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HomeMy WebLinkAboutOrdinance No. 3318-2022KENAI CITY OF KENAI ORDINANCE NO. 3318-2022 Sponsored by: Administration AN ORDINANCE RENAMING AND AMENDING KENAI MUNICIPAL CODE CHAPTER 7.30 LAND SALE PERMANENT FUNDS TO ESTABLISH THE KENAI SENIOR CENTER CONE MEMORIAL TRUST AND DIRECTING ALL PROCEEDS RECEIVED AS A RESIDUAL BENEFICIARY FROM THE TAMARA DIANE CONE TESTAMENTARY TRUST TO BE DEPOSITED INTO SUCH FUND. WHEREAS, Chester Cone moved to Shungnack, Alaska from Arkansas in 1949 to teach at a Bureau of Indian Affairs school; and, WHEREAS, Chester moved to the Kenai area in 1950 seeking a warmer climate and to work in the commercial fishing industry; and, WHEREAS, in the fall of 1950 Chester sent a one-way ticket and an invitation to his old girlfriend, Mavis Stepp, to move to Alaska; and, WHEREAS, Chester and Mavis were married and in 1957 began homesteading off of what is now Beaver Loop Road; and, WHEREAS, Chester was a business man who formed Better Concrete Corporation and owned and operated Beaver Loop Laundromat and Cleaners; and, WHEREAS, the Cone's had two children, Tammy and Curtis; and, WHEREAS, Curtis Cone passed on August 19, 1986; and, WHEREAS, the Cone's established the Tamara Diane Cone Testamentary Trust to provide for Tammy until her passing on July 2, 2022; and, WHEREAS, the Kenai Senior Center was named a residual beneficiary of the Tamara Diane Cone Testamentary Trust and to date has received disbursements from the trust totaling $715,585.23; and, WHEREAS, it is the intent of the City Council to establish a permanent fund with the proceeds and where the fund's earnings, in excess of inflation, may be appropriated for the acquisition of capital items or capital projects for the Kenai Senior Center; and, WHEREAS, establishment of the Kenai Senior Center, Cone Memorial Trust honors the wishes and legacy of the Cone Family, will provide a lasting benefit to the Kenai Senior Center, and is in the best interest of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, AS FOLLOWS: Section 1. Amendment of Chapter 7.30 of Kenai Municipal Code That Kenai Municipal Code, Section 7.30 Land Sale Permanent Funds is hereby amended as follows: Chapter 7.30 [LAND SALE] PERMANENT FUNDS New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3318-2022 Page 2 of 6 7.30.005 - General Fund Land Sale Permanent Fund. (a) A separate fund of the City of Kenai is hereby established as the General Fund Land Sale Permanent Fund. The purpose of the fund is to account for the principal proceeds of the sale of City -owned non - trust lands that are not subject to deed or other conveyance restrictions that require the funds be used for specific other uses or benefits (General Fund lands). (b) The General Fund Land Sale Permanent Fund shall be a restricted fund. City Charter prescribes the establishment of a separate City account for the principal proceeds from sales of City -owned, non - trust lands; however, the establishment of the investment guidelines for that account is within the discretion of the Kenai City Council. (c) The net proceeds received by the City on closing sale of non -trust lands shall be deposited in the General Fund Land Sale Permanent Fund. Where notes are taken in payment for General Fund lands, all principal payments on said notes shall be deposited in the General Fund Land Sale Permanent Fund. Interest on notes taken in payment for General Fund lands shall be recorded as investment earnings in the General Fund Land Sale Permanent Fund. (d) Money placed in the General Fund Land Sale Permanent Fund shall not be available for use by the City for any purpose other than for investments in accordance with City Charter and ordinances. (e) Interest or income earned by the General Fund Land Sale Permanent Fund shall be recorded as investment earnings in the General Fund Land Sale Permanent Fund and can be deposited in the General Fund or held in reserve in the fund. The City Council may, by ordinance, transfer funds from the General Fund to the General Fund Land Sale Permanent Fund. After such a transfer, the money will become a part of the General Fund Land Sale Permanent Fund to be used only for the investment purposes for which the fund is established. 7.30.010 - Airport Land Sale Permanent Fund. (a) A separate fund of the City of Kenai is hereby established as the Airport Land Sale Permanent Fund. The purpose of the fund is to account for the principal proceeds of the sale of Airport Land. Airport Lands shall consist of all land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport under the terms of the 1963 Quitclaim Deed from United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai, Alaska. Additionally, any other land owned by the City and acquired with airport funds shall be Airport Lands. (b) The Airport Land Sale Permanent Fund shall be a restricted fund. The establishment of the fund known as the Airport Land Sale Permanent Fund is within the discretion of the Kenai City Council. Deed restrictions, Federal regulations and grant assurances require that airport funds be used for the use and benefit of the Kenai Municipal Airport. (c) The net proceeds received by the City on closing sale of Airport Lands shall be deposited in the Airport Land Sale Permanent Fund. Where notes are taken in payment for Airport Lands, all payments on said notes shall be deposited in the Airport Land Sale Permanent Fund. (d) Money placed in the Airport Land Sale Permanent Fund shall not be available for use by the City for any purpose other than for investments in accordance with City ordinances. (e) The City Council may, by