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HomeMy WebLinkAbout1965-09-29 Council Minutes - Special MeetingMINUTES OF S.IIAL KENAI CITY COUNCIL ME. ING 29 SEPTEMBER 1965 AIRPORT TERMINAL BUILDING BONDS Roll calls Members present - Chester Cone, Bud Lofstedt, Billy McCann, Roger Meeks, Gene Morin, Carl Seaman and Mayor James G. Dye. Members absent - None. Also presents City Manager, James W. Harrison; DoL Meyer of Marshall and Meyer, Seattle; Harold Galliett, Engr.; Gene Roguszka, Airport Consultant; G. L. Jaynes, Airport Mgr.; Ruby Coyle, Planning Comm. Chairman; and the City Clerk. Harrison reported on Perry Hobbs; of HHFA, visit to Kenai and of his favorable impression of Kenai's growth and planning. Discussion centered on requirements set forth in HHFA's letter and the City Manager's reply, both letters are included in these min- utes. The principal item under study is the pledging of net revenues from sale or lease of non -aviation lands toward bond retirement, and whether or not a special election is needed for this action. Don Meyer does not think a special election is called for --but this question will have to be decided by Legal Counsel. Mr. Meyer also suggests the City's agreement with HHFA should provide for an option for an early retirement of the bonds if the City desires to pay them off. The City would be pledging only net revenues from non -airport lands. Revenue for lands used for airport purposes will be used for maintenance and operation of the airport. Item #4 shows copies of letters, and a sketch, which outlines space to be used by various agencies and businesses. The AdminLetra- tion is being very careful not to give a false picture of revenues anticipated. Assessments for Water 6 Sewer for Aleyeska S/D are included in the sale price of the lots. Mr. Meyer says HHFA has deviated considerably y nor- mal procedures in an effort to help the .1:; of Ken--;, its goals. He urges the City to do everything possia.La .., clear answers to the requests they make. Morin moved, Cone seconded, to authorize the City Manager to hand carry the data on Airport Terminal Bonding to HHFA in Seattle. Motion passed unanimously. Harrison will also inquire as to the status of the City's applications for advance planning funds for other capital improvements Mr. Meyer was asked about the City's bonding capacity: The 1965 evaluation is over $9 million, but he is trying to get an opinion from Thorgrimson as to whether or not the City is still liable for the school bonds. He thinks another resolution from the Boro assem- bly is necessary stating the Boro, as a whole, will assume the debt. He also thinks the City is going to have to give serious con- sideration toward purchasing the power generation. Leon Spencer of R.W.Beck 6 Assoc. will be here next week to conduct the annual audit and inspection. a feasibility study will be made of the City's distribution system; purchase of N.E.A. facilities within the City; and purchase of power generation facilities. Council discussed* Union Oil's proposal for sale of gas to the City. Personnel from Union and Marathon will meet with Council at next week's meeting, 6 October, to try to get this settled. Council wants and injunction prepared in the event an agreement cannot be reached. Special Coun 1 Meeting 29 Sept 65 Page two Don Meyer doubts the wisdom of the City's entering into the gas dis- tribution business. He says the bonds are very hard to sell due to inability to project revenues; the system can be installed, but who is to say how many people will hook-up? He thinks this is something better left to equity capital. Private enterprise will vie for the business when the market warrants. He pointed out the City's Water A Sewer system as an example. Harrison reporteds Gantz, Agar and Simpson had been urging the City to release the W5S construction money to the Bonding Cola. If City Atty. Fisher. says okay, this will be done. Council said to take out the monies the City has spent on repairs due to the fault of the contractor and especially listed the sidewalk at the Post Office. HHFA has okayed a request from Peat Marwick Mitchell 5 Co. for an additional $100 for the HHFA portion of the W&S audit. Seaman moved, McCann seconded, to approve payment to OMM 5 