The URL can be used to link to this page

Home My WebLink About1970-04-08 Council Minutes - Special MeetingAGENDA SPECIAL 14EETIIIG - KENAI CITY COUNCIL 7:30 P.M. APRIL 8, 1970 ''ITSM It ROLL CALL ✓fTEN Z: AWARD BOND BID ✓ ITEM 3 t RESOLUTIOW FOR BORROWING MOJMY FROII DAMS rITEM 4: RESOLUTION FOR PLACING SALES TAX ON THE BALLOT J4. Wo Cswg .2,0Z sG ffm MINUTES OF SPGCIAL KEUI CITY COUNCIL MEETING 7:3U P.M. 8 APRIL, IJ7J Roll call: Members present - Cnarles A. Bailie, Robert Bielefeld, Judi Brown- ing, John Hulien, Billy McCann, Mrs. Florine McCollum, Hugh Malone and Mayor Eugene ii. Morin... Members absent - Pat McFarland. Items 5,6 and 7 were added to the agenda. 2, City Manager Robbins read the bids on the $34U,000 General Purpose G. 0. (W&S) Bond issue which are included in these minutes. Donald A. Meyer, Bond Consultant with Marshall & Meyer, recommended the low bid be accepted saying these bids represent the best price the market is paying today. The market is full of gyrations, but these bids are excellent, considering the times. There is a difference of $6,000 between the first two bids quoted. Rates in Alaska and the lower 48 are comparable. The State of Washington sold a 15 million dollar issue at 7.21%, so Kenai's lowest bid of 7.27 is not far off. These are 20 year bonds with an option to buy back after 10 years. Council disliked the nigh interest rate but realized this is the price of borrowing now and saw no other way to go. McCann moved, Malone seconded, to accept the low bid of Seattle Trust and Savings Bank and Kidder, Peabody & Co. at 7.275476 for the 20 yrs. Gen- eral Purpose G. 0. Water & Sewer Bonds. (340,000) with total interest pay- ments of $324,122.50. After brief discussion the motion carried unanimously by roll call vote. 3, The City Clerk presented Res. #70-8 authorizing a loan from Alaska State Bank. Bids for the proposal to borrow were received from both local banks. ASB bid 6% and National Bank of Alaska, Kenai, bid 6.95%. City Treasurer Ray Burt explained the City would only borrow given amounts as needed, and would come to Council each time. Bailie moved, Bielefeld seconded, to adopt Resolution VU-8 authori- zing a loan from Alaska State Bank, Kenai, at 6% for 165 days of an amount not to exceed $1501,000.00. Mr. Richard McMillian, Mqr,, ASB, Kenai, said his Bank had made a real effort to take care of the City s needs. They have loaned the City $9519650.91 (counting this loan) since 7 January, 1966 - 22 loans in all. They have never charged a bank fee for handling payments from our bond redemption funds or for purchase of treasury bills; they do not charge a fee for NSF checks deposited as revenue for utility users; at the moment, counting this $150,000) they have on loan to the City $247,000 (actually $2340000). Since his Bank is do- ing all the lending they would appreciate being the sole depositor for City funds. Council passed a resolution saying funds should be equally divided for demand deposits and Harrison informed Council this would be reviewed every three months, but McMillian maintains this is not equitable if ASB is furnishing all the loans. Mr. James O'Connell, Mgr. of National Bank of Alaska, Kenai, said the rate of 6% is a very good offer for the loan. He wanted to do as well but was told by his bosses in Anchorage that 146A loans to the City of Anchorage at 6.6% and could not bid a lesser amount in Kenai. He said the City should respect this bid of 6% and tnat he could not quarrel with the facts. 3BA has bought $225,000 Kenai bonds and $424,000 Boro bonds; they still have faith in the community and until recently were more competitive with their proposals. If the City chooses to withdraw its funds he coulnd not say anything in the light of this bid, and he would not be peeved about it. He asked if Council had seen the Treasurer's report on the status of demand deposits with the two banks. This shows status of funds on deposit at present. Don Meyer said NBA had also submitted .a bid on these bonds.today. Replying to a question from Council, ASB has loaned $3,900,000 on the Peninsula; dBA's Kenai Branch has loaned $1,800,000 on the Peninsula. The motion on Res. 7U-8 