HomeMy WebLinkAbout1967-01-07 Council Minutes - Special MeetingKENAI CITY COUNCIL MINUTES OF SPUCIAL MELTING 7 JANUARY 1967
Roll calls Members present - Chester Cone, Gene Morin, Carl Seaman and
Mayor Dye.
Also present - City Manager James W. Harrison, Donald A. Meyer
of Marshall & Mayer, Seattle, and Harold Galliett from Anchorage.
Mayor Dye reviewed the economic situation'regarding the oil industry, the
fertilizer plant, the methane plant and future industrial growth. The
great need is for housing,with utilities,for the influx of people, as
well as sites with utilities for industrial and commercial growth.
The City is.trvtna to get assistance from the Federal Govn't. for
installation of a.gas distribution system, expansion of W6S and electri-
cal systems and for street improvements. The City feels it cannot wait
much longer for outside help and has decided to go ahead on its own,with
bonding,for some of these necessary services. The Mayor will be in Wash-
ington next week, and amoung other things, will try to get a definite
answer whether or not we can expect any financial help.
A conservative estimate of the City's taxable property evaluation is
$11,500,000 for the 1967 tax year, making the bonding capacity $2,300,000.
Outstanding G.O. indebtedness now is $130,000 (W&S Bonds).
.f='.07Mr. Meyer said he would repeat what he told the Kenai City Council four
� years ago - He has "never seen such an enthusiastic bunch of people in
his life". We have always aimed high. .
He also said he has always had faith in Alaska; his firm was the
one who handled our school bonds, and they personally bought our water 5
sewer bonds until they could be sold later on a more favorable market.
This faith has paid off as now the future of Kenai is the brightest spot
on the State. He has always thought WES are the most important services
to offer with water taking priority.
Galliett says the preliminary designs are ready for W6S with the exception
of the lower part of Forest Dro and the beach sewer line. However, he
knows the costs of these additions.
Harrison says the present W6S system is self-supporting now, mainly
because the one employee has also worked with other depts. and his salary
was shared, at tinges, according to work done for these depts. Future
-� consumers, due to the City's mandatory hook-up regulation and to known
growth, will guarantee self-support.
Galliett briefly outlined areas to be served by W6S; costs were
discussed; on a ten yr. pay -plan it was estimated assessments could
assume 25 to 30 percent of the costs --on a 20 yr. pay -plan, perhaps 50%.
Meyer will check on the legality of a 20 yr. pay -plan.
It is Council's idea to ask the people for authorization on bond-
ing for the entire project$ but to issue bonds in stages.
Meyer concurred with the concept of few bond elections; it is
batter to authorize more than will be sold, as this allows Cities to plan
for futvrp expansion without going to the people every year.
The biggest job is to get all information to the people so they will
be fully knowledgeable of the City's needs and plans.
There was considerable discussion as to areas to be first served; need
for another well; plans to use the Kenai River as a source of water for
the anticipated demand; tentative figure on bonding, $3009000 for water
and $3259000 for Sewer.
Street improvements are estimated to cost $300,000 of which about
$1509000 could be assessments.
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MINUTES SPECIAL, COUNCIL MEETING 7 JANUARY 1.967 PAGE TWO
Electric Bond needs: $250,000; $180,000 to purchase HEA facilities,
$20,000 for substations, etc. and another $50,000 for anticipated growth.
These figures are based on rates we now have and were compiled by R.W.
Beck, and payments on future bonds can be handled with the same rates.
These estimates would take care of needs this year, but do not allow for
the immediate needs in the next few yearq.
Meyer says the City should look further ahead; he suggests
$500,000 ea. for W&S and similar increases for other utilities; and let
the market dictate the time for sale of authorized bonds, as well as the
City's capacity for undertaking various phases of the projects.
Regmtding furnishing water to industries North of the City, Galliett
willendeavor to get written comittments from various companies as to
their needs and plans and whether or not they would desire a supply from
the City.
Utilizing river water, the City could furnish 30,000,000 gals. of
water a day, which would be 700 times what the City itself would need.
To provide for the City's immediate need, it would be wise to plan
for a third well off Third Avenue.
But, to plan for more wells would be impractical as a larger source
of water is need; this can be supplied by the river. Great care and
many tests must be made during the high Spring tides to assure there is
no salinity; silt, etc, can be filtered out.
A project of this kind is absolutely necessary; the industries
North must have water; either the City, the Borough or the State must
furnish it. Right now, the City is the only one in a position to do so.
In the event the City can accomplish such a project, the well
houses would be deleted; a large tank could store enough water for fire
purposes.
The City has requested water rights for all surface water, sub-
surface water within the City limits and half of the flow of the Kenai
River. Galliett says this is about 50 times what we need now, even
during the winter.
Meyer says this would be very good for the City as the Federal
Govn't, looks favorably on programs to aid industry, and right now, every-
one is vitally aware of water -pollution and water supplies. This is
also a pallatable project for bond issues, i.e.--to provideearea-wide
Mayor Dye suggests the City notify the Public Service Commission
that we hope to serve industry from Kenai to Point Possession.
' Mayor Dye asked Mr. Meyer if he would consider preparing the brochures,
advising on financial matters of the various bond issues and acting as
consultant to the City preparatory to submitting these bonds to public
bid?
The Mayor also asked his opinion on the City's chances to procure
grants from the Fed. agencies at this time.
Meyer doesn't think the appropriation from 8ongress will allow for
- much hope for the City for Fed. help. At the same time, he says he
doesn't think any town in the country could have gotten as much from HUD
as Kenai did on its terminal bonding. Kenai has a very high priority
and a great deal of respect at the Seattle HUD offices.
