM ROJ1g This document presents the approach the Consortium proposes for the realisation of the study, dealing with the following chapters: · Bdef introduction of the Consortium partners (chapter 2) · Approach of the study (chapter 3) · Team of experts involved (chapter 4) · Time schedule (chapter 5) Agriment lntemationai B V Alaska Pork Project PMROJ19 2. PRESENTATION OF THE CONSORTIUM The Consortium consists of two project partners, who have an impressive track record in the global pork business. The co-operation between the Consortium members ensures that the realisation of the study will be based on objective and relevant information, and that all analyses are interpreted and processed by professional and leading parties in the meat business, both in the USA and the EU. In the following paragraphs a bdef introduction of each of the partners is given. 2.1 Aeriment Internatiqnal BV Agdment Intemational BV, located in Deventer, is part of the Stoas group of companies in Wageningen, the Netherlands. Stoas is a Dutch company specialised in agricultural education, training, consultancy and business development. Agdment Intemational BV inCorporates Stoas' intemational activities and is mainly active in: · Feasibility studies and investment plans · Sector studies · Business development and match making Institutional and co-operative development Management and technical assistance programmes Agdment Intemationai has an experienced staff with gmat expertise in the livestock and meat sector, horticulture as well as in the amble sector covering pdmary production, processing and marketing. The company employs some 20 consultants on a full-time basis, of which them are 9 persons permanently working abroad. Agdment International strongly advocates a project approach, which is based on confidence and trust between the consultants and the recipient parties. In this respect, bottom up approach, regular consultation, feedback and evaluation will a~ys be key elements in projects realised by Agdment International. Another strong asset in the project realisation is the extensive network of contacts with firms, institutions and research stations involved in agriculture. 2.2 Richard J. Metteer Mr. Metteer has been living in Alaska for nearly 25 years now and has acquired an excellent knowledge about the State's business possibilities. Ever since 1988, Mr. Metteer has been busy developing the prospect of producing and processing pork in Alaska. In 1995, he formed Alaska Pork Project Inc. ('APPI'). He exhaustively researched all aspects of growing hogs and processing pork products in Alaska. As a result of this work, he designed a new industry in Alaska to produce and process pork to meet the needs of the most demanding consumers. Dudng the past years, he has become the leading authority on integrated pork production, processing and export in the state of Alaska. Mr. Metteer has developed important relationships with several government agencies and private companies both national and international that sham his interest in developing the pork indust~ in Alaska. Agriment International B V 4 Alaska Pork Project PMRGJlg 3, APPROACH AND METHODOLOGY The study aims to assess the potential to establish an integrated pork production structure in Alaska. One of the main subjects of the study will be to identify the comparative advantages of Alaska. The project should be designed and operated in such a way, that pig finishing, slaughtering and processing of meat is in accordance with the Codex Alimentaris and EU- regulations and USDA regulations. The evaluations will result in a bankable business and investment plan, and will form the basis for additional investment partners to participate and to obtain credit and/or loan facilities The implementation of the feasibility study can be divided into four phases: 1. Analysis of the present situation 2. Strategic orientation 3. Development of a business plan., including project phasing and cash flow planning 4. Go/No go momentum and development of an action plan In the first phase an in depth analysis will be made of the present situation in Alaska regarding (potential) livestock and meat production. A realistic picture should be sketched of the market and competitive environment. Then in the second phase of the project, the business strategy of the project will be developed, based on an analysis of opportunities and threats in the market and an assessment of strengths and weaknesses of the integrated activity to be established (SWOT analysis). Based on this strategy, the activities and structure can be planned (phase 3). Finally, the feasibility of the project will be calculated, both from a commercial and financial point of view. The study is concluded with the development of an action plan provided that the outcome of the study is positive. The complete project approach is visualised in the following scheme: Agdment International B V Alaska Pork Project PMROJ19 PROJECT APPROACH Competitive profile of animal supply pork production Strengths Opportunities Weaknesses Threats Strate~liC Orientation , (3-5 years) I Investment 'Financial i I 'Marketing Pr:~duction and plan plan plan resources plan I .... oo,. o Acti P~'Ii and fi report ........ on, 'nill -~-' I IIII IIIII II I IIII 'Il'iii I' IIIII IIIIIII IIII Phase I Phase 2 Phase 3 Agriment Intematiorlal B V Alaska Pork Project PMROJlg 4.1 Analysis of the present situation A detailed overview of items that will be addressed in the study is reflected hereafter. Firstly, the actual situation in Alaska concerning the production of pigs and pork will be assessed. Presently, the pork sector in Alaska is very small. In the framework of this study, attention will also be paid to the opportunities to create a strong pork sector. i 1. Inventop/of situation and developments in the global meat market: Market situation/developments in 'neighboudng' countries (USA, Canada, Mexico) Market situation/developments in the important importing countries (Japan, South Korea, Hong Kong, Singapore, former Soviet Union EU policy, having a gmat impact on the world's meat supply Development in VVTO I 2. Inventon/of economic, political and agricultural developments in Alaska I 3. Inventory of institutional structure of meat production ,/ Organisation of and co-operation in production chain ,/ Farmers' organisations ,/ Produce boards I 4. Inventory of arable production Physical geographical conditions Climatic conditions Crops produced Harvest yields and losses Nutritional aspects ,, I 5. Inventory of animal feed production facilities Locations Capacities Production levels Assortment Nutritional values Price levels Purchase possibilities in Canada, US and/or Latin Amedca for groins and protein components I 6. Inventory of pig farming Number and size of farms Pig breeds/genetic lines Animal disease situation Quality of facilities (housing, feeding, mechanisation) Technical results (feed conversion, daily gain, mortality, cost price, live weight of finished animals) Supply balance (incl. imports, exports, self-sufficiency) Price levels at farm gate Competition I' 7. Inventory of pig slaugh~ring and processing activities Agriment International B V 7 Alaska Pork Project PMROJ19 Slaughter facilities Slaughter yields Locations Capacities Production levels Cuts/assortment Pdce levels Cost price Hygiene management and quality control I 8. Inventory of distribution and marketing structure throughout the production chain Contract production Cold storage facilities Packaging means Transportation means Sales to traders/wholesalers/market outlets/retailers/institutional buyers in Alaska Exports to USA, Pacific Rim Trade agreements Pdce levels t 9. Assessment of developments in meat consumption on the import markets' Development of and trends in consumption of poultry, beef, pork Cuts and processed meats Consumer requirements (shelf life, convenience foods) Pdce levels I~10. Requirements upon company to be established Legal framework in Alaska Ownership and management structure Management capacity Know how of and experience in agriculture and poultry production Relevant network Commercial experience Management Information Systems Financial position The information necessary to answer all of the above questions will be obtained through desk research (existing data files via (intemet) sources such as USDA, FAO and Dutch Commodity Board for Eggs, Livestock & Meat). Additionally, field missions will be undertaken to Alaska. Also, a visit to Japan and South Korea will be organised to investigate the local markets (volumes, cuts, quality & price levels, trade structure, vetednaq/and customs regulations) and to establish contacts with important players in to local meat markets (importers/traders, wholesalers/retailers, authorities). Additionally, the field visit to Japan and South Korea will be used to identify potential co-investors in the project. Agriment International B V 8 Alaska Pork Project PMROJ l g All mentioned aspects are assessed by comparison with Westem standards, using the following grading scheme: . 5. 4. 3. 2. 1. excellent good satisfactory reasonable, though lacking some crucial aspects unsatisfactoq/; significant improvements are necessary very weak/poor Having done so, a competitive profile can be drawn, giving a first impression of Alaska's comparative position towards other pork producing/exporting countries. From here, the SWOT analysis can be made: 11. Identification of most relevant opportunities and threats for pig and pork production in Alaska 12. Identification of most relevant potential strengths and weaknesses of the new production structure The selected opportunities & threats and strengths & weaknesses will then be the basis for the development of the strategy. 4.2 Strategic orientation Having identified the most relevant strengths & weaknesses and opportunities & threats, the following scheme is used to dedve the strategic issues from the SWOT analysis: STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Does this strength enable us to benefit from this opportunity? Does this weakness prevent us from using this opportunity? Does this strength enable us to avoid this threat? Does this weakness prevent us from avoiding this throat? By quantifying the most relevant combinations, the strategic issues for the production structure can be dedved, which at the same time are an indication for the company's provisional strategic direction. Agdment Intema#onal B V 9 Alaska Pork Project PMROJ l g The process of strategy development then consists of several decisions, each decision narrowing and further detailing the scope of the strategy: 1. Formulation of business mission and vision for the Alaska Pork Project 2. Selection and elaboration of positioning strategy, in terms of cost leadership (cheapest producer), differentiation (best produCer) or segmentation (cheapest or best producer in specific market segments) 3. Development of company strategy, expressed in terms of product-market combinations Once the company strategy has been developed, the business plan will be detailed, which brings us to the next project phase. 4.3 Development of business plan The business plan distinguishes four key areas that have to be detailed: 1. Investment plan 2. Financial plan 3. Marketing plan 4. Production and resources plan 4.3.1 Investment plan As part of the investment plan, following aspects will have to be detailed: ! 1. Detailing of technical/technological specifications (quantities, capacities, etc.) for: Pig breeding & farming (housing, climate control, feeding systems) Amble inputs Feed production Buildings (construction, energy, infrastructure) Facilities/machinery/equipment (incl. slaughtering, processing, rendering and waste water treatment, packaging, dispatch, transport) Environmental and safety aspects I 2. Specification of required investments in the above-mentioned items: I 3. Design of time schedule for planned realisation of the investments I 4. Determination of financial sources for realisation of investments Financial participation of partners External financing (commercial banks, Worldbank/IFC) and conditions thereof Other loan/credit facilities Agfiment International B V 10 Alaska Pork Project PMROJ l g 4.3.2 Financial plan ! 1. Determination of annual operational costs (P/L account), incl.' Raw materials Energy Labour Marketing (distribution, sales/promotion) Interest Depreciation i 2. Gross margin evaluation and cost price calculation: Throughout production chain Comparison with American, European and Asian cost pdce standards I 3. Phasing of investments and operations I 4. Cash flow projections ~/ First two years in quarterly pedods I 5. Balance sheet planning ! 6. Identification of potential partnem and investom in the project 7. Formulation of crucial parameters and indicatom in the management information system (MIS) in order to adequately supervise the execution of the strategic and business plan 4.3.3 Marketingplan The marketing plan will include the following aspects: 1. Determination of sales volume and contribution budgets per market for the coming years Domestic supply Alaska Supply to other US States Overseas export to the Pacific Rim (Japan, South Korea, Hong Kong, Singapore, others) I 2. Formulation of marketing mix: Product: product development, cuts, product range/assortment, frozen/fresh, packaging, guarantee regulations, shelf life, etc. Distribution: truck network, shipments, wholesalers, traders, warehouses, storage, etc. Promotion: presentation, promotion campaign, leaflets/brochures, participation in trade fairs, publicity in national/international trade journals, etc. Price: price levels, discounts, special agreements, contracts, etc. AgrJment International B V 11 Alaska Pork Project PMROJ19 4.3.4 Production and Resources Planning I 1. Structure of livestock supply planning and purchase 2. Necessary production facilities and investments resulting in a Master Plan I 3. Preferred technology, quality level and quality management ! 4. Development of an adequate organisation and management structure Legal structure Organisation chart Management levels Management Information flows Registration & Information system Human resources structure (management/administrative/operational staff) 4.4 Go/No~. o and Development of an action plan Now that the project has been detailed from any possible angle, the investment analyses can be made. This will include: · cost structure profitability · size of the investment · gross and net profit evaluation · sensitivity analysis · operational cash flows expected capital expenditure · forecast of livestock pdces · cost pdces of fresh meat and product · anticipated income from by-products and hides expected interest rates · required rates of return On the basis of the outcome of the above mentioned analyses, the technical, commercial and financial feasibility of an integrated pork production structure in Alaska can be determined. Upon this, the go/no-go decision will be made. If the project appears to be feasible, then a detailed action plan will be developed, including: project phasing, detailing activities to be undertaken (incl. investments) development of tender instructions pre-selection of equipment suppliers milestones prelimina~j time schedule · assistance/training that can be provided by each of the Consortium partners The final report in this phase of the project also includes recommendations. Agrirnent International B V 12 Alaska Pork Project PMROJ19 4. TIME SCHEDULE The study is planned to be realised in a pedod of 7 months. The phasing of the project's main activities is depicted hereafter: Analysis of the present situation Strategic Orientation I Development of a business _plan Go/No-go momentum X Developmentofactionplan Il and final report Presentation of final report X Agdment International B V 13 Alaska Pork Project PMROJ19 5. TEAM OF EXPERTS Agdment International BV and Mr. Metteer have made available a team of qualified and experienced Dutch and Amedcan experts for this study. Each expert qualifies in a specific discipline as required for the study, together covedng ali aspects to be addressed. Nevertheless, should the study come up with specific know how not foreseen at this stage, we can draw upon our extended network to make available the expertise required. In addition to the team of experts, we particularly would like to highlight the professional office support that will be provided by our home office in Deventer, the Netherlands. Our support staff ensures a smooth organisation and co-ordination of the project, including communication and reporting. Detailed Curricula Vitae of the experts proposed are enclosed separately, in Annex i. This chapter gives a bdef introduction of the experts proposed, as well as a list of tasks to be performed by each expert. A total number of 8 experts are proposed for the project: 1. Bert van Laer, B.Sc. Food Technology: Project Manager/Strategic Slaughterhouse Management & Meat Technology Expert . Richard J. Metteer: Meat Business Expert . Dirk-Jan Rood, MBA Business Economics: Financial Expert 4. John Choon Kim Ph.D.: Business Development & Marketing Expert 5. Walter Featherly: Legal Expert 6. David Meeker Ph.D., MBA Pork: Pig Breeding & Husbandry Expert 7. H. Hennevelt: Far East Meat Trading Expert 8. Monique Reinders, B.Sc. Marketing: Business Plan Development Expert Agriment international B V 14 Alaska Pork Project PMROJ19 Name: Proposed position: Age: Key qualifications VAN LAER, Bert (B.Sc. Food Technology) Project Manager/Strategic 'Slaughterhouse" Management & Meat Technology Expert 51 · 26 years of (technical, management and practical) experience in the meat (slaughterhouse) sector · Meat sector analyses and strategic development, policy advisoq/ (pork, beef, poultry) · Analyses of organisation and marketing structure of · slaughterhouses and meat plants · Integrated chain production · Feasibility studies in the agricultural and agra-processing sector · Strategic management of food processing companies, including company restructuring · Project management, planning and implementation · Monitoring and evaluation Name: Proposed position: Age: Key qualifications: METTEER, Richard J. Meat Business Expert 53 · Project developer · Project promoter · Project co-ordinator · Authority in integrated pork production, processing and export in Alaska · Alaska import, export logistics specialist · Maintains professional contacts with government agencies, national and international businesses · Expert on Alaska Name: Proposed position: Age: Tasks in the project: , , ROOD, Dirk Jan (MBA Business Economics) Financial Expert 52 · Business finance and Strategy * International financing · Investment calculations · General & commercial bank management * Corporate financial management . Financial engineering · Feasibility studies · Auditing and dsk covedng strategies · Development of investment proposals Agriment Intema#onal B V 15 Alaska Pork Project PMROJ19 Name: Proposed position: Age: Key qualifications: KlM, John Choon (Ph.D.) Business Development & Marketing Expert ·Intemational business and trade · Globalisation · Market analyses · Marketing strategies · Political risk analyses . Export strategies · Energy resources development · Crisis management Name: ProPosed position' Age: Key qualifications: FEATHERLY, Walter Legal Expert 45 · Business law · Commercial transactions (business formation and capitalisation, securities, real estate, shareholder relations, employment and intellectual property) · Civil litigation (jury and non-jury tdals in both state and federal court, several appeals) · Corporations , . , Name: Proposed position: Age: Key qualifications: MEEKER, David (MBA Pork) Pig Breeding & Husbandry expert · Genetics (incl. research) · Animal nutrition · Swine production (national and international) · Swine health · Food safety · Veterinary medicine · Quality assurance · Disease control programmes Ag#ment International B V 16 Alaska Pork Prqect PMROJ1g Name: Proposed position: Age: Key qualifications: , HENNEVELT, Henk Far East Meat Trading Expert ' 'Set up and expansi'on of marketing and sales structure for meal · Sales network in the Far East · Knowledge of and experience with Far East business mentality and requirements · Planning and logistics of meat ales (frozen and fresh) · Negotiations Name: Proposed position: Age: Key qualifications: REINDERS, Monique (B.Sc. Marketing) Business Plan Development Expert 32 · Marketing strategies · Development of business plans · Subsidy applications ,, Reporting skills Agfiment Intemationai B V 17 Alaska Pork Project PMROJ19 6. BUDGET 1. ALLOCATION OF MAN DAYS Name expert Daily fee Number of man days Alaska/Pacific Netherlands Rim B. van Laer 1.500 R. Metteer 1.500 D. Rood 1.500 J. Kim 1.500 W. Featherly 1.500 D. Meeker 1.500 H. Hennevelt 1.500 M. Reinders 1.000 Total Total 34 25 59 40 40 15 20 35 25 25 25 25 25 25 14 6 20 20 20 178 71 249 all amounts in USS Amount 88.500 60.000 52.500 37.500 37.500 37.500 30.000 20.000 363.500 2. INTERNATIONAL TRAVEL From/to Number of tickets Price per ticket Amount A'dam/Anchorage A'dam/Tokyo/Seoul Total 1.800 1.800 12.600 3.600 16.200 3. LOCAL BOARD & LODGING Number of nights (Dutch experts) 77 Amount per night 200 Amount 15.400 4. LOCAL TRAVEL COSTS FrorrU~o Amount Car rent/train 3.000 Agr~ment Intema~onal B V 18 Alaska Pork Project PMROJ19 $. MISCELLANEOUS reporting, copying, binding, courier, communication, etc. 2.000 TOTAL , ,396.500 Agriment International B V 19 Alaska Pork Project PMROJ19 Alaska Pork Project Summary Prepared by Alaska Pork Project, Inc. 272 Redwood Court Soldotna, Alaska 99669 Telephone: 907 260 3075 Facsimile: 907 262 6653 E-Mail: dick.metteer~acsalaska.net Alaska Pork Project Summary Alaska Pork Project, Inc. is researching and developing the feasibility of a pig meat industry in Alaska. The concept covers an integrated high quality pork production chain in an area of the USA with excellent conditions for animal health, good environmental management, cOmpetitive production cost prices and convenient access to the markets of the Pacific Rim. These conditions exist in Alaska and this document summary shows how the essential elements of the pork chain can be implemented there. The Alaska Pork Project will consist of fully comained facilities to breed, produce, slaughter, process, package, market and distribute 660,000 pigs annually. The hogs will be raised to produce products for health conscious markets The combined investment for the Farm and Industry sectors is $232 million USD The planned yearly sales are $300 million USD, with a 26% return on investment To develop the project to fiall capacity, particularly to create the breeding pyramid, a period of approximately 5 years will be needed. The Alaska Pork Project offers potential, other hog producing areas of the world cannot offer: · Alaska has a disease free status for swine Alaska's location in the Pacific area offers a tremendous opportunity for shipping deep chilled pork into several Pacific Rim markets including Japan · With excellent harbors in Valdez and Seward, inexpensive feed componems can easily be imported and products exported · Alaska offers ideal weather conditions and ample land for animal and grain production The Alaska Pork Project's franchise concept will produce an impressive impact on the comrol of costs for livestock production, through processing to marketing. · The farmers will be organized as private owners of their farms and animals · The system will supply high quality breeding material, feed and technical assistance for good perfomaance of pig growing and a price equalization fired to decrease price risks for the farmers · A holding company will participate in the capitalizing of the farms (about 10%) · The farmers will have a share in the holding company (breeding, feed and meat company) · The holding company has a complete scheme of product/market combinations and other services to the farmers including financial services 272 Redwood Court. Soldotna, Alaska 99669 Telephone: 907-260-3075-Facsimile: 907-260-6653 E-Mail: dick.metteer~acsalaska.net The Alaska Pork Project aims to focus on the upper part of the markets due to the following: · The project will use pig breeds with excellent quality aspects for the Pacific Rim markets. · Commitmem to meat quality, fat comem, cutting specifications, preparations and the highest standards for health and hygiene and no PSE (pale, soft, exudative) meat. · The meat plant design will guarantee efficient slaughtering, for processing quality market ready pork for fresh, frozen or processed meat and packaging to create meat with a long shelf life. · The comparative advantage of short distances to the sales markets can create significant savings in distribution costs. · The excellent image of Dumeco International as a supplier of high quality European pork. The Alaska Pork Project participants offer a well-designed project for pork production, processing and marketing with a number of strategic and economical advantages. · Agrimem Imernational will supply the know-how for all links of the pork chain and assistance to general managemem. · Saskatchewan Wheat Pool, Cebeco NL and Cefetra, will use their trading channels to supply the 220,000 tons of feed components to supply the 660,000 pigs annoy. · Dumeco International will execute the processing and a major part of the international pork trade with (Japan, South Korea, Hong Kong and Singapore). Bell Genetics to initiate and execute the breeding pyramid for pigs, construction of farms and training. Presently Alaska is unknown as a pork supplier. The Alaska Pork Project has in place the fight promotional elemems that will create strong opportunities for supplying the pork products including: · The image of Alaska as a clean, healthy, pork disease free part of the world Alaska's "good neighbor" image with Japan and South Korea Alaska's positive image as a supplier of high quality fish to the world markets The use of know-how of international business partners in the pork chain The effects of the Alaska Pork Project on Alaska are: The project gives rise to employment opportunities, 460 new industry jobs, Will increase Alaska's agricultural production, · Increases Alaska's possibility to create a more diversified industrial structure, Will contribute to Alaska's "Gross State Product" and exports. 272 Redwood Court, Soldotna, Alaska 99669 Telephone: 907-260-3075-Facsimile: 907-260-6653 E-Mail: dick. metteer~acsalaska, net Alaska Pork Project, Inc. bases this project summary document on a pre-feasibility study by the project partners of Alaska and Agriment. The comparative advantages for Alaska are significant. The next step for the Alaska Pork Project is to identify a joint venture partner and create a Memorandum of Understanding by all the necessary project partners to create a complete pork chain in Alaska. A detailed feasibility study must be created to prepare a Business Financing Plan. At this time a budget document for the feasibility study/business plan is available for review. An in depth smmnm'y document is also available upon request. Bearing in mind the expected increase of meat consumption on a global level of 2% annually, the latest developments in the meat industry, and the difficulties the traditional meat producing countries are curremly experiencing diseases, etc., it is necessary to look for alternative meat producing locations. One of the serious options in this respect is Alaska. 272 Redwood Court, Soldotna, Alaska 99669 Telephone: 907-260-3075-Facsimile: 907-26045653 E-Mail: dick.metteer@acsalaska.net Alaska Pork Project, Inc. Alaska Pork Project Franchise Formula Pork production is an industry with strong international trade and competition. The market is asking for safe pork- environmentally-friendly produced with animal welfare in mind while achieving the best economic performance. In creating a successful agricultural business, the starting point is usually the activity of independent private farmers whose guiding principles are dedicated to quality and adding value to their agricultural products. For farmers to be successful in the pork industry today it is crucial that they be able to access the technological resources necessary for this business. Their operation must be market oriented and have the ability to accommodate to changing customer demands, fluctuation in market prices, and new industry developments. Most farmers are not able to acquire these resources on an individual basis. In order to create this basic condition within the Alaska Pork Project a "franchise system" will be introduced. The franchise system has two basic objectives: · The transfer of know-how to farming participants · To provide the necessary combination of support businesses for the farming participants The farmers will be organized as private owners of their farms and animals, but they will participate in a system that supplies the transfer of know-how in all aspects of pork production including: · Training in breeding and reproduction of pigs · Training in animal housing, climate control, health management, veterinary and medical services · 'Training in feed management, feed nutrition, composition and recipes · Training of managers and personnel · Training in marketing, technical and administrative book keeping for the farm · Training in waste treatment and environmental protection · Training in risk management The franchise concept gives the farmers access to a combination of business participants that will give the best financial opportunity for purchasing feed and other outputs while providing an outlet for the sales and marketing of their finished pigs. The technological know-how will be collected and distributed to the farmers from local, national and international sources. These two as~he transfer of know-how and the combination of support businesses--will be organized by an umbrella organization, the "Alaska Pork Franchise", which will participate by investing approximately 10% of the capital for the farms. The farmers, in turn, will own shares in the holding, breeding, feed and meat company. To enhance the economic viability of the project, the Alaska Pork Project will cover the complete market, chain, product/market combinations, and financial and other services for the clients. These franchise services will be provided to the member farmers for a relative nominal fee. The greatest value for the farmers is having access to the know-how and support businesses for successful pig production and having an outlet for the sal~s and marketing of finished pork products. 272 Redwood Court, Soldotna, Alaska 99669 Telephone: 907 260 3075 - Facsimile: 907 260 6653 E-Mail: dick.metteer@acsalaska.net ALASKA PORK PROJECT Prepared by: Agriment International BV P,O. Box 661 7400 AR Devenler The Netherlands Tel: +31 (0)570 660911 Fax: +31 (0)570-676047 .cjO7AOO/alaska pork project TABLE OF CONTENTS Summary ............................................................................................................................... 1 Introduction .......................................................................................................................... 1 Markets ................................................................................................................................. 1 3.1 The Local Markets of The USA, Canada and Mexico ................................................... 1 3.2 The Export Markets ..................................................................................................... 2 3.2.1 Japan ............................................................ , ....................................................... 5 3.2.2 South Korea ......................................................................................................... 5 3.2.3 Hong Kong and Singapore .................................................................................... 5 3.2.4 Former Soviet Union ............................................................................................. 5 3.2.5 European Union .................................................................................................... 5 Objective ............................................................................................................................... 6 Strategy ................................................................................................................................. 8 5.1 Competition Profile ...................................................................................................... 8 5.2 Swot analysis for Alaska Pork Project ........................................................................ 11 5.3 Product/Market Combinations .................................................................................... 13 5.4 Market Objective ........................................................................................................ 14 Market Policy ...................................................................................................................... 14 6.1 Product Policy ............................................................................................................ 14 6.2 Distribution Policy ...................................................................................................... 