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HomeMy WebLinkAbout2026-02-18 Council PacketPage 1 / Kenai City Council - Regular Meeting February 18, 2026 — 6:00 PM Kenai City Council Chambers r LC � A//�\► I 210 Fidalgo Avenue, Kenai, Alaska Kwww.kenai.city **Telephonic/Virtual Information on Page 3** Agenda A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Approval of the Agenda and Consent Agenda (Public comments on Consent Agenda Items limited to three (3) minutes per speaker, thirty (30) minutes aggregated) *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. B. SCHEDULED ADMINISTRATIVE REPORTS 1. Fiscal Year 2025 Audit Report, Principal Assurance Practice Leader Joy Merriner, BDO USA, LLP. C. SCHEDULED PUBLIC COMMENTS (Public comments limited to ten (10) minutes per speaker, twenty (20) minutes aggregated) 1. Project Homeless Connect 2026, LeeShore Center Executive Directory Cheri Smith D. UNSCHEDULED PUBLIC COMMENTS (Public comments limited to three (3) minutes per speaker; thirty (30) minutes aggregated) E. PUBLIC HEARINGS 1. Ordinance No. 3504-2026 -Accepting and Appropriating an Increase in the Title III Grant from the State of Alaska Department of Health, Division of Senior and Disabilities Services, for Nutrition, Transportation, and Support Services. (Administration) 2. Resolution No. 2026-12 -Authorizing the Use of the Fleet Replacement Fund for the Purchase of Two Ford Bronco SUVs Utilizing the State of Alaska Equipment Fleet Contract. (Administration) 3. Resolution No. 2026-13 - Amending the City's Schedule of Rates, Charges, and Fees to Add a Metered Pressed Septage Effluent Rate. (Administration) F. MINUTES 1. *Regular Meeting of February 4, 2026. (City Clerk) G. UNFINISHED BUSINESS Kenai City Council - Regular Meeting Page 1 of 3 February 18, 2026 Page 2 H. NEW BUSINESS 1. *Action/Approval - Bills to be Ratified. (Administration) 2. *Action/Approval - Confirmation of Mayoral Nomination for a Partial Term Appointment of Maeve Spiegler to the Parks & Recreation Commission. (Knackstedt) 3. *Ordinance No. 3505-2026 - Increasing Estimated Revenues and Appropriations in the General Fund — Buildings Department Computer Software, for the Purchase of Permitting Software. (Administration) 4. Action/Approval - Peninsula Oilers Baseball Club Special Use Permit for use of the Challenger Leaning Center to temporarily house players and staff of opposing teams for the 2026 Alaska Baseball League season. (Administration) 5. Action/Approval - Kenai Peninsula Economic Development District Strategic Asset Partner Designation (Pipeline to Pipeline Initiative). (Administration) 6. Discussion/Action - Request for Council Direction to Prepare Legislation to Determine a Portion of City Owned Land - Tract A, Woodland Subdivision Part 4 is No Longer Needed for a Public Purpose. I. COMMISSION REPORTS 1. Council on Aging Commission 2. Airport Commission 3. Parks and Recreation Commission 4. Planning and Zoning Commission 5. Beautification Commission J. REPORT OF THE MAYOR K. ADMINISTRATION REPORTS 1. City Manager 2. City Attorney 3. City Clerk L. ADDITIONAL PUBLIC COMMENTS 1. Citizens Comments (Public comments limited to five (5) minutes per speaker) 2. Council Comments M. EXECUTIVE SESSION N. PENDING ITEMS O. ADJOURNMENT P. INFORMATION ITEMS The agenda and supporting documents are posted on the City's website at www.kenai.city. Copies of resolutions and ordinances are available at the City Clerk's Office or outside the Council Chamber prior to the meeting. For additional information, please contact the City Clerk at 907-283-8231. Kenai City Council - Regular Meeting Page 2 of 3 February 18, 2026 Page 3 Registration is required to join the meeting remotely through Zoom. Please use the following link to register: https://us02web.zoom.us/meeting/register/Wzl RgLBpQkOwBVR75FRfcA Kenai City Council - Regular Meeting Page 3 of 3 February 18, 2026 REPORT TO HONORABLE MAYOR AND MEMBERS THE CITY COUNCIL CITY OF KENAI., ALAS 2025 AUDIT RESULTS BDO USA, P.C. 3601 C Street, Suite 600 Welcome Anchorage, AK 99503 Tel.: 907-278-8878 www.bdo.com January 30, 2026 Honorable Mayor and Members of the City Council City of Kenai, Alaska We look forward to discussing with you the current year audit results for City of Kenai, Alaska. On September 17, 2025, we presented an overview of our plan for the audit of the financial statements including the Schedule of Expenditures of Federal Awards, of City of Kenai, Alaska (the City) as of and for the year ended June 30, 2025. This communication is intended to elaborate on the significant findings from our audit, including our views on the qualitative aspects of the City's accounting practices and policies, management's judgments and estimates, financial statement disclosures, and other required matters to assist you in fulfilling your obligation to oversee the financial reporting and disclosure process for which management of the City is responsible. We are pleased to be of service to the City and look forward to meeting with you to discuss our audit findings, as well as other matters that may be of interest to you, and to answer any questions you might have. Respectfully, Copy to: Terry Eubank, City Manager Dave Swarner, Finance Director BDO USA, P.C., a Virginia professional corporation, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. Page 6 EXECUTIVE SUMMARY 4 AUDIT RESULTS 6 INTERNAL CONTROL OVER FINANCIAL REPORTING 11 DETAIL OF SIGNIFICANT ACCOUNTING PRACTICE, POLICIES, ESTIMATES AND DISCLOSURES 15 ADDITIONAL REQUIRED COMMUNICATIONS OTHER TOPICS 17 21 CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.0 Page 7 CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. Executive Summary Results of Our Audit • Overview and Status - We have completed our audit work with respect to the financial statements and single audit for the year ended June 30, 2025. • Quality of the City's Financial Reporting • Significant Risk Overview &t Discussion • Corrected and Uncorrected Misstatements • Internal Control Over Financial Reporting Required Communications • No significant items. Open Discussion and Questions CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 5 Page 9 CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. Overview Ft Status of Our Audit We have substantially completed our audit of the financial statements as of and for the year ended June 30, 2025. Our audit was conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards. ► The objective of our audit was to obtain reasonable - not absolute - assurance about whether the financial statements are free from material misstatements. ► The scope of the work performed was substantially the same as that described to you in our earlier Audit Plan communications. ► We issued an unmodified opinion on the financial statements and released our report on January 30, 2026. ► We issued an unmodified opinion on the City's Single Audit report, including the Schedule of Expenditures of Federal Awards (SEFA), and related our report dated January 30, 2026. ► In planning and performing our audit of the SEFA, we considered the City's internal control over compliance with requirements that could have a direct and material effect on its major federal program to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with GAS and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. ► Our responsibility for other information in documents containing the City's audited financial statements (e.g., Introductory and Statistical Sections) does not extend beyond the financial information identified in the audit report, and we are not required to perform procedures to corroborate such other information. However, in accordance with professional standards, we have read the information included by the City and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements. Our responsibility also includes calling to management's attention any information that we believe is a material misstatement of fact. We have not identified any material inconsistencies or concluded there are any material misstatements of facts in the other information that management has chosen not to correct. ► All records and information requested by BDO were freely available for our inspection. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 7 Quality of the City's Financial Reporting A discussion will be held regarding the quality of the City's financial reporting, which will include the following: ► Qualitative aspects of significant accounting policies and practices • No concerns. ► Our assessment of critical accounting estimates, accounting policies and practices • No concerns. ► Significant unusual transactions • None identified. ► Financial statement presentation • No significant new presentation or disclosures. ► New accounting pronouncements • Yes, new pronouncements for GASB 101 and 102, with no significant impact. ► Alternative accounting treatments • None Identified. Page 11 N..- CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 8 Areas of Significant Risk Our areas of significant risk, which are risks with both a higher likelihood of occurrence and a higher magnitude of effect that require special audit considerations, are as follows: These risks were identified during the preliminary audit procedures, and there were no additional significant risks added during the audit. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.0 Corrected and Uncorrected Misstatements CORRECTED AND UNCORRECTED MISSTATEMENTS ► There were three corrected misstatements, other than those that were clearly trivial, related to an adjustment for a stale check, investment balances, and land note receivable balances as follows: Item # I Aomunt Name and Adjustment Description Debit Credit 1 Cash Expenses $ 17.346 $17,346 Adjust cash for a check related to Airport expenses that was duplicated 2 Investments 149.018 Investment income 149,018 Increase investment income for end of year adjustments 4 Land sale deferred inflows 35.498 35,498 Land sale receivables Adjust recelvables to correct balances. No impact on fund balance. ► There were no uncorrected misstatements, other than those that were clearly trivial, related to accounts and/or disclosures that we presented to management. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 10 CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described above and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We are required to communicate, in writing, to those charged with governance all material weaknesses and significant deficiencies that have been identified in the City's internal control over financial reporting. The definitions of control deficiency, significant deficiency and material weakness follow: Control Deficiency A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. Significant Deficiency A deficiency or combination of deficiencies in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Material Weakness A deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented or detected and corrected on a timely basis. In conjunction with our audit of the financial statements, we noted no material weaknesses. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 12 Internal Control Over Financial Reporting ► We have communicated to management of the City control deficiencies and provided suggestions for improvement of those deficiencies that were identified as a result of our audit that we did not consider to be material weaknesses or significant deficiencies. ► The following Control Deficiencies were identified: Control Deficiencies An adjustment was identified for a check that should have been voided in the prior year. We recommend that management review outstanding checks for any stale items that should be voided and follow up with Alaska unclaimed property as Cash -Stale Checks appropriate. Segregation of Duties: Five accounting employees have administrative -level access to the general ledger system, including the Controller and Finance Director. This allows users enter, post, and approve their own journal entries. In addition, they can Segregation of Duties add, delete, and modify users. We recommend the City continue to employ robust review controls to compensate for superuser access. Adjustments were identified for investments and notes receivables; however, the underlying schedules that were prepared were Year-end Reconciliations correct. We recommend that management fully reconcile their year-end schedules and other supporting documents to the trial balance. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 13 Internal Control Over Compliance Findings In performing our compliance audit in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance), we obtained an understanding of the City's internal control over compliance to design audit procedures and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, we did not express an opinion on the effectiveness of the City's internal control over compliance. Our consideration of internal control was for the limited purpose described above and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We are required to communicate, in writing and in a timely manner, to those charged with governance all material weaknesses and significant deficiencies that have been identified in the City's internal control over compliance. The definitions of a material weakness, significant deficiency, and control deficiency in internal control over compliance are as follows: A deficiency or a combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that a material Material Weakness noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Significant Deficiency A deficiency or a combination of deficiencies in internal control over compliance that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, Control Deficiency in the normal course of performing their assigned functions, to prevent or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. Instances of Noncompliance In accordance with GAS, matters that involve instances of noncompliance with laws, regulations, contracts, and grant agreements, with Laws and Regulations noncompliance with which could have a direct and material effect on the financial statements. In conjunction with our audit of compliance, we noted no noncompliance or compliance findings. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 14 Detail c Accoun- Poticies Disclose IMEW mmw %N/p Page 19 Significant Accounting Practices (including Policies, Estimates, and Disclosures) ACCOUNTING PRACTICES, POLICIES, ESTIMATES, AND DISCLOSURES The following summarizes the more significant required communications related to our audit concerning the City's accounting practices, policies, and estimates: The City's significant accounting practices and policies are those included in Note 1 to the financial statements. These accounting practices and policies are appropriate, comply with the applicable financial reporting framework and industry practice, were consistently applied, and are adequately described within Note 1 to the financial statements. ► A summary of recently issued accounting pronouncements is included in Note III. L to the City's financial statements. ► The City adopted GASB Statement No. 101 - Compensated Absences - Effective for year-end June 30, 2025. No significant impact. ► The City adopted GASB Statement No. 102 - Certain Risk Disclosures - Effective for year-end June 30, 2025. No significant impact. ► There were no other changes in significant accounting policies and practices during 2025. Allowance for Uncollectible Accounts - Several of the City's accounts receivables are from granting agencies; these are considered by management to be 100% collectible. Customer accounts receivables, including amounts due related to special assessments, interest income, and various user charges are reviewed by management periodically to determine a reasonable amount of allowance, based on known factors, past history, and age of the outstanding amount. Capital Asset Depreciation - Capital assets including property, plant, equipment and infrastructure assets are being depreciated using the straight-line method from a range of 3 to 50 years depending on the classification of the asset. Net Pension / OPEB Liabilities - The net pension / OPEB liabilities (assets) and related deferred inflows and outflows of resources are estimated based on actuarial and other actual contribution date received by the City and by the PERS Plan Administrator. Discount Rate - The City is using a discount rate for calculations related to leases. Critical accounting estimates are those that require management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. the City's critical accounting estimates, including a description of management's processes and significant assumptions used in development of the estimates, are disclosed in Note 1 of the financial statements. ► Management did not make any significant changes to the processes or significant assumptions used to develop the critical accounting estimates in 2025. ► The methods used to account for significant or unusual transactions, and related disclosures, are considered appropriate. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 16 CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 17 Other Required Communications Following is a summary of other required items, along with specific discussion points as they pertain to the City: Significant changes to planned audit There were no significant changes to the planned audit strategy or significant risks initially identified and previously communicated strategy or significant risks initially to those charged with governance as part of our Audit Plan communications. identified Obtain information from those charged There were no matters noted relevant to the audit, including, but not limited to: violations or possible violations of laws or with governance relevant to the audit regulations; risk of material misstatements, including fraud risks; or tips or complaints regarding the City's financial reporting that we were made aware of as a result of our inquiry of those charged with governance. Alternative accounting treatment No alternative accounting treatments permissible under the applicable financial reporting framework for policies and practices related to material items were identified and discussed with management. Significant unusual transactions During the year ended June 30, 2025, we were not aware of any significant unusual transactions. Consultations with other accountants We are not aware of any consultations about accounting or auditing matters between management and other independent public accountants. Nor are we aware of opinions obtained by management from other independent public accountants on the application of requirements of an applicable financial reporting framework. Significant findings and issues arising We have evaluated whether the identified related party relationships and transactions have been appropriately identified, during the audit in connection with the accounted for, and disclosed and whether the effects of the related party relationships and transactions, based on the audit City's related parties evidence obtained, prevent the financial statements from achieving fair presentation. Significant findings or issues arising There were no significant findings or issues arising during the audit that were discussed, or were the subject of correspondence, during the audit that were discussed, or with management. were the subject of correspondence, with management CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 18 Other Required Communications (cont.) Following is a summary of other required items, along with specific discussion points as they pertain to the City: Results of procedures performed related The City releases additional annual information with their financial statements, and as a result, additional procedures were to other information included in annual required to be performed on this information. See additional procedures described on Slide 7. report Other matters significant to the oversight There are no other matters that we consider significant to the oversight of the City's financial reporting process that have not been of the City's financial reporting process, previously communicated. including complaints or concerns regarding accounting or auditing matters Representations requested from Please refer to the management representation letter attached. management Disagreements with management There were no disagreements with management about matters, whether or not satisfactorily resolved, that individually or in aggregate could be significant to the City's financial statements or to our auditor's report. Significant difficulties encountered There were no significant difficulties encountered during the audit. during the audit Matters that are difficult or contentious There were no difficult or contentious matters that we consulted with others outside the engagement team that we reasonably for which the auditor consulted outside determined to be relevant to those charged with governance regarding their oversight of the financial reporting process. the engagement team CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 19 Independence Our engagement letter to you dated June 30, 2025, describes our responsibilities in accordance with professional standards and certain regulatory authorities and Government Auditing Standards regarding independence and the performance of our services. This letter also stipulates the responsibilities of the City with respect to independence as agreed to by the City. Please refer to that letter for further information. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 20 CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.0 BDO's System of Quality Management An audit firm's effective system of quality management ("SoQM") is crucial for supporting the consistent performance of high -quality audits and reviews of financial statements, or other assurance or related services engagements under professional standards, and applicable legal and regulatory requirements. Accordingly, BDO has implemented a SoQM designed to provide reasonable assurance that its professionals fulfill their responsibilities and conduct engagements in accordance with those standards and requirements. The firm's SoQM supports the consistent performance of quality audits through many ongoing activities including, at least annually, certification by leaders with responsibility for key controls and related processes. Our Assurance Quality Management team performs regular reviews and testing of key controls and processes throughout the SoQM and identifies and communicates areas for improvement. In addition, our Audit Quality Advisory Council supports our SoQM by providing guidance and input on audit quality initiatives. As required by International Standard on Quality Management 1 (ISQM 1) under the International Auditing and Assurance Standards Board (IAASB), BDO has conducted an evaluation of the effectiveness of its system of quality management and concluded, as of July 31, 2024, that, except for certain deficiencies related to the execution of its issuer audits, that system provides the reasonable assurance that our professionals will perform audits and reviews of financial statements or related assurance services engagements in accordance with professional standards, and applicable legal and regulatory requirements. BDO has either implemented or is designing remedial actions to address those deficiencies prior to our next evaluation. We will continue to provide you with updates on our progress. Currently, you may find discussion of BDO's system of quality management within our annual Audit Quality Reports, the most recent of which is accessible here. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 22 Attachment Please refer to the Representation Letter attached for further information. CITY OF KENAI, ALASKA 202X AUDIT RESULTS / BDO USA, P.C. 23 About BDO USA Our purpose is helping people thrive, every day. Together, we are focused on delivering exceptional and sustainable outcomes and value for our people, our clients, and our communities. BDO is proud to be an ESOP company, reflecting a culture that puts people first. BDO professionals provide assurance, tax, and advisory services for a diverse range of clients across the U.S. and in over 160 countries through our global organization. BDO is the brand name for the BDO network and for each of the BDO Member Firms. BDO USA, P.C., a Virginia professional corporation, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. For more information, please visit: www.bdo.com. Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your needs. © 2025 BDO USA, P.C. All rights reserved. KFNAI � City of Kenai 1210 Fidalgo Ave, Kenai, AK 99611-77941907.283.7535 ( www kenaixity January 30, 2026 BDO USA, P.C. 3601 C street, Suite 600 Anchorage, Alaska 99503 Ladies and gentlemen: We are providing this letter in connection with your audit of the financial statements of the City of Kenai (the City), which comprise the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information as of June 30, 2025 and the respective changes in financial position and, where applicable, cash flows for the period then ended, and the related notes to the financial statements, for the purpose of expressing an opinion as to whether the financial statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. We confirm that we are responsible for the preparation and fair presentation in the financial statements of financial position, changes in net position, and cash flows in conformity with accounting principles generally accepted in the United States of America. Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. We confirm, to the best of our knowledge and belief, as of the date of this representation letter, as entered on the first page, the following representations made to you during your audit: (1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated June 30, 2025, for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America. (2) We have fulfilled our responsibility, as set out in the terms of the aforementioned audit engagement letter, for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. (3) The financial statements include all properly classified funds and other financial information of the primary government and all component units required to be included in the financial reporting entity by with accounting principles generally accepted in the United States of America. All funds required to be presented as major funds are identified and presented as such. (4) We have made available to you: (a) All financial records, and related data and federal awards (including amendments, if any, and any other correspondence with federal agencies or pass -through entities relevant to federal programs and related activities), including the names of all related parties and all relationships and transactions with related parties, as agreed upon in the terms of the aforementioned audit engagement letter. (b) All additional information that you have requested from us for the purpose of the audit. (c) Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. (d) Minutes of the meetings of the City Council that were held from July 1, 2025 to the date of this letter, or summaries of actions of recent meetings for which minutes have not yet been prepared. (5) There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in financial reporting practices. (6) There are no material transactions that have not been properly recorded in the accounting records underlying the financial statements or schedule of expenditures of federal awards (SEFA). The financial statement misstatements relating to accounts and disclosures identified and discussed with us in the course of the audit that are listed immediately below have been corrected. We have evaluated the propriety of the corrected misstatements based on a review of both the applicable authoritative literature and the underlying supporting evidence from our files and confirm our responsibility for the decision to correct them. )CI_7_11 The City of Kenai I www.kenai.city Corrected Misstatements Item # Account Name and Adjustment Description 1 Cash Expenses Adjust cash for a check related to Airport expenses that was duplicated vestments Investment income Increase investment income for end of year adjustments 4 Land sale deferred inflows Land sale receivables Adjust receivables to correct balances. No impact on fund balance. Debit I Credit $ 17, 346 149,018 35,498 $ 17,346 149,018 35,498 (7) You have identified and discussed with us in the course of the audit the deficiencies in our internal control over financial reporting listed immediately below. Control Deficiencies Other Than Material Weaknesses or Significant Deficiencies: • Cash- Stale Checks- An adjustment was identified for a check that should have been voided in the prior year. We recommend that management review outstanding checks for any stale items that should be voided and follow up with Alaska unclaimed property as appropriate. Segregation of Duties: Five accounting employees have administrative -level access to the general ledger system, including the Controller and Finance Director. This allows users enter, post, and approve their own journal entries. In addition, they can add, delete, and modify users. We recommend the City continue to employ robust review controls to compensate for superuser access. The City of Kenai I wwwkenai.city • Year-end Reconciliations: Adjustments were identified for investments and notes receivables; however, the underlying schedules that were prepared were correct. We recommend that management fully reconcile their year-end schedules and other supporting documents to the trial balance. (8) We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud or noncompliance. We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud or noncompliance. We have no knowledge of any: (a) Fraud or suspected fraud involving management or involving employees who have significant roles in internal control, whether or not perceived to have a material effect on the financial statements. (b) Fraud or suspected fraud involving others where the fraud could have a material effect on the financial statements. (c) Allegations of fraud or suspected fraud affecting the City received in communications from employees, former employees, regulatory agencies, law firms, predecessor accounting firms, or others. (d) Instances of noncompliance or suspected noncompliance with provisions of laws, regulations, contracts or grant agreements, or abuse, whose effects should be considered when preparing the financial statements. (9) We have no plans or intentions that may materially affect the carrying value or classification of assets, liabilities, or equity (10) The following, where applicable and material, have been properly recorded or disclosed in the financial statements: (a) The identity of all related parties and all related party relationships and transactions of which we are aware, including revenues, expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. (b) Arrangements with financial institutions involving compensating balances or other arrangements involving restrictions on cash balances and line -of -credit or similar arrangements. (c) Guarantees, whether written or oral, under which the City is contingently liable. The City of Kenai I www kenaixity .. (d) Significant estimates and material concentrations known to management that are required to be disclosed in accordance with accounting principles generally accepted in the United States of America In that regard, all accounting estimates that could be material to the financial statements, including key factors and significant assumptions underlying those estimates, have been identified, and we believe the estimates are reasonable in the circumstances The methods, significant assumptions, and the data used in making the accounting estimates and the related disclosures are appropriate to achieve recognition, measurement, and disclosure that is in accordance with accounting principles generally accepted in the United States of America. (e) The effects of all known actual or possible litigation, claims, and other liabilities or gain or loss contingencies that are required to be accrued or disclosed by with accounting principles generally accepted in the United States of America, including: • Pending or anticipated tax refunds, other potential or pending claims, lawsuits by or against any branch of government or others; • Written or oral guarantees, endorsements, or unused letters of credit; • Unusual guarantees; or • Labor claims or negotiations. Accounting principles generally accepted in the United States of America require loss contingencies to be accrued if it is probable an asset has been impaired or a liability incurred at the statement of financial position date and the amount of loss can be reasonably estimated. Such contingencies must be disclosed, but may not be accrued, if the loss is reasonably possible (but not probable) or the loss is probable but the amount of loss cannot be reasonably estimated. (f) Commitments, such as: • Major capital asset purchase agreements; • More -than -one-year employment arrangements or contracts with suppliers or customers, or one -year -or -longer term leases; • Deferred compensation, bonuses, pensions plans, or severance pay; or (Clin The Cit of Kenai I www.kenaixit Y Y • Pending sale or merger of all or a portion of the business or of an interest therein or acquisition of all or a portion of the business, assets or securities of another entity; (g) Joint ventures or other participations, the detailed transactions of which are not carried on our books. (11) There are no: (a) Violations or possible violations of budget ordinances, laws or regulations and provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects could be material to the financial statements whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency. (b) Unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with accounting principles generally accepted in the United States of America. (c) Side agreements or other arrangements (either written or oral) that have not been disclosed to you. (d) Restrictions of net position that were not properly authorized and approved, or reclassifications of net position that have not been properly reflected in the financial statements. (12) Receivables recorded in the financial statements represent valid claims against debtors for transactions arising on or before the statement of financial position date and have been appropriately reduced to their estimated net realizable value. (13) The City has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. (14) We have appropriately disclosed the City's policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available and have determined that net position is properly recognized under the policy. (15) We have complied with all aspects of contractual agreements, including debt covenants, that would have a material effect on the financial statements in the event of noncompliance. We have also complied with the SEC disclosure rules for reporting annual financial information and material events to repositories in accordance with SEC Rule N.240, 15c2-12. The City of Kenai I www.kenaixity (16) No discussions have taken place with your firm's personnel regarding employment with the City. (17) We are responsible for compliance with laws, regulations and provisions of contracts and grant agreements applicable to us and we have identified and disclosed to you all laws, regulations and provisions of contracts and grant agreements that we believe have a direct and material effect on the determination of financial statement amounts. (18) Components of net position (net investment in capital assets, restricted and unrestricted) and classifications of fund balance (non -spendable, restricted, committed, assigned and unassigned) are properly classified and, if applicable, approved. (19) Revenues are appropriately classified in the statement of activities within program revenues, contributions, and general revenues. Expenses have been appropriately classified in or allocated to functions and programs in the statement of activities, and allocations have been made on a reasonable basis. (20) In regards to the preparation of the required SF -SAC Data Collection Form, GASB 68, 75, 87, 96, and 101 entries and related footnote disclosures, and the financial statements and related footnote disclosures, services performed by you, we have: (1) assumed all management responsibilities, (2) designated an individual (within senior management) with suitable skill, knowledge, or experience to oversee the services, (3) evaluated the adequacy and results of the services performed, and (4) accepted responsibility for the results of the services. (21) In regard to the Net Pension and OPEB Liability (Asset): We agree with the findings of specialists in evaluating the pension and other postemployment benefits liabilities (assets) and costs and have adequately considered the qualifications of the specialist in determining the amounts and disclosures used in the financial statements and underlying accounting records. We did not give or cause any instructions to be given to specialists with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of the specialists. • We believe that the actuarial assumptions and methods used to measure pension and/or other postretirement liabilities and costs for financial accounting and