passed unanimously by roll call vote. Kenai Council Minutes - Special P•ketirg 4/8/7U page two Item 4: The City Manager read the original preamble to Res. 70-9, and nis sug- gested changes. Bielefeld moved, McCann se con dad, to delete the reference to power gen- eration from the suggested preamble. Motion carried unanimously. Hulien moved to change the 2% to 1% in the Proposition to be placed on the ballot as outlined in Res. 70-9. Motion carried with McCann dissenting. Hulien moved, Bielefeld seconded to limit the sales tax proposition in Res. 7U-9 to two ,years. Motion passed with McCann and Malone dissenting. Council advanced all the arguments for the tax as brought out in last week's public discussion of the proposition. Malone moved, Bielefeld seconded, to adopt Res. 70-9 as amended, placing the sales tax proposition on the ballot. The meeting was opened to public hearing. James Bookey said the City's evaluation for 1970 had increased over 1969's which would result in added revenues of $80,000, and he urged the Council to take a good look at finances before levying a sale tax. Council said even with the increase, additional revenues are needed due to expanded services, inflation, and the deficit created over the past years. Stan Thompson said he doesn't understand how Council really knows what is needed as the budget hasn't been assembled yet for 70-71. He prefers a sales tax over a personal property tax or an increase in real property tax, but is not convinced more taxes are necessary. He doesn't think it would pass with the little information known at this time. He asked why the rush tonight?( If the proposition is to go on the ballot, the Res. must be passed now in order to ad- vertise the 30 days requi red. ) Council has the power to levy real or personal property taxes and to in- stitute a sale tax, but prefers to let the people decide if they want a sales tax. The City has gone for too many years without enough money to operate even minimal services. Present revenues just can't handle our needs, and we must re- tire our debts. The Police Dapartment is costing a lot more than was budgeted for. The public hearing was closed and roll call vote passed Res. 70-9 as amended with McCann dissenting. the 5. Robbins explained ,background of proposed sale of Lot 2, Sec. 4, UN, R11W, S.M. to the Borough for school purposes. The City's appraisal of Lots 1 and 2 was $82,100 - the dorough's appraisal was $83,500. At last night's Boro meeting, the Chairman was authorized to offer $40,000 for Lot 2 in Sec. 4. They anticipate using about 14,9 acres, considering this the usable portion, and will preserve the barabara sites thereon. The City has kept a 100' r.o.w. on the West boundary for the proposed road to connect Beaver Loop with the Spur at some future date. Of the $40,000 an amount of $17,411.53 would go to the Bond redemption fund for W&S assessments against the lot. The balance of $22,588.47 would go to the General Fund. There was some discussion as to the need to advertise the sale of land as required in the Code. The Atty. can rule on this. Hulien moved, McCollum seconded, to enter into sale of land for school purposes on Lot 2, Sec. 4. T5N, RllW, S.M. for $40,000 subject to the Attorney's favorable opinion. Motion carried unanimously. 6. There was considerable discussion as to the need for KCL's hiring an Atty. in Seattle at this time to render an opinion on its contract with CUL. Don Meyer was asked his opinion of attorneys in Seattle and said he learned long ago to stay out of legal opinions. But, he said, the City has real financial problems with KCL. The first problem is to rectify the 1967 bond obligation to buy HEA facilities in the City which he is attempting to accomplish. He finds what he supposed to be true regarding KCL's financial status is not right. Kenai Council Minutes - Special Meeting 4/8/70 Page three Item 6, Cont'd. Meyer said utilities must show a 1.4 bond coverage on debt obligation and KCL hasn't the earnings he thought, based on figures cursorily assembled on his last trip here. KCL has generation problems, contract problems with Wildwood; why contract with other lawyers when the City