14 6.3 Service Policy ............................................................................................................ 14 6.4 Promotion Policy ........................................................................................................ 15 6.5 Price Policy ................................................................................................................ 15 Purchasing Policy .............................................................................................................. 15 Logistic Policy .................................................................................................................... 15 Project Structure ................................................................................................................ 16 Financial Structure ............................................................................................................. 18 10.1 Investments ............................................................................................................ 18 10.2 Profitability ............................................................................................................. 18 Project Planning ................................................................................................................. 19 Ag#ment International B.V. 907AO(TMlaska Pork Project 1. SUMMARY The State of Alaska is known for its resources of oil, gas, minerals and fish. A big part of the country is situated in the polar zone so that agriculture exists only in some Southern parts where the climate accommodates the required conditions. The Alaska Pork Project is an initiative of a few business people in Alaska to develop a project with a gmat potential due to the identified comparative advantages. The most attractive markets for pork are situated in the Pacific Rim (Japan, South Korea) and Alaska is close to this area. Within 5-6 days fresh pork can ardve in those markets by ship. With the excellent harbours of Seward and Valdez inexpensive feed components can easily be imported to Alaska. With a group of strong international players, it is the intention to form a consortium for the marketing and production of high quality pork for the Pacific Rim. The project will include the breeding, feed production, finishing, slaughtering, cutting, deboning packing and distribution. For the livestock production co-operation will be created with approximately 36 plus farmers. The total investment will be approximately 232 million USD. The planned yearly sales are 300 million USD and the expected return on investment for the feed livestock and meat sectors together amounts to 26%. This project document is the result of a pre- feasibility study. Further evaluation and a detailed study are needed to create a complete business plan for the project. 2. INTRODUCTION Growing prosperity has a positive impact on consumption worldwide. Meat consumption is one of the fastest growing segments in the consumption patterns of people, particularly in rapidly developing countries. Recent market survey shows an expected increase in 2000 of 2% on a yearly basis worldwide. Meat production shows gmat changes. Due to the collapse of the economy of the former socialistic states, agriculture and livestock production declined dramatically in Central Europe and the former Sovijet Union. The European Union was confronted with animal disease and environmental restrictions. In Asia, Latin Amedca, Canada and the United States pork production has increased dramatically. The meat business is changing and with this background the opportunities for pig breeding and pork production in the state of Alaska have been investigated. 3. MARKETS The pork world market is very dynamic with significant pdce fluctuations due to shortages or over-supply. To evaluate the feasibility of an investment project in Alaska, it is important to identify the comparative advantages. Regarding marketing and sales, it is not necessary to analyse the market situation of all continents in detail; attention can be concentrated on a few markets (for production and sales), which may have a crucial impact on the position of a pork project in Alaska. In this case, the domestic position of the USA must be compared to Canada and large demanding international consumers such as Japan, South Korea, Hong Kong, Singapore and Russia must be analysed carefully. Since EU policy can have a gmat impact on world supply special attention will be paid to this factor. Finally developments in negotiations of the WTO have to be considered as an important guide for the United States in general and the State of Alaska in particular as a potential national and intemational pork market player. 3.1 The local markets of the USA, Canada and Mexico After the creation of NAFTA the North Amedcan continent is becoming on a unified market. Also, the markets for grains, protein components and meats of the USA, Canada and Mexico are growing towards a unified market step by step. Therefore considering the domestic market of the USA also means taking into consideration developments in Canada and Mexico. Agriment International B.V. I 907AOOtAlaska Pork Project The USA pork market is characterized by an almost self-sufficient position (consumption and production are almost in balance). As shown in the following table the consumption and production of pork fluctuated significantly in the past years. In Canada, approximately one third of the pork produced goes for export with an increase in the past years. The consumption of pork in Mexico is stable. To meet the demand, Mexico needs to import approximately 25% of its pork consumption. Table 1' Domestic pork markets in the USA, Canada and Mexico ('1000 tons) Year USA Canada Mexico COnsumption Production Consumption Production Consumption Production 1995 8067 8096 825 1281 980 954 1996 7643 7766 784 1240 915 890 1997 7569 7748 808 1277 925 895 1998 7980 8170 825 1337 950 930 Source: Netherlands Product Board for Livestock, Meat and Eggs; department market and structure smaller. In the USA the tendency for product types strongly leans to convenience products with high added value. The pdce level of the USA market is mainly influenced by the international commodity trade of pork. The consumption level is very sensitive for prices. Lower pdces mean higher c, onsumption and higher prices give the opposite development of consumption. 3.2 The export markets In the intemational trade of agricultural products, pork is one of the most important items of the development of agriculture. The export volume amounts to approximately 2500 tons or one third of the production volume of the USA. This volume excludes the internal trade in the EU between EU members. Outside the EU, Denmark, Netherlands, Canada and USA are the most important exporters. Japan, former USSR and Hong Kong have the highest volumes of import. The international pork trade summary is shown in the following tables: Table 2' Pork production, consumption, export and import in 1995 ('1000 ton). Country Production Consumption Self support Export Import Canada 1281 825 155.3 % 356 32 ' Taiwan 1233 857 143.9 % 381 5 EU 16088 15316 105.0 % 772 22 ' Brazil 1540 1505 102.3 % 41 6 Poland 1580 1556 101.5 % 68 44 China 3'6484 36215 100.7 % 273 4"' US 8096 8067 100.4 % 350 302 Philippines 754 757 99.6 % 0 3 Mexico 954 980 97.3 % 4 30 South Korea ' 632 675 93.6 % 19 51 Former USSR 3452 4003 86.2 % 0 . 551 Japan 1322 2105 62.8 % 0 841 Hong Kong 156 278 56.1% , 2 123 Total 73572 73139 100.6 % 2014 2266 _ Source: Product Boards for Livestock, Meat and Eggs. Department: Market and Structure. Ag~fment International B. V. 2 907AOOtAlaska Pork Project Table 3: Pork reduction consum tion ex orr and im ort in 1996 '1000 ton. Production Canada 124~ Taiwan 1269 Poland 1640 EU 16364 Brazil 1650 US 7766 China 40375 South Korea 692 Phil, 860 Mexico 89(~ Former USSR 3159 Ja 1266 153 Consumption 784 897 1504 15463 1580 7643 40149 696 870 158.2 % 141.5 % 109.0 % 105.8 % 104.4 % 101.6% 100.6 % 99.4 % 98.9 % 915 97.3 3927 80.4 2140 59.2 260 58.8'~'~'~ Total 77321 76828 100.6 % Source: Product Boards for Livestock, Meat and~M~ ~------'~"~--~~~ 357 168 892 71 432 228 48 0 5 0 0 3 2592 42 16 32 47 1 281 51 10 30 771 955 110 2348 Canada Taiwan Poland EU Braz US China South-Korea Phili Mexico Former USSR Ja Total Production 1277 1025 1480 1627~ 1700 7748 44450 699 890 895 2918 1300 152 80813 Consum 8O8 871 1360 15371 1636 7569 44252 705 901 925 3866 2143 266 80495 158.0 % 117.7% 108.8 105.9 % 103.9 % 102.4 % 100.4 % 99.1% 98.8 % 96.8 % 396 69 152 988 73 443 203 68 0 25 Import 57 5 32 78 Ag#ment International B. V. 907AOOtAlaska Pork Project Table 5' Pork production, consumption, export and import in 1998 ('1000 ton) Country Production Consumption Self support ' ExPort Import Canada 1337 825 162.1% 432 57 , Poland i520 1421 107.0 % 129 30 EU 16694 15609 107.0.% , 10'85 .... 40 Brazil 1800 1725 104.3 % 80 5 , US 8170 7980 102.4 % 490 280 South-Korea 725 722 100.4 % 90 . 85 ' China 47146 46982 100.3 % 169 5 Mexico 930 950 . 97.9 % . 30 50.. Philippines '910 931 97.7 % 0 21 Ta iwa n 816 886 92.1% 0 0 Former USSR ' 2600 3385 76.8 % 0 785 Japan 1331 2087 63.8 % 0 713 Henri Kon~l 150 273 54.9 % 4 126 Total 8412'9 83776 100.4 % 2509 2197 Source: Product Boards for Livestock, Meat and Eggs. Department: Market and Structure. In the years 1995-1996 a strong development in consumption and production occurred in the world but the relative position of countries (importer or exporter) did not significantly change. A recent survey of the Dutch Commodity Board for Livestock and Meat is showing a decline in production in 2000 with a positive impact on pork pdces. Table 6: Developments Pork sector(selected countries) ('1000 ton) Country Production Con,sumption Self support Export Import Denmark '99 1642 330 498% 1360 48 '00 1616 330 490% 1333 48 The Netherlands'99 1711 688 249% 1107 125 '00 1745 713 245% 1218 100 Canada '99 1525 924 165% 506 59 '00 1623 940 172% - 565 51 EU '99 18094 16631 109% 1320 56 '00 17749 16566 107% 1187 .60 ' US '99 ' 8774 8562 102% 577 374 '00 8486 8341 102% 555 387 S. Korea '99 692 767 90% 78 86 '00 704 844 83% 79 257 Former USSR '99 2848 3735 76% 0 894 '00 2735 3501 78% 0 768 Japan '99 1325 2152 59% 0 885.' '00 1323 2164 58% 0 915 ~ , The figures for Japan and South Korea were developed before the outbreak of Foot and Mouth Disease (FMD). In Japan and South Koroa this development had a dramatic impact on consumption, production, and national and international trade. The govemments of both countries am taking all measures to eliminate these infoctious diseases as quickly as possible, but the impact will be visible in the years 2000 and 2001. The structural position as important importing countries will be restored when diseases come under control. Agriment International B.V. 4 907AOOV~laska Pork Project 3.2.1 Japan Japan is the most attractive market for pork export. Traditionally, the consumption of fish was high and red and white meat was Iow. In the past decades the consumption of pork increased significantly, and the potential for further increase exists because consumption is still Iow compared to other countries. Due to the limited agricultural potential of the country, pork production was declining until the supply from Taiwan collapsed because of an outbreak of Foot and Mouth Disease (FMD). The Japanese market demand is very specific. Requirements for meat quality, fat content, cutting specifications and preparation are high. Business practice is based on long term relations between client and supplier. If these requirements are met, profitable pdces can be obtained. The requirements for animal health and absence of meat residues are high. As a result only a limited group of countries are allowed to export to Japan. The major pork suppliers are the USA, Canada, Denmark and the Netherlands. 3.2.2 South Korea A small but attractive market for pork is South Korea. The meat processing industry demands special cuts of loins and bellies. This market supply comes mainly from the USA and Canada. The business practices are more or less similar to practices in Japan. 3.2.3 Hong Kong and Singapore A few years ago, Hong Kong former crown colony of the UK, was retumed to China. Despite this, the capitalistic nature of the city's economy has continued. In the past less than 60% of the demand for pork could be supplied by production within the colony. It is expected that the supply from China will increase; nevertheless Hong Kong remains an interesting partner for international trade, particularly the markets for specific cuts, organs and intestines. After 1987, the production of pigs in the city/state of Singapore was eliminated and moved to Malaysia and some islands of Indonesia. Singapore is an attractive opportunity for trade of particular cuts and offal/intestines. Some of the trading houses dealing in frozen product are promising potential partners. 3.2.4 Former Soviet Union Before the political changes and the breakup of the former Soviet Union, this country was almost self-sufficient in the pork sector. After the changes the economic situation became worse causing a strong decline in meat consumption. The production of pork dropped even faster than the consumption. In 1998, the Soviet Union became the largest importer of pork products, amounting to 785.000 tons, and its sufficiency rate was only 77%. After the currency crisis in August 1998 the export opportunities declined, but they inCrease in 1999 and 2000. A large part of the pork trade is supported by extra subsidies from the EU and aid program from the USA. Export to the Soviet Union can be attractive in some cases but from a structural view it incorporates a gmat number of uncertainties. The execution of trade is mainly based on occasional contracts without continuity. 3.2.5 European Union The European Union is of minor importance for the import of pork, but with future, policy developments it can have a significant impact on the development of the world pork market. The balance in the pork market was disturbed dramatically due to animal diseases in Germany, the Netherlands and Belgium. In 1997 production decreased in these countries, and other countries filled the gap. In 1998 and 1999 production increased and pdces went down to an historical Iow-level worldwide. Agriment International B.V. 5 907AOOiAlaska Pork Project With extra subsidies the export volume was placed in the pork market world-wide and the profitability of the sector came under pressure. Due to environmental restrictions and the obligation to comply with WTO agreements it is expected that pork production in EU will drop in the coming 5-10 years. When competitive pdces are offered, pork imports into the EU may be possible and will have a tendency to grow. 4. OBJECTIVE The objective of the Alaska Pork Project is to create an integrated high quality pork production chain in an area of the USA with excellent conditions for animal health, good environmental management, competitive cost pdces and convenient access to the attractive markets of the Pacific Rim. These conditions exist in Alaska and this project document summa~j shows how the essential elements of the pork chain can be implemented them. Ag#ment International B.V. 6 907AOO~Alaska Pork Project 18.'"'~gdcu~ Research 20.Extension,, ;i.'. Services ~ ,, 1 .Top - Breeding Program 2. F1 Reproduction 3. Artificial Insemination 4. Piglet Production 5. Pig Finishing 6. Pig Collection 7. Slaughtering and! Meat Processing 8. Distribution of Meat and Meat Products ,,,, '~~C__°'°pem~ 9. Groin Growing ~== 10. Feed Components Purchasing 11. Concentrated Feed 12.Veterinary Services 13. Sow and Pig Housing ~___... 14. Quality. Ag#ment International B.V. 7 907AOOtAlaska Pork Project The project can attain better than average profitability when all aspects are realised according to world standards. The project will be realised in phases and will consist of: 1. A breeding pyramid for pigs. 2. Reproduction and finishing structure with pdvate farmers to produce 660,000 pigs annually with excellent meat quality and high meat content. 3. Feed production plant to produce well formulated compound feed'for sows, piglets and pigs. 4. Slaughterhouse and meat processing plant for quality pork ready for the markets of fresh, frozen or processed pork. Before starting to formulate the strategy of the project it is of gmat importance to execute an evaluation of the competitive position. a) Analysing the competition profile. b) SWOT analyses for the Alaska situation c) Formulation of the aimed Product Market Combination (PMCs) d) Formulate the market objective After reaching this point the project document will show the marketing policy to be applied to reach the formulated objectives. 5. STRATEGY 5.1 Competition profile The blue pdnt of the project assumes that the following partners will be involved in the realisation of the necessa~j operations: a) Saskatchewan Wheat Pool, Cebeco and Cefetra for the purchase of inputs, feed formulation, feed production and distribution to breeding plants and pig farmers. b) Bell Genetics (USA) to initiate and execute the breeding pyramid for pigs. c) Dumeco Intemational to execute a major part of the international pork trade (Japan, South Korea, Hong Kong, Singapore) d) Agdment International to supply the know how for all links of the pork chain and assistance to general management. With these partners a strong project for pork production and marketing can be designed with a number of strategic and economical advantages. A competition profile shows clearly the strong and weak factors compared with the competitors for the Alaska Pork Pm ect in Canada and the Mid West of USA. Key "factor ' Weak Average Strong A. Breeding Organisation Genetics ~~__.---~ ~ .O SupPly sperm Selection genetic mater~al ' Accessibility/availability for multiplication breeding stock Hygiene and health status ' ~ ~ -'~~, "~ O a. Multiplication breeding stock Selection breeding matedal UnifOrm sow herd for O Multiplication . . Planning/availability for multiplication Hygiene en health Status Y~ ~--, O , Ag#ment International B. V. 8 gO7AOO~laska Pork Project Key factor Weak Average Strong Hygiene and health status X-.... t* Business size Efficiency X Uniformity piglets for hog finishing operation Feed management O Availability personnel Welfare and environment D. Hog finishing operation Hygiene and health status ~_ . BuSiness size ' Efficiency Uniformity finished hogs for ~ -~' slaughterhouse ...~_.....~ ~> Feed management Availability personnel Welfare and environment /~.~. _~_._._.,_.~.~_~.~.~ .... E. Slaughterhouse Supply surety Selection criteda light/heavy pigs ~-----.._ ... · Transport distance towards hog finiShing operations- .... Transp°rt distance t°wards de- boning plant / buyer Technology .. X Availability personnel F. De-boning plant Supply surety ~______ _.__.__.~ .,.Processing geared to demand X~'- ,.Transport distance slaughterhouse Transport distance processor/ buyer ,, Technology .... ~ O ,,Availability personnel G. Processing industry '?i~ ~ ~ ~~~~~: ~~~?~~~~:~ Flexible assortment, ability to gear ~( ~ to demand Product development X Agriment International B.V. 9 907AOOtAlaska Pork Project Transport distance markets Upgrading possibilities for residual products (slaughter wastes) Technology Availability personnel H. Support Structure Production adaptable to needs Formulation easy / fast adaptability to results Purchasing quantity Addition possibilities enzymes Possibilities for tot heat treatment / pelleting Preventive care Specialism pigs Availability veterinarian Availability medications Education level personnel 3. Construction company Availability in region Specialism barn construction Specialism food industry construction Renovation / maintenance Travel distance to building location 'Possibility for flexible construction 4. barn equipment company Availability equipment Flexible systems Delivery pedod Availability in region Fault cleadng services Flexibility 6. Transport company Availability Hygiene Control Flexibility · Canadian Prairie X Mid West of USA O Alaska Pork Project comparative advantages of the project Agriment Intemational B.V. 10 907AOOIAlaska Pork Project The competition profile evaluation was carded out by American and Canadian experts of the meat sector. When international co-operation with the mentioned partners for the Alaska Pork Project can be implemented, the comparative advantages in the area's market know- how, health, environment and distance to markets can be realized. 5.2 Swot analysis for Alaska Pork Project To estimate the strategic opportunities it is important to evaluate the strengths, the weaknesses, the opportunities and the threats of project concept. Strengths: · Disease free production concept · Consortium covering the whole chain and best technology · Industrial site near excellent accessible harbor · Natural production circumstances · Good labor mentality Weakness: · Limited livestock experience · Lack of skilled employees · All feed components have to come from overseas · Limited financial capacity of the principal · Limited business experience in meat sector Opportunities: · Veq/near to huge grain and protein crop markets (Canada, US) · Close to Pacific Rim markets (Japan, S. Korea, Hon9 Ncr~§) · Business practice with and good image in Japan (fish business) · Fast growing pork consumption in Asia · Good capacity to develop agro-sector knowledge and extension services with agricultural university. Threats: · Cold climate · Limited land available for the project (quality, temperature, rainfall) · Small domestic market · Instability of (some) Asian markets · Long pedod with extreme Iow pork pdces The opportunities and threats (outside factors that are not influential) will be interrelated with the strengths and weaknesses (inside factors of the project that are influential). Thereby for each opportunity or threat the following questions are important: Cdteda for Strategic options Strengths Weaknesses Opportunities Does this strength enable us to benefit from this opportunity?. Does this weakness prevent us from using this opportunity?. Threats Does this strength enable us to avoid this threat? Does this weakness prevent us from avoiding this threat? Ag~fment International B.V. 11 907AOOtAlaska Pork Pr~ect 5.4 Market objective Within the pork market, which continuously shows growth world-wide, the Alaska Pork Project will find a place in the upper part of the market due to excellent access to promising countries for pork sales as the West Coast of the US, Japan, S. Korea, Hong Kong, Singapore and other metropolitan areas in the Pacific Rim. The next section will show briefly the marketing policy to reach the market objective. 6. MARKET POLICY 6.1 Product Policy The project will use pig breeds with excellent quality aspects for the Pacific Rim markets (slaughter weight, meat content, and health, no PSE (pale,soft,exudative) meat. The highest standards of hygiene will be introduced in farming and processing to create meat that has a long shelf life. After slaughtering, the pork will be de-boned and vacuum packed for clients in Japan, South Korea and the Amedcan west coast. Cuts will be prepared mainly for supermarkets and sausage factories. For the North Amedcan continent, trimmings will be selected according to quality, and meat and protein content. The markets in Hong Kong and Singapore are suitable for utilizing organs. 6.2 Distribution Policy The key advantage of the project is the relatively short distance by ship to the important markets of Japan (3000 miles, 5-7 sailing days) and South Korea (3500 miles, 7-10 sailing days). For the project partner Dumeco the advantage is to combine its own frozen pork from Europe with fresh pork from Alaska. At a further stage of development consideration can be given to the creation of a frozen storage facility in the Valdez harbor for transit purposes to extend the pork trade with the USA and/or Canada. 6.3 Service Policy The possibilities for international meat trade for the Asian countries are limited due to outbreaks of FMD in Taiwan, South Korea and Japan. The pork required for the market is shipped to clients from gmat distances. Fresh pork for table meat is specifically required. The Alaska Pork Project allows the consortium partners to offer both frozen and fresh pork to clients at competitive prices. A more flexible supply quantity can be offered to the Pacific Rim market with a transit store capacity. Ag#ment International B.V. 14 907AOOtAlaska Pork Project 5.3 Product/market combinations With the pig farmers the concept of franchise pig growing will be introduced. The farmers are the owner of farm and animals but can participate in a system that supplies high quality breeding material, feed and technical assistance for good performance of pig growing. The holding will participate in the capital of the farms (ca 10%) and the farmers will have a sham in the holding (breeding feed and meat company). To make the project functioning the holding has a complete scheme of product/market combinations (products, services and financial services for the clients) The Alaska Pork Project will cover the complete pork production chain. Farmers will be organised as pdvate owners of their farms in a franchise system. With the business partners, contracts will be made for their part of the business (they can become shareholders as well). The financial partners will be grouped in a holding to initiate and operate the project. For proper functioning of the chain, the Alaska Pork Project holding must offer products, services and financial services to clients in the chain. PM dia.qmm Clients in the chain Breeding organisation Multiplication Breeding stock Multiplication Hog finishing operation Compound feed ,factory Slaughterhouse /Processor Products Feed Breeds from abroad Feed Genetic matedal Sperm Feed Genetic matedal Sperm Feed Piglets Raw materials Finished hogs serVices Extension services~ Breeding technology Extension services~ Education2 Technical administration3 Extension Services Education2 Technical administration3 Extension 'services Education2 Technical administration3 Recepies4 Pig purchase~ feedback information6 Financial services Strategic sham (of approximately 10%) Strategic share (of approximately 10%) Mediation with financing arrangement Strategic share (of approximately 10%) Mediation with financing arrangement Strategic share (of approximately 10%) Mediation with financing arrangement Strategic share of approximately 10% Major share (>50%) Technical (feed, climate and housing) and health (veterinary, medicos) services Education and training of personnel and managers Record keeping of technical and economic administration of the farm Taking care of recipes and providing them with nutritional knowledge Combined purchase of finished pigs which are legally be owned by the franChise farmer slaughtering and processing for the Pacific Rim market Feedback of slaughter information through the whole chain Agriment International B.V. 13 907AOOMlaska Pork Project SWOT ANALYSIS ALASKA PORK PROJECT CRITERIA OPPORTUNITIES THREATS , , ='= E~ ~ ~ .- o ~ Score o~ o .~ >, - .- Di~ ~ 3 3 2 4 1 2 2 3 20 , C~~um ~tn 2 3 5 2 3 2 2 ~ 20 ...... , , , N~ ~mim 2 1 2 3 8 dr~ms~ G~ ~~ 1 4 5 m~ai~ , ................ Um~ ~i~~ 1 3 4 ~~ ....... to ~p in Umit~ fi~~ 1 5 7 8 19 , , um.~ ~~ 3 5 3 4 1 16 ..... , , , ,,~ , , , , , .... ,, ,, , ............. , , , ..... ,, , These scores show a lesser or greater relationship. Strong interrelation scores mean important aspects for the most essential: strategic issues of the project. Keeping in mind the opportunities and threats for Alaska to develop a pork business the most important issues are: 1) Develop disease free production facilities for pigs for which the demand is high in the markets of the Pacific Aim. 2) Use the possibility to create strong consortiUm of companies, between the US and Europe, which can cover all the essential elements of the pork chain (and use the good image of Alaska in Japan for the marketing strategy. 3) Situate the meat industq/(and the feed facton/) near to the harbours of Seward or Valdez, which have a good year round accessibility for large ocean ships, to bring in the feed components and to ship the (fresh and/of frozen) pork to the Pacific Rim markets. 4) Create a consortium of investors able to finance a project of 232 million USD for which a high return on investment can be offered. A detailed business plan has to be developed to prove the viability for the potential business and financial consortium partners. The strategy of the project is to focus on speclalisation in healthy and high quality pork production for the Pacific Rim markets at Iow cost by developing the project near the harbours of Seward or Valdez (Alaska) and by using the know-how of international business partnem in the pork chain. Agriment International B. V. 12 907A(X)tAlaska Pork Project 6.4 Promotion Policy The project must have a strong image for promotion purposes. The Alaska Pork Project has the following: The image of Alaska as a clean, healthy, disease free part of the wodd Alaska's "good neighbour" image with Japan and South Korea Alaska's positive image as supplier of high quality fish to the world market The excellent image of Dumeco International as a supplier of high quality European pork At the moment Alaska is unknown as a pork supplier. A well designed project incorporating the above promotion elements will create strong opportunities. 6.5 Price Policy The Alaska Pork Project aims to focus on the upper market segments in the Pacific Rim and create good profit opportunities for the farmers and project partners. For the production of Iow cost pork the project will use the best possible trade channels to supply feed components as well as pig breeds that are strong performers. The meat plant design must guarantee efficient slaughtering, processing and packaging of meat. The comparative advantage of short distances to the sales markets can create significant savings in distribution costs. 7. PURCHASING POLICY The biggest European trader of feed components (Cefetra, a subsidia~/of CEBECO NL) will use their trading channels to supply the amount of 220,000 tons of feed components to supply 660,000 pigs annually. Feed pdces are connected to wodd market feed component pdces. The supply of breeding sows and piglets to the farmers will be based on commemiai USA prices that may fluctuate weekly. The finished pigs for slaughter are also pdced according to USA pig pdces. Within the franchise formula of the project a pdce equalisation fund will be created to decrease pdce dsks for the farmers. 