Meyer briefly reviewed the situation that has led to the poor image
Alaska has created in the bond world; various Cities in Alaska had
issued bond -anticipation notes, but had found no market. He says there
is not short-cut method for municipal financing; either you have valid
feasible bonding, or you are in trouble; it is very bad for a City to
invite public bids on bond issues and have no bidders; these bond -anti-
cipation notes were issued under false premises, inaccurate statements
MINUTES OF SPECIAL, COUNCIL MEETING 7 JANUARY, 1967 PAGE 3
and the Banking Institutions are shying away from Alaska bonds; as a
result our credit and image is hurt; he is meeting next week with the
Governor to try to rehabilitate the financial picture. His firm owns
more Alaska bonds, as a merchandising firm, than any company in the U.S.
He presented a Memorandum agreement between his firm and the City
wherein he would act only as a consultant. he does not advise public
bidding at this time; Kodiak has tried it twice and had only one bidder,
whiplk is a bad situation. Such lack of interest reflects on the Community
The unfavorable image Alaska has should improve in 6 to 8 months as Alaska
will switch from bond anticipation notes to legitimate bonding, and no
more notes will be issued.
However, he suggests the City and his firm enter into this agree-
ment for the time being and after the people have voted determine the
future course of action.
The Mayor agrees the City should not abuse the privilege of the use of
other people's money, and should be as sure as is humanly possibld-that
fool -proof investments are made. He appreciates what Marshall 6 Meyer
have done for the City and trusts their good judgment.
At the same time, due to the nation-wide interest in Kenai, he
thinks it may be timely to try for public bid% on our bonds; we are
getting publicity in Wall St. Journal,•Oil Field Journals and in the
newspapers of some of the major Cities of the U.S.
Mr. Meyer read his Memorandum to the Council offering to act a financial
consultant to:
1. Determine proper timing of issues.
2. Coordinate schedules of maturities.
3. Prepare a prospectus for all issues.
4. Arrange for publication of notices of sale.
S. Arrange for printing of bonds.
6. Attend sale and evaluate bids.
7. Coordinate all actions leading to sale of bonds with Atty.
and bond counsel.
Their fee would be $5.00 per thousand of each issue offered for
sale, with a minimum of $2,250 on each offering, the fee to become due
and payable with each offering.(At the time they are offered for sale.)
Discussion then centered an amounts to be authorized. It was decided
thusly:
1. $300,000 for Power
2. $650,000 for Gas
3. $500,000 for Water
4. $500,000 for Sewer
5. 400,000 for Streets
6. $300,000 for a Govn't. office building.
The first two would be revenue bonds, and the last four G.O. The
Municipal office building would not only house the City's expanded ad-
ministrative offices, but could serve the State Court facilities, the
various State and Federal agencies, thus amortizing the indebtedness.
At such time as these agencies furnish their own facility, the City,
by then, would need the vacated space. The Court system alone is doing
about 65% of the Peninsula business.
The City hopes to hold the bond election in February in order to
get started by this next construction season. Meyer needs 5 to 6 weeks
to go to sale after authorization.
MINUTES OP SPECIAL COUNCIL MELTING 7 CANUARY, 1967 PAGE FOUR
Cone moved, Seaman seconded, to accept the proposal of Don Meyer to act
as Financial Consultant for the City's projects. Motion passed unanimous-
ly by, roll call vote.
Nr, Neyer says they have similar agreements which will bring,
150 million bonds to market this year; this is the biggest volume they
have ever had.
Morin moved, Seaman seconde4,to instruct the Atty, to draft an election
ordinance for the first possible legal date. Motion carried unanimously.
Mayor Dye instructed the Public Service Commission be notified that while
the City recognizes it is not under the jurisdiction of their office,
at the same time they should be informed the City claims as a service
area for water and sewer the area North from the City to Pt. Possession.
He also suggests the City should have a firm arrangement with
Galliett as to what we want.
Galliett suggested the City might consider his firm as the City's
Engineering firm, at least until such time as the City might hire a
full time City Engineer. He has never asked for a retainer from the
City and has done hours of work on his own time.
He will submit a letter as to what a retainer would cost, and also
a proposal to act as City Engineering firm. Council agrees this should
be done.
Gallietts says the City should insure itself in all contracts that
follow-up services should be furnished by the Engineer for - . J in-
struction, education, operating manuals etc, for personnel that will
be using and maintaining the mechanical equipment.
All plans, maps, etc* are the property of the City. He prefers
the City has the originals of all documents, plans, etc.
There will be a meeting of all power groups in the Cook Inlet Basin in
Anchorage in the very near future. The Mayor asked Mr. Meyer his opinion
on the City's participation in power generation. The City is looking
elsewhere for firm power!-, either as a tie-in or as a permanent supply,
but at the same time wants to keep the rates low.
Mr. Meyer thinks its beterr for the City to generate its own
power as we are right here at the source; we could control our own
destiny; we are in an enviable position because we have an unlimited
supply of natural gas; our source now is a "Rube Goldberg contraption",
according to Mr. Meyer.
Sale of bonds for construction of a generating plant would sell
just as fast as the City can show feasibility of the project; Meyer
says electric bonds can always be financed unless there are dire times.
The City would like to go to a gas -fire steam turbine which could
be operated at much less cost than several separate units; but we cannot
be caught without power, while the new plant is a -building; we might
have to arrange for interim power for a few months; the main thing is
to maintain low rates; the City will know more after this meeting with
other power interests.
One million dollars spent on a new plant would handle our needs
for future growth, but the same amount of money spent on the current
generating facility would meet only our immediate needs.
Meeting adjourned at 1:00 p.m.
R%%ed
Respectfully submitted,
Frances Torkilesen
City Clerk
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