Co. an extra #100 making their fee $925 instead of $825. Motion carried unanimously. There was discussion on Al Poore's plan for a boat ramp and landing. He will present his plan in writing and submit a Plat; Council says a 502 loan might be his best course of action. They want to encour- age him, but do not want to place the City in a position of under- writing a private business. Seaman suggested an assessment district on Willow St. to cut it down to allow excess water drainage. He will underwrite the project if he can be re -paid by assessments. Harrison says the City has to take care of other streets first, but if it is possible this propo- sition might be considered. He will work with Seaman on this. Meeting adjourned at 10s15 p.m. Respectfully subbmm tted, ; fr.'5AA96-" 'Frances Torkilsen City Clerk I F—) CITY OF KENAI „ v a1 A a Pad, 04 aAA a 1utaw BOX $80 — KENAI, ALASKA . TEL 283.7535 septemtier 29, 1965 REs PFL»Alaska•22, Airport Mr, L. R. Durkeep Terminal Building, Director for Northwest Operations, City of Kenai, Alaska. Housing and Homy Finance Agency, Region IV Area Offioe, 450 Federal Office Building, Seattle, Washington 98104 Dear Mrs, Durkee: Reference is made to your letter of September 24t 1965, on the subject application, a will endeavor roto &newer ar lett r.your letter in detail by referring P , 'A, The City of Kenai agrees that it will 0011 a special election to pledge not to exceed $52,500 from the first net revenue frOM the lease and/or sale of Airport lands (all lands except lands needed for airport operations) for debt service and bond reserve for the Airport Terminal Building* *y This does A1s inclueake de the lion, on itch this oyalivRed ubtthe MoteltisfalreadLoty constructed. This on which this Roy only applies to future receipts. 2. The city will pledge the not revenue from the sale of the land (lot 6, Aleyeska Addition (pert 1) ) now bhold under option from act the City of Kenai to Texaco, Inae of which is attached ) exercised as indicated in the option ( a copy the City will on that Hate deposit to the b ildreserve t heaccounsum of for bond requirements on the Airport Terminal $101V000.00. 3.' Requires no comanents. 4 City•of Kenai herewith furnishes letters of committment froms eutical Industries Alaska Ae�on(9/9/65 and 9 28 65) ,140- Federal Aviation Agency (9/28/65, 7/2 65, 5/145 and 4/15/65) -"-- Harold H. dalliett and Associates (9 28/b5) f. -- — Pacific Northern Airlines This represents more then the required 62% of the revenue from a1 fromspace in the the coin3�operatederminalguildilookers, the insurance c, in additionQounterland taxi revenue be the U60• . The documents under which t he non aviation airport lands are either leased or sold contain provisions that the recipient of the ! lease and/or deed wi11 pay all assessments levied for the construct- ion of water and sewer facilities plus the required connect fed. This land now being developed (Aleyeaka Subdivision) has been created as a Water and hdower ater and sewer extensionstrict ihave been con the mputed. and the oharPes for such water /t"-N ('41'"'i Ntttc,nsions will be made to the properties an they are lonoofundo old. The assossn:onts will then run ahotitnt that proroPor• ALI the Actual host eivod IV= such asset3amonto will )o used to P y at, the installation or the oe:-vic,o, a41d in addition the connoction f 600 will be also used for this purpose. All portions connected to the Water and Newer eystem 01' the ('.ity or Kenai are required to pay the user anor;ea on a monthly asis, r.nioh charges will cover any mai.nton- aneo and repalre necessary to said ayatem• It is not antieii,atod that lease moneys will bo used to Ycaho water and sewer extensions on non -aviation airport Lands* it is anticipated that revonuea from the sale and/or noose of said landa, over and above tno r.equiroment to moot the '052 500 reserve, will he used to �?onorolly support the airport inoluding any dei lcio.1cy which might oxS.st i.n op,.)r, ationat revenue f howevor, it is oxpeoted that the revenue -4 11 re sufficient to koop the airport solvent instead of tbo defi.cior+ey shown in 3chodulo V of your letter of 3Optemt er 24, L965. For example, the new vaintonenee BuildInc; now under construction, in only one half the alze planned of wilor. 