8. LOGISTIC POLICY An important crop raising area in Alaska is located near Delta Junction, 280 to 430 miles north of the Seward and Valdez harbours. It can be of gmat advantage to combine crop growing and pig finishing if pig manure could be used as fertiliser in this area (without risk of pollution). The Delta Junction area has enough capacity to absorb the annual amount of manure produced by 660,000 pigs (90,000 acres of amble land are required). The manure has good fertilisation components to increase the crop yields. The most efficient structure can be created if the feed plant and the meat processing plant are situated near Seward or Valdez harbours. The feed will be transported to the farms and the pigs with specialised trucks. Valdez harbour already has silos and storage capacity for feed components. An industrial site* with sufficient space is located in close proximity of either harbour. Agriment International B.V. 15 907AOOtAlaska Pork Project 9. PROJECT STUCTURE Following the pork chain in paragraph 5 the project will need a structure to breed, produce, slaughter, process, package, market and distribute 660,000 pigs annually. a) Breeding pyramid > GGP sows for female line: ~> GGP sows for male line: > GGP farms (400 each): > GP sows for female line: > Boars at Al stations: > GP farms (2600 each): > Al stations: 300 100 1 3,000 260 1 I or2 b) Piglet production P sows: Piglet production: Sow farms (5000 each): 30,000 660,000 6 c) Pig finishing Finishing facilities: Pig production/year: Pig finishing farms: 330,000 660,000 30 d) Feed plant Sow feed Nursery feed Pig feed TOTAL (1,1 O0 kg/sow) (30 kg/piglet) (270 kg/pig) Ton/Year 36,300 19,800 178,000 234,00O Agtfment International B.V. 16 907AOO~leska P(xf~ Project e) Meat plant > Slaughtering (360 pigs/hr) 660,000 pigs/yr Carcass weight 85 kg 56,100 ton/yr > Deboned % ton/yr · Hams 16 9,000 . Loins 14 7,850 · Shoulder 8 4,500 . Belly 6 3,350 · Cuts (others) 20 11,200 · Trimmings 9 5,050 · Bones 15 8,400 TOTAL 49,350 f) Distribution Tons Export fresh cuts (and frozen) Export frozen Domestic fresh supermarkets (market sham 25%) Domestic for meat processors Export organs, etc. Process for bone/meat/meal TOTAL 17,200 10,100 17,000 11,800 5,600 11,2OO 56,100 & 16,800 (%) (31) (18) (30) (21) (~o) (20) (~oo) g) Labour Breeding farms and Al Piglet production Pig finishing Subtotal farming Feed plant (40 t/h) Slaughterhouse and processing Logistic (feed, livestock, meat) 18 100 60 178 10 22O 6O Subtotal industry 290 TOTAL PROJECT 468 The breeding structure for 660,000 needs a development pedod of approximately 5 years. The planning of investment has to be phased carofully to balanco costs and cash flow. Ag#ment International B. V. 17 907AOOtAlaska Pork Project 10. FINANCIAL STRUCTURE 10.1 Investments Based on Agdment's experience with similar projects and on the additional research carded out in the USA a first (indicative) investment budget for the project has been developed. INVESTMENT BUDGET Farming sector > Breeding farms (3000 sow places) > Al stations (2) > Piglet production (30,000 sow places) > Pig finishing (220,000 places) > Feed and Livestock trucks (38) > Environmental Management System Subtotal Industry sector > Slaughterhouse, cutting deboning :> Sausage production (200 t/week) > Frozen storage (5000 ton) > Feed plant (40 t/h)* > Rendering and Waste management > Meat trucks (14) million USD 6 1 45 45 5 25 127 35 25 10 20 8 7 Subtotal 105 TOTAL PROJECT 232 * Storage silos already exist 10.2 Profitability With the specialisation strategy to focus on the Pacific Rim market the added value of the project can be significantly better than the level based on world market pdces. Furthermore significant savings can be reached' · Very competitive feed because overseas supply of grain and protein components can be realised. · Available protein-containing waste from the fish industry for pig feed · Opportunity to use "waste energy" from the local petroleum chemical industry in the feed, rendering and meat plant. · Very Iow logistical costs to bdng the high quality pork fresh chilled to the market of Japan and South Korea. Ag#ment International B V. 18 907AOOMlaska Pork Project Profitability indication (mln USD) Feed Pigs Meat Sausages Sales 35 90 125 50 Input 28 55 90 25 Added value 7 35 35 25 AV% 20% 39% 28% 50% Operational costs 1 18 12 4 Operational profit 6 17 23 21 Interest (8%) 2 9 4 2 Net profit before tax 4 8 19 19 Net profit after tax 3 6 14 13 (Tax 30%) The total ROI = 52 million USD or 26% 11. PROJECT PLANNING This project document is based on a pre-feasibility study by the project partners of Alaska and Agdment. It can be concluded that the comparative advantages for Alaska are significant. The next step would be to create a Memorandum of Understanding by all the necessary project partners to create a complete pork chain in Alaska. A detailed feasibility study must be carded out to prepare a Business Financing Plan. To develop the project to full capacity, particularly to create the breeding pyramid, a period of approximately 5 years will be needed. The industrial and marketing part of the project must be planned carefully as well. A prosperous pork sector will be possible when all the advantages of Alaska are mobilized. Ag#ment International B.V. 19 907AOOIAlaska Pork Project Suggested by: Administration. City of Kenai ORDINAl/CE NO. 1907-2001 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA INCREASING ESTIMATED REVENUES AND APPROPRIATIONS BY $16,000 IN THE SENIOR CITIZENS TITLE III GRANT FUND FOR OPERATING SUPPLIES WHEREAS, meal donations revenue is $16,000 more than anticipated; and WHEREAS, costs of the program have increased and the original budget will be expended in May; and WHEREAS, it is in the best interest of the City of Kenai to appropriate the additional meal donation revenue to continue the program. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA that estimated revenues and appropriations be increased as follows: Senior Citizens Title III Grant Fund Increase Estimated Revenues: Meal Donations $16,000 Increase Appropriations' Congregate Meals' Operating & Repair Supplies Home Meals- Operating & Repair Supplies $12,800 3,200 $16,000 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2nd day of May, 2001. ATTEST: JOHN d. WILLIAM S, MAYO R Carol L. Freas, City Clerk Approved by Finance: (04 / 12 / 2001) jl Introduced: Adopted: Effective: April 18,2001 May 2,2001 May 2,2001 Suggested by: Councu CITY OF KENAI RESOLUTION NO. 2001-28 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, SUPPORTING THE COOK INLET AQUACULTURE ASSOCIATION'S PLAN FOR ASSISTANCE TO THE COOK INLET FISHING COMMUNITY THROUGH FISHERIES ENHANCEMENT AND REHABILITATION. WHEREAS, the Cook Inlet Aquaculture Association was organized and incorporated in 1976 to protect and rehabilitate self-perpetuating salmon stocks and the habitats upon which they depend and to maximize the value of the Cook Inlet (Area H) common property salmon resource by applying science and enhancement technology to supplement the value attained from protection and rehabilitation of self-perpetuating salmon stocks; and, WHEREAS, the Cook Inlet Aquaculture Association is a Qualified Regional Aquaculture Association; and, WHEREAS, salmon prices began a downward trend reducing revenue available to the individuals and businesses that rely on the salmon resource for income and, not only has the price of salmon continued its downtrend, but the return of salmon stocks to Cook Inlet has also weakened, particularly sockeye in 1998 and 2000 and coho salmon in 1999; and, WHEREAS, the Kenai Peninsula Borough and the Federal government have declared the Cook Inlet fishing community, consisting of native and normative subsistence users, commercial, personal use and sport fishers, and the businesses that support these users, an economic disaster; and, WHEREAS, the economic disaster declaration provides short-term assistance to the Cook Inlet fishing community; and, WHEREAS, the Cook Inlet Aquaculture Association has developed a plan to provide long-term assistance to the Cook Inlet Fishing Community through fisheries rehabilitation and enhancement; and, WHEREAS, the Cook Inlet Aquaculture Association has presented the plan to provide long-term assistance to the Cook Inlet fishing community to the Kenai Peninsula Borough; and, WHEREAS, the Kenai Peninsula Borough has identified the plan to provide long-term assistance to the Cook Inlet fishing community as a 2001 Federal funding priority; and, WHEREAS, tourism and commercial fishing are two major industries important to the economy of the City of Kenai that rely on the salmon fisheries of Cook Inlet; and, WHEREAS, subsistence and personal use fishing are important to the citizens of the City of Kenai. Resolution No. 2001-28 Page 2 of 2 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the City of Kenai supports efforts by the Cook Inlet Aquaculture Association to provide long-term assistance to the Cook Inlet fishing community; and, BE IT FURTHER RESOLVED, that the City of Kenai supports the Kenai Peninsula Borough in its efforts to secure Federal funding for the Cook Inlet Aquaculture Association to provide long-term assistance to the Cook Inlet fishing community. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this second day of May, 2001. ATTEST: John J. Williams, Mayor Carol L. Freas, City Clerk clf Approved by Finance: Suggested by: CITY OF KENAI RESOLUTION NO. 2001-29 Administrautm A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AWARDING THE BID TO HANSON'S ROOFING FOR KENAI CITY HALL ROOF REPAIRS - 2001 FOR THE TOTAL AMOUNT OF $13,620. WHEREAS, the following was the only bid received on April 25,2001: BIDDER TOTAL Hanson's Roofing $13,620 WHEREAS, Hanson's Roofing's bid meets the bid specifications; and, WHEREAS, the recommendation from the City Administration is to award the bid to Hanson's Roofing; and, WHEREAS, the Council of the City of Kenai has determined that Hanson's Roofing's bid is a responsible bid and award to this bidder would be in the best interest of the City; and, WHEREAS, sufficient monies are appropriated. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the bid for Kenai City Hall Roof Repairs - 2001 be awarded to Hanson's Roofing for the total amount of $13,620. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2nd day of May. ATTEST: JOHN J. WILLIAMS, MAYOR Carol L. Freas, City Clerk Approved by Finance' ~ Suggested by: Administration City of Kenai RESOLUTION NO. :2001-30 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALAStC~ TRANSFERRING $7,500 IN THE SHOP DEPARTMENT TO PURCHASE BROOM CORES. WHEREAS, the airport broom requires regular replacement of broom bristles; and WHEREAS, having extra sets of broom cores allows for efficient in-shop change' out of bristles; and WHEREAS, funds to purchase an extra set of broom cores are available in the shop repair and maintenance account. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the following budget transfers be made: GeneraJ Fund From: Shop - Repair and Maintenance $7,500 To: Shop - Operating and Repair Supplies $7,500 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2nd day of May, 2001. JO HN J. WILLIAM S, MAYO R ATTEST: Carol L. Freas, City Clerk Approved by Finance' (4/27/2001) jl KENAI AIRPORT COMMISSION APRI~ 12, 2001 Kenai City Council Chambers 7:00 P.M. ***AGENDA*** ITEM 1- CALL TO ORDER AND ROLL CALL ITEM 2' AGENDA APPROVAL ITEM 3. APPROVAL OF MINUTES -- March 8, 2001 ITEM 4: PERSONS SCHEDULED TO BE HEARD ITEM 5- OLD BUSINESS ITEM 6- NEW BUSINESS Discussion -- Kenai Municipal Airport Logo ITEM 7: REPORTS Commission Chair Airport Manager City Council Liaison ITEM 8: COMMISSIONER COMMENTS AND (~UESTIONS ITEM 9' PERSONS NOT SCHEDULED TO BE HEARD ITEM 10: INFORMATION ITEMS Kenai City Council Meeting Action Agendas for March 7 and 21,2001. March 2001 -- Airport Enplanement Report Volunteer Reception Invitation ITEM 11: ADJOURNMENT KENAI AIRPORT COMMISSION APRIL 12, 2001 KENAI CITY COUNCIL CHAMBERS 7:00 P.M. CHAIRMAN HENRY KNACKSTEDT, PRESIDING MINUTES ITEM 1' CALL TO ORDER AND ROLL CALL Chairman Knackstedt called the meeting to order at 7:00 p.m. The roll was taken and confirmed as follows: Present: Absent' Others Present: Public: Knackstedt, Bielefeld, Kleidon, Holloway, Van Zee, O'Reilly Haralson Councilwoman Swarner, Airport Manager Cronkhite, and Contract Secretary Shalev Larry Porter ITEM 2: AGENDA APPROVAL MOTION: Commissioner Bielefeld MOVED to approve the agenda as presented. Commissioner Kleidon SECONDED the motion. There were no objections. SO ORDERED. ITEM 3: APPROVAL OF MINUTES -- March 8, 2001 MOTION: Commissioner Holloway MOVED to approve the minutes as presented. Commissioner Kleidon' SECONDED the motion. There were no objections. SO ORDERED. ITEM 4: PERSONS SCHEDULED TO BE HEARD- -None ITEM 5' OLD BUSINESS- -None ITEM 6' NEW BUSINESS Discussion -- Kenai Municipal Airport Logo Airport Manager Cronkhite asked the Commission to refer to the sample airport graphics included in the packet. Cronkhite explained a new airport logo is needed for the airport; the logo will be used on letterhead and products such as pens and doormats. Cronkhite also explained this logo will be used for many years to come and a progressive look may be desired. A brief discussion took place regarding each sample logo. The Commission agreed logo number two seemed the most pleasing, but several commissioners expressed opinions on how it could be modified to represent a more accurate image both civically and geographically. The modifications to sample number two are: 1) Alter the plane to better represent an aircraft by adding wings and tail. 2) Alter the mOuntain in background to better represent Mt. Redoubt. 3) Add runway markings along the X'in the logo. The modifications to the logo will be discussed at the next commission meeting. MOTION: Commissioner Holloway MOVED to request the Airport Manager to contact the graphic designers to make changes to the logo as discussed. Commissioner Bielefeld SECONDED the motion. There were no objections. SO ORDERED. ITEM 7: REPORTS 7-a. Commission Chair -- Knackstedt reported on the following: *Attended an FAA safety program that involved runway incursions. This program traveled to several airports to inspect and report on problems. Kenai Airport had no problems, but did have several potential problems involving gate security. No conclusions were made during this program, but the discussion was open and helpful. 7-b. Airport Manager -- Cronkhite reported on the following: · Two man-gates at the ends of the terminals will be changed to magnetic locking mechanisms. · Driver train/rig took place at PRISM. This is only a small portion of a long- term training program. · Cronkhite received the official grant offer for ARF/SRE facility. · The airport bird control program has started. This program will be working in conjunction with a bird study program. A biologist will be on site this summer to conduct this study and to offer advice on the wildlife control program on techniques to dissuade animals from coming onto airport property. Such changes include a change in vegetation and other harassment techniques. · The Collings Foundation has agreed to return to Kenai for an aviation display. The exact dates are still unknown. · Cronkhite answered various questions regarding gate security and the option for different types of security gates and the issue of access. Severe commissioners acknowledged the need for something other than the ID card system. Cronkhite responded to general concerns regarding the use of ID card entry gates by stating a new type of gate will be used at the ARF/SRE building and alternative gates are being considered. Commissioner Bielefeld expressed concern over the use of a fence and would appreciate better signage. Cronkhite agreed and stated she would look into it and will report back when more information is known. · Cronkhite and the Commission spoke briefly on the idea of developing an Airport Strategic Plan. The Commission agreed a plan should be discussed to outline AIRPORT COMMISSION MEETING APRIL 12,2001 PAGE 2 airport goals and objectives. Cronkhite said she would gather some general information regarding the basics of developing a strategic plan and will present it to the Commission at the next meeting. 7-c. City Council Liaison -- Councilwoman Swarner reported on the following: .An airport terminal tenants meeting will be held on April 20, 2001 at 3'00 p.m. at Wings Caf~ to discuss the upcoming renovations and carpeting. .Requested the Commission to provide information on the issue of the Float Plane Basin. The Float Plane Basin is estimated to earn approximately $1,000.00 per year. Swamer asked the Commission for possible reasons the basin is not used more. A discussion took place regarding this topic and it was generally concluded that the Float Plane Basin is too short for many aircraft landings. Cronkhite stated in the basin's defense that because the Kenai Airport is a multi-use airport, the Float Plane Basin is a valuable asset and she would like to continue to make as many improvements to the basin as funding will allow. ITEM 8: · COMMISSIONER COMMENTS AND (~UESTIONS Bielefeld: Supports the Float Plane Basin and briefly commented on the options and ideas the Master Plan has for its improvement. Van Zee- Stated the basin is not something that may ever show a high profit and commented on projects and areas that have a higher priority in terms of improvements. ITEM 9' PERSONS NOT SCHEDULED TO BE HEARD Larry Porter of Kenai expressed concern regarding the length and use of the Float Plane Basin; he feels 3,500 feet is too short for many landings. Porter reported he frequently uses the basin and would like to see minor changes and improvements take place. Porter also made a general complaint over the gate system/security system at the basin by stating the present gate mechanism is very difficult for one person to open/close. Cronkhite addressed his concerns and stated a user-friendly device for the gate can be investigated. ITEM 10' INFORMATION ITEMS 10-a. 10-b. 10-c. Kenai City Council Meeting Action Agendas for March 7 and 21,2001. March 2001 -- Airport Enplanement Report Volunteer Reception Invitation ITEM 11' ADJOURNMENT Commissioner Holloway MOVED to adjourn. Commissioner Van Zee SECONDED the motion. There were no objections. SO ORDERED. AIRPORT COMMISSION MEETING APRIL 12,2001 PAGE 3 The meeting adjourned at 8' 15 p.m. Minutes transcribed and prepared by: Sharon Gaudet Shalev, Contract Secretary AIRPORT COMMISSION MEETING APRIL 12,2001 PAGE 4 lo CITY OF KENAI PLANNING & ZONING COMMISSION AGENDA KENAI CITY COUNCIL CHAMBERS April 11, 2001 - 7:00 p.m. http://www, ci.kenai, ak. us CALL TO ORDER: a. Roll Call b. Agenda Approval c. Approval of Minutes: March 28, 2001 d. Consent Agenda *All items listed with an asterisk (*) are considered to be routine and non-controversial by the Commission and will be approved by one motion. There will. be no separate discussion of these items unless a Commission Member so requests, in which case the item will be removed from the Consent Agenda and considered in its normal sequence on the agenda as part of the General Orders. 2. SCHEDULED PUBLIC COMMENT: 3. CONSIDERATION OF PLATS: 4. PUBLIC HEARINGS: 5. OLD BUSINESS: ® NEW BUSINESS: a. *PZ01-15~Home Occupation Permit - Day Care~For the property known as Lot 2A, Brown Subdivision, Kenai, Alaska (302 Haller Street). Application submitted by Carol A. King, 302 Haller Street, Kenai, Alaska. An ordinance amending the definition of "Hotel" and adding definitions for "Lodge" and "Guide Service" in the Kenai Zoning Code and an ordinance amending the Land Use Table to add "Lodge" and "Guide Service".~Discussion. bo 7. PENDING ITEMS: 8. CODE ENFORCEMENT: ® REPORTS: a. City Council b. Borough Planning c. Administration 10. PERSONS PRESENT NOT SCHEDULED: 11. INFORMATION ITEMS: a. "Zoning Bulletin"- March 10 & 25, 2001 b. "Communication Towers" Special Report 12. COMMISSION COMMENTS & QUESTIONS: 13. ADJOURNMENT: CITY OF KENAI PLANNING ~k ZONING COMMISSION KENAI CITY COUNCIL CHAMBERS APRIL 11,2001 - 7:00 P.M. CHAIRMAN RON GOECKE, PRESIDING MINUTES ITEM 1' CALL TO ORDER Chairman Goecke called the meeting to order at 7'00 p.m. 1-a. Roll Call Members Present: Carl Glick, Phil Bryson, Ron Goecke, Barb Nord, Mike Morse, Amy Jackman Members Absent: Donald Erwin Others Present: Administrative Assistant Marilyn Kebschull, Contract Secretary Barb Roper X-bo A~enda Approval MOTION: Commissioner Bryson MOVED to approve the Agenda and requested UNANIMOUS CONSENT. Commissioner Morse SECONDED the motion. There were no objections. SO ORDERED. 1 Approval of Minutes- March 28, 2001 MOTION: Commissioner Glick MOVED to approve the minutes of March 28, 2001 and requested UNANIMOUS CONSENT. Commissioner Jackman SECONDED the motion. There were no objections. SO ORDERED. 1 -do Consent Agenda MOTION: Commissioner Glick MOVED to approve PZ01-15 and requested UNANIMOUS CONSENT. Commissioner Morse SECONDED the motion. There were no objections. SO ORDERED. ITEM 2' SCHEDULED PUBLIC COMMENT-- None .ITEM 3' ,,, CONSIDERATION OF PLATS -- None ITEM 4: · PUBLIC HEARINGS -- None ITEM 5: . OLD BUSINESS-- None ITEM 6: NEW BUSINESS *PZ01-15---Home Occupation Permit- Day Care -- For the property known as Lot 2A, Brown Subdivision, Kenai, Alaska (302 Hailer Street). Application submitted Carol A. King, 302 Hailer Street, Kenai, Alaska. Approved by consent agenda. Discussion -- An ordinance amending the definition of "Hotel" and adding definitions for "Lodge" and ~Guide Service" in the Kenai Zoning Code and an ordinance amending the Land Use Table to add "Lodge" and ~Guide Service". Kebschull again explained the need to amend the definition of "Hotel" in the Kenai Zoning Code and the Land Use Table. Discussion took place regarding the size of the facilities considered a lodge. The Commission also discussed cabin rentals and it was noted a definition was currently in the Code to that regard. It was decided the issue would be scheduled for public hearing at a future meeting. ITEM 7: PENDING ITEMS -- None ITEM 8: CODE EI~'~ORCEMENT -- None ITEM 9: REPORTS 9-a. City Council -- At the request of Councilman Bannock, Commissioner Jackman informed the Commission ten lots in Inlet Woods had been made available for sale and five back lots were retained for public use. The retained lots are those bordering the pond and had been discussed previously. 9-b. Borough Planning-- Commissioner Bryson gave a report based on the Borough's agenda included in the packet. 9-c. Administration-- Kebschull discussed the following items: · Requested a Commissioner be assigned to assist with the review of the proposal for the City's comprehensive plan update. Kebschull announced only one proposal was received and it would be reviewed and rated by the City Engineer, a Commissioner and herself. After the individual reviews and rating is complete, the three will meet to determine whether or not the firm meets the City's criteria and to also decide if it needs to go back out to bid. Commissioners Jackman, Nord and Glick expressed interest and discussed their schedules. It was decided that Glick would PLANNING & ZONING COMMISSION MEETING APRIL 11,2001 PAGE 2 o. assist with the review and he noted that he would be leaving for vacation on April 24th. It was noted the review should be completed before that time. · Asked the Commission if they had any objection to handling Consent Agenda items the same way Council does. It was decided the procedure would be tried and if there were any problems it would go back to how they are handled now. · Reported a proposal for two new ordinances would be included in a future Commission agenda. She noted, they would be for conditional use permits and bed & breakfasts and would require a review of the permits every five years. This review would confirm the permit holder is in compliance with the terms of the permit. Kebschull noted the only review done at this time is if a complaint is made. Jackman asked if the complaints would be examined during the review process and Kebschull explained, complaints are handled as they are received and would not be accumulated and discussed every five years. · Reported she attended a Certified Local Government training seminar in Anchorage presented by the History and Archeology Society. The seminar was informative and would be helpful since the Commission is now tasked for reviewing those items previously handled by the former Historic District Board. ITEM 10: PERSONS PRESENT NOT SCHEDULED -- None ITEM 11- INFO~TION ITEMS 11-a. 11-b. "Zoning Bulletin" - March 10 & 25,2001 ~Communication Towers" Special Report ITEM 12- COMMISSION COMMENTS/h QUESTIONS Commissioner GHck announced he would not be at the next meeting. Chairman Goecke announced he would not be at the next meeting. He also reported the Board of Adjustment voted in favor of Michael Kent in regard to his appeal for a conditional use permit in Angler's Acres. ITEM 13' _ ADJOURNMENT MOTION: Commissioner Bryson MOVED to adjourn. There were no objections. SO ORDERED. The meeting adjourned at 7:40 p.m. Respect~lly submitted, Barbara Roper, Contract Secretary PLANNING & ZONING COMMISSION MEETING APRIL 11,2001 PAGE 3 CITY OF KENAI PLANNING & ZONING COMMISSION AGENDA KENAI CITY COUNCIL CHAMBERS April 25, 2001 - 7:00 p.m. http ://www. ci. kcnai, ak. us le CALL TO ORDER: a. Roll Call b. Agenda Approval c. Consent Agenda *All items listed with an asterisk (*) are considered to be routine and non-controversial by the Commission and will be approved by one motion. There will be no separate discussion of these items unless a Commission Member so requests, in which case the item will be removed from the Consent Agenda and considered in its normal sequence on the agenda as part of the General Orders. 2. *Approval of Minutes' April 11, 2001 3. SCHEDULED PUBLIC COMMENT: 4. CONSIDERATION OF PLATS: a. PZ01-18~Preliminary Plat~FBO Subdivision No. 7~Submitted by Segesser Surveys, 30485 Rosland Street, Soldotna, AK 99669. 5. PUBLIC HEARINGS: 6. OLD BUSINESS: 7. NEW BUSINESS: a. PZ01-16~A resolution of the Planning and Zoning Commission recommending to the Council of the City of Kenai, Alaska that the definition of"Hotel" be amended and to add definitions for "Lodge" and "Guide Service" in the Kenai Zoning Code (14.20.320). b. PZ01-17~A resolution of the Planning and Zoning Commission recommending to the Council of the City of Kenai, Alaska, that the Land Use Table be amended to add "Lodge" and "Guide Service" to the listed uses. 8. PENDING ITEMS: 9. CODE ENFORCEMENT: 10. REPORTS: a. City Council b. Borough Planning c. Administration 11. PERSONS PRESENT NOT SCHEDULED: 12. INFORMATION ITEMS: a. American Planning Association Audio Conference, "Regulating Religious Land Use: Impacts and Implications of New Federal Legislation" b. Wince-Corthell-Bryson Letter, April 16, 2001 Re: ADOT&PF Kenai River Bridge Access Road Pathway Project Meeting c. "Zoning Bulletin"- April 10, 2001 13. COMMISSION COMMENTS & QUESTIONS: 14. ADJOURNMENT: CITY OF KENAI PLANNING/k ZONING COMMISSION KENAI CITY COUNCIL CI-IAM~ERS APRIL 25, 2001 - 7:00 P.M. VICE CHAIR PHIL BRYSON, PRESIDING MINUTES ITEM 1' CALL TO ORDER Vice Chair Bryson called the meeting to order at 7:00 p.m. 1-a. Roll Call Members Present: Bryson, Nord, Erwin, Morse, Jackman Members Absent: Glick, Goecke Others Present: Councilman Bannock, Building Official Springer, Contract Secretary Roper X-bo AEenda Approval MOTION: Commissioner Nord MOVED to approve the agenda and requested UNANIMOUS CONSENT. Commissioner Morse SECONDED the motion. There were no objections. SO ORDERED. 1 Consent Agenda There were no changes to the consent agenda. The consent agenda was approved as presented. ITEM 2: APPROVAL OF MINUTES -- April 11,2001 Minutes were approved by consent agenda. ITEM 3: · SCHEDULED PUBLIC COMMENT-- None ITEM 4: CONSIDERATION OF PLATS PZ01-18 -- Preliminary Plat-- FBO Subdivision No. 7 -- Submitted by Segesser Surveys, 30485 Rosland Street, Soldotna, AK 99669. Vice-Chair Bryson stated he would abstain from voting on PZ01-18 and turned the gavel to Commissioner Nord. MOTION: Commissioner Erwin MOVED to approve PZ01-18 and Commissioner Morse SECONDED the motion. There were no additional comments from staff. Commissioner Bryson explained he would abstain from voting on the issue as Seggeser Survey's works for his firm. There was no further discussion. VOTE: Erwin Yes Morse Yes Bryson Abstain Glick Jackman Absent Yes Nord Yes Goecke Absent MOTION PASSED UNANIMOUSLY. The gavel was returned to Vice Chair Bryson. ITEM 5: PUBLIC HEARINGS-- None ITEM 6- OLD BUSINESS-- None ITEM 7: NEW BUSINESS MOTION: PZO 1-16 -- A resolution of the Planning and Zoning Commission recommending to the Council of the City of Kenai, Alaska that the definition of 'Hotel" be amended and to add definitions for "Lodge" and 'Guide Service" in the Kenai Zoning Code (14.20.320). Commissioner dackman MOVED to approve PZ01-16 and Commissioner Morse SECONDED the motion. There were no additional comments from staff. Vice Chair Bryson opened the issue to public hearing. There were no public comments and the public hearing was closed. The Commission had no comments. VOTE: Nord Jackman Bi, son yes Yes Yes Glick Absent Erwin Yes Morse Yes Goecke Absent PLANNING & ZONING COMMISSION MEETING APRIL 25,2001 PAGE 2 MOTION PASSED UNANIMOUSLY. 7-bo MOTION: P/2 1-17 -- A resolution of the Planning and Zoning Commission recommending to the Council of the City of Kenai, Alaska, that the Land Use Table be amended to add ~Lodge~ and "Guide Service" to the listed uses. Commissioner Nord MOVED to approve PZ01-17 and Commissioner Erwin SECONDED the motion. There were no additional comments from staff. Vice Chair Bryson opened the issue up to public hearing. There were no public comments and the Public Hearing was closed. There was no Commission comments. VOTE: Glick Absent Morse Yes Jackman Yes Erwin Yes Nord Yes Goecke Absent Bryson Yes MOTION PASSED UNANIMOUSLY. ITEM 8: PENDING ITEMS -- None ITEM 9' ,, CODE ENFORCEMENT -- None ITEM 10: REPORTS 10-a. City Council -- Councilman Bannock reported on actions taken at the April 18, 2001 City Council meeting and referred to the action agenda included in the packet. 10-b. Borough Planning -- Commissioner Bryson reported on the April 23, 2001 KPB Planning Commission and referred to their agenda included in the packet. 10-c. Administration-- No report. ITEM 11' PERSONS PRE~ENT NOT SCHEDULED -- None ITEM 12: INFORMATION ITEMS 12-a. American Planning Association Audio Conference, "Regulating Religious Land Use: Impacts and Implications of New Federal Legislation" PLANNING & ZONING COMMISSION MEETING APRIL 25,2001 PAGE 3 12-b. 12-c. Wince-Corthell-Bryson Letter, April 16,2001 Re: ADOT&PF Kenai River Bridge Access Road Pathway Project Meeting "Zoning Bulletin" - April 10, 2001 ITEM 13: COMMISSION COMMENTS/h (~UESTIONS -- None ITEM 14: ADJOURNMENT MOTION: Commissioner Morse MOVED to adjourn. There were no objections. SO ORDERED. The meeting adjourned at 7:23 p.m. Respecffu~y submitted, Barbara Roper, Contract Secretary PLANNING & ZONING COMMISSION MEETING APRIL 25,2001 PAGE 4 BUDGET WORK SESSION APRIL 10, 2001 7:00 P.M. KENAI SENIOR CENTER MAYOR JOHN J. WILLIAMS, PRESIDING Council Present: Staff Present: Others Present: Frazer, Swamer, Porter, Williams, Moore, Bookey and Bannock (arrived at 7'35 p.m.) Freas, Semmens, Ross, Graves, Morris, La Shot, Jankowska, Kelso, Wannamaker, Walden, Cronkhite, Frates. Hal Smalley, Ethel Clausen, Bob Peters, Robert Ruffner, Nate Kiel Williams stated he wanted to hear the budget overview from administration and then discuss the Legislative, perhaps capital improvement budget, as well as an update on CARA funding availability. CARA Funding/Bluff Erosion & Coastal Trail Proiect: Ross explained he received a telephone call from Paul Fuhs who reported the State would be receiving $8 million in CARA funding. The borough had already projected that of the $800,000 the borough would be receiving, $150,000 would be used for coastal zone management. Because the city has been working with the borough in regard to the south shore, it was hoped some of the $150,000 would be dedicated to protection, etc. there. Ross added, the Borough's Director of Planning, who has been involved in the coastal zone management funding, indicated getting support from the borough for the $150,000 will be helpful in obtaining an additional $450,000 (from the $8 million) from the State's Government Coordinating Committee. A briefing paper was sent to the borough and will be proposed at the borough level. Ross believed the city had a good chance of receiving the $450,000 because the engineering and design were ready. Projects for use of the $150,000 could include educational signs, enforcement, and possibly supplementing overtime costs on the south shore of the river. Robert Ruffner (Kenai Water Shed Forum and in the audience) reported $16,000 was in the budget for the south shore projects and it was his understanding CARA funding probably wouldn't be available for the coastal zone program until September. Williams stated Fuhs was excited about the funding possibilities and Williams indicated to him the city needed to identify how the $450,000 could be included in the $8 million for the engineering. Budget Overview: Semmens offered a budget overview presentation including all the funds and noted the budget total was $13,065,347 and would be funded by $12 million in revenues, fund BUDGET WORK SESSION APRIL 10, 2001 PAGE 2 balance, etc. Last year's budget was $12,412,000, an increase of $652,000. A pie chart indicated all fund revenues were divided as follows' Others, 24% (ambulance fees, water/sewer fees, etc.); Fund Balance, 6%; Transfers, 11%; Taxes, 39%; Interest, 15%; State/Federal Taxes, 15%. Semmens reported he was projecting a small increase in assessed value; sales tax projected to be more at $3.9 million as there are indications the economy was picking up in Kenai through oil/gas exploration, residential land sales, etc. (approximately 3% increase); municipal assistance/revenue sharing expected to be the same; fish tax is an average; interest revenue is decreasing; and the total revenue was projected to be $8,092,000. Semmens also reviewed General Fund expenditures and noted that if all the budgets were spent and the revenues came in as planned, there would be a deficit of $501,000. However, he anticipated approximately six percent of the budget amount would not be spent ($515,000) and would give a $14,000 surplus. Next Semmens reviewed the individual departments, their original, amended, and recommended budgets. Williams noted the Parks & Recreation budget increased by 20% over the last two fiscal years and Beautification was increased by 70%. He asked to what the increases were attributed and 'it was noted there would be additional personnel (additional hours), repair and maintenance, operating supplies (flower purchase instead of being grown) and improvements (cemetery fence, refurbishing the Recreation Center floor, etc.). Semmens also reported the following: · The projected revenues are up slightly for the water/sewer fund, the expenditures are anticipated to be slightly less than last year's budget, and in the future, a rate increase will be needed. The Airport Land System budget is slightly lower because the new fuel sales owner sells fuel in a different way (based on where the fuel is sold) that the city does not receive fuel sales taxes and losing the local carrier who bought their fuel in Kenai. The landing fees have been increased and will show a rise. Land lease rents are lower. · They expect a slight deficit in the expenditures but overall, the fund balance is in good shape. · The Boating Facility Fund will break even after a $7,000 