disclosure purposes are appropriate in the circumstances. (22) We acknowledge our responsibility for presenting the supplementary information in accordance with accounting principles generally accepted in the United State of America and we believe it is fairly presented. The methods of measurement and presentation of the supplementary information have not changed from the prior period and we have disclosed to you any significant assumptions underlying the measurement and presentation of the supplementary information. (23) Required supplementary information is measured and presented in accordance with prescribed guidelines. (24) With respect to federal award programs: The City of Kenai I www.kenaixit �, Y Y (a) We are responsible for understanding and complying with, and have complied with, the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), including requirements relating to the preparation of the schedule of expenditures of federal awards (SEFA). (b) We have, in accordance with the Uniform Guidance, identified and disclosed to you in the schedule of expenditures of federal awards (SEFA), expenditures made during the audit period for all government programs and related activities provided by federal agencies in the form of federal awards, grants, federal cost -reimbursement contracts, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and other direct assistance. (c) We acknowledge our responsibility for the preparation of the SEFA and related notes in accordance with the requirements of the Uniform Guidance, and we believe the SEFA, including its form and content, is fairly presented in accordance with the Uniform Guidance. The methods of measurement or presentation of the SEFA have not changed from those used in the prior period and we have disclosed to you any significant assumptions and interpretations underlying the measurement or presentation of the SEFA below. (d) We have notified you of federal awards and funding increments that were received for awards received before December 26, 2014, and differentiated those awards from awards received on or after December 26, 2014, and subject to the audit requirements of the Uniform Guidance. (e) We will include the auditor's report on the SEFA in any document that contains the SEFA and that indicates you have reported on such information. (f) If the SEFA is not presented with the audited financial statements, we will make the audited financial statements readily available to the intended users of the SEFA no later than the date we issue the SEFA and the auditor's report thereon. (g) We are responsible for understanding and complying with, and have complied with in all material respects, the requirements of federal statutes, regulations, and the terms and conditions of federal awards related to each of our federal programs and have identified and disclosed to you the requirements of federal statutes, regulations, and the terms and conditions considered to have a direct and material effect on each federal program. The City of Kenai I www.kenai.city (h) We are responsible for establishing and maintaining, and have established and maintained, effective internal control over compliance for federal programs that provides reasonable assurance that we are managing our federal awards in compliance with federal statutes, regulations, and the terms and conditions that could have a material effect on our federal programs. We believe the internal control system is adequate and is functioning as intended. Also, subsequent to the date of the auditor's report as of which compliance was audited, no changes have occurred in internal control over compliance or other factors that might significantly affect internal control, including any corrective action we have taken regarding significant deficiencies and material weaknesses in internal control over compliance as reported in the schedule of findings and questioned costs. (i) We have made available to you all federal award contracts and grant agreements (including amendments, if any) and any other correspondence with federal agencies or pass -through entities relating to each major federal program and related activities that have taken place with federal agencies or pass -through entities. Q) We have received no requests from a federal agency to audit one or more specific programs as a major program. (k) We have complied with the direct and material compliance requirements and confirm that there were no amounts questioned and no known noncompliance with the direct and material compliance requirements of federal awards. (1) We have disclosed to you any communications from federal awarding agencies and pass -through entities concerning possible noncompliance with the direct and material compliance requirements, including communications received from the end of the period covered by the compliance audit to the date of the auditor's report. (m) Amounts claimed or used for matching were determined in accordance with relevant guidelines in the Uniform Guidance (2 CFR part 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards subpart E). (n) We have disclosed to you our interpretations of compliance requirements that are subject to varying interpretations, if any. (o) We have made available to you all documentation related to compliance with the direct and material compliance requirements, including information related to federal program financial reports and claims for advances and reimbursements. (p) We have disclosed to you the nature of any subsequent events that provide additional evidence with respect to conditions that existed at the end of the reporting period that affect noncompliance during the reporting period. 4 The City of Kenai I www.kenaixity (q) Federal program financial reports and claims for advances and reimbursements are supported by the books and records from which the basic financial statements have been prepared, and are prepared on a basis consistent with the schedule of expenditures of federal awards. (r) The copies of federal program financial reports provided to you are true copies of the reports submitted or electronically transmitted, to the respective federal agency or pass - through entity, as applicable. (s) We have charged costs to federal awards in accordance with applicable cost principles. (t) We are responsible for, and have accurately completed, the appropriate sections of the Data Collection Form as required by the Uniform Guidance. The final version of the applicable audit reporting package, which includes your signed auditor's reports, that we will submit to the Federal Audit Clearinghouse (FAC) will be identical to the final version of such documents that you provided to us. (u) We have identified and disclosed to you the findings received and related corrective actions taken for previous audits, attestation engagements, internal or external monitoring, and other studies directly related to the audit objectives of the compliance audit, including findings received and corrective actions taken from the end of the audit period covered by the compliance audit report to the date of the auditor's report. (v) We are responsible for and have ensured the reporting package does not contain protected personally identifiable information. (25) We have a process to track the status of audit findings and recommendations. (26) There have been no known or suspected breaches of sensitive information (e.g., personnel files) caused by cyber-attack or other means, or other cybersecurity incidents, where the breach or other incident could have a material effect on the financial statements. (27) In connection with any electronic presentation of the financial statements and your audit report thereon on our web site, we acknowledge that: a) We are responsible for the preparation, presentation, and content of the financial statements in the electronic format. b) If your audit report is presented on our web site, the full financial statements upon which you reported and to which you appended your signed report will be presented. c) We will clearly indicate in the electronic presentation on our web site the financial information that is subject to your audit report. We will clearly differentiate any information that may also be presented by us on or in connection with our web site that was contained The City of Kenai I www.kenaixit �, Y Y in the published version of the financial statements and other supplementary information, but which is not part of the audited financial statements or other financial information covered by your audit report. d) We have assessed the security over financial statement information and the audit report presented on our web site, and are satisfied that procedures in place are adequate to ensure the integrity of the information provided. We understand the risk of potential misrepresentation inherent in publishing financial information on our web site through internal failure or external manipulation. e) If the electronic financial statements are generally made available to the public on our web site, we will include a notification to the reader that such financial statements are presented for convenience and information purposes only, and while reasonable efforts have been made to ensure the integrity of such information, they should not be relied on. A copy of the printed financial statements will be provided on request. (28) We have considered climate -related events and conditions when preparing the financial statements and necessary disclosures, and have communicated to you such matters, if any, and their impact on our financial reporting. (29) Our annual report comprises the basic financial statements and the introduction and statistical section. This other information is consistent with the basic financial statements and does not contain any material misstatements. To the best of our knowledge and belief, no events, including instances of noncompliance, have occurred subsequent to the statement of financial position date and through the date of this representation letter, as entered on the first page, that would require adjustment to or disclosure in the aforementioned financial statements or in the schedule of findings and questioned costs Very truly yours, Terry Eubank, City Manager Dave Swarner, Finance Director The Cityof Kenai I www.kenaixit Y KENAI CITY OF KENAI ORDINANCE NO. 3504-2026 Sponsored by: Administration AN ORDINANCE ACCEPTING AND APPROPRIATING AN INCREASE IN THE TITLE III GRANT FROM THE STATE OF ALASKA DEPARTMENT OF HEALTH, DIVISION OF SENIOR AND DISABILITIES SERVICES, FOR NUTRITION, TRANSPORTATION, AND SUPPORT SERVICES. WHEREAS, annually the City receives a grant from the State of Alaska Department of Health, Division of Senior and Disabilities Services, to provide the Senior Citizen Nutrition, Transportation, and Support Services; and, WHEREAS, the original Title III Nutrition, Transportation, and Support Services grant amount of $237,000 was appropriated through Budget Ordinance No. 3471-2025; and, WHEREAS, additional funds were appropriated by the State of Alaska and dispersed among Title III grantees; and, WHEREAS, the City of Kenai was awarded an increase of $72,706.88 to support senior nutrition, transportation, and support services from July 1, 2025, through June 30, 2026; and, WHEREAS, these additional funds will enhance services that support the health, independence, and well-being of older adults in the Kenai communities; and, WHEREAS, acceptance of these funds is in the best interest of the City of Kenai. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, AS FOLLOWS: Section 1. That the City Manager is authorized to accept an increase of $72,706.88 to the FY26 NTS grant from the State of Alaska, Department of Health, Division of Senior and Disabilities Services for the Kenai Senior Center. Section 2. That the estimated revenues and appropriations be increased as follows: Senior Citizen Fund: Increase Estimated Revenues State Grants $72,706.88 Increase Appropriations Access - Salaries $4,664.00 Transportation — Operating & Repair Supplies 6,000.00 Congregate Meals — Operating & Repair Supplies 31,021.44 Home Meals — Operating & Repair Supplies 31,021.44 $72, 006.88 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 Citv Council herebv declares New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3504-2026 Page 2 of 2 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 immediately upon enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 18T" DAY OF February, 2026. ATTEST: Michelle M. Saner, MMC, City Clerk Approved by Finance: Henry H. Knackstedt, Mayor Introduced: Enacted: Effective: February 4, 2026 February 18, 2026 February 18, 2026 New Text Underlined; [DELETED TEXT BRACKETED] L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Council Members THROUGH: Terry Eubank, City Manager FROM: Kathy Romain, Senior Center Director DATE: January 26, 2026 SUBJECT: Ordinance 3504-2026 -Accepting and Appropriating an Increase in the Title III Grant from the State of Alaska Department of Health, Division of Senior and Disabilities Services, for Nutrition, Transportation, and Support Services. The Kenai Senior Center receives a yearly grant from the State of Alaska under the Title III Nutrition, Transportation, and Services (NTS) Program. The original Title III Nutrition, Transportation, and Support Services (NTS) grant amount of $237,000 appropriated through Budget Ordinance No. 3471-2025. Our program has been given an increase of $72,706.88 for services from July 1, 2025, through June 30, 2026 (FY26). These additional funds will be used to purchase operating supplies for congregate and home - delivered meals, increase the fuel budget, and support salaries associated with Homemaker Services provided through the Title III NTS grant. The estimated revenues and appropriations would be increased as follows: Senior Citizen Fund: Increase Estimated Revenues State Grants $72, 006.88 Increase Appropriations Access - Salaries $4,664.00 Transportation — Operating & Repair Supplies 6,000.00 Congregate Meals — Operating & Repair Supplies 31,021.44 Home Meals — Operating & Repair Supplies 31,021.44 $72, 006.88 Your support is greatly appreciated. KENAI CITY OF KENAI RESOLUTION NO. 2026-12 Sponsored by: Administration A RESOLUTION AUTHORIZING THE USE OF THE FLEET REPLACEMENT FUND FOR THE PURCHASE OF TWO FORD BRONCO SUVS UTILIZING THE STATE OF ALASKA EQUIPMENT FLEET CONTRACT. WHEREAS, the City fleet replacement plan calls for the replacement of two Senior Center vehicles in FY26, which are available through State of Alaska equipment fleet contract pricing; and, WHEREAS, the City evaluated the existing vehicles to be replaced to determine replacement needs; and, WHEREAS, the Ford Broncos will be used for delivery for the Meals on Wheels program and have been determined to be a satisfactory vehicle for this use; and, WHEREAS, the Senior Center recommends purchase of two Ford Broncos for a total estimated cost of $66,110; and, WHEREAS, funds for this purchase is available in the Fleet Replacement Fund and this does not require further appropriation; and, WHEREAS, KMC 7.15.070(b)(4) allows the City of Kenai to purchase equipment without competition if the equipment is purchasable under the contract of another governmental agency in which contract the City is authorized to participate; and, WHEREAS, the City of Kenai is eligible to use the State of Alaska equipment fleet contract and this purchase is in the best interest of the City. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That the City Manager is authorized to use the Fleet Replacement Fund and the State of Alaska Equipment Fleet Contract for the purchase of two Ford Bronco SUVs from Kendall Ford for an estimated cost of $66,110 in accordance with KMC 7.15.070(b)(4). Section 2. That this Resolution takes effect immediately upon passage. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 18TH DAY OF FEBRUARY. ATTEST: Michelle M. Saner, MMC, City Clerk Finance Victoria Askin, Vice Mayor New Text Underlined; [DELETED TEXT BRACKETED] L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Council Members THROUGH: Terry Eubank, City Manager FROM: Eric Jean, Assistant Director of Public Works DATE: February 6, 2026 SUBJECT: Resolution No. 2026-12 - Authorizing the Use of the Fleet Replacement Fund for the Purchase of Two Ford Bronco SUVs Utilizing the State of Alaska Equipment Fleet Contract. This Resolution authorizes the purchase of two Ford Bronco SUVs for the Senior Center through Kendall Ford utilizing the State of Alaska Equipment Fleet Contract. The City's Fleet Replacement Fund will be used for this purchase. The cost of the Ford Broncos is $33,055 each for a total price of $66,110. In accordance with the City's fleet replacement plan, the Senior Center was scheduled to replace one Senior Center utility vehicle in FY26. A previous Senior Center vehicle was totaled and auctioned and also needs replaced. After reviewing the main use of these vehicles for Meals on Wheels delivery with the Shop and Senior Center staff, it was determined that Ford Broncos will meet the needs of the City. KMC 7.15.070(b)(4) allows the City of Kenai to purchase equipment without giving an opportunity for competitive bidding if the equipment is purchasable under the contract of another government agency in which contract the City is authorized to participate. The City is eligible to utilize the State of Alaska Equipment Fleet Contract to purchase these vehicles from Kendall Ford. Purchase of these vehicles is in the best interest of the City and we recommend authorizing purchase. Thank you for your consideration. KGNA CITY OF KENAI RESOLUTION NO. 2026-13 Sponsored by: Administration A RESOLUTION AMENDING THE CITY'S SCHEDULE OF RATES, CHARGES, AND FEES TO ADD A METERED PRESSED SEPTAGE EFFLUENT RATE. WHEREAS, the City of Kenai provides wastewater treatment services and can accept septage effluent; and, WHEREAS, acceptance and treatment of pressed septage incurs higher operation and maintenance costs than domestic wastewater; and, WHEREAS, it has been determined that a rate of $50.00 per thousand gallons is sufficient to support the processing of this effluent; and, WHEREAS, it is in the best interest of the City to amend the fee schedule to include a new metered rate for pressed septage effluent. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That the City of Kenai Schedule of Rates, Charges, and Fees is hereby amended to include the following fee under Public Works and Capital Project Fees, Sewer Fees, APX — Public Utility Regulations and Rates, 5. Schedule E — Metered Service: • Pressed Septage Effluent, per thousand gallons: $50 Section 2. That this Resolution takes effect immediately upon passage. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 18T" DAY OF FEBRUARY 2026. Victoria Askin, Vice Mayor ATTEST: Michelle M. Saner, MMC, City Clerk Approved by Finance: J& New Text Underlined; [DELETED TEXT BRACKETED] L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Council Members THROUGH: Terry Eubank, City Manager FROM: Lee Frey, Public Works Director DATE: February 9, 2026 SUBJECT: Resolution No. 2026-13 - Amending the City's Schedule of Rates, Charges, and Fees to Add a Metered Pressed Septage Effluent Rate This memo requests Council's approval to amend the City Fee Schedule to add a new fee for disposal of pressed septage effluent. A business is working to establish a facility that would dispose of septage by receiving septage and pressing the liquid from it. The business is requesting that the resulting wastewater generated (we are referring to as pressed septage effluent) be discharged as effluent into our sewer collection system for eventual treatment and disposal at the City Wastewater Treatment Facility. The business needs an established fee for the disposal of this effluent to continue moving forward with design, permitting and construction necessary to establish this business. The effluent that we would accept would be allowable per our permit with the Alaska Department of Environmental Conservation (DEC) and will be a higher strength wastewater than domestic wastewater. We have determined that a rate of $50 per thousand gallons is sufficient. The business will be required to be permitted through DEC to construct and operate this proposed operation and will also be required to obtain building permits for installation. The septage solids would be disposed of with another party and not accepted by the City for treatment or disposal. The business will be required to provide a method for metering the effluent to be approved by the City prior to discharging into our system. The Public Works Department recommends adding a fee of $50 per thousand gallons for the City of Kenai Fee Schedule under the Sewer Fees, Schedule E - Metered Service. KENAI CITY COUNCIL — REGULAR MEETING Page 46 FEBRUARY 4, 2026 — 6:00 P.M. KENAI CITY COUNCIL CHAMBERS 210 FIDALGO AVE., KENAI, AK 99611 VICE MAYOR VICTORIA ASKIN, PRESIDING MINUTES A. CALL TO ORDER A Regular Meeting of the Kenai City Council was held on February 4, 2026, in City Hall Council Chambers, Kenai, AK. Vice Mayor Askin called the meeting to order at approximately 6:00 p.m. 1. Pledge of Allegiance Vice Mayor Askin led those assembled in the Pledge of Allegiance. 2. Roll Call There were present: Victoria Askin, Vice Mayor Henry Knackstedt, Mayor (remote participation) Sovala Kisena Bridget Grieme Deborah Sounart Glenese Pettey Phil Daniel A quorum was present. Also in attendance were: **Josh Bolling, Student Representative Terry Eubank, City Manager Scott Bloom, City Attorney David Swarner, Finance Director Kevin Buettner, Planning Director (remote participation) Lee Frey, Public Works Director Shellie Saner, City Clerk 3. Agenda and Consent Agenda Approval Vice Mayor Askin noted the following additions to the Packet: Add to item E.2. Public Hearing - Ordinance No. 3501-2026 • Amendment Memo MOTION: Council Member Sounart MOVED to approve the agenda and consent agenda with the requested revisions. Council Member Grieme SECONDED the motion. The items on the Consent Agenda were read into the record. Vice Mayor Askin opened the floor for public comment on consent agenda items; there being no one wishing to be heard, the public comment period was closed. UNANIMOUS CONSENT was requested. VOTE: There being no objection; SO ORDERED. *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 City of Kenai Council Meeting Page 1 of 8 February 4, 2026 Page 47 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. B. SCHEDULED ADMINISTRATIVE REPORTS Annual Review of City of Kenai Permanent and Custody Funds, 2025 Financial Performance, Financial Projections and Recommend 2026 Asset Allocation for the City's Permanent and Custody Funds, Chief Executive Officer Bill Lierman and Chief Investment Officer Brandy Niclai, from Alaska Permanent Capital Management. Brandy Niclai provided a summary on the history, performance and future projections of the Permanent Funds; reviewed asset allocations, returns, withdrawal policies, past market performance; discussed current asset allocation relative to strategic weights and noted year-end cash levels were due to dividend and interest receipts and have since been redeployed; and discussed 2026 market outlook themes including equity valuation levels, earnings dependency, and increased exposure to AI -related sectors and emerging markets. Bill Lierman provided a review on the City's custody assets, noting Alaska Permanent Management has managed the portfolio since November 2024 as a reserve fund held outside the City's primary cash pool; explained the composition of the portfolio; reviewed performance relative to benchmarks, noting the portfolio outperformed cash equivalents; discussed positioning the portfolio to lock in yields ahead of anticipated Federal Reserve rate cuts; and noted plans to request a future work session to review potential strategy adjustments. C. SCHEDULED PUBLIC COMMENTS 1. Kenai Chamber of Commerce and Visitor Center Annual Report, Samantha Springer, Executive Director. Samantha Springer, Executive Director of the Kenai Chamber of Commerce, provided a review of the 2025 Annual report noting a successful year marked by operational stability, consistent programming, and community engagement; highlighted achievements including recognition as Chamber of the Year, expansion of historical and cultural programming, and updates to the Silver Salmon Derby; reported an early -year decline in visitor numbers that recovered by mid -year; noted continued strength in core programs; staffing and Board Member updates; and outlined upcoming events. D. UNSCHEDULED PUBLIC COMMENTS - None. E. PUBLIC HEARINGS 1. Ordinance No. 3500-2026 - Sunsetting the Harbor Commission, Amending Kenai Municipal Code 1.90.010 - General Standards for Standing Advisory Commissions, Repealing Kenai Municipal Code 1.95.040 - Harbor Commission, Repealing Kenai Municipal Code 11.20 - Leasing of Tidelands, Amending Kenai Municipal Code 14.05.010 - Duties and Powers, Enacting Kenai Municipal Code 22.05.016 - Tidelands Available for Leasing, Enacting Kenai Municipal Code Chapter 22.10 - Tideland Leases for Shore Fisheries, and Amending Council Policy 20.020 to Reflect the Sunsetting of The Harbor Commission. (Administration) MOTION: Council Member Sounart MOVED to enact Ordinance No. 3500-2026. Council Member Daniel SECONDED the motion. Vice Mayor Askin opened the floor for public comment. There being no one wishing to be heard, the public comment period was closed. City of Kenai Council Meeting Page 2 of 8 February 4, 2026 Page 48 Appreciation to all Harbor Commission members was shared; and clarification was provided on the process necessary reinstate the Harbor Commission in the future if needed. VOTE: YEA: Sounart, Knackstedt, Daniel, Grieme, Askin, Pettey, Kisena NAY: None **Student Representative Bolling: Yea MOTION PASSED. 2. Ordinance No. 3501-2026 - Determining Four City -Owned Properties in the Beaver Loop Area are Not Needed for a Public Purpose and Authorizing Sale by Public Sealed Bid Auction. (Administration) MOTION: Council Member Sounart MOVED to enact Ordinance No. 3501-2026. Council Member Pettey SECONDED the motion. Vice Mayor Askin opened the floor for public comment. There being no one wishing to be heard, the public comment period was closed. MOTION TO AMEND: Council Member Sounart MOVED to amend the Ordinance No. 3504-2026 as follows: Eleventh whereas clause to read, "at their regularly scheduled meeting on January 28, 2026, the City of Kenai Planning and Zoning Commission reviewed the proposed sale of the properties and recommended enactment to the City Council; and" Council Member Pettey SECONDED the motion. UNANIMOUS CONSENT was requested on the motion to amend. VOTE: There being no objection; SO ORDERED. MOTION TO AMEND: Council Member Sounart MOVED to amend the Ordinance No. 3501-2026 as follows: Insert a new sixth whereas clause to read, "the City's intent in offering these parcels for sale is to facilitate gravel extraction, and the properties are being made available for that purpose exclusively, subject to all applicable zoning, permitting, and regulatory requirements." Council Member Pettey SECONDED the motion. UNANIMOUS CONSENT was requested on the motion to amend. VOTE: There being no objection; SO ORDERED. Clarification was provided regarding the access points to the properties. VOTE ON MAIN MOTION AS AMENDED: YEA: Knackstedt, Daniel, Grieme, Askin, Pettey, Kisena, Sounart, NAY: None **Student Representative Bolling: Yea MAIN MOTION AS AMENDED PASSED. 3. Ordinance No. 3502-2026 - Authorizing the City Manager to Reimburse Annual Leave Used by Firefighter Garrick Martin for Attending a Paramedic Internship Program. (Administration) MOTION: Council Member Sounart MOVED to enact Ordinance No. 3502-2026. Council Member Grieme SECONDED the motion. City of Kenai Council Meeting Page 3 of 8 February 4, 2026 Vice Mayor Askin opened the floor for public comment. public comment period was closed. Page 49 There being no one wishing to be heard, the There was discussion regarding the Administration looking into options to handle this type of reimbursement administratively. VOTE: YEA: Daniel, Grieme, Askin, Pettey, Kisena, Sounart, Knackstedt NAY: None **Student Representative Bolling: Yea MOTION PASSED. 4. Ordinance No. 3503-2026 - Increasing Estimated Revenues and Appropriations in the Water & Sewer Capital Project Fund and Accepting a Loan from the State Revolving Fund Program for the Water Treatment Pumphouse Project. (Administration) MOTION: Council Member Sounart MOVED to enact Ordinance No. 3503-2026. Council Member Daniel SECONDED the motion. Vice Mayor Askin opened the floor for public comment. There being no one wishing to be heard, the public comment period was closed. A summary overview of the memorandum as attached to Ordinance No. 3503-2026 was provided; clarification was provided that this was a forgivable loan, and the benchmarks associated receiving reimbursement were discussed. VOTE: YEA: Grieme, Askin, Pettey, Kisena, Sounart, Knackstedt, Daniel NAY: None **Student Representative Bolling: MOTION PASSED. 5. Resolution No. 2026-10 - Authorizing the Use of the Equipment Replacement Fund for the Purchase of a New Trackless MT7 with Snow Blower Attachment. (Administration) MOTION: Council Member Sounart MOVED to adopt Resolution No. 2026-10. Council Member Pettey SECONDED the motion. Vice Mayor Askin opened the floor for public comment. There being no one wishing to be heard, the public comment period was closed. It was reported that the expected delivery was six months from contract approval. UNANIMOUS CONSENT was requested. VOTE: There being no objection; SO ORDERED. 6. Resolution No. 2026-11 - Designating the Investment and Allocation Plan for the City's Permanent Funds and Establishing Appropriate Benchmarks to Measure Performance for Calendar Year 2026. (Administration) MOTION: Council Member Sounart MOVED to adopt Resolution No. 2026-11. Council Member Daniel SECONDED the motion. Vice Mayor Askin opened the floor for public comment. There being no one wishing to be heard, the public comment period was closed. City of Kenai Council Meeting Page 4 of 8 February 4, 2026 UNANIMOUS CONSENT was requested. VOTE: There being no objection; SO ORDERED. F. MINUTES *Regular Meeting of January 21, 2026. (City Clerk) G. UNFINISHED BUSINESS - None. H. NEW BUSINESS 1. *Action/Approval - Bills to be Ratified. (Administration) Approved by the consent agenda. 2. *Ordinance No. 3504-2026 - Accepting and Appropriating an Increase in the Title III Grant from the State of Alaska Department of Health, Division of Senior and Disabilities Services, for Nutrition, Transportation, and Support Services. (Administration) Introduced by the consent agenda and Public Hearing set for February 18, 2026. 3. Action/Approval - Confirmation of Mayoral Nomination for a Partial Term Appointment of Scott Bremer to the Airport Commission. (Knackstedt) MOTION: Council Member Sounart MOVED to confirm the appointment of Scott Bremer to the Airport Commission. Council Member Pettey SECONDED the motion. UNANIMOUS CONSENT was requested on the motion. VOTE: There being no objection; SO ORDERED. 4. Discussion -Scheduling a Work Session with Alaska Permanent Capital Management to Discuss Potential Amendments to Kenai Municipal Code Investment Options. (Administration) The work session was scheduled for April 1, 2026 at 4:00 p.m. I. COMMISSION / COMMITTEE REPORTS 1. Council on Aging Commission No report, next meeting February 12, 2026. 2. Airport Commission No report, next meeting February 12, 2026. 3. Harbor Commission No report. 4. Parks and Recreation Commission No report, next meeting February 5, 2026. 5. Planning and Zoning Commission Council Member Kisena reported on the January 28, 2026 meeting; the February 11, 2026 meeting was cancelled; and next meeting February 25, 2026. 6. Beautification Commission No report, next meeting April 14, 2026. City of Kenai Council Meeting Page 5 of 8 February 4, 2026 J. REPORT OF THE MAYOR Mayor Knackstedt reported on the following: • Thanked Vice Mayor Asking for presiding during the meeting. • Requested Council consider potential reductions in plan review fees, particularly related to review for identical buildings. • Attended a regional meeting with Borough and City leaders to discuss regional issues including school funding, taxes, housing, and the LNG project. • Participating in a discussion regarding schools closing pools; the need for clear cost information; and Borough Mayor Micciche would be gathering additional information. • Attending and participating in the Senior Center Volunteer appreciation dinner. K. ADMINISTRATION REPORTS 1. City Manager - City Manager Eubank reported on the following: • Provided a video of the new ambulance power loader, which improves safety for firefighters and patients while loading and unloading patients. • Staffing update: New utility operators were expected to start in March; welcomed new building official Chandra Mayeux and returning Police Officer Sarah Herrin; and ongoing recruitment for Airport Manager and Firefighter. • Bridge Access Pedestrian Pathway design is complete; State of Alaska plans to align the Pedestrian Pathway project with the Asphalt Preservation project; bidding was anticipated for May; and the City strongly discouraged full closure of the Warren Ames Bridge. • Kenai Peninsula Housing Initiative (KPHI) grant application for 20 senior and low-income housing units was not funded; funding was received for construction of one low-income fourplex; and continue coordination with on a Community Development Block Grant for water and sewer. • School pool closure update and potential Borough participation moving forward. • Recognized fire, police and dispatch personnel for responses to multiple serious structure fires and life saving efforts during January. • Transition of the City's bid and RFP process to Bid Express was completed. • A request from Kenai Peninsula Economic Development District to become a strategic asset partner regarding workforce development initiatives. • A meeting was scheduled with the Chamber Board to review the community survey results. 2. City Attorney - No report. 3. City Clerk - City Clerk Saner reported on the following: • Update on the Special Election procedures taking place. L. ADDITIONAL PUBLIC COMMENTS 1. Citizen Comments (Public comments limited to (5) minutes per speaker) 2. Council Comments Student Representative Bolling thanked Vice Mayor Askin for visiting the Leadership class; provided an update on winter activities at Kenai Central High School, noting the strong participation and community turnout at athletic events; and students were looking forward to the upcoming Job Shadow event. City of Kenai Council Meeting Page 6 of 8 February 4, 2026 Page 52 Council Member Kisena congratulated the Chamber for all of their accomplishments, Scott Bremer for his appointment to the Airport Commission, and the three new City employees; and he gave a shout out to our public safety departments for their efforts in the last month. Council Member Pettey thanked City Manager Eubank for the video of the new stretcher, noting the enhancement to the safety of our firefighters and patients. Council Member Daniel recognized the Chamber for all their efforts; and thanked City Manager Eubank for sharing the video. Council Member Sounart echoed Council Member Kisena and Daniel comments; and recognized the Public Works Department employees for keeping up with the snow, rain and keeping the roads safe. Council Member Grieme stated her appreciation for the Kenaitze Joint Work Session and the staff members who attended; and recognized the efforts of the Public Safety Departments. Vice Mayor Askin stated she agreed with the other Council members recognitions and comments; reported attending the Senior Center Appreciation event; and stated her appreciation for the Kenaitze Joint Work Session. M. EXECUTIVE SESSION 1. New Gas Storage Facility within the City of Kenai. Pursuant to AS 44.62.310(c)(1) a Matter of which the Immediate Knowledge may have an Adverse Effect upon the Finance of the City and AS 44.62.310(c)(3) a Matter which by Law, Municipal Charter, or Ordinance are required to be Confidential. (Administration) [Clerk's Note: Vice Mayor Askin passed the gavel to Council Member Sounart and declared a possible conflict with the discussion of New Gas Storage Facility as she was an employee of one of the companies involved. Council Member Sounart ruled a conflict did exist and Vice Mayor Askin exited the meeting at 7:40 p.m., abstaining from participating in the Executive Session and discussion of the subject.] MOTION: Council Member Grieme MOVED to enter into executive session to discuss a New Gas Storage Facility within the City of Kenai which may be a subject that immediate knowledge would clearly have an adverse effect upon the finances of the City and is a matter which by law, municipal charter, or ordinance is required to confidential. The executive session will include Mayor Knackstedt, City Council Members, Manager Eubank, Attorney Bloom and Planning Director Buettner. Council Member Kisena SECONDED the motion. UNANIMOUS CONSENT was requested. VOTE: Motion APPROVED, without objection. MOTION: Council Member Grieme MOVED to reconvene into regular session. Council Member Kisena SECONDED the motion. UNANIMOUS CONSENT was requested. VOTE: Motion APPROVED, without objection. [Clerk's Note: The Council entered into executive session at 7:40 p.m. and reconvened into regular session at 8:52 P.M.] N. PENDING ITEMS - None. O. ADJOURNMENT City of Kenai Council Meeting Page 7 of 8 February 4, 2026 P. INFORMATIONAL ITEMS - None. There being no further business before the Council, the meeting was adjourned at 8:53 p.m. I certify the above represents accurate minutes of the Kenai City Council meeting of February 4, 2026. Michelle M. Saner, MMC City Clerk ** The student representative may cast advisory votes on all matters except those subject to executive session discussion. Advisory votes will not affect the outcome of the official council vote. Advisory votes will be recorded in the minutes. A student representative may not move or second items during a council meeting. City of Kenai Council Meeting Page 8 of 8 February 4, 2026 PAYMENTS OVER $35,000.00 WHICH NEED COUNCIL RATIFICATION COUNCIL MEETING OF: FEBRUARY 18, 2026 VENDOR DESCRIPTION DEPARTMENT ACCOUNT AMOUNT PERS PERS VARIOUS LIABILITY 116,127.29 PREMERA JANUARY PREMIUM VARIOUS INSURANCE 223,249.53 HOMER ELECTRIC ELECTRIC USAGE VARIOUS UTILITIES 128,306.23 Page 55 • 0/ KENAI City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city MEMORANDUM TO: City Council Members FROM: Henry Knackstedt, Mayor DATE: February 5, 2026 SUBJECT: Action/Approval - Council Confirmation of Mayoral Nominations of Maeve Spiegler to the Parks & Recreation Commission. A vacancy currently exists on the Parks & Recreation Commission; an application for a partial term has been received and is attached for consideration. Pursuant to Kenai Municipal Code 1.90.010 members are nominated by the Mayor and confirmed by the City Council. Council confirmation of the following appointment is requested: • Maeve Spiegler - Parks & Recreation Commission partial term ending on December 31, 2027. Your consideration is appreciated. KENAI Commission Application Application for Appointments to the Airport. Beautification, Council on Aging, Harbor, Parks & Recreation, and Planning and Zoning Commissions First Name: Ma eve Primary Phone:* Residence Address: Street Number & Street Name. Mailing Address* Street Address Address Line 2 City Kenai Postal/Zip Code 99611 Are you a Resident of the City of Kenai?