0oratinq cost, leas lower City share in exneitisos, will bo less. ;his reduction will amo:!nt to approxitdately *4000 annually. Socondly, budgeting and planning will recognize avoilabl► operaV oral funds. Note tnot prc+v isions are made for annual equipment acquisition w*rich may be dais yed at some point if necessary. in addition, the demand for office apace may reouiro the Airport Mano-or to forego the planned r.ove from the present cuarters, The net offeat would bo no Lana in Terminal ':uildinr• revonue but a 01,200 annual lower Airport Operational expense, Your schodule V has Ottorror "tl the pro{ectod doficit Vor the 4th year. :;nte trot tho ttth year isF'ioCAl .1969-1970o The airport surplus is 43,995 as abown, but the non-svistio., trend revenue was pro acted at .42,925;or leases and :4,300 for gales, for a not deficit, of only 0,230• `the apparent mix-up 000109 fr(:m the 5th year :revenue fi.G urea. 6. A. 'fhe ele ation will lbe ached,,. that permission bo granted by liil! A the ,,eaoral election 01' the City of of 196b, or earlier as requestod to led m3 recuouted. it is requested to call this election as part of Kenai on the first Tuesday in May t,00ura immediate construction. Be (1) Your estimate of 400#00 p•.:r year for the maintenance of the required water and sewer system to 000ve tnc Terminal Building. is not an expense as it is an item which has been included in the operational coot o- the buildin-M !.hen the s uilding is connected to willhcoveryuserecharaoss it sewer la not noc000iry that thon9 for e©rityooflKenais" underwrite the expense. (2) With the preceding, information, a revision of 6ehedule V In not deerled necessary. m2w t 0. A now Schedule IV is attoohado which is self explanator'• , Do 0 J 1 Lett®rs are attaclYad. ('If,`� '.t.' ��Ji'.., ) 11 '� 0,' 2 Letters are attached. 3 schedule is attached. 1a��"�' �• 141 Tho letter of Alaokn AeronaulAcal Industries it attached proposins, a leant for the unfe. Not;ot Itiiona are beIng aonaidered by others for the two north bays, but n6 jonclusive agreer, has r been reached. prom tl,o int;orest expreasev, it is indicated that is this is a very minimum of space for futuro growth& please advice us of any furthor requirements. we still plan on construction this winter. 'rho bide opened today by bears in AnohoraE-o indicated that there is a great desire for winter construction* very truly yours, Jamse W. Harrison, city Manager. WHI JL _._ Enclosures% 1. bClaedule Yxr 2. bohedule 7V 3. Letters of Tenants !�. Sample loses of hangar apace• 5. option of Texaco with conditions thereof. b. Cory Or preliminary plat of Aleyeake bUbdivision showing proposed ` oomirittmonts for land use. 7. Floor plan of Terminal Buildin�l stowing oommittmor ts. 8 Lease of Kenai otoei Buildings# g, copy of Deed under which land was acquired. lo. Diagram of hangar (apron) development. (--N M1 HOUSING AND HOME FINANCE AGENCY OFFICE OF THE R1901omAI. ADMINISTRATOR REGION VI AREA OFFICE 450 Federal Office Building Seattle, Washington 96104 September 24, 1965 Ails MAIL honorable dames 0. 0yo Mayor of Kenai pox 600 kenal, Alaska 99611 pear Mayor 0yei Subjects PFL•Aiaske-220 Airport Terminal Building, City of Kenalp Alaska In car constderattan of the loon being requested, It now appears to us that a 14$0#000 loan would be feasible provided that all proceeds from the sale and leasing of airport lands, as described in your letter of August 30, 194 - be pledged as additional security for -the proposed Airport Terminal Revenue ponds. The loan conditions we will require are outlined in the following, together with our eeoaents and requests for supplemental Information and date needed to develop the loan. 1. Rawenue Pledee end Debt earviee Resew In addition to the pledge of all net revenues from the Terminal Bullding, ` we will require a pledge of net revenues from the loose or Isle of air - part lands (all land except land needed for airport operations) for debt service and building up and maintaining a debt service reserve. The Pa nts for debt service and debt service reserve for a $4$0,000 issue wits be 119,650 semi•snnuaily 039,300 annuals) until the debt vice rseerVo and has accumulated to $52#500. About four years will berequiredto accumulate the debt service reserve. Schedule i illustrates the accumulation of the debt service reserve. p� Frlor to the start of eonatruction, the City w111 be required to deposit - - 114000 Into the Bond Sinking Fund for a debt service reserve. s o j�H L 11 2 3. Debt Serxlce Cov�u Vie,. Schedule 11 Illustrates low the coverage factor Is computed, and shows that coverage requirements can be met. Such requirements are that estimated net revenues available for debt service should be at least 1.2 times the average annual debt service in the second year and at least 1.5 times in the third year of full operation. 