transfer from the General Fund. · The fuel sales are not keeping up with the budget. · The Boating Facility Fund is still a stand-alone fund, but now there is no depreciation (which can be changed by council if desired). · The Senior Citizen Title III Fund (funded by grants and meal donations) is a break-even fund. BUDGET WORK SESSION APRIL 10, 2001 PAGE 3 · Senior Citizen Borough Grant Fund -- The in-kind transfer from the General Fund is used for paying utilities and a slight increase for utilities is expected. · Senior Citizen Title V Fund -- a senior employment program and is totally funded by grants (down from the current budget). · It is expected to receive money from assessments from lots purchased in Inlet Woods in the Debt Service Fund. The debt service is transferred from the General Fund which will have to be paid by 2005 and will have to be paid from the General Fund. · Very little change in the Airport Terminal revenue and a $15,000 deficit was projected, however with the lapse, it will be a break-even budget. · Revenues are consistent in the Congregate Housing and is a break-even fund. BREAK TAKEN: 7:50 P.M. BACK TO ORDER: 8:02 P.M. General Discussion: · . Ross referred to his letter included in the budget document and highlighted the following changes: · Projecting a 3% increase in annual sales tax for 2002 (based on reality of ..... what will be received this year). · Changes in projected revenue growth and an 8% projection of lapse eliminated the forecast of a mil rate increase in the next several years. · Updated narratives were not included for the departments whose requests for changes in personnel were recommended by adrn_inistration. · Recommended personnel changes include: adding back a position cut five years ago in the Police Department (will be 58% federally funded); replacing the bulk of contract hours and records system with a 20-hour position in the Clerk's Department (it was noted the person would be situated in city hall after the nurses move from the downstairs and it would be a decision of the council if the person would be used as the deputy clerk); a six-month temporary position to assist in crack-sealing maintenance, etc. in the Street Department; rewrote the job description for the Administrative Assistant position in the Planning & Zoning Department and recognized it as a planner, upgrading the position; adding a 25-hour position in the Planning & Zoning Department and eliminating the engineering tech hours in the Public Works Administration; increased a part-time position in the Library to full-time position; upgraded a Range 3 position (supervising recreation) to a Range 6 position. · Major expenditures (not previously programmed) include $50,000 for carpeting and the ventilation system repair at the Senior Center; repair 8; maintenance of the Library parking lot (Streets Department); replacement of emergency generator in the Public Safety; purchase of sand for streets. BUDGET WORK SESSION APRIL 10, 2001 PAGE 4 · Capital projects were not included in the budget; engineering has begun on iCe refrigeration and direction whether or nOt council wants to pull funds from the fund balance ($1.5 million?) and what project they want to do. · Funds were not included in the budget in regard to renovation of city hall once the nurses move to their new building. Ross explained funds were not included in the budget. He added, a plan was submitted by an employee committee who reviewed different options, looking at public traffic flow, who interacts with whom, space needs, etc. He added, he believed it was a very good plan and he expected to leave those decisions with the incoming city manager and council. Since the nurses wouldn't be moving from the building until July, he believed there would be plenty of time to discuss the matter further. Since some of the renovating work could be done in-house (except possibly engineering for some of the electrical), he didn't believe the costs would be significant. When asked what the mil rate increase would be if money would be taken from the fund balance for the refrigeration project, Ross suggested a quarter of a mil if $1.5 million is taken which would allow for some excess with which to contract for operations. He added, refrigeration would increase the utilities by $35,000. However, if a half-mil raise were made, there could be enough funds to build a skateboard park. · Funds were included to .replace the emergency generator for the public safety building -- the current generator is 30 years old and part replacement is becoming more and more difficult. The structure in which the generator resides may need some minor alterations to accommodate the new generator. The transfer switches are still in good shape. Hockey Rink: A lengthy discussion took place on the capital outlay for refrigeration at the multipurpose facility. ~illiams noted, there would be cost outlays for the Youth Detention Facility (cost of property, perhaps $200,000) and coastal zone trail project (but the amount was not known). Other possible capital costs were noted as the renovation of city hall and addition to the library. Comments regarding the refrigeration project were: · It is not known what refrigerating the ice will return through direct revenues, sales tax income. · Generally agreed the project needs to go forward, the $1.5 million would include the buy out of the LLC, and the city needs to take over the project, however it is more important the project go forward and the buy-out is secondary. · Concern of effect to the budget if an additional $1 million were taken for a library expansion. · Nate Kiel (speaking for the LLC) stated their members would continue their support of the facility through the winter and summer. He noted, with new dasher boards and new rink, hourly rates could be held at under $100 an hour, demand for the use of the rink with guaranteed ice for practices, games, figure BUDGET WORK SESSION APRIL 10, 2001 PAGE 5 skating, etc. will be very healthy. He suggested council consider the indirect benefits the facility's use will have to the community, i.e. hotel rentals, shopping, etc. Williams noted council's unanimous consent of using $1.5 million from the fund balance to install ice refrigeration to the facility and directed administration to prepare a revised review of the budget based on the idea that $1.5 million will be used from cash (not from bonding or another source). Williams requested the revised review also take into consideration the revenue losses and how they might be recovered through both revenues from the rink and through a mil rate increase sufficient to cover the losses to the cash position of the city regarding operating costs, interest on capital loss, etc. Ross stated administration would bring the operating portion as a contract professional services rather than in-house addition of personnel because there may be an opportunity to contract with a group who have refrigeration maintenance certifications, Zamboni care experience, etc. He added, at the first opportunity, the city would probably contract for the services in order to see what's involved for the first year. He noted, the plan includes restrooms as they will be required with the upgrade of the building. Letters of request: Williams referred to copies of letters of request received from Boys & Girls Club (ALPAR), Kenai River Watershed Forum (Kenai River Festival), and Central Area Transit and requested council review them prior to the next work session. He also referred to an abstract summary for the feature-length documentary proposed by Randy Chalawsky. Williams explained he and Swamer talked with Chalawsky in regard to funding and it was their idea to bring it to council. Wi!l/ams added, he was proposing splitting a $40,000 donation toward the project between the City of Homer, City of Soldoma, Borough, and the City of Kenai and spoke to several of the entities, receiving enthusiasm, but wanting additional information. He will report back to council in regard to his discussions with all the entities at the next budget hearing. Additional Comments' · Ross will bring back the cost information requested in regard to the ice facility. · An effort will be to go through the entire budget at the April 17 budget work session, as well as discussing the impact the $1.5 million will have on the budget. If the entire budget is not reviewed on April 17, Williams requested waiting until May 1 because he may be out of the state (traveling to Washington, DC at the invitation of GovernOr Hickel in regard to fundraising for Alaska Pacific University and the Northern Institute as well as meeting with congressional delegation regarding coastal trail, etc.). Porter stated she would not be able to attend a work session on April 24 either. BUDGET WORK SESSION APRIL 10, 2001 PAGE 6 · City manager search work session would be held at 7:00 p.m., April 11 at the Kenai Senior Center. Adioumment:. The work session adjourned at approximately 8:55 p.m. Notes transcribed and prepared by: Carol L. Freas, City Clerk KENAI CITY COUNCIL WORK SESSION CITY MANAGER SEARCH APRIL ! 1,2001 7:00 P.M. KENAI SENIOR CENTER MAYOR JOHN J. WILLIAMS~ PRESIDING Council present: Staff present: Others present: Bookey, Williams, Porter, Moore, Frazer, Swarner, Bookey Freas, Ross, Graves, Walden, Tilly Leo Oberts, Ethel Clausen, Barb Nord Council reviewed the applications of the 15 applicants who fulfilled the initial application process, i.e. met the minimum requirements and returned the required supplemental information. Council chose to allow each member to offer names of those applicants they preferred to discuss further. The names were deposited with Clerk Freas and a count was made as follows: ~iark 5 ~ Elliot 3 Snow 7~/ Underkofler 3 Hladick 4 I1 Powers 1 Edes 3 I/ Ciesielski 1 Beeler 1 ~ Robinson 1 The applicants receiving one preference were eliminated and the remaining applications were reviewed by the council as a whole. Noting skills, prior experience, education, etc. further eliminations were made (Edes, Underkofler, and Clark) reducing the applicants to three. William B. Elliot: Council's comments to further consider this applicant were' · Prior experience as a city manager · Many projects accomplished at last employment (four years) Linda L. Snow: Council's comments to further consider this applicant were: · All seven council members offered her name for consideration · Stability of job background Is familiar with Kenad · Application generally very impressive Several members of council were contacted by a past mayor who worked with Snow and gave her very good references. · Soldotna City Manager Boedecker spoke highly of Snow. Chris Hladick: Council's comments to further consider this applicant were: · Soldotna City Manager Boedecker spoke highly of Hladick. · Background in environmental biology, geological engineering, public works and construction. Experience with state and federal funding KENAI CITY COUNCIL WORK SESSION APRIL 11,2001 PAGE 2 · Dillingham budget is similar to Kenai's, same types of departments, though less employees than Kenai. · Working toward a Master's Degree in Public Administration. Council took the opportunity to suggest and review any of the 35 total applicants, but there were none brought forward. Ross was asked if there were any other applicants, in his opinion, that should seriously be reviewed that council had not brought forward. Ross noted, most of the applicants didn't respond to the supplemental information requests and waivers and some applicants were not qualified. Ross suggested telephone background checks of references given by the applicants be the next step taken. Because of Ross' experience in interviewing and knowledge of what and what not to ask, council requested him to do the telephone background checks with the references. Ross stated he would first do the background interviews on the references and provide transcripts of those interviews. He added, through those interviews, other information can be gathered and additional contacts made as well as media contacts. Ross explained he would like to have a council member present during the telephone contacts, but understood that might not be workable if there are call backs, etc. He estimated the interviews and checks would take more than a week. After passing the information garnered from the interviews to council, a decision can be made as to what council's next step will be. Attorney Graves will do credit checks. It was suggested council could schedule an executive session during the May 2 meeting in order to discuss the interview findings and debate strengths and weaknesses. Swarner requested letters be sent to the other applicants thanking them for their interest. Ross also noted, when calling the candidates, he would not interview them as council will, but .would give the applicants a chance to disclose anything they may wish to disclose. Council set an executive session for the 'May 2, 2001 council meeting. Council also cancelled the budget work session for April 24 and noted they would set another in May if it is found to be necessary. Williams requested an update synopsis of the bluff erosion/coastal zone trail project for him to take to Washington, DC. Ross reported the Commissioner of Corrections is interested in meeting with both the city and Borough Assembly in regard to the proposed private prison. He noted she would be in the area between May 21 and 25. The work session adjourned at approximately 8:46 p.m. Notes transcribed and prepared by: Carol L. Freas, City Clerk KENAI CITY COUNCIL BUDGET WORK SESSION APRIL 17, 2001 KENAI SENIOR CENTER 7:00 P.M. MAYOR JOHN J. WILLIAMS, pRESIDING Council Present: Staff Present: Others present: Bookey, Swamer, Porter, Williams, Moore, Frazer and Bannock Freas, Ross, Semmens, Frates, Graves, Komelis, Jankowska, La Shot, Kelso, Moms, Walden, Cronkhite, Wanamaker, Kohler, Tilly DeForest, Clausen, Castimore, Baldwin, Peters, Heus, Kiel Mayor Williams opened the work session and noted the letters of request for donations received from the Boys & Girls Club {increase from $800 to $1,000) for the ALPAR litter control program, Kenai River Festival {($300), and Centre Area Rural Transit System, Inc. {$25,000). Also noted was a memorandum from Finance Director Semmens regarding the multipurpose facility proposed refrigeration project and buyout of Phase 1 LLC. Council began with reviewing each individual department budget. · Clerk's Department.: :i;Clerk Freas revieWed her department budget and noted a 20-hour permanent position '~was included which deCreased the amount in professional services as the position would eliminate a large portion of costs attributed to contract secretarial and archiving :work. She also noted there was a small increase in travel to cover costs for training "flor the 20-hour person, as well as car allowance. A lengthy discussion followed regarding the possible need to upgrade the 20-hour position to 25 hours if the Clerk's office is moved to the downstairs area of City Hall being vacated by the Public Health Nurses. It was noted,, the part-time person would be attending commission meetings in the evening which would be included in the hours-per-week worked and at 25 hours per week, health insurance must be included with the person's benefits and increases the cost for the position by approximately $10,000 a year. Because of the significant increase in the cost and the unknown of whether additional hours would be needed, consensus of council was to not to allow the increase to 25 hours, although Williams requested additional hourly information. ACTION: No changes were made and this budget was approved as presented. Visitors Center: Ross reviewed the budget with council and noted the primary increase to the budget would be the city's payment to the Center for services provided from $65,000 to $70,000. There were minor increases elsewhere in the budget, however there was very little difference between the current budget and the amended budget for next year. The purchase of a laptop computer was questioned and Ross explained it would be used for taking an inventory of museum items and city's historical equipment, etc. BUDGET WORK SESSION APRIL 17, 2001 PAGE 2 Bannock stated his disappointment with this budget and suggested the budget be decreased in professional services. He added, he believed the Center should have a goal of decreasing the city subsidy instead of increasing it because they do not pay rent, are recipients of revenue from the building (pull tabs, fee structures, etc.), and the city pays for the maintenance and utilities, etc. It was noted it would be much more expensive ff the city took over the operation and management of the building (including employees). ACTION: No changes made and this budget was approved as presented. Legislative- Upon review and discussion, the following was determined: A donation increase to $1,000 for the Boys & Girls Club for the ALPAR program was approved. · A request to increase the donation for the KCHS Graduation and donation of a computer as a grand prize at the after-graduation party was denied. · Though dissatisfaction with their donating funds that were donated to them was expressed, the city's donation to Peninsula winter Games was approved. A request to increase the Hockey Booster advertisement to full page at a cost of $500 was denied. · Although an objection to a city match to United Way was made, the donation was approved. A request to increase the Industry Counts donation was denied. A request to place $10,000 in the Professional Services portion of the Legislative budget toward the production of a video production by Randy Chalawsky (the issuance of the funding to be reexamined prior to committing the funds) was approved. · The request for $25,000 for the Central Area Rural Transportation Service (CARTS) was denied. · A suggestion to include funding cover donations to the KCVB for yearly special exhibits was denied (they will be reviewed individually). · A $750 donation to Tourism Marketing Council was denied and added to the Miscellaneous/Miscellaneous (now to be $3,100). · A $1,200 request for the KCHS Art Department for a DVD camera (allowing ability to make a DVD presentation for the city and to reproduce for distribution) was denied. ACTION: Changes as stated above. Legal: A $7,350 increase in the total budget would cover increases in salaries and benefits, a new computer for the Legal Secretary, professional services for the code publishing, and books (on-line legal services). BUDGET WORK SESSION APRIL 17, 2001 PAGE 3 ACTION: No changes and accepted as presented. City Manager: Increases to this budget reflect anticipated benefits and travel for the new city manager. It was noted the code provides for a vehicle or monthly car allowance for the city manager and was not provided for in this budget (may be part of the negotiations). Moving expenses were not included as those costs would be negotiated and taken from the current budget. ACTION: No changes made and this budget was approved as presented. Finance Department: A $4,000 increase in Small Tools & Minor Equipment reflects the planned purchase of new computers and office furniture. ACTION: No changes made and this budget was approved as presented. Land Administration' No changes. ACTION: No changes made and this budget was approved as presented. Non-Departmental: Though insurance costs show an increase, the overall budget was down about $8,500 from what was appropriated last year. ACTION: No changes made and this budget was approved as presented. Planning & Zoning: An increase in salaries and benefits reflect the plan to change the Administrative Assistant III to the position of Planner at a Range 14 and upgrading the part-time position to permanent at 25 hours per week, Range 7 and calhng it a Department Assistant II. [The funds that had been included in the Public Works Administration for the Engineering Tech position will be moved to Planning & Zoning and instead of hiring two part-time persons, one 25-hour, Range 7 position will be created and will be supervised by the Planner (increase for Planner will be $3,700 and the part-time position will be $12,000)]. ACTION: No changes made and this budget was approved as presented. Safety: Basically the same budget as last year's. ACTION: No changes made and this budget was approved as presented. BUDGET WORK SESSION APRIL 17,2001 PAGE 4 Police: Increase reflects an additional police officer position (filling a position reduced in 1997) and may be covered by federal grant funding ($75,000 over a three-year period and accepting the grant will require the position to be continued beyond the three-year grant period). The impact of an additional prison at Wildwood was discussed briefly. It was noted a report on the social impacts to the community by the proposed prison was requested by three members of the Borough Assembly. ACTION: No changes made and this budget was approved as presented. Communications: This budget decreased by approximately 15%. ACTION: No changes made and this budget was approved as presented. Animal Control: It was reported the budget reflected a slight increase to operations of the facility and small tools (a shed will be placed for storage of live traps, portable kennels, etc.). ACTION: ,No changes made and this budget was approved as presented. Fire' It was noted this budget reflected an increase in Salaries and Benefits, Small Tools (upgrade of air packs), Professional Services (physicals for ten people, next year this cost will be less), and Utilities. ACTION: No changes made and this budget was approved as presented. BREAK TAKEN: 8:55 P.M. BACK TO ORDER: 9:10 P.M. Public Works Administration: This budget reflects a decrease due to the'removal of the funding for the part-time positions. ACTION: No changes made and this budget was approved as presented. Shop;. Increases to the budget reflect fuel costs and broom segments for the sweeper. ACTION: No changes made and this budget was approved as presented. Streets: This budget reflects the following: BUDGET WORK SESSION APRIL 17, 2001 PAGE 5 · Increase in personnel for a six-month position to assist in street maintenance, crack-sealing operations, placement of street banners, holiday lights, etc. · Increase in Operating & Repair Supplies for sand purchase. · Increase in Machinery & Equipment to replace the truck sander and tailgate spreader. · Renting a sweeper as it is more cost effective. · More effective to hire the part-time person instead of contracting out due to the variety of work responsibilities. A request was made to have the gutters and mediums along the Spur Highway swept earlier in the year and to have the crosswalks at streets and to parks painted early in the summer. ACTION: No changes made and this budget was approved as presented. Buildings: It was noted this budget was increasing approximately $49,000 reflecting changes in salaries and benefits; purchase of a new stand-by generator for the public safety building; funding for remodel of City Hall and some work at a warm storage building to make more room for building maintenance employees after some equipment is moved to the new airport building; and funds to purchase a new vehicle for the building ., 'official. ACTION: No changes made and this budget was approved as presented. Street Lighting: It was explained this budget was increased to purchase more lights because Homer Electric Association will not purchase some of the metal poles. Several suggestions were made where street lights could be placed, i.e. Dolchok/Beaver Loop and Rogers/Lawton. ACTION: No changes made and this budget was approved as presented. Library: The following information reflecting this budget: · Upgrade of part-time position to full time. · Purchase of filtering software (Children's Intemet Protection Act). · Increase in printing and binding for new copier contract. · Increase in repair and maintenance for the web pack licenses and repair of library chairs. ACTION- No changes made and this budget was approved as presented. BUDGET WORK SESSION APRIL 17,2001 PAGE 6 Recreation: This budget reflected the following: · An increase in salaries and benefits to cover costs for upgrading a Range 3 position to a Grade 6. * Increase in Small Tools for a cardio bike. · Increase in Rentals for portable toilets for the Nordic Ski trails during the winter months. · Minor increase in Miscellaneous to cover costs involved with teen dances. ACTION: No changes made and this budget was approved as presented. Parks: This budget reflected the following: · Increase in salaries and operating expenses which includes the 200 hours for the Parks maintenance personnel. · Increase in operating and repair supplies to extend the fertilizer program into the fall. · Increase in repair and maintenance to repair a roof at Municipal Park, and to begin a new project to repair or replace signs in the city parks (beginning this year with a new sign for Municipal Park). · Increase in equipment to replace the snow machine used to groom the Nordic Ski trails. · This budget did not include funding for a skateboard park as costs were being further investigated for skateboard equipment and fence costs. When asked if these funds would be included in the new budget or spent from the current budget, Ross explained it would be council's decision either to begin the program this year or make it a part of the hockey program (raise in mil rate, etc.) and do it next year. It was estimated the cost for a skateboard park would be approximately $30,000- $3:2,000. Porter stated she wanted the issue to be discussed separately and done this summer. Discussion followed regarding the turnaround time for ordering equipment, etc. Frates reported approximately three to four weeks. Ross explained part of the hold-up was investigating participation of the School District, having equipment made locally or purchasing from a manufacturer. His recommendation was to purchase the equipment from the manufacturer and have it installed, along with purchase of fencing at an approximate cost of $32,000 (which would require appropriation from the fund balance). A brief disCussion followed regarding the watering program and it was explained the program would start earlier this year and a sufficient of hoses and sprinklers were available. Beautification' BUDGET WORK SESSION APRIL 17, 2001 PAGE 7 This budget reflected the following: · Increase in maintenance and salaries. · Increase in repair and maintenance for installation of more transformers on street light poles in order to add more holiday decorations throughout the town. · Increase in improvements other than buildings for a new cemetery fence (rod iron along the front and east side if affordable). · Greenhouse repair funds were included for possible replacement of plexi- glass panels. A discussion followed regarding the available space at the cemetery and it was noted there are two areas which have not been used; to the left which has been platted but not brushed out and toward the runway which has been brushed out, but not platted. It was also noted, spaces were still available in the new part to the fight and it is not encouraged to use the pioneer area. It was also noted there had been some interest in installing crypts expressed to Williams. It was noted there was potential to expand the cemetery with FAA's concurrence. ACTION: No changes made and this budget was approved as presented. Refrigeration at Multipurpose Facility: A lengthy discussion took place in regard to the memorandum distributed at the beginning of the meeting indicating the following: "The multipurpose facility refrigeration project and buyout of Phase 1 LLC will require a $1.6 million transfer from the General Fund to the capital project fund. This reduction in fund balance will reduce interest earnings b $90,000 annually since these funds will not be replaced. There will also be $30,000 in additional utilities for refrigeration and we expect revenues for ice rental to add $10,000 to the $40,000 that is already in the bUdget...The ongoing budget impact is $110,000 annually. This would require a mill rate increase of .32 to cover." Comments included: · Concerns of taking the General Fund balance to that level and how far does the council feel comfortable taking the balance. · Administration reviewed the funds and discussed to where the fund balance should go which is a policy call of council; if the funds are pulled from the fund balance, the monies to cover the project (with the additive alternates) and the mil rate is raised to compensate for'the fund balance revenue, is a policy call for council; pulling the funds won't hurt if they are replaced by a mi! rate increase so that next year the budget is not crippled or have operating deficits and need to draw from the fund balance. · The dollar amounts were what council expected; it's a good project for a lot of people; if the mfl rate is raised one-half mil and not used, it could be put back BUDGET WORK SESSION APRIL 17, 2001 PAGE 8 into the fund balance; there may be land sale funds that will be put back into the fund balance. · Hesitant to raise the mil rate because of confidence that the use and popularity will cover the costs. Icing the floor is just the beginning and in time, there will be a desire to enclose the build~ng more, add clubhouse rooms, etc. and more money will be spent. Raising the mil rate could be used as a savings account to cover the costs of those future needs. · In favor of the development to this point, and any future expansions should be through the facility's own capabilities. · The mil rate wouldn't need to be raised, if $1.6 mill_ion is used, the number of the deficit surplus will change to $611,000 and the adjusted deficit surplus will show $110,000 taken from the fund balance to support the operating portion for the budget, i.e. the budget will be in the red by $110,000 unless the operating budget is decreased by $110,000. · Not necessarily willing to support a tax that might increase the fund balance; the city has never been in the position to be forced to make a cut to balance a budget; see what the revenue ramifications will be over FY 2002 and during budget planning next year, make necessary cuts to make up the loss to the fund balance. · Would not cut services to the citizenry unless they request the cuts in library, ambulance, etc. Because the amount would be $110,000, don't raise the mil rate this year, but wait and see. · Because the refrigeration would not be in use for a full year by next budget and whether the costs will be covered would still be an unknown, it was suggested to have a .32 mil rate increase to break even. An unofficial advisory motion was made and seconded to spend $1.6 mill_ion from the General Fund as outlined in the memorandum and was agreed upon unanimously. An unofficial advisory motion was made and seconded for the mfl rate to stay at 3.5 for the coming fiscal year. VOTE: Frazer: Swarner: Bannock: Yes Williams: No [ Booker: Yes .. Moore: Yes [ Porter' Yes Yes Yes The motion passed. Williams noted he would be on the radio on May 7 at 9'00 a.m. and requested council members to join him. Bannock, Porter, and Swarner stated they would accompany him. Rick Baldwin (LLC) stated he would join them too. BUDGET WORK SESSION APRIL 17, 2001 PAGE 9 Water Fund' This budget reflected minor changes, including a decrease of about $20,000 in maintenance and operations because of purchase of equipment last year and not needing purchases this year. ACTION: No changes made and this budget was approved as presented. Sewer Fund: This budget reflected salaries are up a little, but maintenance and operation is down. ACTION: No changes made and this budget was approved as presented. Sewer Treatment Plant: This budget reflected an increase in utilities; an increase in repair and maintenance for roof repairs ($40,000); and small tools also has a minor increase. ACTION: No changes made and this budget was approved as presented. Airport Land System: This budget reflected the purchase of a new pick-up truck as the current one was not functional to do the brake action reports required. The current truck will be kept and used for hauling grass cuttings, etc. ACTION: No changes made and this budget was approved as presented. Airport Maintenance & Operations' This budget reflected fuel cost increases, an increase in small tools for furnishings for the ARFF/SRE building, and an increase in advertising. .ACTION: No changes made and this budget was approved as presented. Airport Administration' ACTION: No changes made and this budget was approved as presented. Airport Land: This budget reflects funds for building outside safety stairs at the PRISM facility. ACTION: No changes made and this budget was approved as presented. Boat Facility: This budget reflects much the same as last year's budget. ACTION: No changes made and this budget was approved as presented. BUDGET WORK SESSION APRIL 17, 2001 PAGE 10 Congregate Meals'. It was noted the meal donation was increased from $3.00 to $4.00. ACTION: No changes made and this budget was approved as presented. Borough Grant Fund: It was noted the buildings budget includes funds for carpeting and a range hood for the Center. ACTION: No changes made and this budget was approved as presented. Senior Employment: It was not anticipated the Title V positions would be lost this year, however if they are lost it would be a major decrease in the program. ACTION: No changes made and this budget was approved as presented. Debt Service Funds: ACTION: No changes made and this budget was approved as presented. Airport Terminal Fund: This budget reflects a reallocation of the seasonal hire against the terminal and the person will be used for inside and outside upkeep, grass maintenance, etc.; increases in Professional Services for determining what needs to be done to the sidewalk, pavement, parking area, etc. for upgrades; an increase in Repairs & Maintenance for the terminal roof flood coating; increase to janitorial services; an. increase for upgrading the sidewalk; and an increase to upgrade the fire alarm system. ACTION: No changes made and this budget was approved as presented. Congregate Housing Fund: This budget reflects increases to the contractor's contract and Repair & Maintenance for painting of the west side of the building and some interior painting. Discussion followed regarding the need to paint the apartments which have not had a change over since the opening of the building and especially those with tenants who smoke. Also discussed was the replacement of the carpet throughout the building in the individual apartments. Ross explained, in reviewing priorities, it was decided to put money in for carpeting next year and the year after, and $50,000 toward carpeting in the Center this year. It was suggested funds from the reserve account be used for the carpeting. Ross explained, if money is taken from the reserve, then the cash flow going to the General Fund would cease and the General Fund would take a $100,000 decrease next year. BUDGET WORK SESSION APRIL 17,2001 PAGE 11 Williams noted, it was never discussed how to handle major repairs and replacements in congregate housing from the fund, i.e. the fund was set up and it was decided to let it run to $500,000 and then flatten it out with the money then going to the General Fund. Amortization/depreciation was discussed in regard to carpeting, replacements, etc. Williams stated he felt the housing funds should not be put into the General Fund and Porter agreed. It was suggested a change in the policy be made (requiring a change to the ordinance). Porter noted a new Meals-On-Wheels van is needed and felt it should be purchased from this fund as well. ACTION: No changes made and this budget was approved as presented. Land Sales Trust Funds: ACTION: No changes made and this budget was approved as presented. Ross noted next year there will be pressure from taking out the $1.6 million, as well as considering a COLA increase. Because of those impacts, council may have to consider a raise in taxes or cutting operations next year. The work session adjourned at approximately 11:40 p.m. Notes transcribed and prepared by: Carol L. Freas, City Clerk AGENDA KENAI CITY COUNCIL- REGULAR MEETING APRIL 18, 2001 7:00 P.M. KENAI CITY COUNCIL CHAMBERS http://www, ci.kenai.ak.us ITEM A: CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval 4. Consent Agenda *Ail items listed with an asterisk (*) are considered to be routine and non- controversial by the council and will be approved by one motion. There will be no separate discussion of these items unless a council member so requests, in which case the item will be removed from the consent agenda and considered in its normal sequence on the agenda as part of the General Orders. ITEM B' SCHEDULED PUBLIC COMMENTS (10 minutes) o Paul Shadura -- Cook Inlet Aquaculture Association/Cook Inlet Community Assistance Through Fisheries Rehabilitation and Enhancement-- Request for Support. ITEM C: PUBLIC HEARINGS o Ordinance No. 1906-2001 -- Amending KMC 7.25.020 to Increase the Amount Allowed to be Transferred in Line Item Accounts Within a Fund Without Council Approval From Less Than $1,000 to Less Than $2,500 and Removing the Limitation on Transfer Authority From Personal Services. , Resolution No. 2001-23 -- Awarding an $11,000 Contract for Insurance Broker Services to Brown Agency, Inc. , Resolution No. 2001-24 -- Supporting the Recommendations of the Education Funding Task Force and Increased Investments in Alaska's Students and Schools. , Resolution No. 2001-25 -- Supporting the State of Alaska DOT/PF in its Effort to Properly Construct Pedestrian and bike Paths Along State Highways and Describing the City of Kenai's Intent to Provide Seasonal Cleaning of the Paths Along the Bridge Access Road. ,, Resolution No. 2001-26 -- Transfemng $16,000 to Personnel Services From Contingency in the Maintenance & Operations Division of the Airport Land System Special Revenue Fund. -1- , Resolution No. :2001-27 -- Supporting the Proposed Increase in Funding to Revenue Sharing and Safe Communities by the Alaska Legislature. ITEM D' COMMISSION/COMMITTEE REPORTS , 2. 