* Yes No Last Name:* Spiegler Home Phone: State/Province/Region AK Country USA Name of Spouse: E-mail* If resident, how long? Name of Employer: 20 months Independent Living Center Commission Membership Requirements: Airport Commission: The Airport Commission has four designated seats and three at large seats. lfappiying for the Airport Commission, he sure and select the Sear you are applying for in the next column. Beautification, Harbor and Parks & Recreation Commissions: May at the discretion of the Council have up to two non-resident members. Council on Aging Commission: Members need only to reside on the Kenai Peninsula and 51 % of whom must be 55-years or older. Planning & Zoning Commission: May have 1 member that is not a resident of the City if that member has controlling ownership in a business physically located in the City. Commission in which you are interested:* Parks and Recreation Commission Why do you want to be involved with this Commission? I want to have an active role in making the KIP and Kenai more accessible. Ensuring paths, trails, beaches and rivers are accessible to residents and visitors is something I like doing. I have not been involved in politics in my adult life, and I have the energy for it as a new, but passionate member of the Peninsula who loves getting outside and enjoying it. List Current Organization Memberships: List Past Organization Memberships: ACPA, NASP& CSPA-NY What background, experience or other credentials do you possess to bring to the Commission? I have a research degree, too much time on my hands, and ten years of experience in event planning and a lifetime of getting outside diverse group of individuals to enjoythe parks and recreation opportunities. I would love to learn more about being involved. If appointed, select items approved for publication on City Website: Primary Phone Home Phone ❑ Email KENAI CITY OF KENAI ORDINANCE NO. 3505-2026 Sponsored by: Administration AN ORDINANCE INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE GENERAL FUND — BUILDINGS DEPARTMENT COMPUTER SOFTWARE, FOR THE PURCHASE OF PERMITTING SOFTWARE. WHEREAS, the Buildings Department previously budgeted $15,000 for purchase of Building Permit Software; and, WHEREAS, additional funding is needed to purchase and implement a building permit software solution; and, WHEREAS, the software solution will be utilized by multiple departments across the City to transition permitting from paper to electronic; and, WHEREAS, it is in the best interest of the City to appropriate an additional $35,000 for Building Permit Software. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, AS FOLLOWS: Section 1. That estimated revenues and appropriations in the General Fund — Buildings Department are hereby increased as follows: General Fund: Increase Estimated Revenues: Appropriation of Fund Balance $35,000 Increase Appropriations: Buildings — Computer Software $35,000 Section 2. 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 3. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect immediately upon enactment. New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3505-2026 Page 2 of 2 ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 4T" DAY OF MARCH, 2026. ATTEST: Michelle M. Saner, MMC, City Clerk Approved by Finance: J& Henry H. Knackstedt, Mayor Introduced Enacted: Effective: February 18, 2026 March 4, 2026 March 4, 2026 New Text Underlined; [DELETED TEXT BRACKETED] L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Gabriel and Council Members THROUGH: Terry Eubank, City Manager FROM: Lee Frey, Public Works Director DATE: February 9, 2026 SUBJECT: Ordinance No. 3505-2026 - Increasing Estimated Revenues and Appropriations in the General Fund — Buildings Department Computer Software, for the Purchase of Permitting Software. The Buildings Department has previously budgeted $15,000 for purchase of Building Permit Software to move the permit process to being fully electronic. Through review of several vendors solutions, it has been determined that additional funds are needed for the purchase and implementation of a software package. We request an additional appropriation of $35,000 to fully fund the purchase and implementation of permitting software. Recommendation of a vendor is anticipated soon with the onboarding of our new Building Official. This software is expected to be utilized by Finance, Utilities, Planning & Zoning, Streets and the City Clerk for permitting and licensing needs. Annual licensing and maintenance costs for the software is planned to be incorporated into future operational budgets. L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Council Members FROM: Terry Eubank, City Manager DATE: February 10, 2026 SUBJECT: Action/Approval - Peninsula Oilers Baseball Club Special Use Permit for use of the Challenger Leaning Center to temporarily house players and staff of opposing teams for the 2026 Alaska Baseball League season. It is recommended that the City Council approve a Special Use Permit (SUP) for the Peninsula Oilers Baseball Club (the Club) to utilize the dormitory facilities at the former Challenger Learning Center of Alaska, located at 9711 Kenai Spur Highway, to house players and staff from visiting teams during the 2026 summer baseball season. Pursuant to Kenai Municipal Code (KMC) 22.05.130, Special Use Permits, the City Council may authorize the City Manager to grant temporary use permits for City -owned real property for periods not to exceed one year, without appraisal or public auction, for uses compatible with the zoning of the property, and on terms and rental rates determined by the Council. The Peninsula Oilers will return to the Alaska Baseball League (ABL) for the 2026 season following a one-year hiatus taken to stabilize the organization's finances. As part of this restructuring, the Club sold its former Old Town Kenai building, which historically housed visiting teams in a 28-bed bunkhouse. This transition has left a gap in the league's required housing infrastructure for opposing teams. The former Challenger Learning Center, now owned by the City, was previously scheduled to house the players and staff of opposing teams prior to the facility's closure last fall. The building includes two large dormitories designed for overnight accommodations, each equipped with 19 bunks (38 total), along with associated lounge areas and restroom and shower facilities. The proposed $1,000 fee for use of the facility will help offset the incremental costs associated with this temporary use. The SUP would be valid for the 2026 summer season, June 1 through August 5. Use of the facility would be limited to Aurora Borealis Room, Girls' & Boys' Dormitories, Lounges, Restrooms, and Showers, and the Kitchen refrigerator and microwaves. The Club would be responsible for providing bedding and towels, as well as custodial services. This request represents a one-time, temporary use and does not constitute a long-term change in use of the facility. The City has a long-standing history of supporting the Peninsula Oilers, a non-profit organization, to promote baseball activities that enhance the community and benefit residents. This support includes leasing Oiler Park ballfields to the Club and donating water and sewer service. Approval of this permit would support the successful return of a 50-year-old Kenai institution, provide a temporary, productive use of a City -owned facility, and help ensure that Kenai remains a viable host city for the Alaska Baseball League. Administration recommends approval of the attached Special Use Permit. Suggested Motion: Move to authorize the City Manager to issue a Special Use Permit to the Peninsula Oilers Baseball Club for the temporary use of dormitory facilities at the former Challenger Learning Center of Alaska to house visiting team players and staff during the 2026 Alaska Baseball League season. Thank you for your consideration. Page 2 of 2 (Cj- The City of Kenai I www.kenai.city CHALLENGER LEARNING CENTER SPECIAL USE PERMIT THE CITY OF KENAI (City) for the considerations, conditions and requirements set forth below, hereby grants to PENINSULA OILERS BASEBALL CLUB (Permittee), a non-profit organization, whose address is 103 S Tinker Ln, Kenai, AK 99611 the right to use a portion of the Challenger Learning Center facility located at 9711 Kenai Spur Highway, Kenai, AK 99611, as provided below. 1. TERM. This special use permit shall commence and be effective on June I" through August 5th, 2026 subject to the needs of the City. Permittee understands, agrees and acknowledges that the City may need the facility for other uses or may sell, rent, or lease the facility to other parties during this term. Notwithstanding any other provision in this permit, if at any time the City desires the facility for any other use, including rent, sale or lease, the City may terminate this permit upon 14 days -notice and shall return any fees on a prorated basis. 2. PERMIT FEES. The fee for this permit is $1,000.00, plus applicable sales tax. 3. SPACE. The space made available by the City for use by the Permittee is within the City of Kenai Challenger Learning Center including dormitories (girls and boys), lounges (girls and boys), restrooms and shower facilities, the Aurora Borealis Room and refrigerator and microwaves in the commercial kitchen. See Attachment A. This Permit does not include the use of any other space, except those identified, inside the City of Kenai Challenger Learning Center. Permittee agrees to stay out of other areas of the facility and keep all players, coaches, staff guests and others out of areas of the building not specifically dedicated for use in this permit. The Permittee agrees to leave the use area in the same condition as the date of commencement of this Special Use Permit, ordinary use and wear thereof excepted. Permittee agrees it is responsible for any damage caused by any users of the facility pursuant to this permit. 4. PURPOSE. The aforementioned space to be used solely for the purpose, and no other, of hosting the opposing teams of the Peninsula Oilers Baseball Club during the 2026 season. 5. LICENSES AND PERMITS; LAWS. Permittee shall adhere to all federal, state, and local laws, ordinances, and regulations while conducting its activities on the Premises. Permittee shall obtain and maintain all required federal, state, and local licenses, permits, certificates, and other documents required for Permittee's operations under the Permit. Permittee shall provide proof of compliance to the City upon request by the City. 6. NO EXCLUSIVITY. This Permit is not intended to grant any exclusive use to the described Premises. 7. CLEANUP & GARBAGE REMOVAL. The Permittee is responsible for all janitorial services during the facilities use. Permittee is responsible for all garbage cleanup and removal off site. Challenger Learning Center Special Use Permit Page 1 of 6 8. INDEMNITY, DEFEND, AND HOLD HARMLESS. PERMITTEE agrees to fully indemnify, defend, and hold harmless, the CITY, its officers, agents, employees, and volunteers from and against any and all actions, injuries, death, damages, costs, liability, claims, losses, judgments, penalties, and expenses of every type and description including any fees and/or costs reasonably incurred by the CITY' S staff attorneys and outside attorneys and any fees and expenses incurred in enforcing this provision (hereafter collectively referred to as "Liabilities"), to which any or all of them may be subjected, to the extent such Liabilities are caused by any act, incident, or accident, occurring as a result of the acts, errors or omissions, of the PERMITTEE or its agents, guests, invitees, or employees, arising in connection with the operations, use, or occupancy of the premises by PERMITTEE. This shall be a continuing release and shall remain in effect after termination of this Agreement. 9. ASSUMPTION OF RISK. PERMITTEE assumes full control and sole responsibility as between PERMITTEE and CITY for the activities of PERMITTEE, its personnel, employees, and persons acting on behalf of or under the authority of the PERMITTEE anywhere on the Premises. PERMITTEE shall provide all proper safeguards and shall assume all risks incurred in its activities on the Premises and its exercise of the privileges granted in this Agreement. 10. INSURANCE. PERMITTEE shall secure and keep in force adequate insurance, as stated below, to protect CITY and PERMITTEE. Where specific limits are stated, the limits are the minimum acceptable limits. If PERMITTEE's insurance policy contains higher limits, CITY is entitled to coverage to the extent of the higher limits. A. Commercial General Liability insurance, including premises, all operations, property damage, personal injury and death, broad -form contractual, with a per - occurrence limit of not less than $1,000,000 combined single limit. The policy must name the CITY as an additional insured. B. Worker's compensation insurance with coverage for all employees engaged in work under this Agreement or at the Premises as required by AS 23.30.045. Permittee is further responsible to provide worker's compensation insurance for any subcontractor who directly or indirectly provides services to PERMITTEE under this Agreement. C. All insurance required must meet the following additional requirements: i. All policies will be by a company/corporation currently rated "A-" or better by A.M. Best. ii. PERMITTEE shall submit to the CITY proof of continuous insurance coverage in the form of insurance policies, certificates, endorsements, or a combination thereof, and signed by a person authorized by the insurer to bind coverage on its behalf. Challenger Learning Center Special Use Permit Page 2 of 6 iii. PERMITTEE shall request a waiver of subrogation against CITY from PERMITTEE's insurer and the waiver of subrogation, where possible, shall be provided at no cost to CITY. iv. Provide the CITY with notification at least thirty (30) days before any termination, cancellation, or material change in insurance coverage of any policy required hereunder. V. Evidence of insurance coverage must be submitted to CITY by June 1, 2026. The effective date of the insurance shall be no later than June 1, 2026. 11. GENERAL TERMS AND CONDITIONS OF USE AND OPERATION A. PERMITTEE may not assign or sublet the Premises. B. PERMITTEE agrees that at all times PERMITTEE will conduct activities with full regard to public safety, and will observe and abide by all applicable regulations and requests by duly authorized agencies responsible for public safety. C. PERMITTEE will comply with all laws of the United States and State of Alaska; all municipal ordinances; and all lawful orders of the police and fire departments, or other municipal authorities; and will obtain, and pay for all necessary permits and licenses and will not do, nor allow to be done, anything on said premises during the term of this Agreement in violation of any such laws, ordinances, rules or orders. D. PERMITTEE shall not admit to said premises a larger number of persons than can safely and freely move about in said premises; and the decision of CITY in this respect shall be final. It is further understood and agreed that PERMITTEE will permit will keep all passageways and fire exits clear at all times; and that the sidewalks, grounds, entries, passages, vestibules, halls abutting streets, and all ways of access to public utilities of said premises, shall not be obstructed by PERMITTEE or used for any purpose other than for ingress to and egress from demised premises. E. PERMITTEE shall not injure, nor in any manner deface said premises; and shall not permit anything to be done whereby said building or premises shall be in any manner injured or marred, or defaced, nor shall PERMITTEE drive, nor permit to be driven, any nails, hooks, tacks, or screws, in any part of the building, nor shall PERMITTEE make, or allow to be made, any alteration of any kind therein. That if said premises, or any portion of said building or grounds, during the term of this lease, shall be damaged by the act, default, or negligence of PERMITTEE or by PERMITTEE'S agents, employees, guests, invitees, or any person, or persons admitted to said premises by said PERMITTEE, the PERMITTEE will pay CITY upon demand such sum as shall be necessary to restore said premises to their original condition. Challenger Learning Center Special Use Permit Page 3 of 6 F. CITY does not relinquish and does hereby retain the right to enforce all necessary laws rules, and regulations, for the management and operations of said premises. CITY retains the right to enter the demised premises at any time and on any occasion, without any restrictions whatsoever. G. CITY reserves the right to eject, or cause to be ejected, from the premises any disorderly person; and neither CITY nor any of its officers, agents, or employees, shall be liable to PERMITTEE for any damages that may be sustained by and through the exercise of such right. H. PERMITTEE will not allow beer, wine, liquor, or alcoholic beverages of any kind to be sold or consumed upon said premises without the express written consent of CITY. Should the City agree to allow the sale of alcoholic beverages on the premises, a vendor licensed by the Alaska Alcoholic Beverage Control Board must dispense any and all alcohol beverages on the premises. The vendor must have, during PERMITTEE'S occupancy of said premises, policies of general liability and liquor liability. Said policy must be from a reliable insurance company authorized to transact business in the State of Alaska and subject to suit in Alaska. The City shall be named as an additional insured on said policy with a waiver of subrogation endorsement. Coverage shall be in the amount of $500,000 for bodily injury, death or property damage resulting from one occurrence. PERMITTEE agrees to furnish and place on file with CITY, a copy of said policy or a certificate that a policy of insurance has been issued, at the time of execution of this Agreement. The policy is subject to approval by CITY. 12. NO DISCRIMINATION. Permittee will not discriminate on the grounds of race, color, religion, national origin, ancestry, age, or sex against any patron, employee, applicant for employment, or other person or group of persons in any manner prohibited by federal or State law. Permittee recognizes the right of the City to take any action necessary to enforce this requirement. 13. CONTACT INFORMATION. The contact information for Permittee, and the person in responsible charge for Permittee during the term of the Permit, for purposes of notice and all communications from City to Permittee is: Challenger Learning Center Special Use Permit Page 4 of 6 The contact information for City for purposes of notice and all communications from Permittee to City is: Terry Eubank 210 Fidalgo Avenue Kenai, Alaska 99611 Telephone: (907) 283-8261 15. RIGHTS OR REMEDIES. No right or remedy herein conferred upon or reserved to each respective party is intended to be exclusive of any other right or remedy. Each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, or now or hereafter existing at law or in equity. 16. GOVERNING LAW; VENUE. The laws of State of Alaska will determine the interpretation of this Agreement and the performance thereof. Any lawsuit brought thereon shall be filed in the Third Judicial District at Kenai, Alaska. 17. AUTHORITY. By signing this Permit, Permittee represents that it has read this agreement and it agrees to be bound by the terms and conditions herein and that the person signing this Permit is authorized to bind Permittee. CITY OF KENAI CITY By: Terry Eubank City Manager STATE OF ALASKA ) THIRD JUDICIAL DISTRICT Date PENINSULA OILERS BASEBALL CLUB PERMITTEE Michael Tice Board President ACKNOWLEDGMENTS ss Date THIS IS TO CERTIFY that on this day of , 2026, the foregoing instrument was acknowledged before me by TERRY EUBANK, City Manager of the City of Kenai, Alaska, an Alaska home rule municipality, on behalf of the City. Notary Public for Alaska My Commission Expires: Challenger Learning Center Special Use Permit Page 5 of 6 STATE OF ALASKA ) ss THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this day of , 2026, the foregoing instrument was acknowledged before me by Michael Tice, of PENINSULA OILER BASEBALL CLUB, a non-profit organization, on behalf of the organization. Notary Public for Alaska My Commission Expires: Challenger Learning Center Special Use Permit Page 6 of 6 L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Council Members FROM: Terry Eubank, City Manager DATE: February 9, 2026 SUBJECT: Action/Approval - Kenai Peninsula Economic Development District Strategic Asset Partner Designation (Pipeline to Pipeline Initiative) The Kenai Peninsula Economic Development District's (KPEDD) has asked the City of Kenai to consider being formally identified as a Strategic Asset Partner in KPEDD's Pipeline to Pipeline (P2P) initiative. This designation would support KPEDD's application for a federal Economic Development Administration (EDA) Public Works and Economic Adjustment Assistance (PWEAA) grant. The Pipeline to Pipeline (P2P) initiative is a regional workforce development effort intended to address a documented decline in the Kenai Peninsula's working -age population while preparing residents for potential large industrial projects, including the Alaska LNG project. The initiative proposes a coordinated public —private —education partnership, including KPEDD, the Alaska Vocational Technical Center (AVTEC), Kenai Peninsula Borough School District (KPBSD), Kenai Peninsula College (KPC), and participating industry partners. As part of its planning, KPEDD has identified the City's Alaska Fire Training Center and/or the former Challenger Learning Center as possible locations that could support an AVTEC-led Instructional Service Center. Any such use would depend on the grant being awarded and on future agreements that would be brought to Council for consideration. KPEDD's request for Strategic Asset Partner designation is intended to demonstrate regional cooperation and awareness of available community assets in KPEDD's grant application. This designation does not commit the City to using City -owned facilities, authorize a lease or transfer of property, or require the City to provide matching funds for any grant. Any future proposal involving City facilities, funding, or operations would require separate review and approval by the City Council. At this stage, the designation would allow KPEDD to identify the City as a collaborative partner while discussions continue about feasibility, consistency with City priorities, and long-term impacts. The City's recent community survey identified workforce development and economic diversification as community priorities. Participation at this level allows the City to stay informed and engaged in regional planning efforts while maintaining full discretion over future decisions related to City assets. If the Council approves the designation, City Administration will continue participating in informational discussions with KPEDD and its partners and will return to the City Council for direction and approval before any commitment involving City facilities, leases, or grant participation. Suggested Motion: Move to identify the City of Kenai as a Strategic Asset Partner in Kenai Peninsula Economic Development District's (KPEDD) Pipeline to Pipeline (P2P) initiative and support KPEDD's application for a federal Economic Development Administration (EDA) Public Works and Economic Adjustment Assistance (PWEAA) grant. Thank you for your consideration. Page 2 of 2 (Cj- The City of Kenai I www.kenai.city City of Kenai Terry Eubank, City Manager 210 Fidalgo Ave. Kenai, Ak 99611 January 29, 2026 Dear Terry, As we finalize our strategy for the upcoming EDA Public Works and Economic Adjustment Assistance (PWEAA) grant application, I am writing to invite the City of Kenai to consider a formal commitment as our Strategic Asset Partner. The Pipeline to Pipeline (P2P) initiative is designed to address the Peninsula's 5% decline in the working -age population by creating a direct conduit to the 10,000+ jobs projected by the Alaska LNG project and other Anchor Industry Partners, as well as the thousands of indirect jobs that are anticipated. To meet the aggressive operational timeline required by these projects, we are requesting the City's consideration in committing existing municipal assets —specifically the Fire Training Center and the former Challenger Center —to serve as the primary infrastructure for an AVTEC-led Instructional Service Center, contingent upon the successful securing of EDA funding. This initiative is a direct response to the recent community survey conducted by the City of Kenai, in which residents identified economic and workforce development as high priorities for the community. The initiative also aligns with the City Council's goal of using survey results to help inform budget decisions and community priorities, including economic development and quality of life. By utilizing these available facilities, the City of Kenai eliminates the multi -year delays of greenfield construction to meet the peak industrial hiring window, effectively anchoring a "braided" talent pipeline —integrating KPBSD, KPC, and Anchor Industry Partners —directly within the community to ensure regional economic benefits remain local. Furthermore, this partnership shifts the ongoing cost burden of maintaining these municipal assets away from the City through a long-term lease structure. Importantly, utilizing the former Challenger Center for this initiative directly aligns with the deed requirements of the parcel, which mandate that the property be used for educational purposes. Beyond the operational benefits, this partnership presents a significant capital improvement opportunity for the City. By including the renovation of these facilities in our EDA application, we are seeking federal investment to modernize and retrofit the buildings to meet high-level vocational standards. This allows the City to achieve substantial upgrades to its property — improving HVAC, electrical, and instructional systems —at no capital cost to the municipal taxpayer, while the difference between a nominal lease rate and the fair market value serves as Economic Development District (EDD) Alaska Regional Development Organization (ARDOR) The U.S. Department of Commerce, Economic The State of Alaska Department of Commerce, E D A Development Administration (EDA) Recognized Community and Economic Development certified KPEDD as an EDD in 1988 ARDOR KPEDD as an ARDOR in 1989 a powerful "in -kind" local match to secure the federal funds. This partnership would be the cornerstone of our "Alaskans First" strategy, signaling to federal and industry partners that Kenai is ready to lead the state's workforce evolution. I would welcome the opportunity to present this proposal to you in more detail and discuss how we can formalize this consideration for our grant submission. Thank you for your time, and all you do for the City of Kenai, and your continued dedication to our region's growth Respectfully, -4441 Cassidi Cameron, Executive Director Kenai Peninsula Economic Development District Economic Development District (EDD) Alaska Regional Development Organization (ARDOR) The U.S. Department of Commerce, Economic The State of Alaska Department of Commerce, E D A Development Administration (EDA) Recognized Community and Economic Development certified KPEDD as an EDD in 1988 ARDOR KPEDD as an ARDOR in 1989 Economic Development District (EDD) Alaska Regional Development Organization (ARDOR) The U.S. Department of Commerce, Economic The State of Alaska Department of Commerce, E D A Development Administration (EDA) Recognized Community and Economic Development certified KPEDD as an EDD in 1988 ARDOR KPEDD as an ARDOR in 1989 Pipeline to Pipeline P2P: Building a Talent Pipeline on the Kenai Peninsula A KPEDD WORKFORCE DEVELOPMENT STRATEGIC INVESTMENT PROPOSAL The Pipeline to Pipeline (P2P) initiative is a strategic public -private -education partnership designed to bridge the gap between a contracting local labor force and an unprecedented surge in industrial demand on the Kenai Peninsula. Cassidi Cameron Executive Director Pipeline to Pipeline P2P: Building a Talent Pipeline on the Kenai Peninsula PIPELINE TO PIPELINE P2P: A STRATEGIC WORKFORCE INVESTMENT I. Executive Summary The State of Alaska and the Kenai Peninsula are on the verge of a major economic shift driven by multi -billion -dollar infrastructure projects, including the Alaska LNG project. To support these initiatives and the "Alaskans First" hiring commitment, this proposal establishes a cooperative Strategic Public -Private -Education Partnership. The primary objective is to rapidly expand the Alaska Vocational Technical Center (AVTEC) by establishing a new Instructional Service Center in Kenai, utilizing existing City of Kenai - owned assets. This infrastructure investment is designed to bridge the demographic gap and ensure a stable, skilled labor poolforAnchor Industry Partners, the Kenai Peninsula Borough, and the state of Alaska. II. The Economic Imperative & Special Need The Kenai Peninsula faces a critical tension: an unprecedented surge in industrial demand coinciding with a marked contraction in the local labor force. This creates a documented "Special Need" for federal investment to prevent severe economic leakage and stabilize a shrinking workforce. The timing of this initiative is ideal, as there is an imminent surge in demand associated with the Alaska LNG project, including both Phase I and Phase II construction, as well as post -construction operations. During construction, there is a potential of up to 10,000 jobs during design and construction, with thousands more in indirect employment. Over the last decade, the Kenai Peninsula Borough has seen an approximate 5% decline in its working -age population, with an impending wave of potential retirements in the next five to seven years based on demographics. Through local training initiatives like Pipeline to Pipeline and Anchor Industry Partners (AIP), and through local stakeholder engagement, our economy prevents economic leakage by keeping project and industry payroll circulating within the region rather than diverting it elsewhere. Additionally, the KPB faces a challenge: the number of residents reaching retirement age (60+) nearly equals or exceeds the number of young adults entering the workforce, contributing to a Long-term contraction of the available labor pool. Pipeline to Pipeline P2P: Building a Talent Pipeline on the Kenai Peninsula III. The Solution: A "Braided" Talent Pipeline The centerpiece of this workforce strategy is a "braided" talent pipeline that integrates K-12 education, vocational training, and industry expertise to create a seamless path toward employment. Training and Educational Partners: KPBSD Career & Technical Education (CTE) functions as the "feeder system," recognizing talent early and offering dual -enrollment options. AVTEC (Alaska Vocational Technical Center) acts as the "finishing school," delivering accredited technical training and hosting industry professionals. Kenai Peninsula College (KPC), as a key partner, offers the academic pathway and advanced degrees, enabling vocational certifications to progress into management and engineering roles, thereby strengthening regional leadership talent. The success of the Pipeline -to -Pipeline initiative is anchored by the strategic participation of Anchor Industry Partners, whose involvement transforms the regional training model into a high-powered recruitment engine. An Anchor Industry Partner is a strategic stakeholder —comprising a major private sector employer, organized labor union, or industry trade association —that formallyjoins the Strategic Public -Private -Education Partnership. These partners serve as the primary drivers of the workforce pipeline, committing resources and expertise to ensure training programs directly meet the "Critical Trade Needs" of the regional economy. Through an innovative Industry Instructor Sabbatical (IIS) Framework, these partners provide the essential human capital required to bridge the gap between classroom theory and industrial application by sending expert employees to serve as faculty for one to two years. This collaborative exchange ensures that the curriculum remains closely aligned with evolving technical standards while allowing industry experts to function as "talent scouts," identifying and vetting top - performing students long before they enter the job market. By committing to this framework and the "Alaskans First" hiring pledge, these anchor partners not only secure a stable, pre -vetted labor pool for their own multi -billion -dollar projects but also play a decisive role in mitigating economic leakage and fostering long-term resilience on the Kenai Peninsula. Process, action, and methods: Through formal articulation agreements, Kenai Peninsula Borough School District (KPBSD) Career and Technical Education (CTE) credits will transfer directly toward AVTEC certifications, significantly accelerating a student's entry into the local workforce. This educational foundation is bolstered by the collaboration with KPC to provide advanced degree pathways and the innovative Industry Instructor Sabbatical (IIS) Framework. The IIS Framework addresses the acute shortage of vocational trainers by allowing expert employees to take a one -to -two-year sabbatical to teach at the new Kenai campus, ensuring that the curriculum remains closely aligned with modern industrial standards K Pipeline to Pipeline P2P: Building a Talent Pipeline on the Kenai Peninsula while providing students with pre -vetted pathways to careers with Anchor industry Partners. IV. Comprehensive Funding Strategy To achieve operational readiness that keeps pace with the region's industrial trajectory, the project leverages a blended capital stack that combines federal grants, private -sector commitments, and municipal assets. This collaborative funding model is essential to address the urgent pressure created by multi -billion -dollar infrastructure developments, such as the Alaska LNG project, which are projected to require a skilled labor force of 7,000 to over 12,000 workers. By repurposing existing public infrastructure, such as the Fire Training and Challenger Centers, the partnership minimizes traditional construction delays and ensures that local training capacity scales rapidly to meet these looming demands. This initiative -taking investment serves as a critical economic safeguard, ensuring that the massive labor needs of the energy and construction sectors are met by a qualified local population rather than outsourced to transient workers, thereby anchoring wealth and Long-term stability within the Kenai Peninsula. 1. Federal Catalyst: EDA Public Works & Economic Adjustment Assistance (PWEAA) By aligning directly with the EDA's "Workforce" Investment Priority and qualifying under "Special Need" criteria, this project provides primary funding for the retrofitting and equipping of the Instructional Service Center alongside strategic program implementation. This investment supports industry -driven sector partnerships that build essential resilience to future sudden and severe economic dislocations while ensuring the local labor force is prepared for the region's massive industrial expansion. 