4. Lma cam,�entr. Commitments satisfactory to the Goverment should be obtained which will equal at least $39,000. This is 6V@ of the revenue from ail space to be leased as shown In your August 30 letter. Schedule ill summarises the data In your August 30 and September 10, 196S letters as to space commitments. To meet the space commitment condition, the total amount In last column of Schedule 111 must equal at least $39#000. In addition evidence of favorable prospects for teasing the remainder of the space Is required. S. Evidence of Feasible Plan far vinanetan ♦6. The feasibility report and other submissions Indicate that the revenue from airport land leasing and sales was to be used to finance construction of water and sewer facilities for such lands, and also to support airport operations. If such revenue is pledged to support the Terminal Building Bonds; will it also be adequate for these other needs? Schedule IV Illustrates the type of Information needed to support estimates of net revenues from Land Leases and Sales. Schedule V, which is based upon a revised Schedule G (from the Consultant's Feasibility Report), Indicates that airport operations may not be able to stay in the black without the Land Lease and Sales revenue. 6. Additional Info=tlen and Data ueadew A. An election which authorises the pledge of ail net revenues trans (1) Terminal Building Operations (as previously voted), and (2) Nonaviation airport land lease and sales revenue, for debt service on the revenue bonds and a debt service reserve until the reserve (of $$2,500) is accumulated, and thereafter sufficient for debt service payments and for maintaining the required debt service reserve. r 3 (The election should be scheduled - It does not need to be held prior to further processing of the Public Facility Loan). Schedule i shows the required payments Into the Bond Sinking Fund and the accumuletlon of the debt service reserve. B. Revision of Schedule 0 of Consultants Feasibility Report. (1) This should include estimated cost of operation and maintenance of water and sewer system for the Terminal Building. In Schedule 110 an estimate of $500 annually was used for this expense. If this expense Is to be borne by the City of Kenai at no charge to the Terminal Building revenues, please furnish a written confirmation of the arrangement from the City. (2) This revision should show how Airport Operations will be able to remain solvent after nonavlatlon land sates and lease revenues are used to support the Terminal Building Revenue Bonds. Schedule V Illustrates the problem that needs to be solved in this regard. Ce Revised estimates. similar In form to Schedule IV, showing how the necessary water and sewer facilities for the nonsviatlon land (to be leased or sold) will be financed. Please specify the arrangements made with the City government for any construction, operation and maintenance work on the water and sewer facilities. B. soave imi tm gets. F (1) Letters or other evidence from Hertz, P.N.A., Oa111ett and ` the City confirming their commitments for building leases. (2) Letter from O.S.A. indicating Its intention to lease the space In the new building requested by F.A,A. Space c"I tments toteling at least $39.000 from ail -prospective ► tenants. See Schedule Ill. (k) Evidence of favorable prospects for leasing the remainder of the Spaces - - We will resume our consideration of the loan request promptly upon receiving your comments and the supplemental data herein requested. - - erely Ha�0w Enclosures n on cc: For L. R. Ourkee Mr. James W. Harrison Director for Northwest Operations Arthur M. Bunnell, Architect i Harold H. Gatllett, Engineer t E