3. 4. 5. 6. 7. Council on Aging Airport Commission Harbor Commission Library Commission Parks & Recreation Commission Planning & Zoning Commission Miscellaneous Commissions and Committees a. Beautification Committee b. Kenai Convention & Visitors Bureau Board c. Alaska Municipal League Report ITEM E: MINUTES o *Regular Meeting of April 4,2001. ITEM F: CORRESPONDENCE ITEM G: OLD BUSINESS , Discussion -- Sale of Block 3, Five Irons Heights Subdivision/Draft Sale Documents ITEM H: NEW BUSINESS , Bills to be Paid, Bills to be Ratified e Purchase Orders Exceeding $2,500 e *Ordinance No. 1907-2001 -- Increasing Estimated Revenues and Appropriations by $16,000 in the Senior Citizens Title III Grant Fund for Operating Supplies. . Discussion -- Inlet Woods Subdivision/62 Unsold Lots in Front Half of Subdivision -- Request for Cash Price Negotiated Sale. ITEM I: ADMINISTRATION REPORTS . 2. 3. 4. 5. 6. 7. Mayor City Manager Attorney City Clerk Finance Director Public Works Managers Airport Manager -2- ITEM J: DISCUSSION 1. Citizens (five minutes) 2. Council EXECUTIVE SESSION- None Scheduled ITEM K: ADJOURNMENT -3- KENAI CITY COUNCIL- REGULAR MEETING APRIL 18~ 2001 7:00 P.M. KENAI CITY COUNCIL CHAMBERS http://www.ci.kenai.ak.us MAYOR JOHN J. WILLIAMS, PRESIDING ITEM A: CALL TO ORDER Mayor Williams called the meeting to order at approximately 7:02 p.m. in the Council Chambers in the Kenai City Hall Building. A-X. PLEDGE OF ALLEGIANCE Mayor Williams led those assembled in the Pledge of Allegiance. A-2. ROLL CALL ,, Roll was taken by the City Clerk. Bannock, Frazer and Williams. Present were: Bookey, Swarner, Moore, Porter, A-3o AGENDA APPROVAL Mayor Williams requested the following changes to the agenda: ADD AS: C-4b, Substitute Resolution No. 2001-25 (The substitute reaffirms the city's support to provide seasonal cleaning of the paths along Bridge Access Road as a resolution supporting the matter was passed in 1997.) MOTION: Councilwoman Swarner MOVED to approve the agenda as amended and Councilman Bookey SECONDED the motion. There were no objections. SO ORDERED. A-4. CONSENT AGENDA MOTION: Councilwoman Swamer MOVED to approve the consent agenda as presented and Councilman Bookey SECONDED the motion. There were no objections. SO ORDERED. ITEM B: SCHEDULED PUBLIC COMMENTS (10 minutes) B-X. Paul Shadura -- Cook Inlet Aquaculture Association/Cook Inlet Community Assistance Through Fisheries Rehabilitation and Enhancement -- Request for Support. KENAI CITY COUNCIL MEETING MINUTES APRIL 18, 2001 PAGE 2 Gary Fandrei, Executive Director of the Cook Inlet Aquaculture Association (CIAA} noted the Kenai Peninsula Borough and the Federal government declared the Cook Inlet fishing community, consisting of native and nonnative subsistence users, commercial, personal use and sport fishers and the businesses supporting the users, an economic disaster. While the economic disaster declarations provide for immediate economic relief, no long-term commitment was made to support the Cook Inlet fishing community. Fandrei gave a presentation explaining CIAA's plan and proposal to continue providing assistance to the Cook Inlet fishing community through existing programs and proposed improvement projects. After reviewing the programs and projects, Fandrei requested a resolution from council supporting the CIAA to secure funding for the programs and projects reviewed. Williams noted the council supported the fishing community for many years and requested Fandrei forward information to the City Clerk to be included in a resolution and placed on the May 2 council meeting agenda. There were no objections from council. B-2. Leo Oberts -- Noted council's interest in the Old Town bluff and brought 1950 and 1969 plats of the bluff area. Council requested Public Works Manager Komelis to get copies of the plats for the city's use. ITEM C: PUBLIC HEARINGS C-1. Ordinance No. 1906-2001 -- Amending KMC 7.25.020 to Increase the Amount Allowed to be Transferred in Line Item Accounts Within a Fund Without Council Approval From Less Than $1,000 to Less Than $2,500 and Removing the Limitation on Transfer Authority From Personal Services. MOTION: Councilman Bookey MOVED for adoption of Ordinance No. 1906-2001 and Councilwoman Swarner SECONDED the motion. There were no public or council comments. VOTE: Booke¥: Porter: Williams' Yes Yes Yes Swarner: lYes Moore: Bannock: Yes Frazer: Yes Yes MOTION PASSED UNANIMOUSLY. KENAI CITY COUNCIL MEETING MINUTES APRIL 18, 2001 PAGE 3 Resolution No. 2001-23 -- Awarding an $11,000 Contract for Insurance Broker Services to Brown Agency, Inc. MOTION: Councilwoman Porter MOVED for approval of Resolution No. 2001-23 and Councilman Bookey SECONDED the motion. There were no public or council comments. VOTE: There were no objections. SO ORDERED. C-3o MOTION: Resolution No. 2001-24-- Supporting the Recommendations of the Education Funding Task Force and Increased Investments in Alaska's Students and Schools. CouncilWoman Swarner MOVED for approval of Resolution No. 2001-24 and requested UNANIMOUS CONSENT. Councilman Moore SECONDED the motion. There were no public or council comments. VOTE: There were no objections. SO ORDERED. C-4o Resolution No. 2001-25 -- Supporting the State of Alaska DOT/PF in its Effort to Properly Construct Pedestrian and bike Paths Along State Highways and Describing the City of Kenai's Intent to Provide Seasonal Cleaning of the Paths Along the Bridge Access Road. MOTION: Councilman Moore MOVED for approval of Resolution No. 2001-25 as substituted and Councilwoman Swarner SECONDED the motion. There were no public comments. Moore stated his concern the new bike paths along Spur Highway were already damaged. Ross noted the city approved seasonally sweeping the paths along Spur Highway because it is aware of how they were built. He added, the city hoped to have more input on the Unity Trail paths. Ross stated he didn't think the city should agree to anything more than sweeping the paths at the beginning of the year. ~NAI CITY COUNCIL MEETING MINUTES APRIL 18,2001 PAGE 4 Komelis reported DOT would be holding a meeting with the agencies on May 15 at 1'30 p.m. in the council chambers in regard to the coastal trail/bluff restoration project. During the meeting, they will discuss design of the pathway. Then, at 7:00 p.m., there will be an open house for the public to review designs, etc. The open house will also be held at city hall. Councilman Bannock also stated his concern of the condition of bike paths in the city. He noted, he observed those paths adjacent to the highway seemed to be in much better shape than those situated several feet off the highway. He added, he believed bike paths, when built away from the roads, were financially unfeasible. Bannock stated he would support the resolution. VOTE: There were no objections. SO ORDERED. C-5o Resolution No. 2001-26 -- Transferring $16,000 to Personnel Services From Contingency in the Maintenance & Operations Division of the Airport Land System Special Revenue Fund. MOTION: Councilwoman Swamer MOVED for approval of Resolution No. 2001-26 and requested UNANIMOUS CONSENT. Councilman Bookey SECONDED the motion. There were no public or council comments. VOTE: There were no objections. SO ORDERED. C-6o Resolution No. 2001-27 -- Supporting the Proposed Increase in Funding to Revenue Sharing and Safe Communities by the Alaska Legislature. MOTION: Councilwoman Swarner MOVED for approval of Resolution No. 2001-27 and requested UNANIMOUS CONSENT. Councilman Bannock SECONDED the motion. There were no public or council comments. VOTE: There were no objections. SO ORDERED. KENAI CITY COUNCIL MEETING MINUTES APRIL 18, 2001 PAGE 5 ITEM D: COMMISSION/COMMITTEE REPORTS D-1. Council on Aging -- No report. D-2. Airport Commission -- Swarner reported a meeting of the airport terminal tenants would be held. Airport Manager Cronkhite reported the Coilings Foundation (historic airplanes) would be coming to Kenai again, but no definite date had yet been set. Discussion followed regarding the possibility of an air show being held in Kenai. Cronkhite explained the Commission had discussed the possibility and are interested in developing an annual event. A "poker run" has also been discussed to coincide with the Collings visit in order to attract Anchorage pilots to the area. D-3. Harbor Commission -- Bookey reported a meeting was held on April 9 and Mr. Oberts brought the plats discussed earlier with council. Bookey also reported the Commission further discussed goals and objectives; it was noted the dock would be opened by the middle of May; and he gave an update on the meeting with the Corps in regard to the bluff erosion/coastal trail project. 9-4. for May 1. Library Commission -- Moore reported the next meeting was scheduled D-5. Parks/l~ Recreation Commission -- Frazer reported the last scheduled meeting had no quorum. Williams suggested the Commission consider whether a subcommittee be formed when the refrigerated ice comes on line at the multipurpose facility. He suggested members of the committee could include those who had been supporting the project in the past. 9-6. the meeting. Planning/h Zoning Commission -- Bannock reported he did not attend D-7. Miscellaneous Commissions and Committees D-7a. Beautification Committee -- Swarner reported the meeting agenda was included in the packet and there was no quorum for the meeting. D-7b. Kenai Convention/h Visitors Bureau Board -- Bookey reported no meeting had been held and reminded those present of the grand opening for "Fish Odyssey: 2001" scheduled for May 4. D-7c. Alaska Municipal League Report -- Williams stated he had no report and requested City Clerk Freas to contact the legislative delegation for an anticipated end-of-session date. ~NAI CITY COUNCIL MEETING MINUTES APRIL 18,2001 PAGE 6 Ross reported he spoke with Paul Fuhs in regard to the bluff erosion project and learned the Borough Planning Director sent a letter of support for CARA funding for the city. Ross was asked what the capital budget position was for the city and Ross answered it was unknown, but he would check into it. Williams reported he spoke with Congressman Young about CARA funding and he felt he would be able to acquire more funding for Alaska with his chairmanship positions. Williams reported he received word the youth detention facility bill was moving along and funding was expected to be included. ITEM E: MINUTES ,, E-X. Regular Meeting of April 4, 2001. Approved by consent agenda. CORRF_~PONDENCE-- None. ITEM G: OLD BUSINESS Discussion -- Sale of Block 3, Five Irons Heights Subdivision/Draft Sale Documents Ross referred to the draft documents included in the packet and noted they included a prohibition for any commercial activity but did not reflect a development schedule and plan requirement. He noted, council discussed a reversionary clause being included with the documents, however the city attorney advised against doing so because it would preclude the city's ability to take the property back (if necessary) through judicial foreclosure. Instead the city would have to take the property back with all liens on it. Ross also reported the appraisal should be received by the next council meeting. He added, if the council wanted to add language to the documents that would require the bidder to submit a development plan and schedule with their bid, it could be done at that time. When council receives the high bid from administration, the development plan and schedule would be submitted as part of the package to council so it can be discussed with the high bidder. Also, there would be a possibility at that point that there may be other options to discuss with council that could satisfy their concern regarding an enforcement tool being included in the documents. Ross added, the options could develop from issues that may be raised from the appraisal when the values assigned to certain parts of the project are known, i.e. water line, road, etc. However, at this time, other than to state the bidder must submit a development .plan and schedule, there was nothing more administration would propose to be included in KENAI CITY COUNCIL MEETING MINUTES APRIL 18, 2001 PAGE 7 the documents. Ross noted, council would have more time to decide if there were more requirements to be added as they would review the appraisal before approving the sale. Williams noted a clause was included that no subsurface interest will be conveyed to the buyer and asked if subsurface fights are required for the installation of utility lines. Graves answered no. There were no changes to the draft documents. ITEM H: NEW BUSINESS H-X. Bills to be Paid, Bills to be Ratified MOTION: Councilwoman Swarner MOVED to pay the bills and Councilman Bookey SECONDED the motion. There were no objections. SO ORDERED. H-2. Purchase Orders Exceeding $2,500 MOTION: Councilwoman Swarner MOVED to approve the purchase orders exceeding $2,500 and requested UNANIMOUS CON$ENT. Councilman Moore SECONDED the motion. There were no objections. 80 ORDERED. H-3. Ordinance No. 1907-2001 -- Increasing Estimated Revenues and Appropriations by $16,000 in the Senior Citizens Title III Grant Fund for Operating Supplies. Introduced by consent agenda. H-4. Discussion -- Inlet Woods Subdivision/62 Unsold Lots in Front Half of Subdivision -- Request for Cash Price Negotiated Sale. Ross reported a request was received for a cash price negotiated sale on Inlet Woods properties which had previously been offered in public sale. Administration required an appraisal done of the 62 lots for council to review and then determine whether they wanted to proceed with the sale. He noted, council directed some of the lots in the subdivision be replatted from two lots into one. However, the appraiser indicated that if the combination of the lots was done prior to the appraisal, it would result in considerably diminished value to the city in the sale. Ross added, he discussed the appraiser's comments with the person requesting the purchase who would also like some of the lots combined but understood and agreed it'was something the buyer KENAI CITY COUNCIL MEETING MINUTES APRIL 18,2001 PAGE 8 should do. Ross noted, administration's proposal to council was to put the joining of the lots on hold and proceed with the appraisal of the lots as they are for a cash sale if council approves the appraisal. Bo°key asked if selling of the lots would give the buyer the majority of the lots in the subdivision and then allow the buyer to change the covenants. Ross answered, if the same individual purchases the rear lots and front lots, he would own the majority of the lots. If the rear lots were not sold, the city would continue to be the majority owner. Bookey stated his concern that the subdivision's covenants could be changed by one person. Attorney Graves stated there were some potential mechanisms used to prevent covenants being changed and would investigate the issue and include that information with the appraisal information. Bookey suggested a building schedule requirement be included for this subdivision as well as the Five Irons property if all the lots are sold to one person to insure the lots are developed and not held. Porter agreed with Bookey and noted the council discussed the issue extensively with the interested purchaser of Five Irons (Anderson), but not with Hall, the requesting purchaser for Inlet Woods properties. Ross noted there were some distinctions with the projects, i.e. there is no potential for the city to install infrastructure on the Inlet Woods lots and if Five Irons is sold at appraisal price "as is" and it was developed within a few years, the city could greatly enhance the property because of projects the city has in mind. He added, there would be a significant motivator for the purchaser of Inlet Woods properties as they would not realize an appreciable gain by holding the property. However, the buyer of Five Irons properties could realize a considerable gain by holding the properties until the city installs water lines in that area. Frazer asked whether the covenants were a part of the sale documents for Inlet Woods and Ross explained the covenants are made a part of all the Inlet Woods sale documents. However, the majority owner of properties in a subdivision can form a homeowners' association and change the covenants. It was noted there is no active homeowner association in Inlet Woods. Frazer asked if a development schedule was included with the Inlet Woods properties, how would undeveloped lots now being held by owners be handled or if only a portion of the lots are purchased by the requestor, would the same development standards be attached to future buyers of one lot or more. Bookey stated he wasn't trying to stop the development and wanted it to continue, but was concerned about a subdivision that had sat undeveloped for over ten years and didn't want to see it continue to sit there, though he didn't think the interested developer would do that. Bookey stated he believed someone purchasing single lots would be handled differently. Bannock stated, if any one person was to purchase all the unsold lots in Inlet Woods and did nothing with them, the city would still be ahead with taxable properties. He ~NAI CITY COUNCIL MEETING MINUTES APRIL 18, 2001 PAGE 9 believed the worst case scenario would be anything better than what the situation is currently. Williams stated noted the problems in the past with developers purchasing city property and then holding it, which retarded the growth of the city. He added, he was more concerned with the Five Iron Heights property because it was part of the payoff for the ice fink. Moore noted the Five Irons property was not included in the BOR negotiations. Ross explained that it was not part of the BOR negotiations, but was figured into the original investment. Williams noted, reasons for development of the Five Irons Heights property was more than just property taxes. Bookey stated he wanted to be fair to the people in the Inlet Woods Subdivision who had already built there and protect the covenants. Graves explained covenants are controlled by one lot, one vote and thought there could be other options to restrict changing the covenants. Frazer suggested that information be included in the sales documents because when the lot is developed and purchased, the restriction to the .developer would disappear for that lot. Bannock stated he didn't know if it was the 'seller of the properties to determine what the covenants could or could not be, but felt it was the buyers prerogative. If the city wanted to protect current property owners from changes in covenants, etc., the city's ability to make zoning changes would disappear. He added, if a single lot is sold, the city doesn't say the covenants must remain the same and didn't think it should be different if all 62 of the lots were sold to one person. Wi!l/ams stated he didn't know how to protect the existing owners or what position the · council should take. Bannock noted the city does not normally involve itself in protecting covenants. The city has a code, personnel, etc. to take care of those protections. Williams asked Moore if there had been any comments from those in his residential area (Inlet Woods) regarding this issue. Moore answered yes. Bookey stated the covenants should stay in place or be compatible with the current ones. Porter stated she understood from the beginning that when those lots were sold, either individually or as a group, the covenants would remain with them. She felt it was the city council's obligation to the current residents to make sure the covenants stay in place, but also felt it was the responsibility of the current residents of the subdivision to have an active home owners association to enforce the current covenants. Bookey stated he sympathized with Bannock's position, but because it is a municipal issue and because it took ten years to get to the point where the lots could be sold, it presented a different issue. He added, he believed the city needed to protect the citizenry currently living there. Frazer stated he would like to see what Graves would bring to them and hoped the covenants could be maintained. Bannock stated he believed the city has the right to add a restriction to the documents, but didn't agree with doing it. He added, with KEN~ CITY COUNCIL MEETING MINUTES APRIL 18, 2001 PAGE 10 future sales of developed lots from individual owners, changes in the composition of what the new property owners would want to allow in their subdivision could be changed and they could amend the covenants. Graves noted, the sale documents could include a restriction that the developer would not be able to make changes to the covenants, but when the property is resold, the right to change the covenants would reattach. He added, it would be a one-time deed restriction to the developer. Ross advised he was advising council their directions to proceed with the combination of some of the lots was being delayed until the appraisal is received and council decides whether they want to go forward with a negotiated sale. Unless council disagrees with the delay of the combination of the lots, he would proceed. Moore requested Ross to forward a notice to the same owners of property in the subdivision regarding the hold on the combining of the lots as were originally noticed about the combining of the lots. Ross stated he would if council had no objections. He added, the city would live up to the combining of two lots that were recently sold with that understanding prior to this discussion. ROss added, up until the date of sale, the 62 lots would be available for sale to anyone. Frazer noted, Ross' question was whether council had any objections to the hold on combining the lots in order to have them be more valuable in regard to the appraisal. Ross stated he was not asking for action unless council wanted to go forward with the combining of lots. No action was taken. ITEM I: ADMINISTRATION REPORTS I-1. Mayor-- Williams reported the following: · A letter of invitation to the Annual Industrial Days picnic was included as an information item scheduled for. August 25. · Noted Representative Chenault's thank-you letter for the airport picture. · Noted the Kenai Alternative School's thank-you letter for the donation to their graduation ceremony. · Noted the letter from the City of Delta Junction included as Information Item No. 4 in regard to the proposed private prison and costs per prisoner. · Noted the invitation to Officer Dave Vroman's retirement luncheon scheduled for April 27. I-2. City Manager-- Ross reported the following: · The recent reduction in interest rates could further complicate the city budget situation. He added, when the budget comes back before council, it would reflect another, review of interest earnings and could reflect a downward adjustment, possibly in the 50,000-$80,000 range. Attended a meeting in Anchorage regarding the conservation easement request that would tie the bird viewing area on the dock road proposal with the KENAI CITY COUNCIL MEETING MINUTES APRIL 18,2001 PAGE 11 boardwalk into Unity Trail. Information he received from the state was being reviewed by Public Works as to how and what should be set aside to be sure the city will always have future corridors. If it is decided to proceed with the easement, it would allow the city to place infrastructure across the river if desired. He noted, if language can be agreed upon, the document would be referred to council for review and consideration. He added, this would involve the state buying a conservation easement from the city and the state adding more funding into the boardwalk area and giving the city an easement across the property formerly owned by Cone which would allow a second entrance into the dock area. Ross stated he didn't think the matter would be before council before July but he hoped a draft would be before council prior to his leaving the city's employment. I-3. Attorney -- Attorney Graves reported he hoped to have an agreement with the court system whereby the city would take over the collection of municipal traffic fines and be able to collect them by electronically attaching Permanent Fund allotments. He added, he and Chief Morris had been working on the issue for some time which included a lot of paperwork in preparation but would dramatically step up the fine collection for municipal funds. I-4. City Clerk -- Freas reminded council of the volunteer reception scheduled for April 27 at the Senior Center and noted she would be attending a seminar in Anchorage on April 19, but would be back in the office on Friday. I-$. Finance Director-- Finance Director Semmens referred to the quarterly investment report included in the packet and invited council to call him if they had questions. Public Works Managers -- No reports. I-7. Airport Manager-- No report. ITEM J: DISCUSSION ,, J-X. Citizens-- None. J-2. Council Frazer-- No comments. Bannock-- No comments. Porter -- * Asked how many council members would be attendin§ the volunteer reception and noted she and Bannock would be in touch in re§ard to assignments. · Asked Ross if any progress was being made in regard to the occupancy of the ARFF building. Ross stated he would check and report back. KENAI CITY COUNCIL MEETING MINUTES APRIL 18,2001 PAGE 12 · Requested La Shot to investigate a junk vehicle at Jim's towing. La Shot reported it had been noticed and Administrative Assistant Kebschull was investigating it. · Requested the sign advertising a restaurant at the King's Inn be checked to see if it was up to code requirements. Moore -- No comments. Swarner -- · Stated she was contacted about a burned out house on Lilac and junk car and whether it had been investigated. · Reported a house on Haller Street with similar problems. Bookey-- No comments. Williams -- Requested council to further consider the budget in regard to funds to be used for the refrigeration of the ice rink in light of the interest rate decrease. EXECUTIVE SESSION- None Scheduled ITEM K: ADJOURNMENT The meeting adjourned at approximately 9:02 p.m. Minutes transcribed and prepared by: Carol L. Freas, City Clerk CITY OF KENAI 210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794 TELEPHONE 907-283-7535 FAX 907-283-3014 ~ I~J~2 M emoranClum Date. To' From; April 27, 2001 Mayor and Council Richard A. Ross, City Manager //~' Appraisal of Five Irons Heights Subdivision, Block 3 High development costs for proposed development of this property have resulted in a low appraisal for cash purchase price. The proposed sale requires major road development, a 12-inch water main line extension, and bringing of all utilities to the parcel. Council is encouraged to read the appraisal closely, as well as the City Attomey's memorandum discussing the requirement of a performance bond as part of the sale, to insure that improvements required by the sale are actually installed. Under the proposed sale, the buyer would have to sign an Installation Agreement and post a performance bond, estimated at approximately $500,000, in addition to the $23,500 minimum purchase price. CiTY OF KENAI 210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794 TELEPHONE 907-283-7535 FAX 907-283-3014 ~ 1992 MEMORANDUM TO:_,/ Richard A. Ross, City Manager FROM'~'~'O Cary R. Graves, City Attomey DATE' April 27, 2001 RE' Installation Agreement for Block 3, 5 Iron Heights Subdivision As you know, some members of Council feel that if Block 3, Five Irons Heights Subdivision is put up for sale, the purchasers should be required to put up some guarantee that the property will be developed. Attached is a proposed btstallation Agreement, should Council decide to make that a condition of sale. I considered three alternative types of development guarantee' 1) a reversionary interest (technically a "possibility of reverter"); 2) a deed of trust; and 3) an installation agreement. I decided against the reversionary interest because, although the reversiOnary clause is supposed to automatically restore title to the City upon failure to develop the property, in reality the City would have to file a quiet title action in order to ensure marketable title and deal with possible liens on the property. The deed of trust process would involve foreclosure and the possibility of liens against the property. Both could involve "unjust enrichment" litigation by the purchaser if he/she invested substantial sums of money in improvements and lost the property only to have the City get the benefit of the improvements. In my opinion, an installation agreement secured by a performance and material bond is the best method to ensure development. It seems to me that if Council decides to sell the property to be developed, it doesn't really want the property back. What it wants is the property developed. That is what the performance and material bond is designed to do. Thus, if the purchaser fails to develop the property, instead of the City getting the property back, the bond company will make sure the development is completed. Also, you will note, the Installation Agreement only requires installation of the paved road and utilities for the property. As we discussed, it is our assumption that if the paved road and utilities are built, the property will be developed in a relatively short time span. If a developer expends around $400,000 to install a paved road and utilities, the developer is not going to sit on the property. He/She will either'build homes or sell the improved lots to people who will build homes. Additionally, the performance and material bond guarantee doesn't work as well with a Richard A. Ross, City Manager April 27, 2001 Page 2 of 2 requirement that homes be built. Limiting the development guarantee to a paved road and utilities is simpler to enforce. In my experience, simpler is better. If council decides they want the development to guarantee homes be built, we probably need to look at modifying the way to guarantee development. It is more complicated, but probably doable. Please let me know if you have any questions. CRG/sp Attachment 2001 LAND SALE- FIVE IRONS HEIGHTS SUBDIVISION BLOCK 3 (Adjacent to Kenai Golf Course) BID DATE and TIME' ,2001 @ 11'00 a.m. LOCATION' KENAI CITY COUNCIL CHAMBERS 210 Fidalgo Avenue, Suite 200 Kenai, Alaska 99611-7794 City of Kenai 2001 Land Sale - Five Irons Heights Subdivision, Block 3 · 2001 @ 11:00 a.m. Table of Contents General Information .............................................................. 