1. Private Sector: Anchor Industry Capital Anchor Industry Partners provide immediate funding for the anchor capital required to launch the facility. This private sector investment performs a vital strategic function by serving as the committed "Local Share" or matching funds necessary to secure federal grant applications. 2. Municipal Partner: Strategic Infrastructure Host By capitalizing on existing municipal assets —specifically the Fire Training Center and the former Challenger Center of Alaska —the City of Kenai serves as the strategic infrastructure host for the project. This approach significantly reduces startup time by eliminating the need for greenfield construction, ensuring the 3 Pipeline to Pipeline P2P: Building a Talent Pipeline on the Kenai Peninsula partnership can meet aggressive operational timelines while anchoring the project within the community. 3. Operational Sustainability: The Partnership Fund To address the prohibitive pay gap between public -sector educator salaries and private -sector rates, a dedicated "Compensation Bridging" fund, supported by industry contributions, will supplement AVTEC instructor salaries. This dedicated financial vehicle serves the strategic function of ensuring that industry experts serving as sabbatical instructors retain their private -sector compensation levels, effectively removing the primary financial barrier to recruitment. V. Strategic Value for Industry Partners Participating Anchor Industry Partners gain a strategic advantage in the race for skilled Labor as their sabbatical instructors function as "talent scouts" to identify top -performing students years before they enter the job market. This collaborative framework ensures that graduates are pre -vetted for technical roles through a curriculum aligned with industry standards. At the same time, the sabbatical program serves as a retention and succession - planning tool that shortens onboarding time and decreases onboarding costs. VI. Roles and Next Steps 1. KPEDD (Kenai Peninsula Economic Development District) As a Strategic Convener & Grant Administrator, KPEDD will move the initiative forward, and the partnership will prioritize securing anchor funding commitments from industry partners while leading the submission for EDA PWEAA funding, utilizing documented "Special Need" demographic data. Simultaneously, efforts will focus on formalizing the cooperative structure by drafting Letters of Commitment that bind partners to the "Alaskans First" hiring pledges and sabbatical participation. 2. AVTEC (Alaska Vocational Technical Center) As the "Finishing School and Standards Keeper" for the partnership, AVTEC provides the accredited, high-level technical training and manages the facility where the braiding of education and industry occurs. To advance this role, AVTEC will work closely with KPEDD and the City of Kenai to complete the Front -End Engineering and Design (FEED) requirements for the Fire Training and Challenger Centers while simultaneously developing the corporate framework contracts to govern the compensation and onboarding of industry instructors. M Pipeline to Pipeline P2P: Building a Talent Pipeline on the Kenai Peninsula 3. KPBSD Career & Technical Education (CTE) As the "Early Pipeline and Feeder System," the Kenai Peninsula Borough School District (KPBSD) Career and Technical Education (CTE) program identifies talent early and reduces time -to -certification for students. To advance this initiative, the district will finalize articulation agreements to formally document credit transfers to AVTEC certifications while simultaneously scouting high -potential students for "internship -to -hire" pathways that begin before graduation. 4. Kenai Peninsula College (KPC) Kenai Peninsula College (KPC) serves as a vital academic catalyst within the "Pipeline to Pipeline" initiative, providing the advanced degree pathways and academic bridges necessary to transition technical certifications into management and engineering tracks. By coordinating credit -transfer pathways from AVTEC to KPC's Associate and Bachelor programs, KPC ensures that the workforce is not only technically proficient but also equipped for long-term career growth and leadership roles within the region. This collaboration strengthens the "braided" talent pipeline by offering students a comprehensive educational ladder that anchors talent on the Peninsula and directly addresses the risk of "knowledge and experience leakage" as the current workforce nears retirement. In summary, the Pipeline to Pipeline (P2P) initiative represents a vital resilience measure for the Kenai Peninsula's economic future. By repurposing existing public infrastructure and "braiding" the efforts of KPBSD, AVTEC, KPC, and Anchor Industry Partners, we can transform an impending labor shortage into a long-term engine for local wealth. This project ensures that industrial expansion translates into stable, long-term employment for residents, preventing "boom -and -bust" volatility and securing a prosperous future for the next generation of the Alaskan workforce. t: L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Council Members FROM: Terry Eubank, City Manager DATE: February 9, 2026 SUBJECT: Discussion/Action - Request for Council Direction to Prepare Legislation to Determine a Portion of City Owned Land - Tract A, Woodland Subdivision Part 4 is No Longer Needed for a Public Purpose. City Council is asked to consider directing the administration to prepare legislation for determining a portion of City owned land — Tract A, Woodland Subdivision Part 4 is no longer needed for a public purpose in order for an application for a non-competitive land sale be considered. On January 14, 2026, the City received an application from an adjacent property owner requesting to purchase a small portion of City -owned land through the non-competitive land sale process outlined in Kenai Municipal Code. The area requested is approximately 2,700 square feet and is located near Redoubt Avenue and Sycamore Street in the Woodland Subdivision. The exact size would be determined by survey if the process proceeds. The request to purchase was made after City staff confirmed that an existing fence in disrepair, installed prior to the applicant's purchase of the property, extends onto City -owned land. City staff advised the applicant that any repair or replacement of the fence would need to be coordinated with the City because it is located on City property. The City acquired Tract A, Woodland Subdivision Part 4 through foreclosure in 1982. In 1983, City Council adopted an ordinance designating this tract for public purposes related to parks and recreation. Because of this designation, the land is not currently eligible for sale unless City Council first determines that the property, or a portion of it, is no longer needed for a public purpose. After review by City staff and consultation with the City Attorney, it was determined that City Council consideration is needed before the application can proceed further. For this reason, the item was removed from the Planning and Zoning Commission agenda and brought directly to City Council. At this stage, Council is not being asked to approve a land sale or determine that the property is no longer needed for a public purpose. The question before Council is limited to whether the City should consider moving forward with requesting removal of the public purpose designation to allow for consideration of an application for a non-competitive land sale. In considering whether to proceed, the Administration notes two policy considerations under Kenai Municipal Code. First, the Administration has concerns whether the application qualifies for the non-competitive sale provision of KMC 22.05.100. The request does not involve encouragement of a new commercial or industrial enterprise, nor a conveyance to another governmental or nonprofit entity. While noncompetitive sales to adjacent owners are allowed when a parcel is of such small size, shape, or location that it could not be put to practical use by any other party, the City -owned tract in question is not currently a small or unusable parcel, although the application proposes subdivision of the larger parcel prior to conveyance. Subdivision and sale in this case may create a future precedent that the City should subdivide large tracts of land to create small tracts only usable by adjacent landowners. Additionally, while the request arose from the presence of an encroaching fence, the situation does not constitute a land use conflict requiring conveyance to resolve competing or incompatible uses. For these reasons, the Administration has concerns that the request does not clearly meet the criteria or intent of the noncompetitive sale provisions of City Code. Second, Kenai Municipal Code 22.05.100(c) provides that the cost of an appraisal shall be credited to the purchaser at closing. The Administration does not recommend crediting appraisal costs toward the purchase price, which is a provision typically used for City -owned leased land with an option to purchase once development is completed on the property. If the sale of a portion of this property were approved to move forward, City participation in subdivision -related costs or crediting appraisal costs to the purchaser would not be in the best interests of the City. The Administration recommends that the applicant be responsible for all costs, including subdivision and appraisal, if the process proceeds. The portion of land requested is zoned Suburban Residential, consistent with surrounding properties. It is located on an upland area adjacent to a ravine and along Redoubt Avenue, which is not currently extended. Due to its size, location, and access limitations, the area may have limited independent use. The Administration does not recommend removing the public purpose designation and subsequent consideration of the application for a noncompetitive purchase. If Council would like to consider removal of the public purpose designation, the Administration will prepare the necessary legislation for this action which would be referred to the appropriate City commissions for review and recommendation, consistent with Kenai Municipal Code 22.05.100. Any future sale would require additional City Council approvals, including a determination by ordinance that the land is no longer needed for a public purpose and approval of subdivision, appraisal, and terms of sale. Council would also retain the option to consider alternatives to a sale, such as a lease, if determined to be in the City's best interest. In order to direct the Administration to prepare legislation to consider removing the public purpose designation, the following motion is suggested. Possible Motion: Move to direct the Administration to prepare the necessary legislation to determine that a 2,700- foot portion of Tract A, Woodland Subdivision Part 4 is no longer needed for a public purpose to make such portion available for lease, sale, or disposal. Page 2 of 3 ( 0 C'J. The City of Kenai I www.kenai.city Thank you for your consideration. Page 3 of 3 . l The City of Kenai www.kenai.city viewKP B Aerial Map ti RE DOUBTAVE lk all" Yam; ., . JPW r' lar k t rr r oN �7 J UNIPER CT a r r �. adr �_fr' i d% -4w�i' :1 !W 1L1 .S Y9P 0 150 300 ft VOTE: Every reasonable effort has been made to ensure the accuracy of these data. However, by accepting this material, you agree that the Kenai Peninsula Borough assumes no liability of any kind arising from the use of this data. The lata are provided without warranty of any kind, either expressed or implied, including but not limited to time, money or goodwill arising from the use, operation or modification of the data. In using these data, you further agree to ndemnify, defend, and hold harmless Kenai Peninsula Borough for any and all liability of any nature arising from the lack of accuracy or correctness of the data, or use of the data. Legend Transportation Mileposts Parcels and PLSS Tax tercels LJ 1/21/2026 11:56:05 AM KENAI PLANNING & ZONING COMMISSION — REGULAR MEETING Page 84 JANUARY 28, 2026 — 7:00 P.M. KENAI CITY COUNCIL CHAMBERS 210 FIDALGO AVE., KENAI, AK 99611 CHAIR KEATON, PRESIDING MINUTES A. CALL TO ORDER A Regular Meeting of the Kenai Planning & Zoning Commission was held on January 28, 2026, in City Hall Council Chambers, Kenai, AK. Chair Keaton called the meeting to order at approximately 7:01 p.m. 1. Pledge of Allegiance Chair Keaton led those assembled in the Pledge of Allegiance. 2. Roll Call There were present: Sonja Earsley Alex Douthit, Vice Chair Stacie Krause A quorum was present. Absent: Marty Askin Also in attendance were: Kevin Buettner, Planning Director Sovala Kisena, City Council Liaison Logan Parks, Deputy City Clerk Gwen Woodard Jeanne Keaton, Chair Diane Fikes 3. Agenda and Consent Agenda Approval Chair Keaton noted the following additions to the Packet: Add to item 1.1. Conditional Use Permit Closures Update • PZ1999-12 • PZ2020-30 • PZ2022-21 MOTION: Commissioner Woodard MOVED to approve the agenda and consent agenda with the requested revisions. Commissioner Earsley SECONDED the motion. The following items were withdrawn at the request of the Administration: Item B.1 Approval of Minutes • January 14, 2026 Item H. 3 Action/Approval - Recommending to City Council Determining an Approximate 2,700 Square Foot Section of the Northwestern Corner of Tract A, Woodland Subdivision Part 4 is Not Needed for a Public Purpose. *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 Planning & Zoning Commission Page 1 of 3 January 28, 2026 Page 85 Commissioner 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. B. APPROVAL OF MINUTES - None. C. SCHEDULED PUBLIC COMMENTS - None. D. UNSCHEDULED PUBLIC COMMENTS - None. E. CONSIDERATION OF PLATS - None. F. PUBLIC HEARINGS - None. G. UNFINISHED BUSINESS - None. H. NEW BUSINESS 1. Action/Approval - Transfer of a Conditional Use Permit, PZ2019-01 for the Use of a Boarding House. MOTION: Commissioner Douthit MOVED to transfer Conditional Use Permit PZ2019-01. Commissioner Woodard SECONDED the motion. Director Buettner summarized the memo as included in the packet. UNANIMOUS CONSENT was requested on the motion. VOTE: There being no objection; SO ORDERED. TRANSFER APPROVED. 2. Action/Approval - Recommending Approval of Proposed Ordinance to City Council Determining Four City -Owned Properties known as Lots 1, 2, 3, and 4, Beaver Loop Acres Addition No. 3 are Not Needed for a Public Purpose. MOTION: Commissioner Douthit MOVED to recommend City Council approval of the proposed ordinance. Commissioner Woodard SECONDED the motion. Director Buettner summarized the memo as included in the packet. Clarification was provided that operational standards would be established in the Conditional Use Permit process; DNR review was not required for sale; the process used to calculate the minimum bid; and sale was recommended due to the City's limited availability to verify extracted quantities. UNANIMOUS CONSENT was requested on the motion. VOTE: There being no objection; SO ORDERED. RECOMMENDATION APPROVED. I. REPORTS 1. Planning Director Planning Director Buettner reported on the following: • Three Conditional Use Permits have been closed pursuant to provisions in City code. • Provided clarification to the Commission on Conditional Use Permit record retention. Planning & Zoning Commission Page 2 of 3 January 28, 2026 Page 86 • Subdivision regulation, temporary dwelling regulations, and the Conditional Use Permit process and land use table updates. • Scheduling a Work Session for February 25, 2026. 2. Commission Chair - No report. 3. Kenai Peninsula Borough Planning Commissioner Fikes reported on recent actions of the Kenia Peninsula Borough Planning Commission. 4. City Council Liaison Council Member Kisena reported on recent actions of the City Council, Work Sessions, and city projects, including airport runway rehabilitation and building a playground. J. ADDITIONAL PUBLIC COMMENTS Marion Nelson referenced historic planning of the playground and encouraged Commission Members to build on the prior plans. K. NEXT MEETING ATTENDANCE NOTIFICATION 1. Next Meeting: February 11, 2026 L. COMMISSION COMMENTS AND QUESTIONS Commissioners thanked staff for their work and the public for attending and participating in Planning & Zoning meetings. M. PENDING ITEMS - None. N. ADJOURNMENT O. INFORMATIONAL ITEMS - None. There being no further business before the Planning & Zoning Commission, the meeting was adjourned at approximately 7:50 p.m. I certify the above represents accurate minutes of the Kenai City Council meeting of January 28, 2026. Logan Parks, Deputy City Clerk Planning & Zoning Commission Page 3 of 3 January 28, 2026 11 r ' 4311, � .4 K - � y - L • � 'L ' --;{. �� ,fin _ .r+R +� {4 Pw� JT•+�y • . Y r _ A •r . J ILove wCenai.com to learn how we lire, ■ c and pI ay area r-round! Fi n d out why we th ink jai is the best place to Alaska. � lie) REMI L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Henry Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Mary Bondurant, Interim Airport Manager DATE: February 10, 2026 SUBJECT: Airport Mid -month Report January 2026 FY2025 Airport Capital Improvement Protects • Runway Rehabilitation Project Construction to start Spring of 2026. Pre -construction meeting was held on Friday, January 16, 2026. • Apron crack sealing, marking, and sealcoat Construction to start Spring of 2026. Pre -construction meeting was held on Wednesday, January 14, 2026. • Acquire SRE (Loader & Plow Truck with Sander) Update: the CAT 980 loader has been delivered with all of the attachments and the plow truck and sander now has a delivery date of April 2026. • Airport Master Plan — Phase 1 These proposed alternatives will be introduced at the February 1211, Airport Commission meeting and on February 19' at a public meeting held in Council Chambers. • ARFF Building Rehabilitation — Boiler Replacement A contract for additional work to put overrides in for the overhead heaters in the OPS Bay was issued on February 9, 2026. In-house Activities Snow and Ice control operations continue on the airfield. The only interruptions to air service have been created by Mother Nature not the Operations staff. They have been doing a good job of keeping the runway safe for operations. Page 2 of 2 Airport Mid -Month Report • Airport staff is reviewing the FY26 budget and building the FY27 budget which is due February 13, 2026. A Runway Safety Action Plan meeting has been scheduled for April 21, 2026 in City Council chambers at 10:30 a.m. This meeting is being handled by Carey Adcock, Air Traffic Control Tower Manager. More information will become available. • Airport received good news from Crowley Fuel that they will be replacing the 24-hour self -fueling credit card system at their facility. Page 2 of 2 The City of Kenai I www.kenai.city City of Kenai - Animal Control 1 510 N. Willow St, Kenai, AK 99611 1 907.283.7353 1 www.6nai.city MEMORANDUM TO: Mayor Henry Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager THROUGH: Dave Ross, Police Chief FROM: Ian Braman, Animal Control Chief DATE: February 1st, 2026 SUBJECT: January 2026 Monthly Report This month the Kenai Animal Shelter took in 31 animals. DOGS: INTAKE 16 DISPOSITION 11 Waiver 4 Adopted 3 Stray 7 Euthanized 1 Impound 3 Claimed 6 Protective Custody 2 Field Release 0 Quarantine 0 Transferred 1 CATS: INTAKE 14 DISPOSITION 14 Waiver 6 Adopted 13 Stray 0 Euthanized 0 Impound 0 Claimed 0 Protective Custody 0 Field Release 0 Quarantine 0 Transferred 1 Transferred in 8 OTHER ANIMALS: INTAKE DISPOSITION Rabbit 1 Rabbit 1 DOA: OTHER STATISTICS: Dog 0 Licenses (City of Kenai Dog Licenses) 26 Cat 0 Rabies Clinic 0 Rabbit 0 Bird 0 3 Animals dropped with After Hours (days we are closed but cleaning and with KPD) 17 Field Investigations & patrols 3 Pet Food Bank Request 0 Volunteer Hours Logged 0 Citations 0 Educational Outreach 12 Microchips Total Animal Contacts: 8 Animals are known borough animals 10 Animals are known City of Kenai 4 Animals are known City of Soldotna 9 Animals are unknown location Statistical Data: 45 2024 YTD Intakes 28 2025 YTD Intakes 31 2026 YTD Intakes Page 2 of 2 (Cj- The City of Kenai I www.kenai.city L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Dave Swarner, Finance Director DATE: February 5, 2026 SUBJECT: Finance Department Mid -Month Report — January 2026 The FY2025 audit was issued January 301h and the auditors are schedule to present to council on February 181" The department is preparing the FY2025 Popular Annual Financial Report (PAFR) and expect to complete it by the end of February. The focus of the department has shifted to the FY2027 budget preparation. Initial budget information was sent to the department heads on January 30th. There is much work to be done by all City departments over the next couple of months. The IT department updated the firmware on our phone system which enabled us to use new security features that were necessary to begin the migration of our email to the cloud. The transition is expected to be completed by the second week of February. L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Jay Teague, Fire Chief DATE: February 10, 2026 SUBJECT: Fire Department Mid -Month Report — January. For January, we experienced a call volume increase from the previous year. January 2025 2026 % change Month totals 137 148 +8% EMS 106 114 +7.5% All Other 31 34 +9% Year total 1481 N/A Training: • 250 total hours of training for month. • Chief Teague and Deputy Chief Coots attended EMS Law for Fire Service training in Juneau. • Paramedic Refresher will be hosted at Library February 9t"-13t" • FF Nelson completed apparatus operator requirements for Engine 2. • New Hires continue to progress through Probationary Task Books (Butler, Vigue, Johnston and Wadman) Projects/Grants/MISC: • Fire Marshal completed 14 commercial property fire inspections. • Chief Teague and Deputy Chief Coots attended Alaska Fire Chief's Association Leadership Summit in Juneau. • Probationary FF Lopez turned in resignation. We have already posted job for his replacement. A good list of candidates is already developing. • Notable calls in January included 3 residential structure fires, 2 commercial structure fires(Cannery & Uptown Motel), 2 significant motor vehicle accidents requiring extrication and multiple cold weather fatalities. L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Stephanie Randall, Human Resources Director DATE: February 6, 2026 SUBJECT: Human Resources Activity — January 2026 Recruitment Human Resources worked with multiple departments on various recruitment efforts. The recruitment for an Airport Manager is ongoing, with a review of applicants to take place in February. The Public Works Department recruited and hired two Utility Operators. The Police Department filled their open police officer position with a returning officer. The Fire Department started recruitment for a Firefighter and the Library recruited for a janitor. The Senior Center began recruiting for a part time driver position. Safety There were seven accidents reported during the month of January. All were related to the weather. One resulted in a minor injury Workers Compensation claim. All City Employees were assigned training in preventing slips, trips and falls as well as hazard communication and preventing harassment in the workplace. Special Projects Human Resources worked with our workers compensaition provider Alaska Public Risk Alliance (APRA) to move employee training from NeoGov to Vector Solutions. HR also worked with the Employee Appreciation Committee to help in planning the Employee Appreciation party. � Page 95 'KF.NAI City of Kenai 1210 Fidalgo Ave, Kenai, AK 99611-77941907.283.7535 I viww.kenai.city MEMORANDUM TO: Mayor Knackstedt and Council Members THROUGH: Terry Eubank, City Manager FROM: Katja Wolfe, Library Director DATE: February 5, 2026 SUBJECT: Library Report for January 2026 4680 Visitors S=a 389 Attendees 54 New Members 62 Programs Program Attendance 430 Computer Sessions Babies and Toddlers 160 4785 WiFi Sessions Children 180 Teens 10 137 Room Reservations Adults 22 269 Hours of Use Everyone 17 2024 2025 2026 ■ Physical Checkouts January ■ Digital Checkouts Januar 321 61 ■ Print DVD Digital ■ Other ■ Audio *Does not include in-house use. L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Tyler Best, Parks and Recreation Director DATE: February 10th,2026 SUBJECT: Mid -Month Report — January January began with significant snowfall, creating favorable conditions for skiing and other snow sports. Warmer temperatures and heavy rainfall later in the month made it difficult to maintain ski trails and the outdoor skating pond. A skating event scheduled for January was postponed due to weather and was rescheduled for February 13 (see attached flyer). No ski events were impacted. The Multi -Purpose Facility (MPF) saw heavy use during the Peninsula Winter Games hockey tournament, which hosted more than 50 teams. The facility was fully utilized from Thursday evening through Saturday evening, and it was secured overnight to protect tournament infrastructure. At the Kenai Rec Center, City League Basketball has kicked off. There are 8 teams in total, 2 more than last year. A third night of games has been added for the City league at the Rec. Parks is excited for the growing league. The numbers below reflect recorded sign -ins; however, these figures do not capture total visitation. Spectators, rental participants, companions, and event attendees are not consistently included. To better reflect overall use, door counter data has been added alongside sign -in info. The difference between sign -ins and door counter totals is nearly 2,000 visits. Kenai Recreation Center Visits — Month of December Weight Room/Cardio Room 1,231 Racquetball /Wall ball Court 301 Shower/Sauna 226 Gymnasium 1,553 Gym rental participants 251 Total Number of Sign -ins 3,562 Door Counter Log 55263 • KENAI City of Kenai Presents 0 •,,,� OPENFAMILY • .� SfUkTE 41 4MUSIC bSKATE RENTALS � (while supplies last!) J FRIDAY February If 1:00 PM - 4-000 PM Daubenspeck Family Park The City of Kenai I www.kenai.city L I000, City of Kenai MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Kevin Buettner, Planning Director DATE: February 10, 2026 SUBJECT: Planning and Zoning — January 2026 Monthly Report General Information Conditional Use Permit cleanup is the focal point of the department, going through each file and updating our master database to have a full grasp on the current state of each Conditional Use Permit. A new memo protocol has been put in place to more adequately record the closure of CUPs and files are all organized both digitally and paper. The Planning and Zoning Department still continues to be active in the City working group for both the Airport and Parks Master Plans, guiding development at the Kenai Municipal Airport and throughout the City into the future. The main update for lands has been the receipt of five land applications that Staff are diligently working through. Department Summary Lands & Leases: • Continued updating of P/W water and sewer map • Continued cleaning up Zoning map • Continued reviewing and itemizing of leases • Receipt of five land applications • Continued Airport Reserve Lease Lot Inspections • Discussed plats, easements and leases with various departments, surveyors and members of the public Planning & Zoning: • Reviewed/updated Parks & Airport Master Plan • Continued Meetings to discuss potential uses of Challenger Center & Fire Training Facility Meetings to discuss residential development in Kenai Reviewed Airport Master Plan to complete Phase 1 Conditional Use Permit annual compliance follow-ups and cleanup Planning and Zoning Commission One (2) public meeting and one (1) Work Session were held in the month of January with the following actions/recommendations: Resolution PZ2026-01 - Granting a Conditional Use Permit to Operate an Automotive Repair Business on the Parcel Described as Lot 23, Block 3, Redoubt Terrace Subdivision, Located at 1606 Salmo Circle, Within the Suburban Residential (RS) Zoning District. Action/Approval - Transfer of Conditional Use Permit, PZ2019-01 for the use of a Boarding House Action/Approval — Recommending Approval of Proposed Ordinance to City Council Determining Four City -Owned Properties known as Lots 1, 2, 3, and 4, Beaver Loop Acres Addition No. 3 are Not Needed for a Public Purpose Action/Approval — Recommending to City Council Determining an Approximate 2,700 Square Foot Section of the Northwestern Corner of Tract A, Woodland Subdivision Part 4 is Not Needed for a Public Purpose Work Session — Addressing Temporary Dwelling Units within the City Page 2 of 2 (Cj- The City of Kenai I www.kenai.city City of Kenai IL7'OV 000, MEMORANDUM K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city TO: Mayor Henry Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: David Ross, Police Chief DATE: February 9, 2026 SUBJECT: Police & Communications Department Activity — January 2026 Police handled 495 calls for service in January and 273 calls were received by dispatch via 911. Officers made 28 arrests. Traffic enforcement resulted in 189 traffic contacts with 30 traffic citations issued and there were 5 DUI arrests. There were 27 reported motor vehicle collisions. There were 8 collisions involving a moose or caribou, and no collisions involving drugs or alcohol. One Investigator attended a two -week long homicide class in Kentucky. All officers, along with some Soldotna Police Officers attended a Defensive Tactics training in Kenai. The dispatch supervisor attended a three-day training on the State's new public safety information software, in Anchorage. The police department had an officer vacancy that occurred in November of 2025 and in January of 2026 that same individual that left, after a change of plans, was rehired by the police department. That officer will start again in February, returning the Department to full staff. The School Resource Officer (SRO) taught multiple DARE classes at Mountain View Elementary and at Kaleidoscope Elementary. He assisted with an intruder drill at Kenai Alternative High School and Aurora Borealis Charter School. Page 100 Page 101 • I000, City of Kenai MEMORANDUM K I N 4 1 To Fidalgo Ave, Kenai, AK 99611-7794 1 907.283.7535 1 www.kenai.city TO: Mayor Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager FROM: Lee Frey, Public Works Director DATE: February 9, 2026 SUBJECT: Public Works Mid -month Report February 2026 Capital Projects currently in process: • Parks & Recreation Master Plan — Project ongoing • Emergency Services Facility Assessment — Completed, evaluating Challenger Center for Police/Fire use • KMA Apron Sealcoating and Crack Sealing — Contract awarded with work to occur next spring • Kenai Municipal Airport Runway Rehabilitation Project - Contract awarded with work to occur next spring • Kenai Municipal Airport Operations Building HVAC Controls Upgrade & Boiler Replacement Project — Project being closed out • Kenai Municipal Airport Master Plan Update — Phase 2 ongoing • USACE Kenai Bluff Bank Stabilization Project — Construction completed. Closeout ongoing • Wastewater Plant Digester Blowers Replacements — Reviewing submittals. Construction to start in spring. • Water Treatment Plant Pumphouse — Project currently out for bidding • Harbor Float Replacement — Construction ongoing • Aliak Storm Drain Repairs — Design completed. Will bid for work in spring of 2026 • Community Wildfire Protection — Phase 3 work ongoing • Street Condition Assessment — Draft report being reviewed • Street Light Assessment — Draft report being reviewed • Architectural Services — Design services ongoing Capital Projects in planning to be released: • Sewer Lift Station Upgrades • Cemetery Improvements Design • Flight Services RTU Replacement • Municipal Park Pavilion Replacement Page 2 of 2 Public Works Mid -Month Report Page 102 Other Projects/Services in development for ITB/RFP: • Fire Monitoring Services • Congregate Housing Care Taker • Banking Services • KFD Fire Foam Replacement We are excited to have our new Building Official, Chandra Mayeux on board and she is looking forward to implementing building permit software. Our Building Foreman has been working to fill several Custodian positions and we are looking forward to having Christopher Byrnes, Briana Skaggs and Jaime Savely join the City. The Streets crew continues snow clearing operations and dealing with the temperature fluctuations. The Shop continues working on outfitting new police vehicles and repairing issues as they arise. The Buildings crew continues working on regular maintenance of our facilities. The Utility Department worked with a contractor to repair a water main break on Skyler Lane near Redoubt Avenue. Pressure was maintained throughout the City after the break occurred. Water was required to be shut off to several homes during the repair. Seth Ballentyne and Bradley Deacon have accepted Utility Operator positions with the City and we look forward to them relocating to Kenai and starting in March. Page 103 City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 1 www.6nai.city MEMORANDUM TO: Mayor Henry Knackstedt and Kenai City Council THROUGH: Terry Eubank, City Manager THROUGH: Kathy Romain, Senior Center Director FROM: Astrea Piersee, Administrative Assistant III DATE: February 6, 2026 SUBJECT: January 2026 Monthly Report Number of individuals served in December: Home Delivered Meals 2328 Individuals 90 Dining Room (Congregate) Meals 867 Individuals 234 Transportation (1-way rides) 299 Individuals 24 Grocery Shopping Assistance 16/54 Writers Group 18 Caregiver Support Group 10 Widows/Widowers Grief Support Group 16 Growing Stronger Exercise 182 Tai Chi Class 31 TOPS Weight Loss Class 18 Bluegrass & Music Sessions 39 Card Games 55 Wii Bowling 5 Arts & Crafts 26 Volunteers Hours 346.75 Individuals 32 Total Event Sign -ins * 1424 Individuals * 217 Vintage Pointe Manor Vacancies 2 *(not including home meals clients) January strolled in at the Kenai Senior Center with a touch of high fashion as the monthly movie, Mrs. Harris Goes to Paris, delighted attendees. The month also included a no -host dinner at Louie's Restaurant —always a favorite —along with the popular monthly Waffle Friday. The Center welcomed a visit from PCHS of Alaska, where representatives provided brochures and answered questions about the services offered. The month wrapped up with the Annual Volunteer Appreciation Dinner. This well -attended event welcomed 94 guests who enjoyed a wonderful dinner, door prizes, and an awards presentation. The evening celebrated the many individuals who support the Center through volunteering in a Page 104 variety of ways, including this event's setup and takedown. Their help is truly appreciated an plays an important role in the success of our programs. Page 2of2 NOTICE OF PUBLIC HEARING FEBRUARY 18, 2026 CITY OF KENAI COUNCIL MEETING NOTICE IS HEREBY GIVEN the City Council of the City of Kenai will conduct a public hearing on the following Ordinance(s) and/or Resolution(s) on the above -noted meeting date: 1. Ordinance No. 3504-2026 - Accepting and Appropriating an Increase in the Title III Grant from the State of Alaska Department of Health, Division of Senior and Disabilities Services, for Nutrition, Transportation, and Support Services. (Administration) 2. Resolution No. 2026-12 - Authorizing the Use of the Fleet Replacement Fund for the Purchase of Two Ford Bronco SUVs Utilizing the State of Alaska Equipment Fleet Contract. (Administration) 3. Resolution No. 2026-13 - Amending the City's Schedule of Rates, Charges, and Fees to Add a Metered Pressed Septage Effluent Rate. (Administration) The public hearing will commence at 6:00 p.m., or as soon thereafter as business permits. All interested persons are invited to attend the meeting telephonically/virtually or in -person and participate in the public discussion. See the agenda for additional information. Written comments may be sent to the Kenai City Council, c/o Kenai City Clerk, 210 Fidalgo Avenue, Kenai, AK, 99611. Copies of the ordinances and/or resolutions are available in the Office of the Kenai City Clerk and will be available at the meeting for public review. Please be advised, subject to legal limitations, ordinances and/or resolutions may be amended by the Council prior to adoption without further public notice. ShVilie Saher, MMC, City Clerk Posted: February 13, 2026 XJ CITY OF KENAI , City Council K E N A I Notice of Meeting City Hall Council Chambers, 210 Fidalgo Ave, Kenai, AK The Kenai City Council will hold a regular meeting on February 18, 2026, beginning at 6:00 p.m. Visit the City Meeting web page for information regarding this meeting: httus://www.kenai.cityi The public is invited to attend and participate. Virtual and telephonic options for participation are available. Additional information is available through the City Clerk's Office or by visiting our website at Shellie Saner, MMC, City Clerk Publish: 02/13/2026 CERTIFICATE OF PUBLICATION & POSTING I, Shellie Saner, City Clerk of the City of Kenai, do hereby certify that on the 5th day of February 2026,1 electronically mailed or caused to be published the foregoing Notice of Meeting to the Peninsula Clarion and requested that this Notice be published in the February 13, 2026 edition of their newspaper. On the 13th day of February, 2026, the Notice of Public Hearing and full meeting agenda was poste}— at Kenai City Hall and on the Internet at ------ww kenai`city. e1ie Safer, MC, City Clerk /$ AID � ~ID \� >,§ cc CD �C�£;2 a . e G Q LLEa- b- m)� , EEE2�M0 \ �-CGE �§ aE k(L w�2 fID &gym G �)\ o#, >cc �0\ } <5 �aq= m b2 4) )m< o CL u 2 $M�-_� LL _- 6=B 0_$2222 E))\° (/\%fib{ =20�0 CD R§632/0 o°U.