i L- Y - ---- - -- �� -- SCXECLLE 9 ESTIMATED NET REVENUES AVAILABLE FOR DEBT SERVICE AND ACCUMULATION OF DEBT SERVICE RESERVE KENAI TERMINAL BUILDING REVENUE 13ONDS Initial 6 Iles. 1st Year 2nd Year 3rd Year 4th Year 196s-6B 1966-67 1967-60 1968-69 1969-"- Availabie for Debt Service (1) $14.284 $30,049 $32,205 $360402 $49,353 Required Minimum Payments to Bond Sinking Fund $ 8.720(2) $17440(3) $28,370(4) $39NOW 33.1280) 126$170 Debt Service Payments $ 8.720 $17:440 $26.170 6 $26:170 Assam Initial t a Payment $10.000 $ - $ - Popment from Operations $ 5.564 $120609 $ 6.035 $ (898) $33,128 Debt Service Reserve Cumulative $15.564 $28,173 $34,208 $45,542 $$2.500 r` Funds available for other { purposes $ $ - $ - $ - $16,225 (1) Haunts taken from Schedule 11. Revenue and Expense Estimates. (2) $8.720 is 6 months'Interest on 0500000 Revenue Bonds. (3) $17.440 is one year's Interest on $4500000. (4) $28,370 is 6 months' interest plus 1/2 annual requirement of $390300. r (5) $39,300 is 1.5 times estimated average annual debt service. (6) $26#170 is estimated overage annual debt service on $450,000 issue. (7) $33►128 Is mount necessary (1969-70) to pay debt service and build up 4 debt service reserve to required amount of $52,500. c SCHEDULE II KENAI AIRPORT TERMINAL BUILDING BASED UPON EXHIBIT 00" OF CONSULTANT'S REPORT 1st 6 Mios 1st Year 2nd Year 3rd Year 4th Year 1965-66 19"-fi7 7-68 - 1,968-66 ZQ .19fi9. Estimated Terminal Revenue $22,510 $45,630 551,900 $54,423 $64,372 5% allowance (1) - I - j -2-6 _ 2,281 2.595 _ 2.Z21 3,219 Aevenue $21,384 $43.349 $49,305 $51,702 $61,153 operations Expense (2) 9.500 00 I L500 19.500 21,002 Available for Debt Service $11,884 $24,849 $29g696 $32,202 $40,153 (from Terminal Bldg operations) Non-Aviatlon Land Lease Revenue (3) 2,400 2,400 2,400 2,400 2,400 Non-Aviatlon Land Sales Revenue(3) _ 2 800 ;, .800 6,,802 Total Available for Debt Service $14.284 530,049 532,205 $38.402 $49,353 Debt Service $ 8,720 $17,440 $26,170 $26,170 $26,170 Debt Service Covered 1.72X 1.2304) 1.4605) 1.87X AADS 026070) covered 1.14X (i) Allowance for vacancies and noncollectlons. (2) Estimate from Schedule G, Feasibility Report, plus $500 for operation and maintenance expenses of private water and sewer system. (3) From 8-30-65 letter and Schedule G. Feasibility Report. (4) Meets requirement of 1.2 cover. (5) Almost meats requirement of 1.5 cover - only $853 net revenue short. SCHEDUI, I-Ij. Space Designation Area, Space Commitments Rental InLDolIars 'Cos ti e Some t meat A. Concessions 1 2660 $ 1,800 $ $ $1,800 A.A. 9-9-65 itr Hertz (KIPP) 2 660 3 40 310 310 ' 4 5 22 734 170 5,460 170 3,299 11161 1,215 A.A. $2,500 Total 6 l215 ib 1'12 124 441 (Misc) Total 1,313 Ml $10,180 $ 0220 $ 6 0 $4.300 B. Airline Service $ $ $ 2,400 $ P.N.A. la lb 292 38 ;;� 1 440 1,440 P N.A. 2a 300 1,440 _Ae ' C. Office Space 2 4a 4b I 4c $ $ 5,400 $ g00 5:4000 4 51400 934 5,390 51390 600 3,600 3,600 300 1,800 1,800 700 clan 5 100 5,100 s P.N.A. Gal IIeta 700 A.A. 6 554 3.200 3,200 1550 F.A.A. F.A.A. 7 8 267 1,388 1,550 8,240 , 8,240 F.A.A. 0 1,220 1 City Total 7,013 041,580 17.700 $23,lao 700 0. Warehouse 1 1,460 $ 5,840 $ - $ 5,840 $ P.N.A. Total -nr $ - i , $ 56340 $ S 5 ,8 Total 10,776 $63,168 $22,206 $33,520 $6,440 Percentage 10070 36% 53% 11% Requirement for space commitments $39,o00 - 62% of total estimated revenue. 0 SCHEDULE IV Mon-Awaon Land Lease and Sales EsjlmaLq_s 1st 6 mos 1st Year 2nd Year 3rd Year 4th Year 1965-66 1966-6 1967-68 196.8-fig IM-7-0 Revenues from Land Leases $ Revenues from Land Sales Total Revenues $ $ Land Lease & Sales Expanse $ Construction of Sewer Water Facilities Other Expenditures Total Expenditures $ Not Available for Support of Terminal Revenue Bond Issue $ SCHEDULE Y Airport Opgratm Cost and Revenue (Schedule G. Feasibfllty BMrt with Adiustment for Loss of Land Revenu i* 1st 6 1bs 1st Year 2nd Year 3rd Year 4th Year i i 6 - 6 66-6 6 - -6127-0-71 Airport Operating Revenue $18,095 $38,510 $39,320 $41,636 $43,745 Expense 17.700 35 950 37 100 )9.490 39.750 Airport operating Surplus $ 395 $ 2,560 $ 2,220 $ 2,1" $ 311995 Deduct Non -Aviation Lease Rave Deduct Non -Aviation Land Sales 2,250 ,_,1,800 ^..._ 2,700 ...3.MO 4,925 --fi.800 Ddfielt in Revenues $ ($ 20490) $ ($ 4,354) 0 7,730)