1 Procedures ...................................................................... 2 - 3 Property Information ............................................................ 3 Other Conditions of Sale ....................................................... 3 Maps of Sale Parcels .......................................................... 4-5 Bid Form ............................................................................. 6 Installation Agreement ..................................... Attachment "A" City of Kenai 2001 Land Sale - Five Irons Heights Subdivision, Block 3 General Information On ,2001, at 11:00 a.m., the City of Kenai will be conducting a cash sale of residential property identified as Block 3, Five Irons Heights Subdivision, according to Plat No. 97-105. Sealed bids will be opened in the Kenai City Hall building at 210 Fidalgo Avenue, in Kenai, Alaska. The property consists of 4.391 +_ acres and is located in a neighborhood zoned Recreation (R), fronting the north side of the Kenai Golf Course south of Lawton Drive, approximately 1.5 miles to the south and east of the downtown Kenai commercial district. Vicinity maps are included in this packet. The minimum bid price is $23,500 and is based on fair market value considering the property is purchased as a cash sale. Property is to be sold subject to any and all restrictions, easements, or reservations of record, zoning ordinances, and any and all plat requirements and covenants. All prospective bidders are urged to examine the parcel prior to the sale. No subsurface interest will be conveyed to the buyer. Prospective buyers are also advised that the City reserves the right to withdraw the parcel scheduled for sale, either before or after the bid opening. Conveyance will be by warranty deed. The buyer will take the property with no amounts due for City special assessments or for City or Borough property taxes for 2001 or prior years. Questions concerning the sale should be directed to Kim Howard at 283-7535, Ext. 223 at City Hall. City of Kenai 2001 Land Sale - Five Irons Heights Subdivision, Block 3 Procedures ~i~J Bids must be submitted in writing on the bid form included in this bid package. All bid forms must be signed and completely filled out. Bidders must be at least eighteen (1 8) years of age at the date of the bid opening. Any irregularities on the bid form, such as incomplete information, insufficient or inconsistent identification of the property, or lack of signature, may invalidate the bid. All bid forms must be sealed with the required bid deposit in an envelope addressed as follows' City of Kenai, Alaska 2001 Land Sale- Five Irons Heights Subdivision, Block 3 210 Fidaigo Avenue, Suite 200 Kenai, Alaska 99611-7794 Bid envelopes must be received prior to the bid opening to be held at 11 '00 a.m. on , 2001 at City Hall at the above address. Hand delivery to Kim Howard in City Hall is recommended. Once received by the City, a bid may not be withdrawn. However, a bidder is not prohibited from making more than one bid. Drawing the name of one of the tie bidders from a hat will break ties. The bidder whose name is drawn shall be deemed to have bid an additional $1.00 in breaking the tie. KMC 22.05.040 (b)(6) allows the bidder who is the initiating applicant, if not the high bidder, to have the option to purchase the property if he or she tenders the City a bid equal to the high bid within five days of the bid opening. This sale has an initiating applicant and this provision will apply. Bidders must submit a development plan and a development schedule with their bid. A $3,000 bid deposit in the form of a cashier's check or money order must be included with the bid form. The minimum acceptable bid $23,500. Payment will be by cash, cashier's check, or money order within 14 (fourteen) days of the bid opening. In the event that full payment is not received from the highest bidder within 14 (fourteen) days of the bid opening, the bid deposit will be forfeited and the successful bidder will lose all right to the property. In this case, the property will be offered to the second highest bidder, who must perform at his or her bid amount within 14 (fourteen) days, or the bid deposit will be forfeited. This process will continue until the land is sold or there are no more bidders. All recording fees, collection fees (set-up and annual), and closing fees will be paid by the buyer. Bid deposits of unsuccessful bidders will be returned by City check within sixty (60) days of the bid opening. This extra time allows the City to offer property to the next highest bidder(s) if the highest bidder fails to perform within the designated time. The bid deposits, less fees, of the successful bidder who performs within the designated time will be applied to the sale price. The City of Kenai will not disclose bidding information, such as what bids have been received from whom (if this information is known), until after the bid opening. Questions concerning the sale procedures should be directed to Kim Howard at 283- 7535 Ext. 223 at City Hall. Property Information The property consists of 4.391 __ acres and is located in a neighborhood zoned Recreation (R), fronting the north side of the Kenai Golf Course south of Lawton Drive, approximately 1.5 miles to the south and east of the downtown Kenai commercial district. Vicinity maps are included in this packet. An appraisal report is available for review at City Hall. The property has a level topography from road grade, moderate to heavy spruce and birch tree cover, and soils suitable for development. Block 3 has public road access and public sewer main. The extension of a 12" water line main must be constructed to City specifications, at the buyer's expense. Also, the road must be constructed to City specifications and paved, at the buyer's expense. Extension of natural gas, electric, telephone and cable television utilities will be the responsibility of the .buyer. The City does not warrant the availability of, or cost of, extending these utilities. Bidders are urged to check with utility companies as to utility locations. Other Conditions of Sale Deed restrictions will prohibit commercial development of the property. Bidders must submit a development plan and a development schedule with their bid. The successful bidder must sign the enclosed Installation Agreement guaranteeing 'installation of a paved road and utilities for the property as described. t i ! i ._~ze ¢~ ,cgt~' LZ:£ L ,,O0,O0. OON] . ,g~'L~LL 5 .t',,I .O0'Ogt I ~',,, L-' i;,O. OON City of Kenai 2001 Land Sale - Five Irons Heights Subdivision, Block 3 · 2001 , , BID FORM Bidder's Name: (Please print or type) Address: Phone Number(s): City, State and Zip: This bid is for the property described as Block 3, Five Irons Heights. (Note: Minimum bid is $23,500 Cash.) Total bid amount in numerals' Total bid amount in writing' My development plan and a development schedule are submitted with this bid. My $3,000 good faith deposit, in the form of a cashier's check or money order, is included with this bid or has been previously submitted to the City. I acknowledge the terms and conditions of the land sale as set out in this bid package. Signature Date INSTALLATION AGREEMENT for BLOCK 3, FIVE IRONS HEIGHTS SUBDIVISION DRAFT This document constitutes the Agreement between the CITY of Kenai ("CITY"), 210 Fidalgo Avenue, Suite 200, Kenai, Alaska 99611-7794, (907) 283-7535, and ("DEVELOPER"); for the installation by the DEVELOPER of subdivision improvements required by the CITY in connection with the land sale and development of the property described as: Block 3, Five Irons Heights Subdivision, Kenai, Alaska; and located in the Kenai Recording District; being hereinafter called "Five Irons Heights," and such improvements to be installed by the DEVELOPER being hereinafter called the "Improvements." o The CITY has agreed to sell "Five Irons Heights" to the DEVELOPER for $ . As a specific condition of the land sale, the DEVELOPER has agreed to install at the DEVELOPER's expense the Improvements described in Paragraphs 2 and 5(b) of this Agreement. The parties agree that the CITY would not have sold the land without the DEVELOPER's specific promise, secured as provided in Paragraph 3 of this Agreement, to develop the property as described in the attachment referenced in Paragraphs 2 and 5(b) of this Agreement within two years of the date of this Agreement. , The required "Improvements" shall include: 1) extension of a 12" water main line down the length of property; 2) the paved extension of Lawton Drive down the length of the property; 3) telephone service extension down the length of the property; 4) electrical extension down the length of the property; and 5) natural gas line extension down the length of the property. The 12" water main line extension and the paved extension of Lawton Drive shall be to the CITY's specifications. The estimated cost of the Improvements is $400,000. , In order to guarantee the performance of the obligations of the DEVELOPER under this contract, the DEVELOPER shall deliver to the CITY, before the execution of this contract by the CITY, a Performance and Labor and Material Payment Bond for 120% of the estimated price for the Improvements as shown in Paragraph 2 of this Agreement and the attachment referenced in Paragraph 5(b) of this Agreement, on a form acceptable to the CITY, as security for the faithful performance of the installation of the Improvements in a manner satisfactory to the CITY, and to cover all guarantees against defective workmanship, materials, or both, for a period of one year after the date of the final completion of the work. o The Surety furnishing the bond shall have a sound financial standing with a rating by A. M. Best of A or B Surety, a record of service satisfactory to the CITY and shall be LAND SALE and INSTALLATION AGREEMENT, SUBDIVISION IMPROVEMENTS for FIVE IRONS HEIGHTS SUBDIVISION ATTACHMENT "A" Page 1 of 5 Se o e ge e 10. 11. authorized to do business in the State of Alaska. The CITY shall be a named obligee under the bonds. The Attorney-in-Fact (Resident Agent) who executed the performance and payment bond in behalf of the Surety must attach a notarized copy of his Power-of- Attorney as evidence of his authority to bind the Surety on the date of execution of the bond. The DEVELOPER shall be the named principal. The condition of this obligation is such that if the principal shall complete the installation and construction of the Improvements as prescribed and required by the CITY under this Agreement then this obligation shall be void, otherwise to remain in full force. Attachments as enumerated below are attached hereto and specifically incorporated herein: (a) Performance and labor and material payment bond; (b) Engineering description and cost estimated Improvements by (c) Map. This Agreement shall mn with the land and shall be to the benefit of the CITY, its successors and assigns. The CITY may record the Agreement. Neither by entering into this Agreement, nor by doing any act hereunder, may the DEVELOPER or any contractor or subcontractor or other agent of the DEVELOPER be deemed an agent, employee or partner of the CITY. The DEVELOPER ~nd its contractors and subcontractors shall not represent themselves to be agents, employees or partners of the CITY. The parties may amend this Agreement only by written Agreement, signed by the party to ~be bound, which shall be attached as an appendix hereto. Any civil action arising from this Agreement shall be brought and tried in the Superior Court for the Third Judicial District of the State of Alaska at Kenai. The laws of the State of Alaska shall govern the fights and duties of the parties under this Agreement. The DEVELOPER shall indemnify (to include payment of all costs of defense including without limitation actual attorney's fees) and save hanuless the CITY, its officers and employees, from all suits, actions, or claims of any character brought because of any injuries or damage received or sustained by any person, persons or property on account of or in consequence of any neglect in safeguarding the work; or through the use of unacceptable materials in constructing the work; or because of any act of omission, neglect, or misconduct of said DEVELOPER; or from any claims or amounts arising or recovered under the "Worker's Compensation Act," or any other law, order, or decree. It is specifically agreed between the parties executing this Agreement that it is not intended by any of the provisions that any part of the Agreement to create, in the public or any member thereof, a third party to this Agreement to maintain a suit for personal injuries or property damage pursuant to the terms or provisions of this Agreement. LAND SALE and INSTALLATION AGREEMENT, SUBDIVISION IMPROVEMENTS for FIVE IRONS HEIGHTS SUBDIVISION Page 2 of 5 12. 13. 14. 15. 16. 17. The CITY may declare the DEVELOPER to be in default if the DEVELOPER is adjudged a bankrupt, makes a general assignment for the benefit of creditors, suffers a receiver to be appointed on account of insolvency, takes advantage of any.law for the benefit of insolvent debtors; or if the DEVELOPER has failed in any measurable way to perform its obligations under this agreement provided the CITY gives the DEVELOPER notice of the failure to perform and the DEVELOPER fails to correct the failure within thirty (30) days of receiving the notice. Upon a declaration of default, the CITY may do any one or more of the following' (a) (b) (c) Perform any act required of the DEVELOPER under this Agreement, including constructing all or any part of the improvements, after giving seven (7) days notice in writing to the DEVELOPER. The DEVELOPER shall be liable to the CITY for any costs thus incurred. Exercise its fights under any performance or warranty guaranty securing the DEVELOPER's obligations under this agreement. Pursue any appropriate judicial remedy, including but not limited to an action for injunction. The DEVELOPER shall place all utilities underground except where this requirement is specifically waived. The DEVELOPER shall comply with all ordinances and secure all necessary permits and authorizations pertaining to work in public rights-of-way. The DEVELOPER shall coordinate and supervise the installation and construction of all utility Improvements, including those not otherwise covered by this Agreement, in a manner that will prevent delays in CITY construction or other damage to the CITY, and that will permit the CITY properly to schedule work that it will perform. The DEVELOPER shall retain an engineer registered as a professional engineer under the laws of the State of Alaska to design and administer the construction of the Improvements, including preparing plans and specifications, inspecting and controlling the quality of the work, and preparing as-built data. The DEVELOPER shall submit to the CITY, in such form as the CITY may specify, all plans and specifications pertaining to the construction of the Improvements. The CITY, either in-house or through retained professionals, shall review the plans and specifications as submitted for approval or indicate to the DEVELOPER how it may modify them to secure approval. The DEVELOPER shall convey to the CITY, or the public, any easement, right-of-way or other property interest necessary to allow the CITY reasonable access to the municipal improvements to operate, maintain, or repair the municipal improvements. The DEVELOPER may condition the conveyance upon the CITY's acceptance of the Improvements. Upon receiving notice that the DEVELOPER has completed the Improvements, the CITY shall schedule inspections of the Improvements. The CITY may inspect all Improvements, and any other work in dedicated easements or rights-Of-way. The CITY LAND SALE and INSTALLATION AGREEMENT, SUBDIVISION IMPROVEMENTS for FIVE IRONS HEIGHTS SUBDIVISION Page 3 of 5 18. 19. 20. 21. shall inform the DEVELOPER in writing of any deficiencies in the work found in the course of its inspection. At its own expense, the DEVELOPER shall correct all deficiencies found by inspections under this paragraph. Upon receiving notice that the deficiencies have been correct, the CITY shall re-inspect the Improvements. The CITY may continue to re-inspect an improvement until the CITY is satisfied that the DEVELOPER has corrected all deficiencies in the improvement. After a final inspection has revealed that all Improvements and other work in dedicated easements and fights-of-way meet CITY standards, and the DEVELOPER has furnished the as-built drawings. The CITY shall notify the DEVELOPER that all Improvements have been accepted. The CITY's final acceptance of the municipal Improvements constitutes a grant to the CITY of all the DEVELOPER's fight, title and interest in and to the road and sewer Improvements. The DEVELOPER shall warrant the design, construction materials and workmanship of the Improvements against any failure or defect in design, construction, material or workmanship which is discovered no more than one year from the date the CITY notifies the DEVELOPER of the acceptance of the Improvements. This warranty shall cover all direct and indirect costs of repair or replacement, and damage to the property, Improvements or facilities of the CITY, or any other person, caused by such failure or defect or in the course of the repairs thereof, and any increase in cost to the CITY of operating and maintaining a municipal improvement resulting from such failures, defects or damages. The CITY shall notify the DEVELOPER in writing upon its discovery of any failure or defect covered by the warranty in Paragraph 19 of this Agreement. Except in case of emergency, the CITY shall notify the' DEVELOPER before conducting any tests or inspections to determine the cause of the failure or defect, and shall notify the DEVELOPER of the results of all such tests and inspections. The DEVELOPER shall correct any failure or defect covered by the warranty within thirty (30) days of receiving notice of the failure or defect from the CITY. The DEVELOPER shall correct the failure or defect at its own expense and to the satisfaction of the CITY. If the DEVELOPER fails to correct the failure or defect within the time allowed by this paragraph, the CITY may correct the failure or defect at the DEVELOPER's expense. If the DEVELOPER fails to pay the CITY for the corrective work within thirty (30) days of receiving the CITY's bill therefore, the CITY may pursue any remedy provided by law or this Agreement to recover the cost of the corrective work, together with interest, costs and reasonable actual attorney's fees. Unless otherwise expressly provided herein, time is of the essence of each and every term, covenant and condition of the Agreement. LAND SALE and INSTALLATION AGREEMENT, SUBDIVISION IMPROVEMENTS for FIVE IRONS HEIGHTS SUBDIVISION Page 4 of 5 IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed by their duly authorized officials, this Agreement in fiVe counterparts each of which shall be deemed an original on the date first written above. OWNER CITY OF KENAI By: Richard A. Ross City Manager DEVELOPER By: DEVELOPER STATE OF ALASKA THIRD JUDICIAL DISTRICT This is to certify that on the day of ,2001, Richard A. Ross, City Manager of the CITY, being personally known to me or having produced satisfactory evidence of identification, appeared before me and acknowledged the voluntary and authorized execution of the foregoing instrument on behalf of said CITY for the purposes therein mentioned. Notary Public for Alaska My commission expires: STATE OF ALASKA THIRD JUDICIAL DISTRICT This is to certify that on the day of ,2001, ., being personally known to me or having produced satisfactory evidence of identification, appeared before me and acknowledged the voltmtary and authorized execution of the foregoing instrument on behalf of said CITY for the purposes therein mentioned. Notary Public for Alaska My commission expires' LAND SALE and INSTALLATION AGREEMENT, SUBDIVISION IMPROVEMENTS for FIVE IRONS HEIGHTS SUBDIVISION Page 5 of 5 CITY OF KENAI ~~~!~ ~~~ NOTICE OF LAND SALE 2001 Land Sale - Five Irons Heights Subdivision, Block 3 (Adjacent to Kenai Golf Course) Subject to KMC 22.05, the City Manager or his authorized representative will sell by competitive sealed bid to the highest responsible bidder the interest of the City of Kenai in the following described property. Block 3, Five Irons Heights Subdivision, according to Plat No. 97-105, Kenai Recording District, Third Judicial District. The property consists of 4.391 _+ acres and is located in a neighborhood zoned Recreation (R), fronting the north side of the Kenai Golf Course south of Lawton Drive, approximately 1.5 miles to the south and east of the downtown Kenai commercial district. The extension of a 12" water line main must be constructed to City specifications, at the buyer's expense. Also, the road must be constructed to City specifications and paved, at the buyer's expense. Extension of natural gas, electric, telephone and cable television utilities will be the responsibility of the buyer. Covenants on the warranty deed will prohibit commercial development of the property. The property will be sold as a cash sale, by competitive sealed bid to the highest responsible bidder. Minimum acceptable bid shall not be less than the fair market value of $23,500. Bidders must submit a development plan and a development schedule with their bid. A $3,000 bid deposit in the form of a cashier's check or money order must be included with each bid form. The successful bidder must sign an Installation Agreement guaranteeing installation of a paved road and utilities for the property. Conveyance will be made by Warranty Deed. No subsurface interest will be conveyed to the buyer. KMC 22.05.040 (b)(6) allows the bidder who is the initiating applicant, if not the high bidder, to have the option to purchase the property if he or she tenders the City a bid equal to the high bid within five days of the bid opening. This sale has an initiating applicant and this provision will apply. Bid package can be obtained at City Hall, 210 Fidalgo Avenue, Suite 200, Kenai, Alaska 99611-7794. Bids will be publicly opened and read aloud at 11 '00 a.m. on , 2001 in the office of the City Manager in Kenai City Hall. Additional information may be obtained by contacting Klm Howard at 283-7535 Ext. 223. Publish: Peninsula Clarion 2 X's SUMMARY APPRAISAL OF BLOCK 3, FIVE IRONS HEIGHTS SUBDIVISION KENAI, ALASKA 996~ AS OF APRIL 13, 200~ FOR KlM HOWARD CITY OF KENAI 210 FIDALGO AVENUE, SUITE 200 KENAI, ALASKA 996~1 BY ALASKA CERTIFIED APPRAISAL SERVICES 46580 ROOSEVELT AVENUE SOLDoTNA, ALASKA 99669 SUMMARY APPRAISAL OF BLOCK 3, FIVE IRONS HEIGHTS SUBDIVISION KENAI, ALASKA 996~1 AS OF APRIL '13, 2001 FOR KlM HOWARD CITY OF KENAI 210 FIDALGO AVENUE, SUITE 200 KENAI, ALASKA 99611 BY ALASKA CERTIFIED APPRAISAL SERVICES 46580 ROOSEVELT AVENUE SOLDoTNA, ALASKA 99669 ALASKA CERTIFIED APPRAISAL SERVICES 46580 ROOSEVELT AVENUE - SOLDOTNA, AK 99669 (907) 262-8490 April 13, 2001 Kim Howard City of Kenai 210 Fidalgo Avenue, Suite 200 Kenai, Alaska 99611 Re: Our File No. 1336, Block 3, Five Irons Heights Subdivision Kenai, Alaska 99611 Dear Ms. Howard: As requested, a summary appraisal of the above referenced property was completed. The purpose of this appraisal was to estimate the current market · value of the fee simple interest in the property. This appraisal is subject to the following conditions imposed by the City of Kenai. The buyer must extend a 12" .water main along Lawton Drive the length of the subject. The buyer must also upgrade and pave Lawton Drive. Furthermore, there will be deed restrictions prohibiting any commercial use. Additionally, a development plan must be submitted and approved by the City. To the best of my knowledge and interpretation, this appraisal conforms to City of Kenai appraisal instructions and to the Uniform Standards of Professional Appraisal Practice (USPAP). This is a Summary Appraisal Report which is intended to comply with the reporting requirements set forth under Standards Rule~ 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP) for a summary appraisal. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop my opinion of value. The value conclusion is subject to the assumptions and limiting conditions beginning on page '10. Based on the inspection of the property and the investigation and analysis undertaken, I have formed the opinion that, as of April 13, 2001, and su~iect to the assumptions and limiting conditions and to the City's specific requirements as set.forth in this report, the current market value of the subject is' TWENTY THREE THOUSAND FIVE HUNDRED DOLLARS ($23,500) The summary appraisal report that follows sets forth the identification of the property, all assumptions and limiting conditions concerning the area and the File No. 1336 Page No. 1 ALASKA CERTIFIED APPRAISAL SERVICES , subject property, the comparable data, the results of my investigation and analysis, and the reasoning leading to the conclusions set forth herein. Retention and use of the report signifies acceptance of all assumptions and limiting conditions specified. This letter is invalid as an opinion of Value if detached from the report and accompanying exhibits. Thank you for the opportunity to be of service. Should any questions arise regarding this assignment, please contact me. Sincerely, ALAS~ CERTIFIED APPRAISAL SERVICES Chuck Osmond, Appraiser Certificate No. AA45 File No. 1336 Page No. 2 ALASKA CERTIFIED APPRAISAL SERVICES TABLE OF CONTENTS LETTER OF TRANSMI~AL ............................................................................. 1 CERTIFICATION ............................................................................................... 4 SUMMARY OF SALIENT FACTS AND CONCLUSIONS .................................. 6 PREMISES OF THE APPRAISAL .................................................................... 9 ASSUMPTIONS AND LIMITING CONDITIONS ................................................ 10 PURPOSE AND USE OF THE APPRAISAL~ .................................................... 14 . PROPERTY RIGHTS APPP~ISED ................................................................... 14 DEFINITION OF MARKET VALUE ................................................................... 14 SCOPE OF APPRAISAL ................................................................................... 15 PRESENTATION OF DATA ............................................................................. 16 IDENTIFICATION OF THE PROPERTY ........................................................... 17 LOCATION MAP ............................................................................................... 20 NEIGHBORHOOD ANALYSIS .......................................................................... 21 PROPERTY DESCRIPTION ............................................................................. 23 SITE DESCRIPTION ......................................................................................... 24 PLAT MAP ......................................................................................................... 25 HIGHEST AND BEST USE ...................................... ......................................... 28 ANALYSIS OF DATA AND CONCLUSIONS .................................................... 32 METHODOLOGY OF THE APPRAISAL PROCESS ......................................... 33 COMPARABLE SALES ..................................................................................... 34 ESTIMATED GROSS SELLOUT PRICE ........................................................... 34 ABSORPTION ANALYSIS ................................................................................ 35 DISCOUNTED SELLOUT ANALYSIS ............................................................... 35 CONCLUSION OF MARKET VALUE ................................................................ 38 ADDENDA ........................................................................................................ 41 File No. 1336 Page No. 3 ALASKA CERTIFIED APPRAISAL SERVICES CERTIFICATION The undersigned does hereby certify that, except as otherwise noted in this report: (1) I have no present or contemplated future interest in the real estate that is the subiect of this report, and I have no personal interest or bias with respect to the parties involved. (2) My compensation is not contingent upon the reporting of a Predetermined value or direction in value that favors the cause of the client, tho amount of th~ valu~ estimato, tha attainment of a stipulatod event, or the occurrence of a subsequent event. (3) To the best of my knowledge and belief, the statements of fact contained in this appraisal report, upon which the analyses, opinions and conclusions expressed herein are based, are true and correct. (4) The reported analysis, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions, and conclusions. (5) My analysis, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. (6) I have made a personal inspection of the property that is the subject of this report. (7) N© one provided significant professional assistance to the person signing this report. (8) The appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. File No. 1336 Page No. 4 ALASKA CERTIFIED APPRAISAL SERVICES (9) I am qualified and competent to complete an appraisal of the subject property. (10) The appraiser has no outside interests that could influence his estimate of value. DATE OF VALUATION' ABSORPTION PERIOD: CURRENT "AS IS" MARKET VALUE: April 13, 2001 1 Year $23,5OO ALASKA CERTIFIED APPRAISAL SERVICES Chuck Osmond, Appraiser Certificate No. AA45 File No. 1336 Page No. 5 ALASKA CERTIFIED APPRAISAL SERVICES , , SUMMARY OF SALIENT FACTS AND CONCLUSIONS TYPE OF REPORT This is a Summary Appraisal Report which is intended to 'comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP) for a summary appraisal. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop my opinion of value. Supporting documentation concerning the data, reasoning, and analyses is contained in my files. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report. APPRAISAL DEVELOPMENT AND REPORTING PROCESS In preparing this appraisal, the appraiser · physically inspected the subject; · gathered information on comparable sales and listings; · physically inspected the comparables; · confirmed and analyzed the data; · applied the market approach to develop lot value estimates; · completed an absorption analysis study; · analyzed and estimated construction and holding period costs; · completed a subdivision analysis; · and developed the final opinion of value. To develop the opinion of value, the appraiser performed a complete appraisal process as defined by the Uniform Standards of Professional Appraisal Practice. This means that no departures from Standard 1 were invoked. This Summary Appraisal Report is a brief recapitulation of the appraiser's data, analyses, and conclusions. Supporting documentation is retained in the appraiser's file. File No. 1336 Page No. 6 ALASKA CERTIFIED APPRAISAL SERVICES DATE OF APPRAISAL AND DATE OF REPORT The date of the appraisal and the date of the report are April 13, 2001, which was also the final date of inspection. CLIENT & OWNER City of Kenai 210 Fidalgo Avenue, Suite 200 Kenai, Alaska 99611 APPRAISER Chuck Osmond Alaska Certified Appraisal Services 46580 Roosevelt Avenue Soldotna, Alaska 99669 LOCATION AND PROPERTY SUMMARY The subject property is an unimproved tract of land located on the south side of Lawton Drive westerly of Swires Road. It adjoins the Kenai City Golf Course and is positively influenced by this factor. PROPERTY IDENTIFICATION The subject property is legally described as Block 3; Five Irons Heights Subdivision. The Kenai Peninsula Borough assessing department identifies the subject as parcel number 049-382-14. LAND AREA The subject is a rectangular shaped parcel with approximate dimensions, of 150' x 1,275'. It contains a total of 4.391 acres. File No. 1336 Page No. 7 ALASKA CERTIFIED APPRAISAL SERVICES IMPROVEMENTS The subject is unimproved. ZONING The subject property is zoned Recreational. The City, however, is adding additional deed restrictions which will prohibit commercial use of any kind. HIGHEST AND BEST USE The highest and best use of the subject property is to subdivide into nine single- family residential lots. INTEREST APPRAISED The fee simple interest in the property is to be appraised. FIVE YEAR SALES HISTORY The subject has not sold within the previous five years. SUMMARY OF ESTIMATES Absorption Period' "As Is" Value Estimate of Raw Land: 1 year $23,50O File No. 1336 Page No. 8 ALASKA CERTIFIED APPRAISAL SERVICES , PREMISES OF THE APPRAISAL File No. 1336 Page No. 9 The appraisal is subiect to the following limiting conditions: The City of Kenai will require that any purchaser of the subject install a 12" water main down the length of the subject along Lawton Drive. Furthermore, the City will require that Lawton Drive be upgraded and paved. In addition, the City will "require that the purchaser submit a development plan for the City's approval. The City will also place deed restrictions on the property prohibiting any commercial use. As instructed by the City, the estimate of value considers all of these factors. This is a Summary Appraisal Report which is intended to complY with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP) for a summary appraisal. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to ) develop my opinion of value. Supporting documentation concerning the data, reasoning, and analyses is contained in my files. The depth of discussion contained in this report is specific to the needs of the client and for the intended use. The appraiser, is not responsible for unauthorized use of this report. That the date of value to which the opinions expressed in this report apply is set forth in the letter of transmittal. The appraiser assumes no responsibility for economic or physical factors occurring at some later date which may affect the opinions herein stated. That no opinion is intended to be expressed for legal matters or that which would require specialized investigation or knowledge beyond that ordinarily employed by real estate appraisers, although such matters may be discussed in this report. That no opinion to title is rendered. Data on ownership and the legal description were obtained from sources generally considered reliable. Page No. 10 File No. 1336 ALASKA CERTIFIED APPRAISAL SERVICES Title is assumed to be marketable and free and clear of all liens and encumbrances, easements, and restrictions, except those specifically discussed in the report. The property is appraised assuming it to be under responsible ownership and competent management and available for its highest and best use. That no engineering survey has been made by the appraiser. Except as specifically stated, data relative to size and area were taken from sources considered reliable, and no encroachment of real property is assumed to exist. That maps, plats, and exhibits included herein are for illustration only, as an aid in visualizing matters discussed within the report. They should not be considered as surveys or relied upon for any other purpose. That no opinion is expressed as to the value of subsurface oil, gas, or mineral rights, and that the property is not subject to surface entry for the exploration or removal of such materials except as is expressly stated. That testimony or attendance in court or at any other hearing is not required by reason of rendering this appraisal unless such arrangements are made at a reasonable time in advance. That no detailed soils studies covering the site were available to the appraiser. Therefore, premises as to soil qualities employed in this report are not conclusive, but have been considered consistent with information available to the appraiser. Acceptance of this report implies that the client has read and agrees with the facts, these conditions, and conclusions. In the event of litigation concerning this property, the client agrees to compensate the appraiser for court preparation and testimony performed at his request, or when required to testify by subpoena by another party. It is further agreed that Alaska Certified Appraisal Services and the individual appraiser's liability is limited to the amount of the appraisal fee. File No. 1336 Page No. 11 ALASKA CERTIFIED APPRAISAL SERVICES Where the value of the land and the improvements is shown separately, the value of each is segregated only as an aid to better estimate the value of the whole, and the value for either may or may not be its correct market value. Use of any portion of this report out of context is not permitted. This appraisal has been prepared for the sole use of the client to whom it is addressed and is not intended for third party use unless specifically mentioned. The appraiser does not claim any expertise in assessing the existence or risk associated with hazardous materials. I have attempt'ed to note any obvious environmental concerns during inspection that any lay person might be reasonably expected to observe, However, any statement as to the existence or non-existence of hazardous or toxic materials on the site should be interpreted as cautionary and the client is ultimately responsible for determining any associated risk to their satisfaction. The estimate of value contained in this appraisal is based upon the assumption that the property is in compliance with the Americans with Disabilities Act ("ADA"), which became effective January 26, 1992. I have not made a specific survey or analysis of this property to determine whether or not it is in. conformity with the various detailed requirements of the ADA. It is possible that a survey of the property together with a detailed analysis of the requirements of the ADA would reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact would have a negative effect upon the value of the property. STANDARD FOR RESTRICTION UPON DISCLOSURE AND USE Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which he is connected) shall be disseminated to the public through advertising media, public relations media, news media, sales media, or any other public means of communication without the prior written consent and approval of the appraiser. No part of this report or any of the File No. 1336 Page No. 12 ALASKA CERTIFIED APPRAISAL SERVICES conclusions may be included in any offering statement,, memorandum, prospectus, or registration without the prior written consent of the appraiser. File No. 1336 Page No. 13 ALASKA CERTIFIED APPRAISAL SERVICES PURPO$1= AND USI= OF THE APPRAISAL The objective of this appraisal is to estimate the current market value of the suBiect. The purpose of this report is to present the data and reasoning that the appraiser has used to form the opinion of value. This appraisal is to be used by the City of Kenai for asset management decisions relative to the proPerty. PROPERTY RIGHTS APPRAISED The fee simple value is to be appraised. A fee simple estate implies' absolute ownership unencumbered by any other interest or estate; subject only to the /imitations of eminent domain, escheat, po/ice power and taxation.~ _n~FINITION OF MARKET VALUE Market value is defined by FIRREA (12 CFR 34.42 (F)) and USPAP, as' The most probable price which a property should bring in a competitive and open market under afl conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each is acting in what they consider their own best interests; I American Institute of Real Estate Appraisers, The Dictionary of Real Estate Appraisal, 1984, Page 123. File No. 1336 Page No. 14 ALASKA CERTIFIED APPRAISAL SERVICES.~_~ (3) a reasonable time is allowed for exposure on the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. The date of value to which this estimate of market value applies is April 13, 2001. The value estimate is in terms of cash. , SCOPE OF APPRAISA ,L. In estimating market value for the subject, the appraiser has adhered to the valuation process. This begins with the definition of the appraisal problem, which includes identifying the real estate, the property rights to be valued, the date of value, the use of the appraisal, and the definition of val'ue. After identifying these factors, the sugject property was physically inspected and its characteristics analyzed. The market in which the subject operates was studied and analyzed, and market information was collected, examined, and analyzed. Market information was obtained from reviewing economic publications, trade journals, and local government data and from interviews with'owners, buyers, sellers, property managers, builders, assessors, appraisers, agents, and brokers. The highest and best use of the property was considered next. The market data, which was collected and given a preliminary analysis earlier, was then analyzed in detail and reconciled int© value indications in the applicable approaches to value. A final value conclusion was then reached after weighing ali of the data and conclusions. A summary report was then prepared, supporting and explaining the opinions and conclusions presented. . File No. 1336 Page No. 15 ALASKA CERTIFIED APPRAISAL SERVICES PRESENTATION OF DATA File No. 1336 Page No. 16 ALASKA CERTIFIED APPRAISAL SERVICES IDENTIFICATION OF THE PROPERTY The subject property is identified as follows' The subject is legally described as Block 3; Five Irons Heights Subdivision. The tax parcel number is 049-382-14. There is no personal property or other items that are not real property included in this report. Photographs of the subject are shown beginning on the following page. File No. 1336 Page No. 17 SUBJECT PROPERTY PHOTOGRAPHS (Taken 4/13/01 by C. Osmond) p~oT~ f~l' LOoking southeasterly at the s~bject. PHOTO #2: Street view looking east on Lawton Drive. Subject is to right. File No. 1336 Page No. 18 ALASKA CERTIFIED APPRAISAL SERVICES PHOTO #3: Looking easterly on fairway adjoining subject. The subject is in the treed ama to the left. PHOTO ~.4: Photo of typical vegetation on the site. File No. 1336 Page No. 19 LOCATION MAP d 999 DeLorm¢. Street Atlas USA · ; .,, ALASKA CERTIFIED APPRAISAL SERVICES NI=IGHRORHOOD ANALYSIS The subject is located in the east central portion of Kenai. This neighborhood is located east of the commercial core area of Kenai. The north boundary is the Spur Highway, the south boundary is the Kenai Golf Course, the west boundary is the commercial core area of Kenai, and the east boundary is Swires Road. This neighborhood is developed primarily with a wide mix of residential uses. Development ranges from older poor quality homes to large new custom homes. There is also a number of apartments and multi family uses. Mixed development is common and acceptable in the Kenai area. Most of the neighborhood has paved streets and public water and sewer available. Natural gas, electricity and telephone are also available to most properties. The Kenai Junior and Senior High Schools are located in the area as well as Mountain View Elementary School. The Oilers ball field and the Kenai Golf Course provide nearby recreational opportunities. Development over the last few years has been moderate. The level of new construction is expected to increase substantially during the 2001 building season. Currently, the inventory of available existing homes is very Iow and homes are selling quickly at near full asking price. In fact, there have been some instances recently where prices were bid up higher than the asking price. A number of buyers which I recently interviewed indicated that they have not been able to find what they desire in existing housing and are considering new construction. Interviews with builders and subcontractors indicate that the upcoming building season will be an active one. New housing starts will almost certainly exceed that of last year. The subject neighborhood is very desirable because of its proximity to schools, shopping, and employment; all of which are within a five minute commute from anywhere in the neighborhood. One factor that may affoct development in the area is that many buyers prefer to buy outside of city limits because of an interest rate break. Also, many buyers prefor the larger lots typically found outside of city limits. The subject enjoys an excellent location fronting on the Kenai Golf Course. Lots developed on similar parcels have sold very quickly at prices at the top of the File No. 1336 Page No. 21 ALASKA CERTIFIED APPRAISAL SERVICES market. The subject is well situated in the neighborhood for single family residential subdivision. The current strong market also favors such a subdivision. It is expected that property values will appreciate at a moderate rate into the foreseeable future. File No. 1336 Page No. 22 ALASKA CERTIFIED APPRAISAL SERVICES PROPERTY DESCRIPTION File No. 1336 Page No. 23 · ALASKA CERTIFIED APPRAISAL SERVICES SITE DESCRIPTION LOCATION The subject fronts on undeveloped Lawton Drive and backs to the Kenai Golf Course. More Specifically, the subject property is located east of the golf .course driving range and westerly of Swires Road. DIMENSIONS~ SHAPE AND AREA The subject is a rectangular shaped parcel with approximate dimensions of 150' x 1,275'. The total area is 4.391 acres. TOPOGRAPHY AND VEGETATION The subject's topography varies from generally level to gently rolling. In general, the parcel gradually slopes downward to the east. The northeastern most corner of the subject appears to be Iow lying and may have a relatively high water table. The majority of the site, however, appears to have good drainage and is highly developable. Vegetation consists of an appealing growth of mature birch and spruce. ACCESS Primary access to the subject is via Lawton Drive. Lawton Drive has not been fully developed in the vicinity of the subject. As instructed by the City of Kenai, this appraisal considers the requirement that Lawton Drive be' upgraded and paved by the purchaser of the property. Cost factors will be considered later in the report. With the improvement of Lawton Drive the subject's access will be goOd. File No. 1336 Page No. 24 ALASKA CERTIFIED APPRAISAL SERVICES PLAT MAP ,O0'O~L 0 (~1 · U o -oU U - "" ,g'lT' L~C [. M,,gO,C'. !..00 [,99'[~' L 3,,00,00.00h ,O0'OCj I, I.iJ M,, L~,'lzO, OON File No. 1336 Page No. 25 ALASKA CERTIFIED APPRAISAL SERVICES FLOOD INFORMATION The subject is not located in a known flood hazard area. SOILS AND DRAINAGE A soils analysis was not available to the appraiser. It is therefore assumed that soils are consistent with those in the immediate area which consist of sands, silts, and gravels with limited amounts of organic overburden. It is assumed that soils, when properly prepared at the time of construction, will adequately support typical residential homes. Drainage appears adequate. EASEMENTS No title report was available. It is assumed that any easements which exist are of the typical utility type and do not adversely affect the value of the lots. Plat notes indicate that there is a 10' utility easement adjacent to the right-of-ways. ENCROACHMENTS Inspection of the subject showed no apparent encroachments. An as-built survey was not available to confirm this observation. UTILITIES Currently, the only utility available to the subject site is public sewer which runs the length of Lawton Drive. It is a requirement of anyone purchasing the subject that they install a 12" water main the length of the subject property. Additionally, natural gas, electricity, and telephone extensions will be required. The cost of installing these utilities will be discussed later in the discounted sellout analysis. File No. 1336 Page No. 26 ALASKA CERTIFIED APPRAISAL SERVICES ASSESSED VALUE AND PROPERTY TAXES According to Kenai Peninsula Borough (KPB) assessment records, .the subject was assessed for 2000 at $62,000. Using the 2000 mill rate of 11.50 indicates 2000 tax liability of $713. .ADVERSE INFLUENCE There are no external influences within the immediate vicinity of the sUbject which would have a particularly adverse effoct on the subject's value. ENVIRONMENTAL HAZARDS No adverse environmental conditions are known to affect the subject. It is cautioned, however, that I am neither trained nor qualified to detect the presence of hazardous materials. ZONING The subject property is zoned Recreational. The City, however, is adding additional deed restrictions which prohibit commercial use of any kind. File No. 1336 Page No. 27 ALASKA CERTIFIED APPRAISAL SERVICES HIGHEST AND BEST USE The Appraisal Institute defines highest and best use as: "the most profitable, likely use to which a property can be put. The opinion of such use may be based on the highest and most profitable continuous use to which the property is adapted and needed, or likely to be in demand in the reasonably near future. However, elements affecting value that depend on events or a combination of occurrences that, although in the realm of possibility, are not fairly shown to be reasonably probable, should be excluded from consideration. Aisc, if the intended use is dependent on an uncertain act of another person, the intention can not be considered. That use of the land that may reasonably be expected to produce the greatest net return to the land over a given period of time. That legal 'use that will yield to the highest present value, sometimes called 'optimum use'." In estimating the highest and best use, there are essentially four states of analysis: (1) Possible Use' What uses of the site in question are physically possible? (2) Permissible Use (legal)' What uses are legally permitted by zoning, private restrictions, leases, building codes, etc.? (3) Feasible Use' Which if any of the physically possible and legally permissible uses are likely to produce a positive net income, or return? File No. 1336 Page No. 28 ALASKA CERTIFIED APPRAISAL SERVICES (4) Maximally Productive: Which of the. feasible uses produces the highest price, or value, consistent with the market rate of return for that use? The highest and best use of the land (or site) if vacant and available for use may be difforent from the highest and best use of the improved property. This is true when the improvement is not an appropriate use, but nevertheless makes a contribution to total property value in excess of the value of the site. The following tests must be met in estimating the highest and best use. The use must be legal. The use must be probable, not speculative or conjectural. There must be a profitable demand for such use, and it must return to the land the highest net return for the longest period of time. These tests are applied below to the subject property, assuming it. to be vacant. PHYSICALLY POSSIBLE The first constraint imposed on the possible use of the property is dictated by the physical aspects of the site itself. The size, shape, topography, Ioc~tion, and availability of utilities all affect the uses to which a site can be developed. In this case the subject is a long, narrow 4.391 acre parcel which has a depth of 150' and has a length of 1,275', It has frontage on undeveloped Lawton Drive and backs to the Kenai City Golf Course.. Most of the length of the golf course frontage is on an appealing fairway. Utilities necessary for development are either in the area or near the subject where extension can be made to the property. This subject is physically very similar to a strip of land approximately 1,200' to the west which was very successfully divided into thirteen lots, with each lot having a typical frontage of 106'. This 'previous development, however, received a waiver to allow lot sizes less than the 20,000 square feet permitted by zoning. While the lots developed on the subject would be slightly larger, the subject is clearly physically suitable for single-family development. File No. 1336 Page No. 29 ALASKA CERTIFIED APPRAISAL SERVICES LEGALLY PERMISSIBLE Given zoning requirements and deed restrictions, the subject could be subdivided into lots with a minimum size of 20,000 square feet. Each lot could be legally developed with one to three residential units. While up to a triplex would be allowed on lots subdivided on the subject, the demand for multi-family housing is very Iow at this time. On the other hand, demand for single-family housing is good and improving. Consequently, the most likely use of the lots wOuld be for single-family residential. Zoning requires a minimum lot size of 20,000 square feet, thus a maximum of nine lots could be developed on the subject. The Southeastern end of the subject is iow lying and has inferior fairway frontage. Consequently, it is likely that eight lots would be developed with areas of 20,000 square feet while the ninth lot would have the remainder of the square footage (31,272 square feet). The 20,000 square foot lots would have frontage of 133.3' while the ninth lot would have frontage of approximately 208'. This subdivision would provide the maximum number of lots allowable under zoning and would help to make the eastern most lot as desirable as the other eight lots. FINANCIALLY FEASIBLE In order for a use to be feasible, it must provide a return to the owner over and above the value of the land. In determining the most feasible use of a particular property, the appraiser must consider such items as the demand for the type of Property in question, current construction and financing costs, and current rental and vacancy rates. Also to be considered is the current inventory of competitive available properties, as well as those being proposed or presently under construction. Finally, the general economic conditi°ns of the market area, present neighborhood build-up, and trends in surrounding land use are also to be considered as important factors in the analysis. Only one to three family development of subdivided lots is legally possible. There is very little demand for multi-family development while single-family demand is high at this time. The subject is suited for subdivision into nine single- ,, File No. 1336 Page No. 30 ALASKA CERTIFIED APPRAISAL SERVICES family lots. It is very similar to a strip of land to the west which was successfully subdivided in a similar fashion, although with smaller lots. Utility extension costs are very high; 'however, the extensions are required by the City. Because of the requirement to extend water and improve Lawton Drive, the only feasible use would be to subdivide the subject with the maximum' number of lots allowed. Consequently, single-family residential subdivision is considered to be the only feasible use. MAXIMALLY PRODUCTIVE As the only feasible use is for single-family subdivision, this use is also considered maximally productive. HIGHEST AND BEST USE Only single-family subdivision is physically possible, legally permissible, and feasible. Consequently, it is my opinion that the highest and best use of the subject is for single-family residential subdivision. As discussed, the most likely subdivision would be a nine lot subdivision, where eight of the lots have frontage of approximately 133' and areas of 20,000 square feet. The eastern most lot would be larger with frontage of approximately 208' and an area of about 31,272 square feet. The larger size of the eastern most lot is necessary to compensate for lower topography and less desirable fairway frontage characteristics. The overall value of the nine lots would be relatively similar. File No. 1336 Page No. 31 ALASKA CERTIFIED APPRAISAL SERVICES ANALYSIS OF DATA AND CONCLUSIONS File No. 1336 Page No. 32 ALASKA CERTIFIED APPRAISAL SERVICES ~ METHODOLOGY OF THE APPRAISAL PROCESS The appraisal process is the orderly program in which the data used to estimate the value of the subject property is acquired, classified, analyzed, and presented. The first step is defining the appraisal problem (i.e., identification of the real estate, the effective date of the value estimate, the property rights being appraised, and the type of value sought). Once this has been accomplished, the appraiser collects and analyzes the factors that affect the market value of the subject property. These include area and neighborhood analysis, site and improvements analysis, highest and best use analysis, and the application of the three apProaches to estimating the property's value. Appraisers generally use three approaches to value: the direct sales comparison approach (also known as the market approach), the cost approach, and the income approach. In the case of raw land, however, the cost and income approaches are not generally applicable. Several methods of valuing raw land are available to the appraiser. Among them are direct market comparison, land abstraction, the land residual technique, and the anticipated use of development. The most preferred method is direct market comparison where sales of similar properties are compared directly with the subject. In this case, direct market comparison is not applicable. The subject has the unique characteristic of fronting on the Kenai Golf Course and being highly suitable for a single family subdivision. There are simply no comparable acreage sales available. The best approach in this case is the anticipated use of development. Anyone considering purchase of the subject would clearly see that the subject is highly desirable for a single family residential subdivision. The methodology of this approach is to first estimate the type of subdivision which would occur and then to estimate the value of the individual lots after the subdivision. Following which is a series of deductions from gross sales price necessary to account for the costs for constructing the lots, marketing the .property, and accounting for holding costs such as taxes. In addition, deductions for developers and entrepreneurial profit must be considered. Because there is very good data from a subdivision of a similar parcel just west of the subject, this approach appears to be not only appropriate, but also highly reliable. File No. 1336 Page No. 33 · ALASKA CERTIFIED APPRAISAL SERVICES ~ ESTIMATED GROSS SELLOUT PRICE As previously discussed, I have reached the conclusion that the most reasonable development of the subject would be a nine lot subdivision similar to that already developed in Blocks 1 and 2. The next step in the process is to estimate the market value of the average or typical lot. In this case, there is very good data available from the thirteen lots which were developed in Blocks 1 and 2. The comparable sales from this earlier subdivision are summarized in the following table. ,, , , LOT SALES SUMMARY CHART LOT/BLOCK PRICE DATE BUYER SIZE 1/1 $38,515 11/16/98 Danny E. Jr. & Kelly Brewer 15,251 2/1 $32,000 1/20/99 Michael R. & Barbara M. Christian 15,251 3/1 $33,000 11/19/98 Daniel Castimore 15,251 4/1 $38,500 12/2/98 Tim J. Wisniewski 15,251 5/1 $32,000 1/13/99 Rodney S. & Wanda K. Cason 15,251 611 $32,000 11/16/98 Bill B. & Hannele K. Zubeck 18,251 112 $33,300 11/12/98 William Bruce Steiner 19,002 2/2 $32,000 11/12/98 William Bruce Steiner 16,002 3/2 $32,000 8/12/99 Gary D. & Diana R. Brumley 16,002 412 $32,000 Available N/A 16,002 5/2 $32,000 9/23/99 Jason A. & Barbara A. Elson 16,002 612 $32,000 8/16/99 Jeffrey Allen Couture 16,002 7/2 $32,525 11/16/98 Bill E. & Brenda Zubeck 21,112 Twelve of the thirteen lots sold in less than a year. The thirteenth lot is still available at a price of $32,000. This lot, however, has not been actively marketed for sale. The lots which sold ranged in price from a Iow of $32,000 to a high of $38,515. The highest sale, at $38,515, had a more open view to the south and in this regard is superior to that expected of the subject lots. On the other hand, the subject lots will overall be larger and, perhaps more importantly, be wider. In addition, the single-family home and lot market has significantly improved since the date of the previous subdivision. In fact, the surprising strength of the residential market has only become apparent within the last month. It is clear that there is demand for new construction and high amenity File No. 1336 Page No. 34 ALASKA CERTIFIED APPRAISAL SERVICES lots, like those expected of the subject, will be sought after. Given the improvement in the residential lot market and the fact that the subject lots will be larger than the lots previously developed along the Kenai Golf Course, I believe that the value of the subject lots will 'be slightly higher than the upper end of the previous sales in Blocks 1 and 2. Based on the data available, I have formed the opinion that the average market value of the individual su~iect lots is $40,000. This equates to a gross sellout price of $360,000. Gross sellout price is not the equivalent of market value. In order to estimate market value it is necessary to consider the costs associated with completing, holding, and selling the lots and also the time necessary for marketing. The next step is estimating the absorption period. ABSORPTION PERIOD ANALYSIS Estimating the absorption of the subject is made relatively simple by the fact that Blocks 1 and 2, which are very similar to the subiect, were recently developed and had excellent marketing success with relatively little marketing effort. Twelve of the thirteen lots' sold in less than twelve months. Based on the success of the previous similar deVelopment, it appears that the subject .lots could also be developed and sold within twelve months, especially with a strong marketing effort. The absorption period is therefore estimated to be only one year. DISCOUNTED SELLOUT ANALYSIS The next step in the appraisal process is the estimation of market value, i.e. the value of the lots to a single purchaser. Since the typical purchaser of a project like the subject Would be an entrepreneur or investor, his primary concern would be the income producing capabilities of the lots. He would be concerned with the timing of revenues (time value of money), construction costs (road and utilities), and the necessary absorption period holding costs (i.e., taxes and sales and closing costs). Therefore, the estimated gross sellout price must be adjusted for these factors to reflect market value to a single purchaser. , File No. 1336 Page No. 35 ALASKA CERTIFIED APPRAISAL SERVICES The appraiser must estimate the gross income from sales and the expenses which are required to sustain the property throughout the holding period. The resulting net income is then discounted to present worth to reflect value as of the date of valuation. This is typically referred to as the discounted sellout approach or subdivision analysis method. The methodology behind this approach simply includes the making of a series of deductions from gross sellout price to account for the various identifiable and market supportable profit and holding costs involved with an extended holding period. Gross sellout price for the lots has been estimated in the previous section of this report at $360,000. The construction period costs which must 'also be deducted from this amount include the extensions of public water, natural gas, telephone, and electricity and the improvement and paving of Lawton Drive. The absorption period costs, which must be deducted from gross income, include entrepreneurial and developer's profit, sales and closing costs, and real estate taxes. The resulting cash flow is then discounted to account for the time value of money. CONSTRUCTION PERIOD COSTS The following is a discussion of the expected constrUction costs required to successfully complete the subject lots. Water Extension and Road Improvements are estimated to be $200,000 based on a quote from Brad Zubeck, of Zubeck Construction. It is aSsumed that only strip paving will be done and that there will be no curb and gutter. Telephone Service Extension costs are estimated to be $15,000 based on a quote from Alaska Communication SYstems (ACS). All of the telephone extension costs are expected to be reimbursed within a three year time period. While reimbursements of all extension costs are expected to occur, the present worth of the reimbursements is less than the actual up front cost of $15,000. In order to account for the time value of money, the reimbursements ($5,000 per year for three years) were discounted at a rate of 10%. The net present worth of telephone reimbursements calculates to $12,434. Electrical Extension costs were' estimated to be approximately $35,000, according to Brad