—:5 Qf7t�k2=_. cow 72t22 z m)2kk{�} Lij �2k0!P2 Q®C\j— 0- E. CITY OF KENAI NOTICE OF ORDINANCES AND RESOLUTIONS ADOPTED AT THE FEBRUARY 18, 2026 KENAI CITY COUNCIL REGULAR MEETING NOTICE IS HEREBY GIVEN the City of Kenai Council passed or took other actions as identified below on the following Ordinance(s) and/or Resolution(s) at the above -referenced meeting. PUBLIC HEARINGS 1. ENACTED WITHOUT OBJECTION. Ordinance No. 3504-2026 - Accepting and Appropriating an Increase in the Title III Grant from the State of Alaska Department of Health, Division of Senior and Disabilities Services, for Nutrition, Transportation, and Support Services. (Administration) 2. ADOPTED WITHOUT OBJECTION. Resolution No. 2026-12 - Authorizing the Use of the Fleet Replacement Fund for the Purchase of Two Ford Bronco SUVs Utilizing the State of Alaska Equipment Fleet Contract. (Administration) 3. ADOPTED WITHOUT OBJECTION. Resolution No. 2026-13 - Amending the City's Schedule of Rates, Charges, and Fees to Add a Metered Pressed Septage Effluent Rate. (Administration) L�bAn Perks, Deputy City Clerk Posted: February 19, 2026 City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 ( www.kenaixity MEMORANDUM TO: Mayor Knackstedt and Council Members FROM: Terry Eubank, City Manager DATE: February 9, 2026 SUBJECT: Action/Approval - Kenai Peninsula Economic Development District Strategic Asset Partner Designation (Pipeline to Pipeline Initiative) The Kenai Peninsula Economic Development District's (KPEDD) has asked the City of Kenai to consider being formally identified as a Strategic Asset Partner in KPEDD's Pipeline to Pipeline (P2P) initiative. This designation would support KPEDD's application for a federal Economic Development Administration (EDA) Public Works and Economic Adjustment Assistance (PWEAA) grant. The Pipeline to Pipeline (P2P) initiative is a regional workforce development effort intended to address a documented decline in the Kenai Peninsula's working -age population while preparing residents for potential large industrial projects, including the Alaska LNG project. The initiative proposes a coordinated public —private —education partnership, including KPEDD, the Alaska Vocational Technical Center (AVTEC), Kenai Peninsula Borough School District (KPBSD), Kenai Peninsula College (KPC), and participating industry partners. As part of its planning, KPEDD has identified the City's Alaska Fire Training Center and/or the former Challenger Learning Center as possible locations that could support an AVTEC-led Instructional Service Center. Any such use would depend on the grant being awarded and on future agreements that would be brought to Council for consideration. KPEDD's request for Strategic Asset Partner designation is intended to demonstrate regional cooperation and awareness of available community assets in KPEDD's grant application. This designation does not commit the City to using City -owned facilities, authorize a lease or transfer of property, or require the City to provide matching funds for any grant. Any future proposal involving City facilities, funding, or operations would require separate review and approval by the City Council. At this stage, the designation would allow KPEDD to identify the City as a collaborative partner while discussions continue about feasibility, consistency with City priorities, and long-term impacts. The City's recent community survey identified workforce development and economic diversification as community priorities. Participation at this level allows the City to stay informed APPROVED BY COUNCIL Data: `1- 1 t1� KI NAI City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 1 www.kenaixity IL #_, W;?-A1 k, 11111 y TO: Mayor Knackstedt and Council Members FROM: Terry Eubank, City Manager DATE: February 10, 2026 SUBJECT: Action/Approval - Peninsula Oilers Baseball Club Special Use Permit for use of the Challenger Leaning Center to temporarily house players and staff of opposing teams for the 2026 Alaska Baseball League season. It is recommended that the City Council approve a Special Use Permit (SUP) for the Peninsula Oilers Baseball Club (the Club) to utilize the dormitory facilities at the former Challenger Learning Center of Alaska, located at 9711 Kenai Spur Highway, to house players and staff from visiting teams during the 2026 summer baseball season. Pursuant to Kenai Municipal Code (KMC) 22.05.130, Special Use Permits, the City Council may authorize the City Manager to grant temporary use permits for City -owned real property for periods not to exceed one year, without appraisal or public auction, for uses compatible with the zoning of the property, and on terms and rental rates determined by the Council. The Peninsula Oilers will return to the Alaska Baseball League (ABL) for the 2026 season following a one-year hiatus taken to stabilize the organization's finances. As part of this restructuring, the Club sold its former Old Town Kenai building, which historically housed visiting teams in a 28-bed bunkhouse. This transition has left a gap in the league's required housing infrastructure for opposing teams. The former Challenger Learning Center, now owned by the City, was previously scheduled to house the players and staff of opposing teams prior to the facility's closure last fall. The building includes two large dormitories designed for overnight accommodations, each equipped with 19 bunks (38 total), along with associated lounge areas and restroom and shower facilities. The proposed $1,000 fee for use of the facility will help offset the incremental costs associated with this temporary use. The SUP would be valid for the 2026 summer season, June 1 through August 5. Use of the facility would be limited to Aurora Borealis Room, Girls' & Boys' Dormitories, Lounges, Restrooms, and Showers, and the Kitchen refrigerator and microwaves. The Club would be responsible for providing bedding and towels, as well as custodial services. This request represents a one-time, temporary use and does not constitute a long-term change in use of the facility. The City has a long-standing history of supporting the Peninsula Oilers, a non-profit organization, to promote baseball activities that enhance the community and benefit AF-rnoVED BY COUR M. L Date:.7 - 1(6- Z � KENAI ...enai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1 907.283.7535 1 wwwl<enai.city MEMORANDUM TO: City Council Members FROM: Henry Knackstedt, Mayor DATE: February 5, 2026 SUBJECT: Action/Approval - Council Confirmation of Mayoral Nominations of Maeve Spiegler to the Parks & Recreation Commission. A vacancy currently exists on the Parks & Recreation Commission; an application for a partial term has been received and is attached for consideration. Pursuant to Kenai Municipal Code 1.90.010 members are nominated by the Mayor and confirmed by the City Council. Council confirmation of the following appointment is requested: • Maeve Spiegler - Parks & Recreation Commission partial term ending on December 31, 2027. Your consideration is appreciated. APPROVED BY COUNCIL Date: 11 • I �) - Z(P KENAI City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-77941 907.283.7535 1 www.kenaixity MEMORANDUM TO: Mayor Knackstedt and Council Members FROM: Terry Eubank, City Manager DATE: February 9, 2026 SUBJECT: Discussion/Action - Request for Council Direction to Prepare Legislation to Determine a Portion of City Owned Land - Tract A, Woodland Subdivision Part 4 is No Longer Needed for a Public Purpose. City Council is asked to consider directing the administration to prepare legislation for determining a portion of City owned land — Tract A, Woodland Subdivision Part 4 is no longer needed for a public purpose in order for an application for a non-competitive land sale be considered. On January 14, 2026, the City received an application from an adjacent property owner requesting to purchase a small portion of City -owned land through the non-competitive land sale process outlined in Kenai Municipal Code. The area requested is approximately 2,700 square feet and is located near Redoubt Avenue and Sycamore Street in the Woodland Subdivision. The exact size would be determined by survey if the process proceeds. The request to purchase was made after City staff confirmed that an existing fence in disrepair, installed prior to the applicant's purchase of the property, extends onto City -owned land. City staff advised the applicant that any repair or replacement of the fence would need to be coordinated with the City because it is located on City property. The City acquired Tract A, Woodland Subdivision Part 4 through foreclosure in 1982. In 1983, City Council adopted an ordinance designating this tract for public purposes related to parks and recreation. Because of this designation, the land is not currently eligible for sale unless City Council first determines that the property, or a portion of it, is no longer needed for a public purpose. After review by City staff and consultation with the City Attorney, it was determined that City Council consideration is needed before the application can proceed further. For this reason, the item was removed from the Planning and Zoning Commission agenda and brought directly to City Council. At this stage, Council is not being asked to approve a land sale or determine that the property is no longer needed for a public purpose. The question before Council is limited to whether the City should consider moving forward with requesting removal of the public purpose designation to allow for consideration of an application for a non-competitive land sale. PREVIEWED BY COUNCIL/ NO ACTIM',� TAKEN Date'. 2 . I Q L(V I -0 -0 < 0 K m k k c \ m 0 0 m ■ F m ■ n a m m 0 z o. 0 7 m co ■ c � M m m 0 k c � 0 q c $ m 0 z 0 _ m = � k k k m > Cl)cn U q ■ m z -i R $_ > 0 r k m m z c z "U m V » 0 rn cp � r_ q U k p -4 c _ ¢ % I Project Homeless Connect 2026 In partnership with the Kenai Peninsula Homelessness Coalition and the Kenai Peninsula Project Homeless Connect Sub -committee. Our Goals Connect people to services efficiently effectively that would otherwise be dif.._�._ to access. • Build a more compassionate community. • Reduce stigma. • Provide annual data. Alaska In Alaska, a full-time worker must earn an hourly wage of $29.73 to afford the average Fair Market Rent (FMR) for a 2-bedroom rental apartment in the state ($1,546). To afford this rent, without paying more that 30% of income for housing, they must earn $61,835 annually. Someone working minimum wage ($13.00) would need to work 91 hours per week or 2.3 full-time jobs to afford a 2-bedroom apartment at FMR. Extremely low-income households are those whose incomes are at or below the federal poverty guideline Federal Poverty Guideline - Alaska • $19,950 single $27,050 family of 2 $41,250 family of 4 ***.NLIHC.org/National Low Income Housing Coalition 2026 Point in Time Count / PHC Point in Time Count — count of sheltered and unsheltered persons experiencing homelessness carried out on one night in the last 10 calendar days of January. According to HUD guidance, the PIT count should be completed using unduplicated counts or statistically reliable estimates of persons experiencing homelessness in both sheltered and unsheltered locations on a single night. 15th Annual PHC • 111 participants • Total number in households - 241 • 43 vendors • 183 volunteers • 55% of participants reported first time attending event. • 80% stated they would use a Cold Weather Emergency Shelter if available in community. • Number of pets provided services - 24 dogs & 12 cats 2026 PHC Data Gender 54% Female 45 % Male Slept Night Prior 34% Street/car/shelter 35% Friends/Family 22% Apartment/House Age 35 — 44 (29%) 55 — 64 (20%) How Long Homeless 41 % less than 1 year 43% 1 year or more Race 71% Caucasian 23% AK. Native / Indian Number of times Homeless in last 3 years 24% first time 31 % 2-3 times 27% 4 or more times Veteran Status 9% Disability 60% (67 people) Based on disclosure of disability — MH, Alcohol/Drug, Chronic, Developmental, Physical 2026 PHC Data Domestic Violence 55% 80% female/20 male Primary Reason for Homelessness Lack/loss of job (10%) Substance abuse (8%) Other (56%) Lack of money, house fire, death in family, disabled, cost/lack of housing availability Last Permanent Address 40% Soldotna 29% Kenai 9% Kasilof Sterling, Nikiski, Ninilchik, Clam Gulch, Anchor Point, Anchorage, WA, OR, Colorado, Montana What people need • Primary needs: food, money, transportation. employment, hou • Secondary needs: rental & utility assistance, gas vouchers, vehicle repair, basic hygiene items, medical & dental, winter gear, access to shower & laundry. Participant Exit Survey: • 99% stated the event was helpful to them. • 98% felt respected and supported. Participants & Households 350 300 250 200 150 100 50 0 m 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Participants # in Households Gender & Disabilities ,1 :, •1 O M 011 20 10 4 0 = W, =- 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 % Females % Males ■ % Disabilities Housing Status 50 45 r 35 30 25 20 15 10 o 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 III1 1 ,[, 2022 2023 2024 2025 2026 Friends/Family Emergency ■ Not Habitable Primary Reason for Homelessness EN 30 20 10 � I 0 I I � 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Loss of Job Domestic Violence ■ Other (lost income, eviction, divorce, death, etc.) 15 Year Data Comparison Year Participants Household 2012 62 169 2013 47 115 2014 60 167 2015 89 189 2016 123 213 2017 132 203 2018 119 320 2019 126 318 2020 148 316 2021 109 229 2022 68 122 2023 96 164 2024 140 203 2025 115 185 2026 111 241 a Male Disability Vendors 1st Time PHC 53% 47% 82% 20 100% 51% 49% 34% 25 92% 65% 35% 33% 25 91% 54% 46% 47% 27 80% 44% 56% 48% 24 68% 44% 56% 53% 33 54% 45% 55% 55% 30 68% 60% 40% 68% 31 56% 52% 48% 70% 35 67% 47% 53% 76% COVID 62% 42% 58% 45% 27 56% 55% 45% 73% 40 62% 50% 50% 67% 36 58% 52% 47% 75% 40 51% 54% 45% 60% 43 55% IW Thank you to our Sponsors'. /_\I:I Alaska Housing Finance Corp. Alaska Mental Health Trust Authority Ashley Blatchford Breath Free Coalition Bishop's Attic Cadre Feed Central Peninsula Hospital Change 4 the Kenai Christ Lutheran Church Church of Jesus Christ of Latter Day Saints City of Kenai City of Soldotna Cook Inlet Counseling Evenson Heritage Lodge Fred Meyer Guardian Home Depot Independent Living Center Jennifer Randleas Kaytlynn Malone Kenai Methodist Church Kenai Peninsula Interfaith Group Kenai Peninsula Food Bank Kenai Peninsula Foundation Kenai Peninsula Scent Work Club Kenai Public Health Kenai Rotary Club Kenaitze Indian Tribe Knights of Columbus Mary Armstrong Michelle McDonald Midnight Son Seventh-Day Adventist Church North Star United Methodist Church Our Lady of Perpetual Help Catholic Church Our Lady of the Angels Catholic Peninsula Community Health Services Project Homeless Connect Safeway — Kenai & Soldotna Save U More Soldotna Animal Hospital/Dr. Grady Austin Soldotna Regional Sports Complex Soldotna Rotary Club Soldotna United Methodist Church Spendard Builders Supply Thrivent Financial Walmart Thank you'. Cheri Smith: csmith@leeshoreak.org Kathy Gensel: kgensel(a-cpgh.org. CITY OF KENAI, ALASKA ANNUAL COMPREHENSIVE FINANCIAL REPORT Fiscal Year: July 1, 2024 -June 30, 2025 ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY OF KENAI, ALASKA Year Ended June 30, 2025 Brian G. Gabriel, Sr. Mayor Terry Eubank City Manager Prepared by Finance Department David Swarner Finance Director CITY OF KENAI, ALASKA ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2025 INTRODUCTION SECTION Table of Contents Letter of Transmittal Organization Chart List of Principal Officials FINANCIAL SECTION Auditor Report - Report of Independent Auditors Management's Discussion and Analysis Basic Financial Statements Government -wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds: Statement of Net Position Statement of Revenues, Expenses, and Changes in Net Position Statement of Cash Flows Fiduciary Funds: Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to Basic Financial Statements Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: General Fund Airport Special Revenue Fund Water and Sewer Special Revenue Fund Public Employees' Retirement System (PERS) - Pension Plan: Schedule of the City's Proportionate Share of the Net Pension Liability Schedule of the City's Contributions Public Employees' Retirement System (PERS) — OPEB ARHCT Plan: Schedule of the City's Proportionate Share of the Net OPEB Liability (Asset) Schedule of the City's Contributions Public Employees' Retirement System (PERS) — OPEB RMP Plan: Schedule of the City's Proportionate Share of the Net OPEB Liability (Asset) Schedule of the City's Contributions Public Employees' Retirement System (PERS) — OPEB ODD Plan: Schedule of the City's Proportionate Share of the Net OPEB Liability (Asset) Schedule of the City's Contributions i 1 4 5 7 11 20 22 24 26 28 30 31 32 33 34 35 37 65 70 72 74 74 76 76 77 77 78 78 Notes to Required Supplementary Information 79 CITY OF KENAI, ALASKA ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2025 Supplementary Information Other Governmental Funds Nonmajor Governmental Funds: Combining Balance Sheet 82 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 84 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual: Personal Use Fishery Special Revenue Fund 86 Cone Memorial Trust Special Revenue Fund 88 Senior Citizen Special Revenue Fund 89 Debt Service Fund 91 General Government Land Sales Permanent Fund 92 Airport Land Sales Permanent Fund 93 Internal Service Funds Combining Statement of Net Position 95 Combining Statement of Revenues, Expenses and Changes in Net Position 96 Combining Statement of Cash Flows 97 Fiduciary Funds Statement of Fiduciary Net Position 99 Statement of Changes in Fiduciary Net Position 100 STATISTICAL SECTION Table I - Net Position by Component 101 Table 11 - Change in Net Position 102 Table III - Governmental Activities Tax Revenues by Source 104 Table IV - Fund Balances of Governmental Funds 105 Table V - Changes in Fund Balances of Governmental Funds 106 Table VI - General Governmental Tax Revenues by Source 107 Table VI I - Taxable Sales by Category 108 Table VI I I - Sales Tax Rates — Direct and Overlapping Governments 109 Table IX - Ratios of Outstanding Debt by Type 110 Table X - Computation of Direct and Overlapping Debt 110 Table XI - Legal Debt Margin Information 111 Table XI - Demographic and Economic Statistics 112 Table XIII - Principal Employers 113 Table XIV - Full-time Equivalent City Government Employees by Fund 114 Table XV - Operating Indicators by Function 115 Table XVI - Capital Asset Statistics by Function 116 KENAI _ ,enai 1 210 Fidalgo Ave. Kenai. AK 99611-7794 1 907.283.7535 1 www.kenai.city January 30, 2026 Honorable Mayor Brian Gabriel, City Council Members and Citizens of the City of Kenai, Alaska In accordance with Section 29.35.120 of the Alaska Statutes and the City Charter, we are pleased to submit the Annual Comprehensive Financial Report for the year ended June 30, 2025. The financial statements were prepared in conformance with generally accepted accounting principles (GAAP) and audited in accordance with audit standards generally accepted in the United States of America and the standards applicable to financial audits performed in accordance with Government Auditing Standards, issued by the Comptroller General of the United States, by licensed certified public accountants. This report consists of management's representations concerning the finances of the City of Kenai. Consequently, management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City's financial statements have been audited by BDO USA P.C., a firm of independent certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2025 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City's financial statements for the fiscal year ended June 30, 2025, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City was part of broader federally and state mandated "Single Audit" designed to meet the special needs of federal and state grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with certain legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal and state awards. These reports are available in the City's separately issued Single Audit Reports. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. Profile of the City of Kenai The City was incorporated in 1960 as a home rule city and its charter was adopted May 20, 1963. The City occupies a geographic area of approximately 45 square miles located in the south-central part of the state of Alaska. Major city services include police, fire, ambulance, airport, street maintenance, recreation, parks, building inspection, water and sewer, dock, cemetery and library. Funding for the City's General Fund, by order of financial significance, is provided from sales tax, property tax, charges for services, intergovernmental revenue, other sources and interest earnings. Other funds rely on charges for services, interest earnings, grants and other sources. The City operates under a council - manager form of government. Policy -making and legislative authority are vested in a governing council consisting of six members and the mayor. The city manager, attorney and clerk are appointed by the council. The council and mayor are elected on a non -partisan basis. Council members serve three-year staggered terms, with 2 members elected each year and are elected at large. The mayor is elected at large and serves a three-year term. The city manager is the City's chief executive officer and is responsible for carrying out the policies and ordinances of the City, for overseeing the day-to- day operations of the government and for hiring the heads of the various departments. Budgetary Control The annual budget serves as the foundation for the City's financial planning and control. All departments submit budgets to the city manager on or about the last Monday in February. The city manager uses these requests for developing a proposed budget. The city manager submits the proposed budget to the council at or around the first regular council meeting in April. The council is required to hold public hearings on the proposed budget and generally adopts the budget by ordinance at the first meeting in June. The city manager is authorized to make unlimited budget transfers within a department of a fund and up to $10,000 between departments of a fund. Council action is required for transfers between funds, for transfers exceeding $10,000 and for new appropriations. Budget -to -actual comparisons are provided in this report for each individual governmental fund for which an annual budget has been adopted. Factors Affecting Financial Condition Economy The primary private sector portions of Kenai's economy are oil and gas, commercial fishing, tourism and retail sales. The repurposing of the existing liquified natural gas (LNG) terminal in Nikiski will provide certainty to the Southcentral Alaska gas market while meeting the needs of Railbelt utilities. Railbelt utilities are a group of interconnected electric utilities primarily along the Alaska Railroad. Interest in oil and natural gas exploration and development in Cook Inlet is increasing with the announcement of the rejuvenation of the LNG terminal. Support for the proposed gas pipeline from the North Slope to Cook Inlet is gaining momentum and would greatly enhance the long-term viability of the areas industrial complex. The state of Alaska is working with the gas producers and other interested entities to develop a gas pipeline, but when a gas line will be built is not known at this time. Commercial fishing continues its cyclical cycles in terms of production. The 2025 fishing season had an above average return of sockeye salmon to peninsula rivers. Chinook (King) salmon are a stock of concern for peninsula rivers and commercial salmon fishing was significantly restricted in Cook Inlet in an attempt to protect this stock. The commercial set netting on the east side of the Cook Inlet was closed for the entire season for the second time in the history of the fishery. Tourism to Kenai continued its upward trend in FY25 and remains a vital component to the Kenai economy. The largest personal use dipnet fishery occurs at the mouth of the Kenai River, where tens of thousands of Alaskans catch a year's supply of sockeye salmon in July, makes Kenai a busy and very popular place. Accessible beaches, beautiful scenery, fishing and abundant historic sites all make Kenai a great destination for tourists on the Kenai Peninsula. Kenai Municipal Airport is a gateway for tourist to the Kenai Peninsula and the City of Kenai, providing access to the City as a playground known by Alaskans as "The Place We Alaska". Sales tax is the largest revenue source for the City. Retail sales businesses generate the largest share of sales tax revenue. Sales tax revenues for FY25 exceeded projections and reflected stable growth, increasing by 3.30% compared to FY24. Overall, the projection for the economy of Kenai is optimistic. Kenai is situated in a beautiful area with abundant land and natural resources, an accommodative business climate, and a stable population base. The City's greatest assets are its land holdings for which new lease and sale policies have been developed to encourage economic growth and the Kenai Municipal Airport, the traveling hub for the Kenai Peninsula. Long term financial planning General Fund's fund balance increased to 18.69 million in FY25, primarily attributed to the timing of FY23 and FY24 Supplemental Emergency Medical Transport (SEMT) Medicaid fund receipts, stable sales tax performance, an increase in the PERS on -behalf funding from 3.10% in FY24 to 4.76% in FY25, and investment earnings. A General Fund, Fund Balance of $18.69 million represents approximately 96% of one years of expenditures and transfers to other funds. This healthy fund balance provides options for the City and generates interest income that can be used for operations. The City is in compliance with its fund balance policy which was implemented in FY17. The policy established a target range of fund balance with required adjustment periods should fund balance exceed or drop below the targeted range. One of the long-term financial challenges facing the City is the loss of state funding for major capital improvement projects. Kenai, like all Alaska communities, benefited from a history of state grants for the construction of City facilities and infrastructure. With the decline in oil and gas revenues by the state of Alaska, such grants are very unlikely in the near future and the City will have to find creative ways to construct new and maintain its existing facilities and infrastructure. The City's excellent financial condition is a tremendous asset in meeting this challenge. The City is actively pursuing economic development opportunities and the long-term financial outlook is positive. Acknowledgment The preparation of this Annual Comprehensive Financial Report in a timely manner was accomplished with the efficient and dedicated service of the entire staff of the Finance Department. Due credit should also be given to the City Council for their efforts in planning and conducting the financial operations of the City in a responsible manner. Respectfully submitted, Terry A. Eubank, City Manager David Swarner Finance Director City of Kenai Organization Chart The Citizens of the City of Kenai Mayor & City Council Airport Commission City Manager Council on Aging Airport Manager Library Director Harbor Commission City Planner Parks and Recreation Director Planning & Zoning Commission Finance Director Police Chief Parks & Recreation Commission ( Fire Chief Public Works Director Beautification Committee Human Resources Senior Center Director Director City Clerk ( City Attorney 4 CITY OF KENAI, ALASKA ORGANIZATION AND PRINCIPAL CITY OFFICIALS Kenai was founded in 1791. It is located south of Anchorage on Cook Inlet in the Central Kenai Peninsula. The City is 161 highway miles from Anchorage. By air, Kenai is three hours from Seattle and thirty minutes from Anchorage. Kenai was the site of the first major Alaskan oil strike in 1957 and has served as a center for exploration and production since that time. Commercial fishing and processing contribute to the economy. Kenai adopted the Council Manager form of government in 1963 and has been operating under this form since that time. The City Council, together with appointed City officials, meets the first and third Wednesday of each month in the City Administration Building for regular Council sessions. In addition, numerous special meetings and work sessions are scheduled throughout the year. The Council, which consists of the Mayor and six council members, is elected at large and on a non -partisan basis. Annual elections are held in October. The terms of office are three years but are overlapping so that the City is provided with a continuity of knowledge in City business and legislative matters. Mayor Council Members City Council Brian G. Gabriel, Sr. Victoria Askin Alex Douthit Phil Daniel Henry Knackstedt Sovala Kisena Deborah Sonuart City Administration City Manager Finance Director Human Resource Director City Clerk Planning & Zoning Director City Attorney Police Chief Fire Chief Public Works Director Librarian Parks & Recreation Director Airport Manager Senior Center Director Term Fnrlc 2025 2025 2025 2026 2026 2027 2027 Terry Eubank Dave Swarner Stephanie Randall Shellie Saner Kevin Buettner Scott Bloom David Ross Jay Teague Lee Frey Katja Wolfe Tyler Best Derek Ables Kathy Romain 5 This page intentionally left blank AUDITOR REPORT BDO Independent Auditor's Report Tel: 907-278-8878 3601 C Street, Suite 600 Fax: 907-278-5779 Anchorage, AK 99503 www.bdo.com Honorable Mayor and Members of the City Council City of Kenai, Alaska Kenai Alaska Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Kenai, Alaska (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business - type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. BDO USA, P.C., a Virginia professional service corporation, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 7 Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Kenai's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information, and the schedules of the City's proportionate share of the net pension and net OPEB liability or asset and City's contributions be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 30, 2026 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Anchorage, Alaska January 30, 2026 This page intentionally left blank 10 MANAGEMENT'S DISCUSSION AND ANALYSIS Management's Discussion and Analysis As management of the City of Kenai (the City), we offer readers of our financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. Financial Highlights • At the close of FY2025, the City assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $226,961,238. Of this amount, unrestricted net position of $26,703,602 may be used to meet the government's ongoing obligations to citizens and creditors. A significant portion of this legally unrestricted amount has been designated for specific purposes. • The City's total net position increased by $4,724,306. For the fiscal year ended June 30, 2025, governmental type activities net position increased by $4,747,203 and business -type activities decreased by $22,897. • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $70,753,168, an increase of $5,506,202 from the prior year. Prepaids and portions of the City's permanent fund, which cannot be spent, account for $5,965,015 million of total fund balance. About $60.3 million of the remaining fund balance is restricted, committed, or assigned. The remaining $4,483,248 million is unassigned and available for spending. • At the end of the current fiscal year, fund balance for the General Fund was $18,688,947, an increase of $2,214,111 from the prior year. • The City has a long-term liability for compensated absences, general obligation debt, and net pension of $1,215,577, $565,000, and $14,278,378, respectively. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. The basic financial statements include two kinds of statements that present different views of the City's activities: • Government -wide financial statements provide both short-term and long-term information about the City's overall financial condition in a summary format. • Fund financial statements focus on individual parts of the City, reporting the City's operations in more detail than the government -wide statements. Government -wide financial statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Kenai's finances in a manner similar to a business enterprise. The statement of net position presents information on all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources. Net position — the difference between the City's assets and deferred outflows and its liabilities and deferred inflows - is one way to measure the City's financial position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. There are other non -financial factors, such as the condition of facilities, roads, and other infrastructure that should be considered in the evaluation of overall financial condition. The statement of activities presents information showing how a government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. is Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, public works, parks, recreation and cultural, airport, water and sewer, and social welfare services. The City's only business -type activity is the operations of a congregate housing facility. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City of Kenai can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between the two. Five of the City's governmental funds are considered major funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the major funds including: the General Fund, the Airport Special Revenue Fund, the Water & Sewer Special Revenue Fund, the Kenai Bluff Erosion Capital Project Fund, and the Airport Land Sales Permanent Fund. Individual fund data for each of the non -major governmental funds is provided in the form of combining statements elsewhere in this report. A budgetary comparison statement has been provided for the General, Airport Special Revenue, and Water & Sewer Special Revenue Funds to demonstrate compliance with the Fiscal Year (FY) 2025 budget. Proprietary funds The City of Kenai maintains two different types of proprietary funds: enterprise and internal service. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses an enterprise fund to account for the Congregate Housing Facility. Information for this fund is presented in the proprietary statement of net position and the proprietary statement of revenues, expenses, and changes in net position. Internal service funds are used to accumulate and allocate costs internally among the City's various functions. The City of Kenai uses internal service funds to account for the purchase of heavy equipment that is primarily used by the General Fund, for the purchase of fleet vehicles used by the General and Senior Citizen Special Revenue Funds, and for the cost of managing employee health care. Because these services predominantly benefit governmental rather than business type functions, they have been included within governmental activities in the government -wide financial statements but are presented separately in the proprietary fund financial statements. Fiduciary funds Through a management agreement, the City manages the donations of the Kenai Community Foundation and Kenai Senior Connection, 501(c)(3) not -for -profit entities, whose purpose is to support the Kenai Senior Center, museums, parks and recreation, music, fine arts, library, and historic purposes within Kenai's city limits. The City's sole purpose is management of the Foundations' donations; all decisions regarding Foundation awards are made by the Foundations and not the City. `F: Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Required supplementary information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information and accompanying notes. Budgetary comparison schedules for certain major funds; schedules of the City's net pension and OPEB obligation information and contributions; and accompanying notes can be found on pages 67-82 of this report. Other information In addition to the basic financial statements and accompanying notes and required supplementary information and accompanying notes, this report also presents certain other supplementary information. The combining statements referred to earlier in connection with non -major funds are presented immediately after the required supplementary information. Also included are budget comparisons for some of the nonmajor governmental funds. Government -wide financial analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. At June 30, 2025, the City's net position exceeded liabilities by $226,961,238. By far the largest portion of the City's net position reflects its investment in capital assets. The following table provides a summary of the City's net position (minor arithmetic differences are due to rounding): Net Position (in thousands) Governmental Activities Business -Type Activities Total 2025 2024 2025 2024 2025 2024 Current and other assets $ 90,300 $ 85,406 $ 748 $ 736 $ 91,048 $ 86,142 Capital assets, net 155,170 155,620 2,309 2,415 157,479 158,035 Total assets 245,470 241,026 3,057 3,151 248,527 244,177 Deferred outflows of resources 2,107 2,357 - - 2,107 2,357 Long-term liabilities outstanding 15,644 15,362 6 5 15,650 15,367 Other liabilities 3,878 4,453 43 115 3,921 4,568 Total liabilities 19,522 19,815 49 120 19,571 19,935 Deferred inflows of resources 4,101 4,362 - - 4,101 4,362 Net position: Invested in capital assets net of related debt 154,605 154,955 2,309 2,415 156,914 157,370 Restricted: Nonexpendable 4,017 3,699 - - 4,017 3,699 Airport purposes 31,257 28,889 - - 31,257 28,889 Net other postemployment benefits 6,204 6,746 - - 6,204 6,746 Youth athletics 908 825 - - 908 825 Senior Services 958 865 - - 958 865 Unrestricted 26,004 23,227 699 616 26,703 23,843 Total net position $ 223,953 $219,206 $ 3,008 $ 3,031 $226,961 $222,237 13 Governmental activities Governmental activities increased the City's net position by $4,747,203 compared to $4,961,380 in the prior year. The decrease in the change in net position was mainly due to public safety expenditures of $10,110,075, which increased over the prior year's amount of $8,235,779. Investment earnings were $5,413,762 in the current year over the prior year's 4,663,9358, operating grants and contributions were up in the current year at $1,768,482, compared to $1,244,753 in the prior year, and public safety revenues were $1,729,709 in the current year, which increased over the prior year's amount of $1,118,823. Business -type activities Business -type activities decreased the net position of the City by $22,897. The primary drivers were the $17,714 increase in repairs and maintenance and the $14,510 increase in depreciation offset by $4,150 decreases in supplies and $4,168 decrease in utilities as compared to FY24. Rental rates of the Congregate Housing Facility are insufficient to cover depreciation on the facility, which was built primarily with grant funds. Absent rate adjustments for inflationary costs, continued declines in net position are expected. Changes in net position The City's total revenues and expenses for governmental and business -type activities are reflected in the following table (minor arithmetic differences are due to rounding): Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales taxes Other Total revenues Expenses: General government Public safety Public works Parks, recreation, and cultural Water and sewer services Airport Interest on long-term debt Social welfare services Senior Housing Total expenses Increase (decrease) in net position Net position, beginning Net position ending Changes in Net Assets (in thousands) Governmental Activities Business -Type Activities Total 2025 2024 2025 2024 2025 2024 $ 10,107 $ 8,411 $ 511 $ 487 $ 10,618 $ 8,898 1,769 1,245 3 2 1,772 1,247 1,864 1,582 - - 1,864 1,582 4,540 4,440 - - 4,540 4,440 10,497 9,975 - - 10,497 9,975 3,926 3,227 - - 3,926 3,227 10,110 8,236 - - 10,110 8,236 3,466 2,829 - - 3,466 2,829 3,087 2,952 - - 3,087 2,952 3,347 3,031 - - 3,347 3,031 4,491 4,426 - - 4,491 4,426 30 35 30 35 987 844 - - 987 844 GJ,YYY GJ,JVV 4,747 4,961 219,206 214,245 $ 223,953 $219,206 JVJ - (23) 6 3,031 3,025 $ 3,008 $ 3,031 JV,V IJ GV, I IY 4,724 4,967 222,237 217,270 $226,961 $ 222,237 14 Financial Analysis of the City's Funds The City of Kenai uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds The purpose of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. The total fund balance of governmental funds is $70,753,168, which is up $5,506,202 from last year. About $4,483,248 million of fund balance is unassigned fund deficit, which is available for spending at the City Council's discretion. The remainder of fund balance, $66.3 million, is non -spendable, restricted, committed or assigned to indicate that it is not available for new spending. Restricted is the largest portion of this; $33.1 million is restricted for airport purposes and athletics. The General Fund is the chief operating fund of the City of Kenai. At the end of the current fiscal year, unassigned fund balance of the General Fund was $6,486,708, and total fund balance was $18,688,947. Fund balance increased $2,214,111 in the current year. The City's reserves remain healthy and stable. As a measure of liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures and transfers out. Unassigned fund balance represents 33.43% of total expenditures and transfers, while total fund balance represents 96.31 % of that same amount. General Fund expenditures increased $971,417 or 5.62% over last year and $1,495,170 or 8.92% over fiscal year 2023. General Fund revenues increased $1,578,432 or 8.01 % from last year. The primary revenue sources of the General Fund include property tax of $4,540,042, sales tax of $10,497,334, intergovernmental revenues of $745,058, and charges to other funds of $1,834,200. Sales tax revenue increased $522,302 or 5.24% largely attributed to the stability of the local economy and gasoline prices. Property taxes increased by $86,358 or 1.95%. Current -year property values increased 1.87% and the mill rate remained unchanged. I ntergo $7 General Fund Revenues Interest, Miscellaneous, -- -- $1,017,824 n19 ty Tax, D, 042 ales Tax, $10, 497, 334 15 Tax revenues support General Fund operations exclusively and represent 42.92% of all governmental funds revenue. Other funds rely heavily on intergovernmental revenues, charges for services, and investment earnings. Investment earnings in governmental funds increased $497,129 from the prior year due to strong returns in equity markets. Capital projects funds and the senior services related funds are largely financed by grants from the federal, state and borough governments. The Airport Special Revenue Fund accounts for the operations of the airport. Fund balance increased $287,069 or 10.25%. Total revenues decreased $204,345 or 7.43%. Fund expenditures decreased by $18,125 or 0.54%. FY25 transfers out of $43,237 was for airport master plan projects. The Water & Sewer Special Revenue Fund accounts for the operations of the water and sewer utility of the City. Fund balance increased $1,002,654 or 4.46%. There was a rate increase of 5.0% in FY23. Charges for service increased $180,966 or 5.59% this year due to increased rates. Significant capital improvement projects funding continued in FY25 as transfers decreased $27,581 or 4.06% over FY24 and was down $87,611 or 11.84% over FY23. FY25 transfer out included $552,389 for lift station improvements and $100,000 wastewater treatment plant operations building replacement design. Significant capital funding is anticipated in future years to ensure the utilities continued safe and efficient operation. Kenai Bluff Erosion Capital Project accounts for $10,500,000 in State grants designated for the Kenai Bluff Erosion Capital Project to stabilize the bluff along the ocean front of Kenai. The project is being managed by the US Army Corps Engineers. The City has prepaid the US Army Corps Engineers $1,948,489 for the project along with $712,389 year to date ($546,239 in FY25 and $166,148 in prior years) on the project. The Airport Land Sales Permanent Fund accounts for the investment of proceeds from the sale of airport lands originally deeded to the City by the federal government for operations of the airport. City code calls for the transfer of between 3.80% and 4.20% of the funds five-year average balance at December 315' to the Airport Special Revenue Fund to fund airport operations. Equity market improvements resulted in an investment gain in FY25 of $3,065,564 compared to investment gain in FY24 of $2,794,019. The FY25 transfer of $1,094,116 to the Airport Special Revenue Fund for operations remained at 3.80% of the funds five-year average balance at December 31 st and was $28,498 or a 2.67% increase over the prior year. Proprietary Funds The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The Congregate Housing Fund is the only enterprise fund. It is reported in the proprietary fund financial statements and as a business -type activity in the government -wide financial statements. Internal service funds are used to accumulate and allocate costs among the City's various functions. The City utilizes three internal service funds. The Equipment Replacement Fund is used to account for the purchase of equipment costing more than $50,000. The Equipment Replacement Fund charges the user departments in the General Fund such that the General Fund reimburses the Equipment Replacement Fund for the replacement value of the asset over its useful life. The Fleet Replacement Fund is used to account for the purchase of General and Senior Center Special Revenue Funds fleet vehicles. User departments will be billed for the replacement cost of vehicles they are utilizing. The Employee Health Care Fund accounts for the costs of providing employee health care and charges each fund based on the number of employees eligible for coverage. Because the services of the Equipment Replacement, the Fleet Replacement, and the Employee Health Care Funds substantially benefit only governmental rather than business -type functions, its activity has been included within governmental activities in the government -wide financial statements but they are presented in the proprietary fund financial statements. At year-end, Congregate Housing Fund net position totaled $3,008,064 and unrestricted net position was $698,887. Net position decreased $22,897 for the year. Current revenues are simply insufficient to cover expenses. It is anticipated that net position will continue to decline in future years without an increase in tenant rents. General Fund Budgetary Highlights The General Fund appropriations budget, expenditures, and transfers were amended and increased by the City Council during the year by $318,238. Supplemental funding included $85,000 in overtime for firefighters, $56,996 for Public Works assistant director position, $37,226 Lilac lane road project, $28,000 donation to Parks & Rec, $27,250 land auction services, $22,000 audit services, $15,000 land survey services, $14,850 donations to Library, M $14,348 High Intensity Drug Trafficking Areas (HDITA) grant for police, $8,250 in grants for the Library, $4,907 AMLJIA grant for ballistic vest, $2,505 in grants to animal control, and $1,906 in donations to animal control. Actual revenues and transfers in were $1,815,301 more than the final budget. The City experienced an increase in ambulance fees of $617,237 compared to FY24. Ambulance fees were $686,181 above budget due to receiving both the FY23 ($525,672) and FY24 ($454,983) of the Supplemental Emergency Medical Transport (SEMT) Medicaid reimbursement program in FY25. The SEMT program that was established by the State of Alaska with an effective date of August 31, 2019. The City experienced an increase in the PERS on -behalf funding of $125,135 as the on -behalf rate increased from 3.10% in FY24 to 4.76% in FY25. The City received $77,819 from the Pacific States Marine Fisheries Commission (PSMFC) as part of the 2018 and 2020 Copper River and Prince William Sound salmon disasters as well as the 2018 East Side Set Gillnet (ESSN) and 2020 Upper Cook Inlet (UCI) salmon disasters. The City experienced a positive variance in sales tax of $455,912, investments earnings of $93,963, property taxes of $86,358, and building permits of $48,075 compared to FY24. The actual expenditures and transfers out were $1,326,465 less than budgeted compared to $1,675,131 less than budgeted in FY24. The City typically does not spend the entire authorized appropriation. The variance this year was 6.72% of final budget compared to 8.12% last year. While the overall budget increased, the overall expenditures increased 5.23% thus resulting in less of a cost savings compared to the prior year. Primary areas of variance to budget were $215,395 lower in wages and $77,418 lower in benefits due to extended vacancies for a planning director, police officers, firefighters, dispatcher, animal control officers, and equipment operator. Leave usage was lower than projected by $60,070, the majority being in Police ($20,820) and Fire ($14,927) associated with the vacancy factors. Professional services were lower than projected by $110,293, the majority being $40,960 land appraisal services under projected cost, $19,003 for a cybersecurity managed and detected response service, and $9,011 classification/salary study under projected cost. Grant Awards were $56,320 under budget with the primary amount being $43,046 for Storefront and Streetscaping for which applicants had not completed their projects. The Contingency Fund was under budget by $81,667 as fortunately there was little need for it in FY25. Insurance costs were $36,061 and utility costs were $76,209 less than projected. Operating supplies were $97,721 less than budget due to primarily the Shop miscellaneous parts $44,879. Repair and Maintenance was $61,994 less than budget, $27,820 street lighting repairs and equipment maintenance lower than projected. Parks construction project $25,750 for fencing at the Little League Baseball field was not completed. Capital Assets At June 30, 2025, the City's capital assets had a total net book value of $157,478,831. Governmental activities totaled $155,169,654 and business -type activities totaled $2,309,177. Additional information on the City's capital assets can be found in the notes to the basic financial statements on pages 49-50. Major capital additions for FY25 included: New Buildings and Building Improvements: Airport Sand Storage Building $ 3,065,725 Parks & Rec Kenai Rec Center Roof, HVAC & Flooring 1,731,740 Public Works Willow Street Repaving 999,649 Public Works Lilac Street Reconstruction 744,200 Congregate Housing Boiler Replacement 583,744 Public Works Misc Roadway Repairs 290,066 Public Works First Avenue Roadway Repairs 216,554 Airport Terminal Landscaping 138,970 Total New Facilities and Facility Improvements 7,770,648 Equipment: Fire Department Ambulances (2) 514,861 Police Vehicles (6) 360,852 Parks & Rec Ventrac Tractor & Attachments 60,233 Fire Department NoFoam Portable System 33,408 Public Works Caterpillar remanufactured Grader Engine 30,924 Communications Konica Minolta Bizhub 6501 Copy Machine 14,283 Public Works Drone 12,265 Miscellaneous Other Equipment 24,887 Total Equipment 1,051,713 Total Additions $ 8 8 22,361 17 Debt Administration No new debt was issued by the City in FY25. At June 30, 2025, $565,000 of General Purpose Advanced Refunding bonds remained outstanding. Remaining authorized but unissued are $2,000,000 of Bluff Erosion Control bonds. There are long-term liabilities for compensated absences totaling $1,215,577 and Net Pension Liability of $14,278,378. Additional information on the City's long-term liabilities can be found in the notes to the basic financial statements on pages 61-62. Economic factors and next year's budget Unemployment data is not available for the City; however, the average unemployment for the Kenai Peninsula Borough for current year (CY) 2024 stood at 5.2%, an increase from 4.7% in FY2023. This compares to the FY2024 statewide average of 4.9%. Traditionally the Borough's unemployment rate has been 2% to 3% higher than the statewide rate. Much of this due to the seasonality of work in the fishing and tourism industries of the Borough. In 2017, the City established a fund balance policy that establishes minimum and maximum amounts of fund balances for the General Fund. These levels are reviewed on an annual basis and the policy requires that fund balances exceeding the maximum or fund balances less than the minimum come back into compliance within 3 years. This is assessed each fiscal year as part of the budgetary process. In addition, the Alaska legislature provided funding for Public Employees' Retirement System (PERS) cost in excess of 22%, which was paid directly to PERS. The total City of Kenai on -behalf payment made by the State for FY2025 was $426,759. This contribution includes the difference between the actuarially determined rate of 26.76% and the City contribution rate of 22.00%. In setting the budget for FY2025, the City established goals, among them: • Submit a budget for consideration that maintains the City's current mill and sales tax rates. • Review the City's salary schedule and pay plan, utilizing the employee compensation and classification study, to ensure it provides appropriate compensation to employees comparable to other places of public employment. Incorporate adjustments necessary to the salary schedule and pay plan to address any pay inequities caused by misclassification of positions or those needed for the City to be a competitive public employer. • Review the health, dental, and life insurance benefits to improve the sustainability and quality of coverage. • Seek opportunities for efficiency by striving to reduce the cost of goods and services without negatively impacting operations. • Compile a list of capital projects costing $35,000 or more for Council adoption. • Adjust rates, charges, and fees in all funds commensurate with inflation as measured by the Alaska Consumer Price Index for All Urban Consumers, second half over second half. The monthly rents at Vintage Point should not increase more than $50 per month over FY24 rates for existing tenants as of June 30, 2024. • For the Airport, Water & Sewer, Personal Use Fishery, and Congregate Housing Funds, the proposed budget should project ending fund balance/retained earnings of at least 50% of the FY2024 budgeted expenditures net of any projected lapse and any use of fund balance should be for one-time capital purchases and not for recurring expenditures/expenses. • Senior Citizen Fund fees and rates should be adjusted to a level sufficient to limit the increase in required transfer from the General Fund to no more than a 10% increase. Requests for information This financial report is designed to provide a general overview of the City of Kenai's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Finance Director, City of Kenai, 210 Fidalgo Avenue, Kenai, Alaska 99611. 18 BASIC FINANCIAL STATEMENTS This page intentionally left blank 19 CITY OF KENAI, ALASKA STATEMENT OF NET POSITION JUNE 30, 2025 ASSETS Equity in central treasury (cash and investments) Receivables (net of allowances for uncollectibles) Leases receivable Prepaids Restricted assets - net other postemployment benefits asset Other assets Land Property and equipment in service Accumulated depreciation Construction in progress Total assets DEFERRED OUTFLOWS OF RESOURCES Pension related Other postemployment benefits related Total deferred outflows of resources Total assets and deferred outflows of resources Accounts payable Accrued payroll and payroll liabilities Unearned revenue Other liabilities Accrued interest Long-term liabilities: Net pension liability - due in more than one year Compensated absences: Due within one year Due in more than one year Long-term debt: Due within one year Due in more than one year Total liabilities DEFERRED INFLOWS OF RESOURCES Prepaid licenses and fees Prepaid property taxes Leases Other postemployment benefits related Total deferred inflows of resources Governmental Business -type Activities Activities Total $ 73,725,924 $ 747,403 $ 74,473,327 4,237,836 959 4,238,795 4,149,984 - 4,149,984 1,948,489 1,948,489 6,204,029 6,204,029 33,416 - 33,416 6,331,687 274,500 6,606,187 260,218,692 6,323,380 266,542,072 (120,744,570) (4,305,648) (125,050,218) 9,363,845 16,945 9,380,790 245,469,332 3,057,539 248,526,871 1,652,202 455,291 2,107,493 1,652,202 455,291 2,107,493 $ 247,576,825 $ 3,057,539 $ 250,634,364 $ 782,871 $ 16,269 $ 799,140 312,174 - 312,174 2,092,964 6,403 2,099,367 281,094 18,790 299,884 2,354 - 2,354 14,278,378 14,278,378 301,891 2,003 303,894 905,673 6,010 911,683 105,000 105,000 460,000 460,000 19,522,399 49,475 19,571,874 2,400 72,510 3,811,481 214,861 4,101,252 2,400 72,510 3,811,481 214,861 4,101,252 See accompanying notes to basic financial statements. 20 CITY OF KENAI, ALASKA STATEMENT OF NET POSITION JUNE 30, 2025 Governmental Business -type Activities Activities Total NET POSITION Net investment in capital assets $ 154,604,654 $ 2,309,177 $ 156,913,831 Restricted: Permanently restricted - nonexpendable - General Government Land Sales Permanent Fund 4,016,526 - 4,016,526 Airport purposes 31,257,256 31,257,256 Net other postemployment benefits 6,204,029 6,204,029 Youth athletics 908,059 908,059 Senior services 957,935 - 957,935 Unrestricted 26,004,715 698,887 26,703,602 Total net position 223,953,174 3,008,064 226,961,238 Total liabilities, deferred inflows of resources and net position $ 247,576,825 $ 3,057,539 $ 250,634,364 See accompanying notes to basic financial statements. 21 CITY OF KENAI, ALASKA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2025 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental activities: General government $ 3,925,449 $ 1,109,273 $ 418,417 $ 494,728 Public safety 10,110,075 1,729,709 485,105 169,524 Public works 3,466,526 267,899 91,428 46,644 Parks, recreation, and cultural 3,087,053 736,874 80,195 196,386 Water and sewer services 3,346,591 3,796,562 68,459 - Airport 4,491,486 2,220,263 54,486 905,424 Social welfare services 986,515 246,815 570,392 51,511 Interest on long-term debt 30,333 - - - Total governmental activities 29,444,028 10,107,395 1,768,482 1,864,217 Business -type activities: Senior Housing 568,982 510,867 2,603 - Total Government $30,013,010 $ 10,618,262 $ 1,771,085 $ 1,864,217 See accompanying notes to basic financial statements. General revenues: Property taxes Sales taxes Unrestricted investment earnings Total general revenues Change in net position Net position - beginning Net position - ending 011 Net (Expenses) Revenues and Changes in Net Position Governmental Business -type Activities Activities Total $ (1,903,031) $ - $ (1,903,031) (7,725,737) - (7,725,737) (3,060,555) - (3,060,555) (2,073,598) - (2,073,598) 518,430 - 518,430 (1,311,313) - (1,311,313) (117,797) - (117,797) (30,333) - (30,333) (15,703,935) - (15,703,935) - (55,512) (55,512) (15,703,935) (55,512) (15,759,447) 4,540,042 - 4,540,042 10,497,334 - 10,497,334 5,413,762 32,615 5,446,377 20,451,138 32,615 20,483,753 4,747,203 (22,897) 4,724,306 219,205,971 3,030,961 222,236,932 $ 223,953,174 $ 3,008,064 $ 226,961,238 See accompanying notes to basic financial statements. 23 ASSETS Equity in central treasury (cash and investments) Receivables (net of allowances for uncollectibles) Leases receivable Other assets Prepaid Due from other funds Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and payroll liabilities Due to other funds Unearned revenue Other liabilities Total liabilities Deferred inflows of resources: Special assessments receivable - unavailable Ambulance billing receivable - unavailable Land sales - unavailable Leases related Prepaid licenses and fees Prepaid property taxes Total deferred inflows of resources Fund balances: Nonexpendable Restricted Committed Assigned Unassigned (deficit) Total fund balances Total liabilities, deferred inflows of resources and fund balances See accompanying notes to basic financial statements. CITY OF KENAI, ALASKA GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2025 Major Governmental Funds Airport Water & Sewer Special Special General Revenue Revenue $ 17,033,702 $ 2,927,943 $ 2,850,408 2,423,570 72,544 360,338 652,870 3,469,653 - 27, 045 - - 87,294 - - $ 20,224,481 $ 6,470,140 $ 3,210,746 $ 161,437 $ 91,572 $ 105,855 271,837 24,202 7,664 2,146 41,948 24,849 163,072 3,031 109,370 598,492 160,753 247,738 95,806 - - 175,950 - - 590,376 3,221,105 - 2,400 - 72,510 - - 937,042 3,221,105 - 908,059 - - 8,392,252 - - 2,901,928 3,088,282 2,963,008 6,486,708 - - 18,688,947 3,088,282 2,963,008 $ 20,224,481 $ 6,470,140 $ 3,210,746 24 Kenai Bluff Airport Nonmajor Total Erosion Land Sales Governmental Governmental Capital Project Permanent Funds Funds $ - $ 31,180,081 $ 14,312,361 $ 68,304,495 115,666 151,262 1,114,456 4,237,836 - - - 4,122,523 - - - 27,045 1,948,489 - - 1,948,489 - - - 87,294 $ 2,064,155 $ 31,331,343 $ 15,426,817 $ 78,727,682 $ 28,372 $ 4,456 $ 386,831 $ 778,523 - - 8,471 312,174 87,294 - - 87,294 1,948,489 - 75,532 2,092,964 - - 5,030 280,503 2,064,155 4,456 475,864 3,551,458 95,806 - - 175,950 69,631 195,278 264,909 - - 3,811,481 2,400 - - - 72,510 - 69,631 195,278 4,423,056 1,948,489 - 4,016,526 5,965,015 - 31,257,256 957,935 33,123,250 - - 9,540,749 17,933,001 - - 295,436 9,248,654 (1,948,489) - (54,971) 4,483,248 - 31,257,256 14,755,675 70,753,168 $ 2,064,155 $ 31,331,343 $ 15,426,817 $ 78,727,682 See accompanying notes to basic financial statements. 25 CITY OF KENAI, ALASKA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2025 Total fund balances for governmental funds Total net position reported for governmental activities in the statement of net position is different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds. Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. The PERS ARHCT, RMP and ODD OPEB plans have been funded in excess of required contributions. This asset is not a financial resource and therefore it is not reported in the funds. Certain changes in receivables are deferred rather than recognized immediately. These items are amortized over time - Deferred inflows of resources - leases Some liabilities, including bonds payable, net pension liabilities, interest payable on bonds (net of related interest subsidy), and compensated absences are not payable in the current period so they are not reported in the funds. Bonds payable Net pension liability Compensated absences Accrued interest (net of related interest subsidy) Deferred outflows and inflows of resources related to pension and other postemployment benefits are applicable to future periods and therefore, are not reported in the funds: Deferred outflows of resources for pensions Deferred outflows of resources for other postemployment benefits Deferred inflows of resources for other postemployment benefits Internal Service Funds are used by management to charge the cost of certain activities to individual funds. The assets and liabilities of the Internal Service Funds are included in the governmental activities statement of net position. Net position of governmental activities $ (565,000) (14,278,378) (1,207,564) (2,354) 1,652,202 455,291 (214,861) $ 70,753,168 151,905,908 536,665 6,204,029 27,461 (16,053,296) 1,892,632 8,686,607 $ 223,953,174 See accompanying notes to basic financial statements. 26 This page intentionally left blank 27 CITY OF KENAI, ALASKA GOVERNMENTALFUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2025 Major Governmental Funds Airport Water & Sewer Special Special General Revenue Revenue Revenues: Taxes $ 15,037,376 $ - $ - Intergovernmental revenues 745,058 27,540 31,019 Charges for services 4,094,008 382,293 3,449,362 Investment earnings 1,017,824 299,351 256,882 Miscellaneous revenues 388,012 1,837,971 347,199 Total revenues 21,282,278 2,547,155 4,084,462 Expenditures: Current: General government 4,015,443 - - Public safety 9,199,970 - - Public works 2,620,887 - - Parks, recreation, and cultural 2,372,822 - - Water and sewer services - - 2,569,674 Airport - 3,310,965 - Social welfare services - - - Debt service: Principal - - - Interest - - - Capital outlay 55,184 - 14,911 Total expenditures 18,264,306 3,310,965 2,584,585 Excess of revenues over(under)expenditures 3,017,972 (763,810) 1,499,877 Other financing sources (uses): Transfers in 336,869 1,094,116 155,166 Transfers out (1,140,730) (43,237) (652,389) Net other financing sources (uses) (803,861) 1,050,879 (497,223) Net change in fund balances 2,214,111 287,069 1,002,654 Fund balances - July 1 16,474,836 2,801,213 1,960,354 Fund balances - June 30 $ 18,688,947 $ 3,088,282 $ 2,963,008 See accompanying notes to basic financial statements 28 Major Governmental Funds Kenai Bluff Airport Nonmajor Total Erosion Land Sales Governmental Governmental Capital Project Permanent Funds Funds $ - $ - $ - $ 15,037,376 546,239 - 1,653,143 3,002,999 - - 504,857 8,430,520 - 3,065,564 521,443 5,161,064 - 397,077 429,604 3,399,863 546,239 3,462,641 3,109,047 35,031,822 546,239 546,239 1,550 4,016,993 265,010 9,464,980 59,735 2,680,622 257,543 2,630,365 151 2,569,825 - 3,310,965 1,062,876 1,062,876 100,000 100,000 30,750 30,750 3,041,910 3,658,244 - 4,819,525 29,525,620 3,462,641 (1,710,478) 5,506,202 - - 1,681,190 3,267,341 - (1,094,116) (336,869) (3,267,341) - (1,094,116) 1,344,321 - - 2,368,525 (366,157) 5,506,202 - 28,888,731 15,121,832 65,246,966 $ - $ 31,257,256 $ 14,755,675 $ 70,753,168 See accompanying notes to basic financial statements. 29 CITY OF KENAI, ALASKA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2025 Net changes in fund balances - total governmental funds $ 5,506,202 The change in net position reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives. Expenditures for capital assets $ 3,658,244 Current year depreciation (4,779,345) (1,121,101) Special assessments, taxes, land sales, leases and ambulance services receivable reported in the governmental activities are not revenues of the current period using the flow of current financial resources basis. This is the decrease in other long-term assets. 184,264 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. This is the amount of the (increase) decrease in: Compensated absences (42,149) Bond interest payable 417 (41,732) Repayment of the principal of long-term debt consumes current financial resources of governmental funds but does not have any effect on net position. 100,000 Changes related to net pension and other postemployment benefits liabilities and assets and related accounts can increase or decrease net position. This is the net increase in net position due to changes in net pension and other postemployment benefits liabilities, assets and the related deferred inflows and outflows: Net pension (558,628) Other postemployment benefits (301,691) (860,319) Internal Service Funds are used by management to charge the cost of certain activities to individual funds. The net revenue of Internal Service Fund activities is reported with governmental activities. 979,889 Change in net position of governmental activities $ 4,747,203 See accompanying notes to basic financial statements. 30 CITY OF KENAI, ALASKA PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2025 Governmental Business -type Activities - Activities - Internal Service Enterprise Fund Funds Congregate Housing ASSETS Current assets: Equity in central treasury (cash and investments) $ 747,403 $ 5,421,429 Deposits with others - 6,371 Accounts receivable 959 - Total current assets 748,362 5,427,800 Noncurrent assets: Land 274,500 - Property and equipment in service, at cost: Buildings 6,323,380 - Equipment - 6,907,304 Total property and equipment in service 6,323,380 6,907,304 Less accumulated depreciation (4,305,648) (3,969,706) Net property and equipment in service 2,017,732 2,937,598 Construction work in progress 16,945 326,148 Total noncurrent assets 2,309,177 3,263,746 Total assets $ 3,057,539 $ 8,691,546 LIABILITIES Current liabilities: Accounts payable $ 16,269 $ 4,939 Compensated absences - due within one year 2,003 - Unearned revenue 6,403 - Other liabilities 18,790 - Total current liabilities 43,465 4,939 Noncurrent liabilities: Compensated absences - due in more than one year 6,010 - Total liabilities 49,475 4,939 NET POSITION Investment in capital assets 2,309,177 3,263,746 Unrestricted 698,887 5,422,861 Total net position 3,008,064 8,686,607 Total liabilities and net position $ 3,057,539 $ 8,691,546 See accompanying notes to basic financial statements. 31 CITY OF KENAI, ALASKA PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2025 Governmental Business -type Activities - Activities - Internal Service Enterprise Fund Funds Congregate Housing Operating revenues: Rents and leases $ 508,310 $ - Other revenue 2,557 3,795,196 Total operating revenues 510,867 3,795,196 Operating expenses: Personal services 100,554 - Supplies 11,316 Utilities 73,668 Repair and maintenance 47,191 - Insurance/benefits 25,881 2,708,328 Depreciation 155,245 299,105 Manager's fee 111,960 - Miscellaneous 4,367 60,572 Expenses chargeable from other funds 38,800 - Total operating expenses 568,982 3,068,005 Operating income (loss) (58,115) 727,191 Nonoperating revenues: Intergovernmental grants Investment earnings Total nonoperating revenues Changes in net position Net position - July 1 Net position - June 30 2,603 - 32,615 252,698 35,218 252,698 (22,897) 979,889 3,030,961 7,706,718 $ 3,008,064 $ 8,686,607 See accompanying notes to basic financial statements. 32 CITY OF KENAI, ALASKA PROPRIETARY FUNDS STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2025 Cash flows from operating activities: Receipts from customers Payments to suppliers Payments to employees Receipts (payments) for interfund services Net cash provided by operating activities Cash flows from noncapital financing activities: State grant Net cash provided by noncapital financing activities Cash flows for capital and related financing activities: Financing Activities Acquisition and construction of capital assets Net cash used by capital and related financing activities Cash flows from investing activities: Investment earnings Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - July 1 Cash and cash equivalents - June 30 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation Miscellaneous expense Accounts receivable Accounts payable Compensated absences Unearned revenue Other liabilities Net cash provided by operating activities Business -type Governmental Activities - Activities - Internal Enterprise Fund Service Funds Congregate Housing $ 515,290 $ 351,118 (351,889) (2,771,975) (99,269) - (38,800) 3,444,078 25,332 1,023,221 2,603 - 2,603 - - (851) (49,594) (969,750) (49,594) (970,601) 32,615 252,698 10,956 305,318 736,447 5,116,111 $ 747,403 $ 5,421,429 $ (58,115) $ 727,191 155,245 299,105 - 1,442 (941) - (79,296) (4,517) 1,285 5,364 1,790 - $ 25,332 $ 1,023,221 See accompanying notes to basic financial statements. 33 CITY OF KENAI, ALASKA FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2025 ASSETS Equity in central treasury (cash and investments) Interest receivable Total assets LIABILITIES Accounts payable NET POSITION Restricted for organizations Total liabilities and net position Total Custodial Funds 1,641,231 4,345 $ 1,645,576 $ 209 1,645,367 $ 1,645,576 See accompanying notes to basic financial statements. 34 CITY OF KENAI, ALASKA FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2025 Total Custodial Funds Additions: Investment earnings 164,239 Less investment management fees 2,464 Net investment earnings 161,775 Total additions 161,775 Deductions - Payments to others 36,997 Net increase in fiduciary net position 124,778 Net position - July 1 1,520,589 Net position - June 30 $ 1,645,367 See accompanying notes to basic financial statements. 35 This page intentionally left blank IM. NOTES TO BASIC FINANCIAL STATEMENTS CITY OF KENAI, ALASKA NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2025 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Kenai (City) was formed by a Home Rule Charter on May 20, 1963 under the provisions of Alaska Statute, Title 29, as amended. The City operates under a council-manager form of government and provides the following services: public safety (police, fire, animal control, and 911 communications), public improvements, airport, dock facility, water and sewer, library, senior citizen, recreation, parks, planning and general administrative services. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The more significant accounting principles of the government are described below. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues along with user fees, are reported separately from the business -type activities, which rely to a significant extent on fees and charges for support. The effect of any interfund activity, for the most part, has been removed from these statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who use, purchase, or directly benefit from the goods, services or privileges provided by a given segment or function and includes restricted grants and contributions that are restricted to meeting the operations or capital requirements of a particular function or segment. Taxes and other items not properly included in program revenues are reported as general revenues. Major individual governmental and proprietary funds are reported as separate columns in the fund financial statements, the fiduciary activities are not included. C. Measurement Focus and Basis of Accounting and Financial Statement Presentation The government -wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of cash flows. Grants and similar programs are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Net position is reported as restricted when constraints placed on the net position is either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Governmental fund type financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible in the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days after year end, except for reimbursement -type grants, in which revenue is considered available if collected within 180 days after year end. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, compensated absences, pensions, and other post -employment benefits are recorded only when payment is due. Taxes, charge for services, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivables due within the current fiscal period is considered to be susceptible 37 to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when received by the government. The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Airport Special Revenue Fund accounts for activities of the airport except for land sales. It relies on intergovernmental revenue, user fees and investment earnings to finance operations. The Water and Sewer Special Revenue Fund accounts for activities of the City's water and sewer utility. It relies on user fees to finance operations. The Kenai Bluff Erosion Capital Project accounts for the capital project to stabilize the bluff along the ocean front of Kenai. The primary funding source for this fund is state grants. The Airport Land Sales Permanent Fund accounts for sales of airport land. All proceeds from airport land sales are deposited into this account and invested. Annual transfers to the Airport Special Revenue Fund for operations are limited to 3.8% or 4.2% of the fund's balance at December 31st of each year. If the fund's market value at December 3111 exceeds the fund's inflation adjusted principal balance, the allowable transfer is 4.2% and if it does not, the allowable transfer is 3.8%. Additionally, the City reports the following fund types: Enterprise Fund - the Congregate Housing Fund accounts for the activities of the senior housing project. Primary funding source is rents from its tenants. Internal Service Funds —the Equipment Replacement Fund, Fleet Replacement Fund and Employee Health Care Fund are internal service funds. The Equipment Replacement Fund accounts for the purchase of equipment costing more than $50,000 that will be used by General Fund departments on a cost - reimbursement basis. The Fleet Replacement Fund is used to account for the purchase of fleet vehicles used by departments of the General and Senior Citizen Fund on a cost -reimbursable basis. The Employee Health Care Fund accounts for the cost of providing health and life insurance to the employees of all City funds. Fiduciary Funds — the City utilizes this fund type to account for the resources invested by the City, under management agreements, for the Kenai Community Foundation and Kenai Senior Connection. The Kenai Community Foundation is a not -for -profit organization devoted to supporting museums, parks and recreation, music, fine arts, library, and historic purposes within Kenai's city limits. Kenai Senior Connection is a not - for -profit organization devoted to supporting the operations of the Kenai Senior Center. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's enterprise functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise fund and of the City's internal service funds are charges to customers for sales and services. Operating expenses for the enterprise fund and internal service funds include the cost of sales and services, 38 administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. D. Use of Accounting Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates. E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position 1. Cash and cash equivalents The City maintains a central treasury for most of its cash and cash equivalents, which is utilized by all funds. For the purposes of these financial statements, the City considers highly liquid investments that are readily convertible to cash, with an original maturity of three months or less, to be cash equivalents. Investment income is recorded in the General Fund, except that interest earned on cash held in the Water and Sewer Special Revenue Fund (including cash in water and sewer related capital project funds), the Airport Special Revenue Fund (including cash in the Airport Land Sales Permanent Fund and airport related capital project funds), the Congregate Housing Enterprise Fund, Employee Health Care Internal Service Fund, Personal Use Fishery Special Revenue Fund, Cone Memorial Trust Special Revenue Fund, Kenai Community Foundation and Kenai Senior Connection Fiduciary Funds, and the Fleet and Equipment Replacement Internal Service Funds are recorded in these funds. 2. Receivables and payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to other funds" or "due from other funds" (i.e., the current portion of interfund loans). 3. Restricted assets Monies or other resources, the use of which is restricted by legal or contractual requirements are recorded as restricted assets. 4. Property taxes Property taxes are assessed on real and personal property. Mill rates are established annually by City resolution. The mill rate for the fiscal year 2024 was 4.35 mills. The Kenai Peninsula Borough bills and collects property taxes on behalf of the City. Taxes are levied on July 1 of each year and are due in either two equal installments on September 15 and November 15, or one installment on October 15. Property taxes attach as an enforceable lien on property as of January 1. Property taxes are recorded as a receivable when billed. Uncollected property tax not received soon after year-end, in excess of the estimated uncollectible portion, is deferred. 5. Leases The City has leased multiple nonfinancial assets to third parties. The City recognizes a lease receivable and a deferred inflow of resources in both the government -wide and governmental fund financial statements, where applicable. At the commencement of the leases, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. 39 Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. The City uses its estimated incremental borrowing rate as the discount rate for leases where the stated interest rate is absent from the contracts. The lease term includes the noncancellable period of the lease, including any extension options that are reasonably intended to be exercised. Lease receipts included in the measurement of the lease receivable are composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. 6. Prepaid items Payments made to vendors for services that will benefit periods beyond June 30, 2025, are recorded as prepaid items. Prepaids are recognized when incurred and the expenditure is recorded in the period that is benefited using the consumption method. 7. Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000. All infrastructure assets, including those acquired prior to June 30, 1980, are reported. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of art and similar items are recorded at acquisition value rather than fair value at the date of donation. Acquisition value is the price that would be paid to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition date. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, and equipment of the City is depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings costing more than $50,000 50 Buildings costing less than $50,000 25 Improvements other than buildings 25 Water and sewer infrastructure 50 Street infrastructure 30 Machinery and heavy equipment 20 Other equipment 10 Office equipment 5 8. Compensated absences It is the City's policy to permit employees to accumulate earned but unused vacation benefits. The City makes annual appropriations for the amount of leave expected to be used, which is available to employees at essentially their discretion. Each employee is allowed to accumulate up to 80 days of annual leave at the end of a calendar year, with any excess accumulation paid in cash in the following January. All vacation pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee terminations or in situations where the leave is used but not yet paid. Most funds, except the capital project funds, will be utilized to liquidate the liability for compensated absences. The most significant, due to the fact that it has the largest payroll, is the General Fund. 9. Long-term obligations In the government -wide and proprietary fund type financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or 40 proprietary fund type statement of net position. In the fund financial statements, governmental fund types recognize long-term debt obligations only when due. 10. Fund balances In the fund financial statements, governmental funds report aggregate amounts for five classifications of fund balances based on the constraints imposed on the use of these resources. The non -spendable fund balance classification includes amounts that cannot be spent because they are either (a) not in spendable form — prepaid items or inventories; or (b) legally or contractually required to be maintained intact. The spendable portion of fund balances comprises the remaining four classifications: restricted, committed, assigned, and unassigned. Restricted fund balance. This classification reflects the constraints imposed on resources either (a) externally by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed fund balance. These amounts can only be used for specific purposes pursuant to constraints imposed by formal ordinances of the City Council —the government's highest level of decision -making authority. Those committed amounts cannot be used for any other purpose unless the City Council removes the specified use by taking the same type of action imposing the commitment. This classification also includes contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned fund balance. This classification reflects the amounts constrained by the City's "intent" to be used for specific purposes, but that are neither restricted nor committed. The City Council has the authority to assign amounts to be used for specific purposes by resolution. Assigned fund balances include all remaining amounts (except negative balances) that are reported in governmental funds, other than the General Fund, that are not classified as non -spendable and are neither restricted nor committed. Unassigned fund balance. This fund balance is the residual classification for the General Fund. It is also used to report negative fund balances in other governmental funds. When both restricted and unrestricted resources are available for use, it is the City's policy to use externally restricted resources first, then unrestricted resources —committed, assigned, and unassigned —in order as needed. The City has established a General Fund, Fund Balance Policy. This policy sets a minimum and maximum value for fund balance. A budget stabilization reserve is established equal to a risk adjusted three months of expenditures and operating transfers. When combined, the budget stabilization reserve and other fund balance commitments of Council equals the General Fund's minimum level of fund balance. If fund balance drops below this minimum, Council must adopt a plan to achieve the minimum level within three years inclusive of the current budget year. In addition to a budget stabilization reserve, the Fund Balance Policy establishes an Operational and Capital Contingency Reserve equal to a risk -adjusted one month of budgeted General Fund expenditures and transfers. The combination of the budget stabilization reserve, other fund balance commitments of Council, and the operational and capital contingency reserve equals the maximum level of fund balance. If fund balance exceeds this maximum, Council must adopt a plan to achieve the maximum level within three years inclusive of the current budget year. 11. Net position and net position flow assumptions Net position represents the residual interest in the City's assets and deferred outflows of resources after liabilities and deferred inflows of resources are deducted and consists of three components: net investment in capital assets, restricted position and unrestricted net position. Net investment in capital assets includes capital assets, net of accumulated depreciation, reduced by outstanding debt incurred to acquire, construct or improve those capital assets, excluding unexpended proceeds. The restricted category represents the balance of assets restricted for general use by external parties (creditors, grantors, contributors, or laws or Cy regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted net position consists of the net position not meeting the definition of either of the other two components. Sometimes the City will fund outlays for a purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted and unrestricted net position in the government -wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City's policy to consider restricted net position to have been used before unrestricted net position is applied. 12. Pensions and other postemployment benefits (OPEB) For purposes of measuring the net liabilities, assets, deferred outflows of resources and deferred inflows of resources related to pensions and OPEB, and pension and OPEB expense, information about the fiduciary net position of the Public Employees' Retirement System (PERS) and additions to/from PERS's fiduciary net position have been determined on the same basis as they are reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Most funds, except the capital project funds and the Congregate Housing Enterprise Fund, will be utilized to liquidate the pension and OPEB liabilities. The most significant, due to the fact that it has the largest payroll, is the General Fund. 13. Deferred outflows/inflows of resources In addition to assets, the statement of the net position reports a separate section for deferred outflows of resources. The separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expenses/expenditures) until then. Deferred outflows of resources consist of pension and OPEB related items. These items are amortized resulting in additional expense in future periods. In addition to liabilities, the statement of net position and governmental fund balance sheet report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows of resources for ambulance services, property taxes, special assessments, land sales, leases, and other unavailable revenues are reported in the governmental fund statements. Deferred inflows of resources consist of prepaid property taxes, leases, unavailable revenues, and OPEB related items in the government -wide statement of net position. OPEB related items are amortized resulting in a reduction of expense at a later date. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary information Annual budgets are adopted on a basis consistent with GAAP for all governmental fund types, except the capital project funds which adopt project -length budgets. All annual appropriations lapse at a fiscal year end. Budgets for the general fund, special revenue funds, debt service funds, permanent funds and enterprise fund are annual budgets. Capital project fund budgets are project -length budgets. The Equipment Replacement and Fleet Replacement Funds, which are internal service funds, are not required to have a budget. The City Council approves all asset acquisitions for these funds by resolution. Annual budgets must be submitted to the City Council by the City Manager during or prior to the sixth week preceding the first day of each fiscal year. The City Council must adopt an annual budget and set the tax rates not later than the tenth day of June for the following fiscal year. Budgetary control (the level at which expenditures may not exceed budget) is maintained at the object class level by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders that would result in an overrun of object class balances are not released until additional appropriations are made available. Amendments to appropriations may be made by the city administration by transfers within a fund in amounts less than $10,000. Other amendments, including supplemental appropriations, may be made by the City Council. The City Council authorized supplemental appropriations during the year in capital projects funds, special revenue funds and the General Fund. General Fund supplemental appropriations were $318,238. Supplemental funding included $85,000 for firefighter overtime due to vacancies, $56,996 for changes in Public Works staffing, $37,226 to provide funding or supplemental funding for capital improvement projects, $44,756 for various donations received for appropriation, $30,010 for various grant funded expenditures, $27,250 for land auction services, $22,000 for increases in audit cost, and $15,000 for land survey cost. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as appropriate constraints of fund balances if they meet the definitions and criteria as outlined above. These commitments will be re -appropriated and honored during the subsequent year. Significant encumbrances exceeding $75,000 as of June 30, 2025 were: Airport Imp. Nonmajor Capital Project Gov't Funds Airport Training Center Building Rehab Project $ 369,127 $ - Airfield Drainage Improvements 321,849 - Airport Master Plan 254,168 - Airport Equipment - Loader 769,983 - Airport Equipment — Plow Truck and Sander 119,924 - Equipment Replacement Fund — Ambulances (2) - 504,988 Fleet Replacement Fund — Transit Vans (2) - 135,700 $ 1,8 55,051 $ 640,688 III. DETAILED NOTES ON ALL FUNDS A. Deposits and investments The City maintains a central treasury that is available for use by all funds. Each fund type's portion of the central treasury is displayed on the balance sheet or statement of net position as "Equity in Central Treasury" unless there is a deficit which is then shown as "Due to Other Funds". At year-end, all of the City's bank deposits were either insured or collateralized with securities held by the City's agent in the City's name. The City's general investment policy authorizes investment in: (a) obligations of the United States or an agency or instrumentality of the United States; (b) certificates of deposit with banks and savings and loan associations; (c) repurchase agreements; (d) money market mutual funds consisting primarily of obligations of the United States or an agency or instrumentality of the United States, or repurchase agreements collateralized with such obligations; and (e) the Alaska Municipal League Investment Pool (AMLIP). Generally, investment maturities cannot exceed five years from the date of purchase. Repurchase agreements must be collateralized with United States government obligations. Certificates of deposit must be insured or collateralized with obligations of the United States or its agencies or instrumentalities. Collateral must be held by a third -party trustee. The City's Airport Land Sales Permanent Fund investment policy authorizes investment in: (a) Corporate obligations of investment grade quality as recognized by a nationally recognized rating organization; (b) Domestic Equities, which, taken as a whole, attempt to mirror the characteristics or replicate the Standard & Poor's 500 Index or another index of similar characteristics, including both mutual funds and exchange -traded funds (ETF's); (c) Domestic Equities, which, taken as a whole, attempt to replicate the Standard & Poor's 400 Mid - Cap Index or another index of similar characteristics, including both mutual funds and ETF's; 43 (d) Domestic Equities, which, taken as a whole, attempt to replicate the Standard & Poor's 600 Small - Cap Index or another index of similar characteristics, including both mutual funds and ETF's; (e) International Equities, which, taken as a whole, attempt to replicate the Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index or another index of similar characteristics, including both mutual funds and ETF's; (f) Equities, which, taken as a whole, attempt to replicate the universe of domestic real-estate investment trusts as represented by the Standard & Poor's U.S. REIT composite index or another index of similar characteristics, including both mutual funds and ETF's; (g) Emerging Market Equities, which, taken as a whole, attempt to replicate the Morgan Stanley Capital International Emerging Markets Index or another index of similar characteristics including both mutual funds and ETF's; (h) 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 ETF's; (i) Domestic bonds, which, taken as a whole, attempt to mirror the characteristics or replicate the Bloomberg Barclays U.S. 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 ETF's (ETF's). Repurchase agreements must be collateralized with United States government obligations. Certificates of deposit must be insured or collateralized with obligations of the United States or its agencies or instrumentalities; (j) Alternative Beta investments, which, taken as a whole, attempt to mirror the characteristics or replicate the Wilshire Liquid Alternative Index; and (k) Cash allocation, which, taken as a whole, attempts to mirror the characteristics or replicate the Citi Group 90 Day T-Bill Index. The Alaska Municipal League Investment Pool (AMLIP) is an external investment pool that is rated AAAm for credit risk purposes. Alaska Statute 37.23 establishes regulatory oversight of the Pool. The law sets forth numerous requirements regarding authorized investments and reporting. On a monthly basis, the investments in the Pool are reviewed for fair value by an independent pricing service. The values of investments in the AMLIP are approximately equal to fair value. There are no limitations or restrictions on participant withdrawals from the AMLIP investment pool. The City had no unfunded commitments to AMLIP. The City can redeem its investments in AMLIP in a daily basis with no prior notification. The fair value of the City's investments at year-end is shown below. All of the City's remaining investments are in the category of least risk and include investments that are insured or registered in the City's name, or securities that are held by the City or its agent in the City's name. All of the United States treasury bills, treasury notes, and United States agency securities are held in a custodial account in the Principal Financial Trust Department, and are recorded in its internal records in the City's name in accordance with a safekeeping agreement. Principal Financial is not a counterparty to security transactions. The City maintains an interest -bearing checking account, which had a bank balance of $1,344,919 and a carrying value of $1,091,986 at year-end. The City also holds an account for collection of online and credit card payments for utilities with a balance of $7,434 and cash on hand of $2,279. These deposits are insured for the first $250,000 and the balance is collateralized by securities held by a third -party custodian in the City's name. As of June 30, 2025 the City had the General Fund, Special Revenue Funds, Congregate Housing Enterprise Fund, Capital Project Funds and Internal Service Funds City investments and maturities as follows: Investment Fair Value Less than 1 year 1 to 2 years 2 to 5 years U.S. Treasury/Agencies $31,706,406 $ 11,744,201 $11,415,399 $8,546,806 Money Market Fund 1,643,304 1,643,304 - - Certificates of Deposit 730,215 244,740 - 485,475 Total Investments at Fair Value Level 34,079,925 $13,6 22,245 $11,4 55,399 $9.0 22,281 AMLIP * 3,559,151 Total Central Treasury $37,6 99,076 44 * The City's investment in AMLIP is measured at net asset value, as of June 30, 2025. Management believes this value approximates fair value. General Government Land Sales and Airport Land Sales Permanent Funds, Cone Memorial Trust Fund and Fiduciary Funds' investments: Investment U.S. Treasury/Agencies Investment Grade Corporate Bonds Money Market Fund Mutual Funds: High Yield Domestic Bonds U.S. Equity Securities International Securities Infrastructure Equities Alternative Beta Securities Real Estate Equities Total Fair Value % of Portfolio $ 7,315,096 19.61 % 2,078,653 5.57 1,381,624 3.70 1,468,896 3.94 13,992,204 37.51 4,845,035 12.99 1,845,942 4.95 3,664,647 9.82 714,313 1.91 137 306 410 100.00% The following is a reconciliation of the City's deposit and investment balances to the financial statements at June 30, 2025. Pooled Cash Kenai Kenai and Community Senior Investments Foundation Connection Totals Bank deposits and cash on hand $ 1,163,843 $ 5,229 $ - $ 1,169,072 Investments 73,309,484 244,741 1,391,261 74,945,486 $74,473,327 249 770 $1,391 261 $76 114,558 Interest Rate Risk. The fair values of the City's general fixed -income investments fluctuate in response to changes in market interest rates. Increases in prevailing interest rates generally translate into decreases in fair values of those instruments. Fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument, and other general market conditions. The City manages interest rate risk by requiring specific percentages of the portfolio to be invested within certain time periods and the policy limits the longest maturity to five years. The policy requires 20% of the portfolio to be invested for less than one year and no more than 30% of the portfolio can be invested longer than two years. The fair values of the City's Airport & General Land Sales Funds fixed income investments fluctuate in response to changes in market interest rates. Increases in prevailing interest rates generally translate into decreases in fair values of those instruments. Fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument, and other general market conditions. Duration of a financial asset measures the sensitivity of the asset's price to changes in interest rates. The benchmark indices for the fixed income component of the fund is the Bloomberg Barclays US Aggregate Bond Index for the Investment Grade Domestic Bond component and the Bloomberg Barclays U.S. Corporate High Yield Very Liquid Bond Index for the High Yield Domestic Bond allocation. The indices allow for maturities greater than 1 year. At June 30, 2025 the aggregate index had an average duration of 6.06 while the fund's fixed income component had an average duration of 6.05. Concentration Risk. The City's general investment policy places no limit on the amount that can be invested in any one issuer. For concentration risk in the Permanent Fund & Fiduciary Fund Portfolio — There are four positions noted with greater than 5% exposure: ISHARES Core MSCI EAFE ETF = 6.90%, ISHARES CORE MSCI EMERGING MARKETS = 5.10%, ISHARES CORE S&P MID -CAP ETF = 10.0%, SPDR S&P 500 ETF TRUST = 22.4%. 45 The City's Land Sale Funds, consisting of the General Government and Airport Land Sales Permanent Funds, investment policy places no limits on the amount that can be invested in any one issuer but rather establishes limits by asset class. The following is a list of asset classes allowed, their benchmark index, their appropriate target weighting, and the actual weighting at June 30, 2025. ASSAt C;InSs Cash Fixed income: Investment Grade Domestic Bond High Yield Domestic Bonds Domestic Equity: Large -Cap domestic equities Mid -Cap equities Small -Cap equities International equities International emerging markets Real-estate equities Infrastructure equities Alternative Beta Total Benchmark Index 90-day US Treasury Bill Target % Actual % Weighting Weighting 0-10% 3.71% Bloomberg Barclays US Aggregate Bond Index 16-36 25.28 Bloomberg Barclays U.S. Corporate High Yield Very Liquid Bond Index 0-8 3.95 Standard & Poor's 500 Index 12-32 22.42 Standard & Poor's 400 Mid -Cap Index 0-18 10.02 Standard & Poor's 600 Small -Cap Index 0-10 5.02 Morgan Stanley Capital International Europe, Australasia and Far East (MSCI EAFE) Index 4-16 7.88 Morgan Stanley Capital International Emerging Market Index 0-10 5.07 Standard & Poor's US REIT Index 0-4 1.91 STOXX Global Broad Infrastructure Index 0-10 4.93 Wilshire Liquid Alternatives Index 0-15 9.81 100.00% Credit Risk. The City's general investment policy specifies the types of investments that can be purchased. The intent of this is to limit the credit risk, or the risk that the issuer of the investment securities purchased will default at maturity of the investment. The City may invest only in obligations of the United States government, its instrumentalities and agencies; insured or collateralized certificates of deposit; savings accounts; collateralized repurchase agreements; money market funds; and the State investment pool. Credit risk is effectively limited by limiting the eligible investment options. All of the U.S. Agency securities in the Custody portfolio as of June 20,2025 are rated Aal by Moody's Investors Service and AA+ by Standard and Poor's. The Bloomberg Barclays US Aggregate Bond Index is utilized as the benchmark by the City's Permanent Fund investment policy, which requires investment in securities of investment grade or higher (rated Baa or higher by Moody's Investor Service or rated BBB or higher by Standard and Poor's). At June 30, 2025 all fixed -income investments were rated BBB or better by both Moody's Investor Service and Standard and Poor's. Option Risk. Option risk is the risk that an investment's issuer may exercise a right embedded in the investment —an embedded option. The City invests in securities issued by U.S. Government Agencies that may contain call options. As of June 30, 2025, the Custody account contained seven securities representing 15.9% of the portfolio that contained call options. Additionally, this account contained seven mortgage pool securities representing 10.8% of the portfolio that may be prepaid in part or in whole at any time. The exercise of the call option by the issuer occurs during times of declining interest rates; therefore the City is exposed to the risk of having to reinvest at a lower interest rate due to its callable securities. Fair Value Measurement. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2025: 46 Investments Measured at Fair Value U.S. Treasuries $ 26,587,983 U.S. Agencies 12,433,519 Corporate bonds 2,078,653 Certificates of deposit 730,215 Money market funds 3,024,928 Mutual funds 26,531,037 Total investments at fair value level 71,386,335 AMLIP * 3,559,151 Total Central Treasury & Land Sale Funds Investments $74,9 55,486 Fair Value Measurement Using Quoted Prices in Active Markets for Significant Other Significant Identical Assets Observable Unobservable Level 1 Inputs (Level 2) Inputs (Level 3) $ 26,587,983 $ - $ - - 12 433 519 - 2,078,653 - - 7303215 - 3,024,928 - - 26,531,037 - - $56,1 33,948 $15,2 22,387 $ - U.S. Treasuries, money market funds, and mutual funds classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. U.S. Agencies, corporate bonds, and certificates of deposit classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. * The City's investment in AMLIP of $3,559,151 is measured at net asset value, as of June 30, 2025. Management believes this value approximates fair value. B. Receivables Receivables at June 30, 2025 for the City's individual major funds and the nonmajor governmental funds in the aggregate are as follows: Water & Kenai Airport Sewer Erosion Airport Nonmajor Total Special Special Bluff Capital Land Sales Governmental Governmental General Revenue Revenue Project Permanent Funds Funds Taxes $1,813,358 $ - $ $ - $ $ - $1,813,358 Intergovernmental 39,933 4,633 115,666 776,143 936,375 Customer and other 983,250 75,758 376,001 - 129,758 1,564,767 Special assessments 95,806 - - - - 95,806 Land contracts - - 69,631 195,464 265,095 Accrued interest 285,541 81,631 13,091 380,263 Total receivables 3,217,888 80,391 376,001 115,666 151,262 1,114,456 $5,055,664 Less allowances for uncollectibles 79( 4,318) (7,847) (15,663) - - 81( 7,828) Net receivables $2.423,570 $72,544 $360,338 $115,666 $151,262 $1.114,456 $4 237 836 C. Leases receivable During the current year, the City, as lessor, entered into several multiple -year lease agreements with third parties for various nonfinancial assets. The lengths of the lease terms vary, and the City used their incremental borrowing rate of 5% when there was no stated interest rate in the lease contract. The City received payments totaling $466,856 for the fiscal year ended June 30, 2025. The City recognized $217,179 in lease revenue and $326,949 in interest revenue for the fiscal year ended June 30, 2025. As of June 30, 2025, the City's receivable for lease payments was $4,122,523. Accrued interest receivable was included in the City's lease receivable in the statement of net position of $27,461, resulting in a balance of $4,149,984. The City recognized a deferred inflow of resources associated with the lease of $3,811,481 on June 30, 2025, that will be recognized as revenue over the remainder of the lease terms. 47 D. Deferred inflows of resources, deferred outflows of resources, and unearned revenues Governmental funds report deferred inflows in connection with receivables for revenue that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. Governmental funds report acquisitions of net assets by the governmental funds that are applicable to a future reporting period as deferred inflows of resources and consumption of net assets that are applicable to a future period as deferred outflows. At June 30, 2025, the various components of unearned revenue, deferred inflows of resources, and deferred outflows of resources reported at the fund level and the government -wide level were as follows: Pension related Other postemployment benefits related Special assessments receivable (General Fund) Ambulance billing receivable (General Fund) Land sales receivable (Airport Land Sales Permanent Fund) Land sales receivable (General Land Sales Fund) Leases Prepaid property tax (General Fund) Prepaid licenses (General Fund) Other postemployment benefits related Prepaid rents & leases (General Fund) Prepaid rents & leases (Airport Fund) Prepaid rents & leases (Congregate Housing) Deferred revenue (Kenai Bluff Erosion) Deferred revenue (NonMajor Funds) Prepaid water & sewer service Fund Level Government Wide Deferred Deferred Deferred Inflows Unearned Outflows Inflows Unearned $ - $ - $1,652,202 $ - $ - - - 455,291 - - 95,806 - - - - 175,950 - - - - 69,631 - 195,278 - 3,811,481 - 72,510 - 2,400 - - 2,146 - 41,948 - 6,403 - 1,948,489 - 75,532 - 24,849 $4.423,056 $2,099,367 3,811,481 - 72,510 - - 2,400 - - 214,861 - - - 2,146 - - 41,948 - - 6,403 - - 1,948,489 - - 75,532 - - 24,849 $2,107,493 $4,101,252 $2.099,367 48 E. Capital assets Capital asset activity for the year ended June 30, 2025 was as follows: Governmental Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being deprecreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and Equipment Infrastructure Total capital assets being deprecreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Balance Balance July 1, 2024 Increases Decreases June 30, 2025 $ 6,331,687 $ - $ - $ 6,331,687 12,974,467 3,914,298 (7,524,920) 9,363,845 19,306,154 3,914,298 (7,524,920) 15,695,532 95, 081, 227 4,797,465 - 99, 878, 692 60, 603, 828 138,970 - 60, 742, 798 24, 470, 685 1,051,713 - 25, 522, 398 71, 824, 335 2,250,469 - 74, 074, 804 251, 980, 075 8,238,617 - 260, 218, 692 (32,522,194) (1,753,930) - (34,276,124) (33,730,445) (1,531,644) - (35,262,089) (14,936,067) (965,402) - (15,901,469) (34,477,414) (827,474) - (35,304,888) (115,666,120) (5,078,450) - (120,744,570) 136, 313, 955 3,160,167 - 139, 474,122 Governmental activities, capital assets, net $155,620,109 $ 7,074,465 $ (7,524,920) $ 155,169,654 The Internal Service Funds serve the governmental funds; therefore, their capital assets are included as part of the above totals for governmental activities. Business -type Activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated - Buildings Less accumulated depreciation for Buildings Total capital assets being depreciated, net Business -type activities capital assets, net Balance Balance July 1, 2024 Increases Decreases June 30, 2025 $ 274,500 $ - $ - $ 274,500 551,095 49,594 (583,744) 16,945 825,595 49,594 - 291,445 5,739,636 583,744 - 6,323,380 (4,150,403) (155,245) - (4,305,648) 1.589.233 428.499 - 2.017.372 $ 2.4 44,828 $ 4 88,093 $ 583 744 $ 2,3 99,177 49 Depreciation expense charged to each governmental function is as follows: General government $ 76,177 Public safety 336,651 Public works 892,543 Parks, recreation and cultural 404,928 Water and sewer services 993,259 Airport 2,306,604 Social welfare services 68.288 $ 5.0 88,450 F. Pension and other postemployment benefits plans (a) Defined Benefit (DB) Pension Plan General Information About the Plan The City participates in the Alaska PERS. PERS is a cost -sharing multiple -employer plan that covers eligible State and local government employees, other than teachers. The Plan was established and is administered by the State of Alaska Department of Administration. Benefit and contribution provisions are established by State law and may be amended only by the State Legislature. The Plan is included in an annual comprehensive financial report that includes financial statements and other required supplemental information. That report is available via the internet at https://drb.alaska.aov/docs/reports/#Pers. Actuarial valuation reports, audited financial statements, and other detailed plan information are also available on this website. The Plan provides for retirement, death and disability, and postemployment healthcare benefits. There are three tiers of employees, based on entry date. For all tiers within the DB plan, full retirement benefits are generally calculated using a formula comprised of a multiplier times the average monthly salary (AMS) times the number of years of service. The multiplier is increased at longevity milestone markers for most employees. Peace/Fire employees accrue benefits at an accelerated rate. The tiers within the Plan establish differing criteria regarding normal retirement age, early retirement age, and the criteria for calculation of AMS, Cost -of -Living Adjustment (COLA) adjustments, and OPEB. A complete benefit comparison chart is available at the website noted above. The PERS DB Plan was closed to new entrants effective July 1, 2006. New employees hired after that date participate in the PERS Defined Contribution (DC) Plan described later in these notes. Historical Context and Special Funding Situation In April 2008, the Alaska Legislature passed legislation converting the previously existing PERS plan from a DB agent -multiple employer plan to a DB cost -sharing plan with an effective date of July 1, 2008. In connection with this conversion, the State of Alaska passed additional legislation that statutorily capped the employer contribution rate, established a state funded "on -behalf' contribution (subject to funding availability), and required that employer contributions be calculated against all PERS eligible wages, including wages paid to participants of the PERS Tier IV DC plan described later in these notes. The Alaska Legislature has the power and authority to change the aforementioned statute through the legislative process. Alaska Statute 39.35.280 requires the State of Alaska to contribute to the Plan an amount such that, when combined with the employer contribution, is sufficient to pay the Plan's past service liability contribution rate as adopted by the Alaska Retirement Management Board (ARM Board). As such, the Plan is considered to be in a special funding situation as defined by GASB, and management has recorded all pension related liabilities, deferred inflows/outflows of resources, and disclosures on this basis. The City recorded the related on -behalf contributions as revenue and expense or expenditure as prescribed by GAAP, pursuant to the relevant basis of accounting based on fund type. 50 Employee Contribution Rates Regular employees are required to contribute 6.75% of their annual covered salary. Peace officers and firefighters are required to contribute 7.50% of their annual covered salary. Employer and Other Contribution Rates There are several contribution rates associated with the pension contributions and related liabilities. These amounts are calculated on an annual basis. Employer Effective Rate: This is the contractual employer pay -in rate. Undercurrent legislation, the amount calculated for the statutory employer effective contribution rate is 22% on eligible wages. This 22% rate is calculated on all PERS participating wages, including those wages attributable to employees in the DC plan. Contributions derived from the DC employee payroll are referred to as the Defined Benefit Unfunded Liability (DBUL) contribution. ARM Board Adopted Rate: This is the rate formally adopted by the ARM Board. This rate is actuarially determined and used to calculate annual Plan funding requirements, without regard to the statutory rate cap or the GASB accounting rate. Effective July 1, 2015, the Legislature requires the ARM Board to adopt employer contribution rates for past service liabilities using a level percent of pay method over a closed 25- year term that ends in 2039. This change results in lower ARM Board Rates than those previously adopted. State Contribution Rate: This is the rate paid in by the State as an on -behalf payment under the current statute. The statute requires the State to contribute, based on funding availability, an on -behalf amount equal to the difference between the ARM Board Rate and the Employer Effective Rate. In the governmental fund financial statements, on -behalf contribution amounts have been recognized as additional revenues and expenditures. In the proprietary funds and government -wide financial statements, the on -behalf amounts reflect revenue and expense only during the measurement period in which the Plan recognizes the payments, resulting in a significant timing difference between the cash transfers and revenue and expense recognition. Contribution rates for the year ended June 30, 2025 were determined in the June 30, 2023 actuarial valuations. The City's contribution rates for the 2025 fiscal year were as follows: ARM Board State Adopted Contribution Defined benefit plans: Rate Rate Pension 20.03% 4.76% Postemployment healthcare (ARHCT) -% -% Defined contribution — Pension 6.73% -% Total Contribution Rates 26.76% 4.76% Alaska Statute 39.35.255(a) capped the employer rate at 22.00% with the State of Alaska making a nonemployer contribution for the difference between actuarially required contribution and the cap. For the fiscal year the employer rate is 22.00% for pension and 0.00% for ARHCT. The contribution requirements for the City are established and may be amended by the ARM Board. Additionally, there is a DBUL amount levied against the DCR Plan payroll. The DBUL amount is computed as the difference between (a) amount calculated for the statutory employer contribution rate of 22.00% on eligible salary less (b) total of the employer contribution for (1) DC employer matching amount, (2) major medical, (3) occupational death and disability, and (4) health reimbursement arrangement. The difference is deposited based on an actuarial allocation into the DB plan's pension and healthcare funds. 