ordinance, transfer funds from the Airport Special Revenue Fund to the Airport Land Sale Permanent Fund. After such a transfer, the money will become a part of the Airport Land Sale Permanent Fund to be used only for the investment purposes for which the fund is established. New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3318-2022 Page 3 of 6 7.30.015 - Kenai Senior Center, Cone Memorial Trust Permanent Fund (c) The proceeds receiv Senior Center. Cone (d) Money placed in the available for use by ordinances 7.30.020 - Investments. (a) The [LAND SALE] Permanent Funds shall be managed by the Finance Director, with the following conditions: (1) The City will contract for the management of the investments for each [LAND SALE] Permanent Fund with one (1) or more professional investment managers with experience handling institutional endowment investments subject to Council approval. (2) The [LAND SALE] Permanent Funds shall be invested in such types of income producing investments as limited by subsection (b) of this section, Authorized Investments for the [LAND SALE] Permanent Funds. The investments for each [LAND SALE] Permanent Fund shall be approved by resolution annually, usually during the City budget process, in the form of an asset allocation plan, with each [LAND SALE] Permanent Fund following the same asset allocation plan. The asset allocation plan shall have specific categories of investments for the funds with percentage targets that allow for reasonable fluctuations above and below the target percentage. The plan will establish benchmarks for evaluating the performance of each investment manager and asset classification. Investments shall be managed such that the target ranges of the asset allocation plan are adhered to. (3) Investments of the [LAND SALE] Permanent Funds will take a conservative posture on derivative securities by recognizing that derivatives may be utilized within investment vehicles as a portfolio management tool to create or enhance exposure to an asset class or implementation strategy while requiring that any embedded leverage created by their use be fully collateralized. Net exposure exceeding the asset value of the investment vehicle is prohibited. Exposure must be net long at all times. (4) All income derived from investment of each [LAND SALE] Permanent Fund, including interest income, realized gains, and undistributed earnings, can be distributed or reinvested into the respective [LAND SALE] Permanent Fund and shall be invested in accordance with subsection (b) of this section, Authorized Investments for the [LAND SALE] Permanent Funds. (5) Appropriations from the Airport Land Sale Permanent Fund may be made as follows: (i) In any fiscal year, the amount available for appropriation for airport operations and capital needs will be based upon the five (5) year average of the fund's calendar year end market New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3318-2022 Page 4 of 6 value. An amount not to exceed three and four -fifths percent (3.8%) of the five (5) year average market value may be distributed if the average market value is less than the fund's inflation adjusted principal balance. An amount not to exceed four and one -fifth percent (4.2%) of the five (5) year average market value may be distributed if the average market value is greater than the fund's inflation adjusted principal balance. (6) Appropriations from the General Fund Land Sale Permanent Fund shall be limited to the lesser of the cumulative earnings at calendar year end for the fund or four percent (4%) of the fund's fair market value as of December 31st of each year. "Cumulative earnings" is defined as the market value at calendar year end minus the fund's inflation adjusted principal balance. (7) Appropriations from the Kenai Senior Center Cone Memorial Trust Permanent Fund may be made as follows: end minus the fund's inflation adiusted principal balance. (b) Authorized Investments for the [LAND SALE] Permanent Funds. (1) Investments authorized by KMC 7.22.030. (2) Corporate obligations of investment -grade quality as recognized by a nationally recognized rating organization. If, after purchase, these obligations are downgraded below investment grade, the obligations shall be sold in an orderly manner within ninety (90) days of downgrading. (3) Domestic equities which, taken as a whole, attempt to mirror the characteristics or replicate the Standard and Poor's 500 Index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including both mutual funds and exchange traded funds (ETFs). (4) Domestic equities which, taken as a whole, attempt to replicate the Standard and Poor's 400 Mid -Cap Index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including both mutual funds and exchange traded funds (ETFs). (5) Domestic equities which, taken as a whole, attempt to replicate the Standard and Poor's 600 Small -Cap Index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including both mutual funds and exchange traded funds (ETFs). (6) International equities which, taken as a whole, attempt to replicate the Financial Times Stock Exchange Developed ex North America Index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including both mutual funds and exchange traded funds (ETFs). (7) Equities which, taken as a whole, attempt to replicate the universe of domestic real estate investment trusts as represented by the Standard and Poor's REIT composite index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including both mutual funds and exchange traded funds (ETFs). New Text underlined; [DELETED TEXT BRACKETED] Ordinance No. 3318-2022 Page 5 of 6 (8) Emerging