Hibberd of Homer Electric Association (HEA). These costs File No. 1336 Page No. 36 ALASKA CERTIFIED APPRAISAL SERVICES ~ may vary slightly depending on how many lots are developed. It is very likely that all of the electrical costs can be reimbursed. HEA pays a reimbursement fee of $4,870 per electrical service. The reimbursement is available' for a period of ten years after construction. Based on a reimbursement rate of $4,870 per service, it would take the development of approximately seven of the lots to fully reimburse the developer for his up front electrical costs. It is expected that the up front electrical cost will be reimbursed to the developer over a three year period. The present worth of the electrical reimbursements was calculated the same way that the present worth of the telephone reimbursements was calculated. The present worth of the electrical reimbursements totaled $29,013. Natural Gas can be extended based on a rate of $8.25 per linear foot according to Enstar. It is expected that an extension of approximately 1,500 feet would be necessary. Total gas extension costs would therefore be $12,375. Survey and Plattin.q is estimated to cost $4,500. Construction Financing is estimated to be $19,015 based on an interest rate of 9.5% and a loan amount of 75% of hard construction costs. The term is expected to be one year. HOLDING PERIOD COSTS i The following is a discussion of the expected holding period costs required to successfully market the lots. Entrepreneurial and Developer's Profit is estimated at 15% of sales, it is necessary to include entrepreneurial profit as no one would be willing to undertake such a venture without a substantial return. Sales and Closing Costs are the estimated sales commissions and closing costs anticipated in the marketing of the subject lots. I have used 10% of the gross sales income as being representative of local sales expense. File No. 1336 Page No. 37 ALASKA CERTIFIED APPRAISAL SERVICES Real Estate Taxes are estimated based on the current mill rate of 11.50 and a projected assessed value equal to 100% of gross sales. Taxes are based on a prorated amount of 50% for the lots sold. DISCOUNTING The typical residential lot subdivision is larger than that expected of the subject. ConSequently, typical subdivisions have lot sales occurring over a number of years. In these cases, it is necessary to discount the yearly cash flows to be reflective of present worth. In this case, however, the expected subdivision is small, simple, and of short duration. It is .expected that the subject could be developed and sold within one year. In fact, marketing of the subject lots could begin at the same time construction begins and income should be produced throughout the holding period. Discounting is not appropriate in this case because of the short duration and the fact that revenue will be generated throughout the year. CONCLUSION OF MARKET VALUE Based on the preceding analysis and as summarized on the following cash flow chart, I have formed the opinion that the market value of the subject property, as of April 13, 2001, is: TWENTY THREE THOUSAND FIVE HUNDRED DOLLARS ($23,500) VALUE CONCLUSION COMMENT...S. The Iow conclusion of value results directly from the City's requirement that the buyer of the sugiect improve the full length of Lawton Drive and install a 12' water main. The value of the subject would be significantly higher if this constraint was not imposed. Without this requirement, and if on-site wells were allowed, the subject could be easily subdivided into three to four large highly desirable lots. In fact, it may be more economical to subdivide the subject into File No. 1336 Page No. 38 ALASKA CERTIFIED APPRAISAL SERVICES , , , only two lots. This would allow development of the subject without significant improvement to Lawton Drive. The obvious benefit to. the City by requiring the improvement of Lawton Drive and the installation of a 12" water main is that these improvements would be paid by the developer and not the City. File No. 1336 Page No. 39 ALASKA CERTIFIED APPRAISAL SERVICES CASH FLOW ANALYSIS CHART Income Gross Sales PV of Telephone Reimbursements PV of Electrical Reimbursements Total Income Construction Costs Road & Water Electrical Telephone Survey & Plat Natural Gas Total Hard Construction Costs Construction Financing Total Construction Costs Holding Costs Entrepreneurial & Developer's Profit (15%) Taxes Sales & Marketing (10% of Sales) Total Holding Costs Total Costs Net Profit/Indicated Value Rounded To: $360,000 $12,434 $29,,013 $401,448 $200,000 $35,000 $15,000 $4,500 $12,375 $266,875 $19,0!5 $285,890 $54,000 $2,070 $36,000 $92,070 $377,960, $23,488 $23,500 File No. 1336 Page No. 40 ALASKA CERTIFIED APPRAISAL SERVICES ADDENDA File No. 1336 Page No. 41 ALASKA CERTIFIED APPRAISAL SERVICES QUALIFICATIONS CHUCK OSMOND, APPRAISER CERTIFICATION State of Alaska: Certified General Real Estate Appraiser - Certificate No. AA45. EDUCATION Bachelor of Science: Real Estate. Graduated with honors from Arizona State University, August 1981. Real Estate Courses Completed at ASU' Real Estate Appraisal: Course covering factors affecting the value of real estate; theory and practice of appraising; preparation of the .appraisal report; techniques in appraising. Income Property Analysis: Detailed course covering all aspects involved in the appraisal of income producing properties. Real Estate Finance: Course covering sources and availability of financing; management, servicing and repayment of loans. Real Estate Investment. Course covering real estate investment potential as affected by market conditions and government policies. Land Development: Course covering theories of neighborhood and city growth; municipal planning and zoning; development of residential, commercial, industrial, and special purpose properties. Real Estate Principles: Course covering .regulations, practices, legal aspects, and professional ethics of the real estate business. Real Estate management: Course covering the management of residences, apartments, and commercial properties; consideration of professional standards; methods of promoting, leasing, insuring, and maintaining properties. Real Estate Law: Comprehensive two semester course covedng legal practices as they apply to the real estate field and to leases, titles, mortgages, lending, and trust work. File No. 1336 , Page No. 42 ALASKA CERTIFIED APPRAISAL SERVICES Professional Courses and Seminars Completed: Appraising Real Property, Society of Real Estate Appraisers, 1980 Principles of Income Property Appraisal, Society of Real Estate Appraisers, 1981 Applied Residential Property Valuation, Society of Real Estate Appraisers, 1985 Applied Income Property Valuation, Society of Real Estate Appraisers, 1985 Adjusting for Differences in Residential Properties, S.R.E.A., 1982 Cash Equivalence Seminar, Society of Real Estate Appraisers, 1982 Narrative Report writing, AIREA, 1983 The Analysis & Valuation of Leased Fee & Leasehold Interests, AIREA, 1985 Real Estate Appraisal, University of Alaska Anchorage, 1992 Valuing Easements, International Right of Way Assoc., 1992 Appraisal & Appraisal Review, National Highway Institute, 1994 Appraising 1-4 Family Income Properties, Appraisal Institute, 1997 Alternative Residential Reporting Forms, Appraisal Institute, 1997 Standards of Professional Practice, Appraisal Institute, 1997 The Appraisal of Local Retail Properties, Appraisal Institute, 1999 Special Purpose Properties, Appraisal Institute, 1999 Adjustment Grfd for Residential Properties, Appraisal Institute, 1999 Valuation of Detrfmental Conditions, Appraisal Institute, 1999 HUD National & Local Policies, Acheson,1999 The Technical Inspection of Real Estate, Beckman Co., 2001 EMPLOYMENT HISTORY February 1992 to present- Alaska Certified Appraisal Services, Soldotna, Alaska: Owner and Chief Appraiser. July 1983 to February 1992- Alaska Valuation Service, Inc., Anchorage, Alaska: Fee Appraiser and Consultant. May 1982 to July 1983 - A-1 Appraisal Service, Inc., Phoenix, Arizona: Fee Appraiser and Consultant. May 1981 to September 1981 - Jim Jay Realty and Appraisers, Paradise Valley, ^dzona: Fee Appraiser and Consultant. File No. 1336 Page No. 43 ALASKA CERTIFIED APPRAISAL SERVICES EXPERIENCE Preparation of narrative appraisal reports for all types of vacant land and income producing properties, including: office buildings, retail stores and shopping centers, heavy and light industrial properties, and multi-family housing. Preparation of form appraisals for single4amily, multi4amily, condominium, and vacant land. Analysis and appraisal of leased fee and leasehold interests. Market rent studies..Appraisals for purposes of litigation, condemnation, and acquisition. Qualified as an expert witness: States of Alaska and Arizona. Appraisal, analysis, and feasibility determinations for single-family, multi-family, zero-lot line, commercial and industrial subdivisions. Appraisals of remote and recreational properties, fishing and hunting lodges, fish processing facilities, ship repair yards, tide and submerged lands, time share properties, mining claims, large acreages, aviation and oil industry properties, school sites, service stations, docks, hotels, motels, and restaurants. Study, analysis, and appraisal of surface and subsurface estates and of other partial interests, such as easements, agricultural rights and mineral rights. Appraisal experience covers the entire State of Alaska. TYPICAL CLIENTELE Alaska banks, credit unions and mortgage companies; State of Alaska Agencies including' Division of Natural Resources, Department of Transportation, Alaska Railroad, Attorney General's Office, Division of Investments, and Division of ^griculture; Federal Agencies including: Bureau of Land Management, U.S. Fish and Wildlife, Federal Deposit Insurance Corporation, and the U.S. Postal Service; Native Corporations; relocation services; national and local corporations; the Municipality of Anchorage, the City of Kenai, the Matanuska- Susitna Borough, and other local governmental bodies; and numerous attorneys, businesses, and private individuals File No. 1336 Page No. 44 CITY OF KENA! 210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794 TELEPHONE 907-283-7535 FAX 907-283-3014 ~ 1992 M emoranClum Date: To: From; April 27, 2001 Mayor and Council Richard A. 'Ross, City Manager~(/FM~ Inlet Woods Subdivision Lot Sale- 53 Undeveloped Lots There has been some discussion on Council as how to ensure development of lots currently out for sale in Inlet Woods. The discussion has centered on how do we ensure that a buyer does not acquire the property at the reduced value because of lack of electrical and telephone utilities, and then not develop it. In working on the same problem with the Five Irons Heights parcel, the City Attorney has developed an Installation Agreement and performance bond requirement to ensure that the utilities are extended. The Administration's recommendation to Council is that we delay the proposed sale of the 53 Inlet Woods lots from May 11, 2001 to May 18, 2001 and publicize this same standard as an addendum to that sale. The sale price would remain at $180,000 but the Installation Agreement would require a bond be posted at 120% of the cost of utility extension. The agreement would require installation within two years of sale. From: John J Williams [kenai_mayor@hotmail.com] Sent: Tuesday, May 01,2001 6:41 PM To: cfreas@ci.kenai.ak.us Subject: Fwd: Inlet Woods >From: "lverson, Tim G" <iverst.q~unocal.com> >To: "'kenai_mayor@hotmail.com"' <kenai mayor~hotmail.com> >Subject: Inlet Woods >Date: Tue, 1 May 2001 10:40:49-0700 > >Mr. Williams, >As a property owner in Inlet Woods subdivision I would like to express my >views on the sale of the property in blocks. I understand Clint Hall will >be >purchasing the back 53 lots and he has proposed to buy the front 62. I >believe you should sell him the back lots and see what he does with them >before committing the whole subdivision to one contractor without seeing >his >results. While he is building on the back lots, could you remove lot lines >on some of the front lots to attract an assortment of contractors looking >to >build one or two homes as opposed to monopolizing the subdivision. My >concern is that he will come in and build smaller less expensive homes and >bring down the property values of the existing residents. When I built in >this subdivision, some of the attraction was the variety and sizes of the >existing homes. >Thank you for your time. > >Tim Iverson > 1510 Windward Drive >Kenai, AK 99611 >283-5038 hm >776-6749 wk >iverstg@unocal.com Get your FREE download of MSN Explorer at http://explorer.msn.com 0 z 0 0 0 n, Z (~ o I'- I'- o o~ o ,~' 0 0 o4 o~ 00 o z IL! w I- 0 w z o~ ~ r¢ F---ff--- 2 -J 2 2 m F-- F--- ~ D ___ ~_ z 5 0 0 0 0 0 0 0 w n,' -f z w z -- w 0 ~ ~ < z ~ (/> z z z 0 ~ < n n n n -- ~ o ~ ~ n, ~ 0 w < < < 0 n, 0 o~ m u.I uJ < 0 < 0 z j < 0 < w m< z _o o_ z m n,' n- n, n,' :::3 :3 ::) ::3 0 0 0 0 LL! UJ UJ UJ 0 0 0 0 (.9 (,.9 0 (,.9 z z z z z z 0 n,, 0 1 ,.,. 0 (~ z z 0 Z 0.. l. IJ I. IJ w I.IJ z I.IJW ©© w r~ Suggested by' Administratic City of Kenai ORDINANCE NO. 1908-2001 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA INCREASING ESTIMATED REVENUES AND APPROPRIATIONS BY $302,000 FOR WASTEWATER PLANNING AND DESIGN INCLUDING PLANT EXPANSION WHEREAS, the City received a $151,000 grant from the State of Alaska Department of Environmental Conservation for wastewater planning and design including plant expansion; and WHEREAS, a matching amount of $151,000 must be provided for the project as agreed to in Resolution 98-55; and WHEREAS, funds are available in the fund balance of the Water and Sewer Special Revenue Fund; and WHEREAS, the project will be accounted for in the Wastewater Treatment Capital Project Fund. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA that estimated revenues and appropriations be increased as follows: Water and Sewer Special Revenue Fund Increase Estimated Revenues' Appropriation of Fund Balance Increase Appropriations: Transfer to Capital Project Fund Wastewater Treatment Capital Project Fund Increase Estimated Revenues: Transfer from Water & Sewer Special Revenue Fund State Grant Increase Appropriations: Administration Engineering/Design $151,000 $151,000 $151,000 151,000 $302,000 $ 2,000 300,000 $302,000 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of May, 2001. ATTEST: JOHN J. WILLIAMS, MAYOR Carol L. Freas, City Clerk Approved by Finance' (04/18/2001) jl Introduced: May 2, 2001 Adopted: May 16, 2001 Effective: May 16, 2001 Suggested by: Administrati~ City of Kenai OI~DINANt~E NO. 1909-~2001 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA INCREASING ESTIMATED REVENUES AND APPROPRIATIONS BY $50,000 IN THE WATER AND SEWER FUND AND THE GILL STREET CROSSING CAPITAL PROJECT FUND FOR A NEW WATER MAIN. WHEREAS, there is only one water main serving all of Redoubt Terrace Subdivision; and WHEREAS, the City's previous "Water System Study" recommended a new water main into Redoubt Terrace Subdivision at Gill Street; and WHEREAS, the State of Alaska DOT will be rebuilding the Kenai Spur Highway at Gill Street this summer; and WHEREAS, it is in the best interest of the City to install a water main across the Kenai Spur Highway at Gill Street before DOT repaves the Kenai Spur. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA that estimated revenues and appropriations be increased as follows: Water and Sewer Special Revenue Fund Increase Estimated Revenues: Appropriation of Fund Balance Increase Appropriations: Transfer to Capital Projects Gill Street Crossing Capital Proiect Fund Increase Estimated Revenues: Transfer from Special Revenue Fund $50,O00 $50,000 $50,000 Increase Appropriations: Admin. $ 1,000 Engineering 5,000 Construction 44,000 $50.000 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16t~ day of May, 2001. ATTEST: JOHN J. WILLIAMS, MAYOR Carol L. Freas, City Clerk Approved by Finance: (04/26/2001) jl Introduced: May 2,2001 Adopted: May 16, 2001 Effective' May 16, 2001 Suggested by: Council Member Bannock CITY OF KENAI ORDINANCE NO. 1910-2001 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING THE DEFINITION OF HOTEL AND ADDING DEFINITIONS FOR "LODGE" AND "GUIDE SERVICE" IN THE KENAI ZONING CODE (14.20.320). WHEREAS, the current definition of "hotel" in 14.20.320 does not distinguish between large and small hotel-type uses; WHEREAS, adding a definition of "lodge" to describe a small (five or fewer rooms} hotel-type use, while redefining "hotel" to encompass more than five rooms, would clarify the Kenai zoning code; WHEREAS, the de£mition of "guide service" should be added to the Kenai zoning code due to the increased number of guide services in the city; NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, Alaska, that KMC 14.20.320 is amended by changing the definition of "hotel" and adding the definitions of "guide service" and "lodge" as follows' "Guide Service" means any activity on any premises used for collecting or returning persons from recreational trips when remuneration is provided for the service. "Hotel" means [ANY] a building or group of buildings lIN WHICH THERE ARE] containing more than five guest rooms used [, DESIGNED, OR INTENDED TO BE USED] for the purpose of offering [TO THE GENERAL PUBLIC, FOOD OR LODGING, OR BOTH, ON A DAY-TO-DAY BASIS] public lodging on a day-to-day basis with or without meals. "Lodge" means a building or group of buildings containing five or fewer guest rooms used for the purpose of offering public lodging on a day-to- day basis with or without meals. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of May 2001. ATTEST: John J. Williams, Mayor Carol L. Freas, City Clerk Introduced: Adopted: Effective: May 2,2001 May 16,2001 June 16,2001 CITY OF KENAI PLANNING & ZONING COMMISSION RESOLUTION NO. PZ01-16 AN RESOLUTION OF THE PLANNING AND ZONING COMMISSION RECOMMENDING TO THE COUNCIL OF THE CITY OF KENAI, ALASKA, THAT THE DEFINITION OF HOTEL BE AMENDED AND TO ADD DEFINITIONS FOR ~LODGE' AND ~GUIDE SERVICE' IN THE KENAI ZONING CODE (14.20.320). WHEREAS, the current definition of 'hotel' in 14.20.320 does not distinguish between large and small hotel-type uses; WHEREAS, adding a definition of 'lodge' to describe a small (five or fewer rooms} hotel-type use, while redefining ~hotel' to encompass more than five rooms, would clarify the Kenai zoning code; WHEREAS, the definition of 'guide service" should be added to the Kenai zoning code due to the increased number of guide services in the city; NOW, THEREFORE, BE IT RECOMMENDED TO THE COUNCIL OF THE CITY OF KENAI, Alaska, that KMC 14.20.320 be amended by changing the definition of "hotel" and adding the definitions of "guide service" and "lodge" as follows' 'Guide Service" means any activity on any premises used for collecting or returning persons from recreational trips when remuneration is provided for .the service. 'Hotel' means a building or group of buildings containing more than five guest rooms used for the purpose of offering public lodging on a day-to- day basis with or without meals. 'Lodge' means a building or group of buildings containing five or fewer guest rooms used for the purpose of offering public lodging on a day-to- day basis with or without meals. PASSED BY THE PLANNING & ZONING COMMISSION OF THE ALASKA, this 25th day of APRIL, 2001. Chairmar~ q CITY OF KENAI, ATTEST: Suggested by: Administration CITY OF KENAI ORDINANCE NO. 1911-2001 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING THE LAND USE TABLE TO ADD "LODGE" AND "GUIDE SERVICE" TO THE LISTED USES. WHEREAS, the Council of the City of Kenai added the definitions of "Lodge" and "Guide Service" to the Kenai zoning code; WHEREAS, the Land Use Table should be amended to include the new definitions; 'WHEREAS, the land use "Lodge/Fraternal Organizations" should be amended deleting the term "Lodge" to avoid confusion; NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, Alaska, that the definitions of "Guide Service" and "Lodge" be added to the Land Use Table, and the term "Lodge" be removed from "Fraternal Organizations," as appear on Attachment A. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2001. day of May John J. Williams, Mayor ATTEST: Carol L. Freas, City Clerk Introduced' Adopted: Effective: May 2,2001 May 16,2001 June 16,2001 P -- Principal Permitted Use C -- Conditional Use S -- Secondary Use N -- Not Permitted I~AND ll~qE TAIII~E NOTE: Reference footno~ on following pages for additional restrictions. ZONING DISTRICTS C RR RRI RS RS1 RS2 RU CC CG IL IH R TSH LAND USES COMMERCIAL Guide Service N C C C N N C P P P P C P Lodge N C C C N N C P P P C C P , MISCELLANEOUS ILODGES/]Fraternai N C C C C C C P P P C C P Organizations , Ordinance No. 1911-2001 Attachment A CITY OF KENAI PLANNING & ZONING COMMISSION RESOLUTION NO. PZ01-17 AN RESOLUTION OF THE PLANNING AND ZONING COMMISSION RECOMMENDING TO THE COUNCIL OF THE CITY OF KEN~, ALASKA, THAT THE LAND USE TABLE BE AMENDED TO ADD ~LODGE' AND 'GUIDE SERVICE" TO THE LISTED USES. WHEREAS, the Planning Commission of the City of Kenai recommended to the Council of the City of Kenai that definitions of 'Lodge' and 'Guide Service" be added to the Kenai zoning code; WHEREAS, the Land Use Table should be amended to include the new definitions as appear on Attachment A; WHEREAS, the land use 'Lodge/Fratemal Organizations~ should be amended deleting the term "Lodge" to avoid confusion as appear on Attachment A. PASSED BY THE PLANNING & ZONING COMMISSION OF THE CITY OF KENAI, AI~SKA, this 25TH day of APRIL, 2001. ATTEST: Suggested by: Administration City of Kenai ORDINANCE NO. 1912-2001 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASIC~ AMENDING KMC 23.50.010 EMPLOYEE CLASSIFICATIONS TO INCLUDE NEW POSITION TITLES. WHEREAS, the FY 2002 budget includes two new position titles including a range 14 Planner in the Planning and Zoning Department and a range 6 Parks and Recreation Center Supervisor in the Parks & Recreation Departments; and WHEREAS, these position titles will be effective on July 1,2001. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA KPC 23.50.010 be amended to include the following: Code Class Class Title Range 117 Planner 14 216 Parks & Recreation Supervisor 6 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of May, 2001. ATTEST: JOHN J. WILLIAMS, MAYOR Carol L. Freas, City Clerk Approved by Finance: (04 / 26 / 2001) jl Introduced: Adopted: Effective: May 2,2001 May 16,2001 July 1, 2001 INFORMATION ITEMS KENAI CITY COUNCIL MEETING MAY 2, 2001 o , 4/16 / 01 Cook Inlet RCAC, Council Briefs. 4/17 / 01 Representative Lancaster thank-you for office plant. April 16, 2001 www.circac.org 2001 - 4 *******Phillips Discusses Plans for Exploratory Well in Lower Cook Inlet******* Phillips Petroleum Company representatives came to Anchor Point on April 1 lth to talk about a proposed drilling project. The community meeting was held in the evening at the Chapman Elementary school and drew an audience of about 50 people, including CIRCAC Program Coordinator Mike Munger. The primary topic of discussion was Phillips' plan to develop an off-shore exploratory well in lower Cook Inlet, near Stariski Creek. The company intends to drill the well from land and use directional drilling technology to explore its off-shore state lease. Company representatives said that the drilling pad will be located on a private parcel of land that meets the required setbacks from Cook Inlet and Stariski Creek. The drill pad site will be 500 feet from the inlet and one-quarter mile from Stariski Creek. There are no wetlands on the property and a survey has indicated there are no archaeological resources at the site. Access to the site is from a road off the Sterling highway that goes around an existing gravel pit. The pit may be used to supply gravel for the drilling pad. The well will be directionally drilled to a depth of approximately 7,000 feet. Nabors-Alaska rig 273 will be used to drill the well. Phillips hopes to begin work on the well in mid-September and expects the drilling to be completed in about 90 days. Phillips said the project will require them to address several community issues such as environmental impacts, drinking water, waste disposal, noise, air emissions, water use, and safety. Phillips has begun the process of acquiring the permits needed to proceed with the drilling project. A pre-application meeting has been held with the state Division of Governmental Coordination and the company plans to submit initial permit requests in mid-April. Cook Inlet RCAC will be reviewing and making comments on the company's proposed contingency plan and permit application. *'*******International Oil Spill Conference********************************** Cook Inlet RCAC Executive Director James E. Carter, Sr. was the moderator of a panel discussion during the recent International Oil Spill Conference. The conference was held at the T Convention Center in Tampa, Florida. The convention attracts a large number of people from around the world that are involved in oil spill response and prevention. The event includes a number of special sessions, poster presentations, and on-water demonstrations of new oil spill response equipment (picture at right). CIRCAC's Jim Carter was Chairman of a session that focused on risk management. The panel featured several experts in the field of spill response and preparedness. Presentations were made covering a variety of issues including the development and use of Geographic Information Systems (GIS) for pre-planning and response activities, planning for spill response and prevention in Antarctica, risk assessment models, and the development of response guidelines for sensitive areas. ********Governor Signs Spill Prevention and Response *********************** th On April 6 , Governor Tony Knowles signed into law a bill (SB 16) that will implement prevention and response standards for large, non-tank vessels and the Alaska Railroad. In a press release fi'om the Governor's office, the Governor stated the bill tightens up the state's spill safety net. "Just as we have worked to make Alaska's crude oil transportation system the safest in the world, we must extend that safety net to cover the other vessels and tank cars that carry large quantities o£ fuel oil in Alaska. This law is another step in that direction," Knowles said. The legislation covers vessels that carry large amounts of fuel, not as cargo but for propulsion. The type of non-tank vessels that will be affected include cruise ships, cargo ships, and seafood processors that can hold as much as one million gallons of fuel. The bill reflects many of the recommendations that were submitted to the Legislature by the Task Force on Motorized Oil Transport. The 23-member Task Force was created by the Legislature last year to come up with recommendations on how industry should be required to meet response planning standards. Appointed to the Task Force were representatives fi'om all facets of the marine transportation industry, including CIRCAC Executive Director Jim Carter. The Task Force members were recognized by Alaska Department of Environmental Conservation Commissioner Michele Brown for their efforts in developing the fi'amework for the legislation. At the signing ceremony, Governor Knowles also thanked the bill's sponsor, Senator Dine Pearce, for her efforts in guiding the bill through the Legislature. *******Public Outreach************************************************* Cook Inlet RCAC set up rdan informational booth at the ComFish trade show in Kodiak which was held the weekend of March 23 . The show is the largest of its kind in Alaska and is attended by hundreds of people associated with the commercial fishing industry. Public Outreach Coordinator Joe Gallagher, along with CIRCAC Directors Rob Lindsey (City of Kodiak) and Mary Jacobs (Kodiak Island Borough) hosted the CIRCAC booth. The information booth provided an opportunity to meet with many Kodiak residents, such as Senator Alan Austerman (pictured with CIRCAC's Rob Lindsey), and talk about CIRCAC's mission and current projects. A CIRCAC presentation was also made during ComFish as part of a special seminar session. CIRCAC's Joe Gallagher was the guest speaker at the Anchor Point Chamber of Commerce meeting on March 28th. And on April 12th, CIRCAC Science Coordinator Sue Saupe was the guest speaker at the Soldotna Rotary Club luncheon. Sue's presentation highlighted the results of CIRCAC's on-going environmental monitoring program and outlined the goals of the current Cook Inlet intertidal survey project. '~ - If you are interested in having a presentation from CIRCAC, please contact Joe Gallagher to arrange a time and date. *******Upcoming Meetings********************************************* Prevention, Response, Operations, and Safety Committee- April 27 - AVTEC Center (SEWARD) Kachemak Bay Geographic Response Strategies Workgroup - May 15 - Homer City Hall Cook Inlet RCAC Quarterly Meeting - May 25 - CISPRI Headquarters (NIKISKI) Cook Inlet RCAC - 910 Highland Ave. Kenai, AK 99611 - (907) 283-7222 - hx' i, 907) 283-6102 circac¢?~circac.org SESSION ADDRESS: State Capitol Juneau, Alaska 99801-1182 Phone (907) 465-2693 Toll Free 800-463-2693 Fax 907-465-3835 laska State .Legislature INTERIM ADDRESS: 35477 Suite 101-B Spur 1, Soldotna. Alaska 99665 Phone 907-260-5236 Fax 907-260-3044 Rep res enta ti e £a ncas ter District $ H~~t ~ roafb~ s, Mayor 210 Fidalgo Avenue, Suit 200 Kenai, AK 99611 April 17, 2001 ? Dear Mayor Williams and Staff: Thank you very much for the shamrock plant. It is a nice and welcome addition to our office here in Juneau. The Legislature is getting hectic now, with the pace picking up. We will see you soon! Once again, thank you for the plant. It has a nice home in my office. If there is anything I can do for you, please do not hesitate to contact me. Cordially, en ancaster, Representative E-Mail: Representative_Ken_Lancaster~legis.state.ak.us Cooper Landing · Bear Creek · Funny River · Hope · Moose Pass · Ridgeway · Seward · Sold°tna · Sterling Listening to you- Getting things done. MAKE PACKET$ COUNCIL PACKET DISTRIBUTION COUNCIL ~EETIN6 bATE: ~ayor/¢ouncil Attorney ~/' TayIor/$prin~ler/Kebschull Clerk ~' City Mana~ler -/ Public Works Police Deportment ~ Finonce~ ~ Engineer Senior Center ~Airport / Kim bibrar7 ~ P~rks & Recreation ~ Clarion Fire Deportment /~~ ~ ~ AGENDA DISTRIBUTION Sewer Treatment Plant Streets Shop bock Buildin~ ~aintcn~nce Animal Control Water/Sewer Count er Fox by computer to Contacts; Agenda List' Microsoft Fox from printer list; Address Book; Assembly Members KSRM HEA Kenoi Chamber of Commerce ~Ton Little (Daily News/$oldotno) KVCC KDLL Ebb DELIVER Council Pockets to Police Deportment Dispatch desk. The Clarion and KDLL will pick their packet up at City Hall. The portion of the agenda published by the Clarion should be foxed os soon os possible after Noon on pocket day. Home Page documents (agenda, resolutions and ordinances for public hearing) ore pl~ced in the Clerk's HTMb file. Pl~ce them onto the city's ~eb$ite from there ~$ soon os possible. AGENDA KENAI CITY COUNCIL- REGULAR MEETING MAY 2, 2001 7:00 P.M. KENAI CITY COUNCIL CHAMBERS http://www.ci.kenai.ak.us ITEM B: SCHEDULED PUBLIC COMMENTS (10 minutes) 1. Dick Metteer-- Alaska Pork Project, Inc. ITEM C: PUBLIC HEARINGS 1. Ordinance No. 1907-2001 --Increasing Estimated Revenues and Appropriations by $16,000 in the Senior Citizens Title III Grant Fund for Operating Supplies. 2. Resolution No. 2001-28 -- Supporting the Cook Inlet ^quaculture Association's Plan for Assistance to the Cook Inlet Fishing Community Through Fisheries Enhancement and Rehabilitation. 3. Resolution No. 2001-29 -- Awarding the Bid to Hanson's Roofing for Kenai City Hall Roof Repairs -- 2001 for the Total Amount of $13,620. 4. Resolution No. 2001-30 -- Transferring $7,500 in the Shop Department to Purchase Broom Cores.. ITEM G: OLD BUSINESS 1. Discussion -- Appraisal of Five Iron Heights Subdivision, Block 3. 2. Discussion --Inlet Woods Subdivision Lot Sale -- 53 Undeveloped Lots. ITEM H: NEW BUSINESS 1. Bills to be Paid, Bills to be Ratified 2. Purchase Orders Exceeding $2,500 3. *Ordinance No. 1908-2001 -- Increasing Estimated Revenues and Appropriations by $302,000 for Wastewater Planning and Design Including Plant Expansion. 4. *Ordinance No. 1909-2001 --Increasing Estimated Revenues and Appropriations by $50,000 in the Water and Sewer Fund and the Gill Street Crossing Capital Project Fund for a New Water Main. 5. *Ordinance No. 1910-2001 -- Amending the Definition of Hotel and Adding Definitions for "Lodge" and "Guide Service" in the Kenai Zoning Code (14.20.320). 6. *Ordinance No. 1911-2001 -- Amending the Land Use Table to Add "Lodge" and "Guide Service" to the Listed Uses. 7. *Ordinance No. 1912-2001 -- Amending KMC 23.50.010 Employee Classifications to Include New Position Titles. EXECUTIVE SESSION - Scheduled/To discuss personal characteristics of city manager candidates. ITEM K: ADJOURNMENT The public is invited to attend and participate. Additional information is available through the City Clerk's office at 210 Fidalgo Avenue, Suite 200 or visit our website at http://www, ci.kenai.ak.us Carol L. Freas, City Clerk D747/211