is hiring a firm with 22 lawyers in Seattle as Bond Counsellors? Also, why hire a lawyer now to deal with contracts when we have real problems of mtce. and operation of the utility? Fiscal '69 KCL figures show $166,000 left for debt service; based on the figures of 31 Dec.169, KCL's debt service allowance would be $1000000. The Treasurer's figures for Jan. thru Mar. show KCL is just barely breaking even on operations without providing for debt service. Lien bonds must provide 1.4 coverage - on the revenues now,the coverage is 1/2 to 3/4 of 1% on the '60 issues. We must first put our house in order - then worry about what a lawyer will say about a contract. KCL has bought more power this year, yet revenues are considerably less - WHY is this? When he talked with the All -state insurance people on buying more bonds, they about tore him apart. KCL's revenues are not only decreasing, they owe subdividers in the amount of $186,000 plus interest, they owe the bank over $58,000. Now is not the time to think about undertaking generation unless 4'y they can pay for their distribution. Morin said the City decreased its rates some months ago - perhaps this would account for the decreased revenues in spite of the purchase of more power. The Treasurer will ascertain f'f some of these expenses should have been capital- ized. Also, KCL's revenues shoud show up better in April, May and June as they will be paying less for power, according to the de-esculated scale for power pur- chases. The Mayor pointed out, the rate for purchase of power decreases, but so does revenue during the summer months. Mayer said the City must furnish an engineer's certificate of 1.4 coverage for sale of new bonds. The first quarter of 169 showed an income of $19,000 over expenses - the first quarter in '70 shows a break even basis without debt coverage. Council said in view of the circumstances, the KCL Mgr. should not go to Seattle at this time. The Mayor said the rate study showed a drop to 1.5 after change of rates as compared to 2.+ last year, but apparently even the 1.5 is not being realized. Malone said the auditors report says we should put our utilities on a -1 more business -like basis%and we should see the distribution system in the black before worrying about generation. He also wants to see the figures on capitali- zation of KCL expenses when they are obtained. McCann reminded Council that KUSCO, or HEA or the Tyonek. Indians are will- ing to buy KCL any time. Robbins asked what would happen if the City entered into a contract with KUSCO or HEA to manage KCL for the City. No one knew the answer. The Chicago Pneumatics at CUL should be ready to go on the line tomorrow night if the parts come tomorrow morning. 7. The Mayor said CSHB 202, giving the Public Service Commission jurisdiction over utilities owned by municipalities was once more before the Legislature. Kenai, on its own and as a member of the Alaska Municipal League,has fought this type of Legislation tooth and nail for years, and it seems the fight gets harder every year. Council discussed this briefly. McCann moved, Bielefeld seconded, the City should support CSHB 202. Roll call vote: Affirmative - Bielefeld, Hulien, McCann (Browning);Negative - Bailie, McCollum, Malone, and the Mayor broke the tie with a "no" vote. MacMillian said he did not get tection on demand deposits with ASB. meeting. Meeting adjourned 9:30 p.m. an answer to his request for some pro - This will b/e on the agendaatnext week's Respectfully submitted, Frances Torkilsen City Clerk L!� �T�fi r 1Y t r77 • � NOTES ON BID OPENING, WATER & SEWER GENERAL PURPOSE GENERAL OlLIGATIOH BONDS 10:00 A.M., KENAI, ALASKA $340s000.00 1. SEATTLE TRUST AND SAVINGS BANK, SEATTLE, AND KIDDER, PEABODY & COMPA09 NEW YORK AiD SEATTLE 7.27j476`6 TOTAL INTEREST PAYMENTS a $324.122.60 2. KIRCHiiER, MOORE & COMPANY, DENVER, COLORADO, AND NATIONAL 3AiiK OF ALASKA, ANCHORAGE AiD KENAI 7.4115325 TOTAL INTEREST PAYMENTS ■ $3309183.75 3. SEATTLE FIRST NATIONAL BANK, SEATTLE, AND FOSTER AND MARSHALL, INC.,SEATTLE 7.420879% TOTAL INTEREST PAYMENTS - $3309600.00 Franc rki Isen City Jerk �I f r i i V, . _. a It — .---— — - - - - --- -- ---- t