market equities which, taken as a whole, attempt to replicate the Financial Times Stock Exchange Emerging Index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including both mutual funds and exchange traded funds (ETFs). (9) Global infrastructure equities which, taken as a whole, attempt to replicate the STOXX Global Broad Infrastructure Index, or a substantially similar index, including both mutual funds and exchange traded funds. (10) Investment grade domestic bonds which, taken as a whole, attempt to mirror the characteristics or replicate the Bloomberg Barclays Aggregate bond index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, including individual securities, mutual funds and exchange traded funds (ETFs). (11) High yield domestic bonds which, taken as a whole, attempt to mirror the characteristics or replicate the Bloomberg Barclays U.S. Corporate High Yield Very Liquid bond index or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, utilizing mutual funds and/or exchange traded funds (ETFs). (12) Alternative beta funds which, taken as a whole, attempt to provide systematic exposure to trading strategies included in, or similar to, those within the Wilshire Liquid Alternatives Index, or another index of similar characteristics and approved by resolution of the Council as a component of the annual [LAND SALE] Permanent Funds Asset Allocation Plan, utilizing mutual funds and/or exchange traded funds (ETFs) that adhere to the limitations identified in subsection (a)(3) of this section. (c) Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or that could impair their ability to make impartial investment decisions. Such employees and officers shall disclose to the City Manager any material financial interests in financial institutions that conduct business with the City and such information shall be kept confidential to the extent otherwise allowed by law. Employees and officers shall subordinate their personal investment transactions to those of the City, particularly with regard to the timing of purchases and sales. A "material financial interest" in an entity is a financial interest of any kind, which, in view of all the circumstances, is substantial enough that it would, or reasonably could, affect the employee's or officer's judgment with respect to transactions to which the entity is a party. (d) The Finance Director shall submit to the City Council a quarterly investment report that summarizes recent and anticipated market conditions and that describes the City's investment portfolio in terms of transactions during the quarter, maturities, risk characteristics, and investment return compared with both benchmark performance returns and with the City's budgetary expectations. (e) The Finance Director shall establish custody and safekeeping procedures with regard to all investments authorized by this chapter. All such investment securities, or their related collateral securities, shall be either held by the City or by a custodial agent for the City. Section 2. Direct the $715,585.23 received to date and any addition proceed the City receives as a residual beneficiary of the Tamara Diane Cone Testamentary Trust be deposited into and accounted for in the Kenai Senior Center, Cone Memorial Trust Permanent Fund. New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3318-2022 Page 6 of 6 Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 19T" DAY OF OCTOBER, 2022 ATTEST: OAr San r, M City Clerk Brian Gabriel Sr., Mayor Introduced: October 5, 2022 Enacted: October 19, 2022 Effective: November 18, 2022 New Text Underlined, [DELETED TEXT BRACKETED] I OV ��bav K N A City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www1enai.city MEMORANDUM TO: Mayor Gabriel and Council Members THROUGH: Paul Ostrander, City Manager FROM: Terry Eubank, Finance Director DATE: September 29, 2022 SUBJECT: Ordinance 3318-2022 Amending KMC 7.30 to Establish the Kenai Senior Center Cone Memorial Trust. The purpose of this memo is to recommend passage of Ordinance 3318-2022 which will amend KMC 7.30 Land Sale Permanent Funds to establish the Kenai Senior Center Cone Memorial Trust and codify a restriction that cumulative earnings of the fund may only be used for Kenai Senior Center Capital Projects. Cumulative earnings is defined as the market value at calendar year end minus the fund's inflation adjusted principal balance. In other words, only the investment earnings of the fund less the amount needed to inflation proof the fund, inflation is measured by the annual change in the Anchorage, Alaska Consumer Price Index for All Urban Consumers (CPI-U), may be used for acquisition of capital items or capital projects of the Kenai Senior Center. As a residual beneficiary, the City has received to date $715,585.23 in disbursements from the Tamara Diane Cone Testamentary Trust. The trust was established by the Chester and Mavis Cone for the benefit of their daughter. Tamara Cone passed on July 2, 2022 and the City was named as a 1/3 beneficiary of any remaining trust assets. Chester and Mavis were longtime Kenai residents who homesteaded in the Beaver Loop area of Kenai. Chester and Mavis owned and operated Better Concrete Corporation and the Beave Loop Laundromat and Cleaners. Chester was actively involved in the founding and formation of the City. Establishing the Kenai Senior Center Cone Memorial Trust Permanent Fund will honor Chester and Mavis's wishes in leaving these funds to the Kenai Senior Center and ensure the lasting benefit of their gift for this and future generations of Kenai residents. Your support for passage or Ordinance 3318-2022 is respectfully requested.