51 In 2025, the City was credited with the following contributions to the pension plan: Measurement City Period Fiscal Year July 1, 2023 to July 1, 2024 to June 30, 2024 June 30, 2025 Employer contributions (including DBUL) $1,491,437 $1,514,751 Nonemployer contributions (on -behalf) 276,706 426,759 Total Contributions $1 7 88,143 $1 941,510 In addition, employee contributions to the Plan totaled $168,603 during the City's fiscal year. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2025, the City reported a liability for its proportionate share of the net pension liability (NPL) that reflected a reduction for State pension support provided to the City. The amount recognized by the City for its proportional share, the related State proportion, and the total portion of the NPL that was associated with the City were as follows: City proportionate share of NPL $14,278,378 State's proportionate share of NPL associated with the City 5,337,152 Total NPL $19,615,530 The total pension liability for the June 30, 2024 measurement date was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 and adjusted to reflect updated assumptions to calculate the NPL as of that date. The City's proportion of the NPL was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating entities, including the State, actuarially determined. At the June 30, 2024 measurement date, the City's proportion was 0.26034%, which was a decrease of 0.00816 from its proportion measured as of June 30, 2023. For the year ended June 30, 2025, the City recognized pension expense of $2,937,399 and on -behalf revenue of $857,909 for support provided by the State. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Deferred Outflows of Resources $ 137,451 1,514,751 $1.6 22,202 Deferred Inflows of Resources The $1,514,751 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction in the NPL in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending June 30, 2026 2027 2028 2029 Total Amortization $ (382,687) 712,436 (105,164) (87,134) $ 137,451 52 Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of June 30, 2023, using the actuarial assumptions listed below, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2024: Actuarial cost method Entry Age Normal Amortization method Unfunded accrued Actuarial Liability, level percent of pay basis Inflation 2.50% per year Salary increases For peace officer/firefighter, increases range from 8.50% to 3.85% based on service. For all others, increases range from 6.75% to 2.85% based on service. Allocation methodology Amounts for the June 30, 2024 measurement date were allocated to employers based on the ratio of the present value of projected future contributions for each employer to the total present value of projected future contributions for the Plan for the fiscal years 2025 to 2039. The liability is expected to go to zero at 2039. Investment rate of return 7.25%, net of pension plan investment expenses. This is based on an average inflation rate of 2.50% and a real rate of return of 4.75%. Mortality Peace officer / firefighter Pre -commencement mortality rates were based upon the Pub-2010 Safety Employee table, amount -weighted, and projected with MP- 2021 generational improvement. Deaths are assumed to result from occupational causes 70% of the time. Post -commencement mortality rates for healthy retirees were based on the Pub-2010 Safety Retiree table, amount -weighted, and projected with MP-2021 generational improvement. Post -commencement mortality rates for disabled retirees were based on the Pub-2010 Safety Disabled Retiree table, amount -weighted, and projected with MP-2021 generational improvement. Post -commencement mortality rates for beneficiaries were based on the Pub-2010 Contingent Survivor table, amount - weighted, and projected with MP-2021 generational improvement. These rates are applied only after the death of the original member. All others Pre -commencement mortality rates were based on the Pub-2010 General Employee table, amount -weighted, and projected with MP- 2021 generational improvement. Deaths are assumed to result from occupational causes 35% of the time. Post -commencement mortality rates for healthy retirees were based on 98% of male and 106% of female rates of the Pub-2010 General Retiree table, amount - weighted, and projected with MP-2021 generational improvement. Post -commencement mortality rates for disabled retirees were based on the Pub-2010 Non -Safety Disabled Retiree table, amount -weighted and projected with MP-2021 generational improvement. Post - commencement mortality rates for beneficiaries were based on 102% of male and 108% of female rates of the Pub-2010 Contingent Survivor table, amount -weighted, and projected with MP-2021 generational improvement. These rates are applied only after the death of the original member. The total pension liability was determined by an actuarial valuation as of June 30, 2023, rolled forward to the measurement date of June 30, 2024. The actuarial assumptions used in the June 30,2023 actuarial valuation were based on the results of an actuarial experience study for the period from July 1, 2017 to June 53 30, 2021, resulting in changes in actuarial assumptions effective for the June 30, 2022 actuarial valuation, which were adopted by the Board to better reflect expected future experience. Long -Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return, excluding the inflation component of 2.39%, for each major asset class included in the pension plan's target asset allocation as of June 30, 2024 are summarized in the following table: Long -Term Target Expected Real Asset Class Allocation Range Rate of Return Domestic equity 26% +/-6% 5.48% Global equity (non-U.S.) 17% +/-4% 7.14% Global equity -% -% 5.79% Aggregate bonds 21 % +/-10% 2.10% Multi -asset 8% +/-4% -% Real assets 14% +/-7% 4.63% Private equity 14% +/-7% 8.84% Cash equivalents -% -% 0.77% Discount Rate The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that employer and State contributions will continue to follow the current funding policy, which meets State statutes. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the City's proportionate share of the NPL calculated using the discount rate of 7.25%, as well as what the City's proportionate share of the NPL would be if it were calculated using a discount rate that is one percentage -point lower or one percentage -point higher than the current rate: Current Discount Proportional 1 % Decrease Rate 1 % Increase Share 6.25% 7.25% 8.25% City's proportionate share of the net pension liability 0.26034% $19,020,144 $14,278,378 $10,265,708 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the separately issued PERS financial report. 2. Defined Contribution (DC) Pension Plan Employees hired after July 1, 2006 participate in PERS Tier IV, a DC plan. This Plan is administered by the State of Alaska, Department of Administration in conjunction with the DB plan noted above. Benefit and contribution provisions are established by State law and may be amended only by the State Legislature. The ARM Board may also amend contribution requirements. Included in the Plan are individual pension accounts, a retiree medical insurance plan and a separate Health Reimbursement Arrangement account that will help retired members pay medical premiums and other eligible medical expenses not covered by the medical plan. 54 This Plan is included in the annual comprehensive financial report for PERS, and at the following website, as noted earlier. https://drb.alaska.gov/docs/reports/#pers. Contributions to the DC plan consist solely of employer and employee contributions with no special funding or other non -employer contributions. In addition, actual remittances to the PERS system require that the City contribute at 22%. After deducting the DC plan contributions (and related OPEB contributions), the remaining remittance (the DBUL) is deposited into the DB plan as noted earlier. Benefit Terms Employees are immediately vested in their own contributions and vest 25% with two years of service, plus an additional 25% per year thereafter for full vesting at five years of service. Non -vested employer contributions are forfeited upon termination of employment from the Plan. Such forfeitures were applied in the year ended June 30, 2025 to cover a portion of the City's employer match contributions. For the year ended June 30, 2025, forfeitures reduced pension expense by $14,213. Employee Contribution Rate Employees are required to contribute 8.0% of their annual covered salary. This amount goes directly to the individual's account. Employer Contribution Rate For the year ended June 30, 2025, the City was required to contribute 5.0% of covered salary into the Plan. The City and employee contributions to PERS for pensions for the year ended June 30, 2025 were $380,400 and $608,904, respectively. The City contribution amount was recognized as pension expense/expenditures. 3. Defined Benefit OPEB Plans As part of its participation in PERS, the City participates in the following cost sharing multiple employer defined benefit OPEB plans: Alaska Retiree Healthcare Trust (ARHCT), Retiree Medical Plan (RMP) and Occupational Death and Disability Plan (ODD). The ARHCT, a healthcare trust fund, provides major medical coverage to retirees of the DB plan. The ARHCT is self -funded and self -insured. The ARHCT was closed to all new members effective July 1, 2006. Benefits vary by Tier level. The RMP provides major medical coverage to retirees of the PERS DC Plan (Tier IV). The RMP is self -insured. Members are not eligible to use the Plan until they have at least 10 years of service and are Medicare age eligible. The ODD provides death benefits for beneficiaries of plan participants and long-term disability benefits to all active members within PERS. The Plans are administered by the State of Alaska, Department of Administration. The OPEB plans are included in the annual comprehensive financial report for PERS, at the following website, as noted earlier. https://drb.alaska.gov/docs/reports/#pers. Employer Contribution Rates Employer contribution rates are actuarially determined and adopted by and may be amended by the Board. Employees do not contribute. Employer contribution rates for the year ended June 30, 2025 were as follows: Alaska Retiree Healthcare Trust Retiree Medical Plan Occupational Death and Disability Total Contribution Rates Other Peace/Fire 0.83% 0.83% 0.24% 0.69% 1.07% 1.52% 55 In 2025, the City was credited with the following contributions to the OPEB plans: Employer contributions — ARHCT Employer contributions — RMP Employer contributions — ODD Total Contributions Measurement Period City Fiscal Year July 1, 2023 to July 1, 2024 to June 30, 2024 June 30, 2025 $ 25 $ 1,069 71,808 63,214 32,540 33,230 $104,373 $ 97,513 OPEB Asset, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB Plans At June 30, 2025, the City reported an asset for its proportionate share of the net OPEB asset (NOA) that reflected a reduction for State OPEB support provided to the City. The amount recognized by the City for its proportional share, the related State proportion, and the total were as follows: City's proportionate share of NOA — ARHCT $5,746,996 City's proportionate share of NOA — RMP 173,936 City's proportionate share of NOA — ODD 283,097 Total City's Proportionate Share of Net OPEB Asset $6.204,029 State's proportionate share of the ARHCT NOA associated with the City 2,134,859 Total Net OPEB Asset $8.3 88,888 The total OPEB asset for the June 30, 2024 measurement date was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 and adjusted to reflect updated assumptions to calculate the NOA as of that date. The City's proportion of the NOA was based on a projection of the City's long-term share of contributions to the OPEB plans relative to the projected contributions of all participating entities, actuarially determined. June 30, 2023 June 30, 2024 Measurement M asurement Date Employer Date Employer Proportion Proportion Change City's proportionate share of the net OPEB assets: ARHCT 0.26790% 0.26097% (0.00693)% RMP 0.38954% 0.37313% (0.01641)% ODD 0.49246% 0.47420% (0.01826)% For the year ended June 30, 2025, the City recognized OPEB expense (benefit) of $502,279. Of this amount, $83,951 was recorded as on -behalf revenue and expense for support provided by the ARHCT plan. OPEB expense (benefit) and on -behalf revenue are listed by plan in the table below: Plan OPEB Expense (benefit) ARHCT $ 488,947 RMP 22,103 ODD (8,771) Total $ 502,279 On- behalf Revenue $ 83,951 $ 83,951 M. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB plans from the following sources: Deferred Outflows of Resources ARHCT RMP ODD Total Difference between expected and actual experience $ 3,113 $ 4,378 $ - $ 7,491 Changes in assumptions 154,298 58,858 - 213,156 Net difference between projected and actual investment earnings 87,516 2,454 904 90,874 Changes in proportion and differences between City contributions and proportionate share of contributions 27,214 2,467 16,576 46,257 City contributions subsequent to the measurement date 1,069 63,214 33,230 97,513 Total Deferred Outflows of Resources Related to OPEB Plans $273,210 $ 131,371 $50,710 $ 455,291 Deferred Inflows of Resources ARHCT RMP ODD Total Difference between expected and actual experience $ - $ (19,330) $(66,318) $ (84,648) Changes in assumptions - (116,928) (701) (117,629) Changes in proportion and differences between City contributions and proportionate share of contributions - (1,433) (10,151) (11,584) Total Deferred Inflows of Resources Related to OPEB Plans $ Amounts reported as deferred outflows of resources related to OPEB plans resulting from City contributions subsequent to the measurement date will be recognized as an increase in the NOAs in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending June 30, ARHCT RMP ODD Total 2026 $(138,432) $(24,155) $(19,278) $(181,865) 2027 579,652 779 (9,937) 570,494 2028 (92,906) (25,372) (11,686) (129,964) 2029 (76,173) (17,657) (9,198) (103,028) 2030 - (9,800) (5,862) (15,662) Thereafter - 6,671 (3,729) 2,942 Total Amortization $ 272,141 $(69�534) $ 5( 9.6901 $ 142,917 57 Actuarial Assumptions The total OPEB liability for each plan was determined by actuarial valuations as of June 30, 2023, using the following actuarial assumptions, applied to all periods included in the measurement, and rolled forward to the measurement date of June 30, 2024: Actuarial cost method Entry Age Normal Amortization method Unfunded Accrued Actuarial Liability, level percent of pay basis Inflation 2.50% per year Salary increases For peace officer/firefighter, increases range from 8.50% to 3.85% based on service. For all others, increases range from 6.75% to 2.85% based on service. Allocation methodology Amounts for the June 30, 2024 measurement date were allocated to employers based on the ratio of the present value of projected future contributions for each employer to the total present value of projected future contributions to the Plan for fiscal years 2025 to 2039. Investment rate of return 7.25%, net of postemployment healthcare plan investment expenses. This is based on an average inflation rate of 2.50% and a real rate of return of 4.75%. Healthcare cost trend rates Pre-65 medical: 6.4% grading down to 4.5% (ARHCT and RMP Plans) Post-65 medical: 5.4% grading down to 4.5% Rx/EGWP: 6.9% grading down to 4.5% Initial trend rates are from FY 2025 Ultimate trend rates reached in FY 2050 Mortality Pre -commencement mortality rates were based on the Pub-2010 Peace officer/firefighter Safety Employee table, amount -weighted, and projected with (ARHCT and RMP Plans) MP-2021 generational improvement. Deaths are assumed to result from occupation causes 70% of the time. Post - commencement mortality rates for healthy retirees were based on the Pub-2010 Safety Retiree table, amount -weighted, and projected with MP-2021 generational improvement. Post - commencement mortality rates for disabled retirees were based on the Pub-2010 Safety Disabled Retiree table, amount - weighted, and projected with MP-2021 generational improvement. Post -commencement mortality rates for beneficiaries were based on the Pub-2010 Contingent Survivor table, headcount -weighted, and projected with MP-2021 generational improvement. These rates are applied only after the death of the original member. (ODD Plan) Pre -commencement mortality rates were based on the Pub-2010 Safety Employee table, amount -weighted, and projected with MP-2021 generational improvement. Deaths are assumed to result from occupational causes 70% of the time. Post - commencement mortality rates for healthy retirees were based on the Pub-2010 Safety Retiree table, amount -weighted, and projected with MP-2021 generational improvement. Post - commencement mortality rates for disabled retirees were based on the Pub-2010 Safety Disabled Retiree table, amount - weighted, and projected with MP-2021 generational 58 improvement. Post -commencement mortality rates for beneficiaries were based on the Pub-2010 Contingent Survivor table, amount -weighted, and projected with MP-2021 generational improvement. These rates are applied only after the death of the original member. All Others Pre -commencement mortality rates were based on the Pub-2010 (ARHCT and RMP Plans) General Employee table, headcount -weighted, and projected with MP-2021 generational improvement. Deaths are assumed to result from occupational causes 35% of the time. Post - commencement mortality rates for healthy retirees were based on 101 % of male and 110% of female rates of the Pub-2010 General Retiree table, headcount -weighted, and projected with MP-2021 generational improvement. Post -commencement mortality rates for disabled retirees were based on the Pub-2010 Non -Safety Disabled Retiree table, headcount -weighted, and projected with MP-2021 generational improvement. Post - commencement mortality rates for beneficiaries were based on 101 % of male and 108% of female rates of the Pub-2010 Contingent Survivor table, amount -weighted, and projected with MP-2021 generational improvement. These rates are applied only after the death of the original member. (ODD Plan) Pre -commencement mortality rates were based on the Pub-2010 General Employee table, amount -weighted, and projected with MP-2021 generational improvement. Deaths are assumed to result from occupational causes 35% of the time. Post - commencement mortality rates for healthy retirees were based on 98% of male and 106% of female rates of the Pub-2010 General Retiree table, amount -weighted, and projected with MP- 2021 generational improvement. Post -commencement mortality rates for disabled retirees were based on the Pub-2010 Non - Safety Disabled Retiree table, amount -weighted, and projected with MP-2021 generational improvement. Post -commencement mortality rates for beneficiaries were based on 102% of male and 108% of female rates of the Pub-2010 Contingent Survivor table, amount -weighted, and projected with MP-2021 generational improvement. These rates are applied only after the death of the original member. Participation (ARHCT) 100% of system paid members and their spouses are assumed to elect the healthcare benefits paid as soon as they are eligible. Peace officer/firefighter 20% of nonsystem paid members and their spouses are assumed to elect the healthcare benefits as soon as they are eligible. All others 25% of nonsystem paid members and their spouses are assumed to elect the healthcare benefits as soon as they are eligible. The total OPEB liability for each plan was determined by actuarial valuations as of June 30, 2023, rolled forward to the measurement date of June 30, 2024. The actuarial assumptions used in the June 30, 2023 actuarial valuation were based on the results of an actuarial experience study for the period from July 1, 2017 to June 30, 2021, resulting in changes in actuarial assumptions effective for the June 30, 2022 actuarial valuation, which were adopted by the Board to better reflect the expected future experience. For the ARHCT 59 and RMP plans, the per capita claims costs were updated to reflect recent experience for the June 30, 2023 actuarial valuation. Long -Term Expected Rate of Return The long-term expected rate of return on OPEB plan investments for each plan was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The best estimates of arithmetic rates of return, excluding the inflation component of 2.39% for each major asset class included in the OPEB plan's target asset allocation as of June 30, 2024 are summarized in the following table: Long -Term Target Expected Real Asset Class Allocation Range Rate of Return Domestic equity 26% +/-6% 5.48% Global equity (non U.S.) 17% +/-4% 7.14% Global equity -% -% 5.79% Aggregate bonds 21 % +/-10% 2.10% Multi -asset 8% +/-4% -% Real assets 14% +/-7% 4.63% Private equity 14% +/-7% 8.84% Cash equivalents -% -% 0.77% Discount Rate The discount rate used to measure the total OPEB asset for each plan as of June 30, 2024 was 7.25%. The projection of cash flows used to determine the discount rate assumed that employer and State contributions will continue to follow the current funding policy that meets State statutes. Based on those assumptions, the fiduciary net position for each plan was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability for each plan. Sensitivity of the Net OPEB Asset (Liability) to Changes in the Discount Rate The following presents the City's proportionate share of the NOA calculated using the discount rate of 7.25%, as well as what the City's proportionate share of the respective plan's NOA would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Current Discount Proportional 1 % Decrease Rate 1 % Increase Share 6.25% 7.25% 8.25% City's proportionate share of the net OPEB asset: ARHCT 0.26097% $3,638,909 $5,746,996 $7,520,996 RMP 0.37313% (30,130) 173,936 329,909 ODD 0.47420% 265,907 283,097 296,569 Sensitivity of the Net OPEB Asset (Liability) to Changes in the Healthcare Cost Trend Rates The following presents the City's proportionate share of the NOA calculated using the healthcare cost trend rates as summarized in the 2023 actuarial valuation reports as well as what the City's proportionate share of the respective plan's NOA (liability) would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current healthcare cost trend rates: 60 Current Healthcare Proportional Cost Trend Share 1 % Decrease Rate 1 % Increase City's proportionate share of the net OPEB asset (liability): ARHCT 0.26097% $7,723,526 $5,746,996 $3,399,013 RMP 0.37313% 350,495 173,936 (62,970) ODD 0.47420% n/a n/a n/a OPEB Plan Fiduciary Net Position Detailed information about the OPEB plan's fiduciary net position is available in the separately issued PIERS financial report. 4. Defined Contribution OPEB Plan PIERS DC Pension Plan participants (PERS Tier IV) also participate in the Health Reimbursement Arrangement Plan (HRA Plan). The HRA Plan allows for medical care expense to be reimbursed from individual savings accounts established for eligible persons. The HRA Plan became effective July 1, 2006 at which time contributions by employers began. Contribution Rates AS 39.30.370 establishes this contribution amount as "three percent of the average annual employee compensation of all employees of all employers in the plan". As of July 1, 2024, for actual remittance, this amount is calculated as a flat rate for each full-time or part-time employee per pay period and approximates $2,387 per year for each full-time employee, and $1.53 per hour for part-time employees. Annual Postemployment Healthcare Cost In fiscal year 2025, the City contributed $203,325 in DC OPEB costs. These amounts have been recognized as expense/expenditures. G. Changes in long-term obligations Activity in long-term liabilities in governmental activities is as follows: Balance Balance Due within July 1, 2024 Additions Reductions June 30, 2025 one year Compensated absences $ 1,165,415 $1,062,826 $ 1,020,677 $ 1,207,564 $301,891 Net pension liability 13,922,381 355,997 - 14,278,378 - Advance refunding bonds 665,000 - 100,000 565,000 105,000 Total governmental activities $15,7 22,796 $1,418,823 $ 1.1 00,677 $16,0 00,942 $406,891 Activity in long-term liabilities in business -type activities is as follows: Balance Balance Due within July 1, 2024 Additions Reductions June 30, 2025 one year Compensated absences $6 228 $7 516 $6.231 $8. 113 $2. 003 A summary of bonds payable at June 30, 2025, is as follows Date of Interest Maturity Annual Outstanding Issue Issued Rate Dates Installments June 30, 2025 7/7/20 $1,020,000 5.00 2020 — 2029 $125,000 - $131,000 $565,000 61 Debt service requirements for the general obligation refunding bonds at June 30, 2025 are as follows: Governmental Activities Fiscal Year Principal Interest Total 2026 105,000 25,625 130,625 2027 105,000 20,375 125,375 2028 110,000 15,000 125,000 2029 120,000 9,250 129,250 2030 125,000 3,125 128,125 Total $ 565,000 $73,375 638 375 The City has an unissued general obligation of $2,000,000 authorized by City voters for the City's Kenai River Bluff Erosion Project. The City has a legal debt limit equal to twenty percent of the assessed value of all real and personal property in the City. The 2024 Certified Main and Supplemental Tax Rolls for the City showed total taxable assessed for real and personal property of $1,025,749,864, making the legal debt limit $205,149,973 for the City. H. Interfund receivables, payables, and transfers Amounts due from other funds are as follows - Due to General Fund from Kenai Bluff Erosion Capital Project for short-term operating advances Transfers between funds were as follows: From General Fund to: Nonmajor governmental funds for capital costs Nonmajor governmental funds for debt service Nonmajor governmental funds for operating costs Total from General Fund From Airport Special Revenue Fund to - Nonmajor governmental funds for capital costs From Water & Sewer Special Revenue Fund to - Nonmajor governmental funds for capital costs Water & Sewer Special Revenue Fund to return unexpended capital funds From Airport Land Sales Permanent Fund to - Airport Special Revenue Fund for operating costs From nonmajor governmental funds to: General Fund for operating costs General Fund to return unexpended capital funds Total from nonmajor governmental funds Total transfers to other funds $ 87 294 $ 792,513 130,750 217,467 1,140,730 43,237 497,223 155,166 652,389 1,094,116 228,684 108,185 336,869 $3.2 77,341 62 I. Fund balance designations Pursuant to GASB Statement Number 54, fund balances reported for the major funds and the nonmajor funds in the aggregate on the governmental funds' balance sheet are subject to the following constraints: Nonspendable Prepaids Permanent Fund Total Nonspendable Restricted: Airport purposes Cone Memorial Trust Athletics Total Restricted Committed: Capital Improvement Budget stabilization Capital improvement plan reserve Total Committed Assigned: Operational & capital contingency reserve Compensated abs. Airport operations Water & Sewer operations Personal use fishery operations Total Assigned General Airport Water & Special Sewer Special Revenue Revenue Kenai Bluff Erosion Airport Land Capital Sales Project Permanent $1,948,489 $ Nonmajor and Totals Other Funds $ - $ 1,948,489 4,016,526 4,016,526 1,948,489 4,016,526 5,965,015 31,257,256 - 31,257,256 - - 957,935 957,935 908,059 - - 908,059 908,059 31,257,256 957,935 33,123,250 5,395,279 9,540,749 9,540,749 - 5,395,279 8,392,252 9,540,749 17, 933, 001 1,798,519 - - 1,798,519 1,103,409 26,499 27,655 1,157,563 - 3,061,783 - 3,061,783 - 2,935,353 2,935,353 - - - - - 47J,N30 L7J,YJV 2,901,928 3,088,282 2,963,008 295,436 9,248,654 Unassigned 6,486,708 - - (1,948,489) (54,971) 4,483,248 Total Fund Balances $18,688,947 $ 3,088,282 $ 2,963,008 - $31,257,256 $ 14,755,675 $ 70,753,168 J. Risk management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; environmental contamination; and natural disasters. Risk financing activities are accounted for in various operating funds, with unallocated or Citywide activities being accounted for in the General Fund. The City purchases commercial insurance to transfer a substantial portion of the above risks of loss. Property insurance is purchased to provide coverage for buildings and heavy equipment, generally with deductibles of $25,000. Various liability insurance policies are purchased to provide protection against torts, injuries, and errors and omissions. Most liability policies are written with low or zero deductibles. In addition to the deductibles on insurance policies, the City retains risk of loss related to certain potential liabilities and property damages. These include environmental liabilities, employment discrimination, and vehicle property losses. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The City analyzes potential losses on a case -by -case basis to determine amounts that should be accrued or disclosed in the financial statements. K. Contingencies The City is involved in lawsuits arising in the ordinary course of operations, including actions commenced and claims asserted against it. Management of the City does not believe that the ultimate resolution of these 63 lawsuits and claims will have any material effect on its financial position or results of operations, and therefore, no provision has been made in the accompanying financial statements. L. New accounting pronouncements The GASB has issued several new accounting standards with upcoming implementation dates. The following new accounting standards were implemented by the City for the 2025 reporting: GASB Statement No. 101 — Compensated Absences — Effective for year-end June 30, 2025. Earlier application is encouraged. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends June 30, 2025. The city evaluated the impact of this Statement and determined there was not material impact to the financial statements for FY25. GASB Statement No. 102 — Certain Risk Disclosures — Effective for year-end June 30, 2025. Earlier application is encouraged. The objective of this Statement is to provide users of the government financial statements with essential information about risks related to a government's vulnerabilities due to certain concentrations or constraints. The disclosures will provide users with timely information regarding certain concentrations or constraints and related events that have occurred or have begun to occur that make a government vulnerable to a substantial impact. The city evaluated the impact of this Statement and determined there was not material impact to the financial statements for FY25. The GASB has issued new accounting standards with upcoming implementation dates. Management has not fully evaluated the potential effects of these statements, and actual impacts have not yet been determined. The statements are as follows: GASB Statement No. 103 — Financial Reporting Model Improvements — Effective for year-end June 30, 2026. Earlier application is encouraged. The objective of this Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government's accountability. This Statement also addresses certain application issues. GASB Statement No. 104 — Disclosure of Certain Capital Assets — Effective for year-end June 30, 2026. Earlier application is encouraged. The objective of this Statement is to provide users of governmental financial statements with essential information about certain types of capital assets in order to make informed decisions and assess accountability. The disclosures requirements will improve consistency and comparability between governments. GASB Statement No. 105 — Subsequent Events — Effective for year-end June 30, 2027. Earlier application is encouraged. The objective of this Statement is to improve the financial reporting requirements for subsequent events, thereby enhancing consistency in their application and better meeting the information needs of financial statement users. This statement clarifies the subsequent events that constitute recognized and nonrecognized events and establishes specific note disclosure requirements for nonrecognized events. 64 REQUIRED SUPPLEMENTARY INFORMATION CITY OF KENAI, ALASKA GENERALFUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Original Final Variance With Budget Budget Actual Final Budget Revenues: Taxes: General property $ 4,467,109 $ 4,467,109 $ 4,514,635 $ 47,526 General sales 10,073,705 10,073,705 10,497,334 423,629 Penalty and interest on taxes 10,000 10,000 25,407 15,407 Total taxes 14,550,814 14,550,814 15,037,376 486,562 Intergovernmental revenues: Federal grants - (762) 103,829 104,591 Kenai Peninsula Borough 52,800 52,800 52,800 - State of Alaska shared revenues: Marijuana licenses 2,500 2,500 3,500 1,000 Electric utility tax 29,000 29,000 28,495 (505) Fish tax 17,500 17,500 568 (16,932) Liquor licenses 17,000 17,000 21,625 4,625 Community Assistance 175,745 175,745 166,905 (8,840) State of Alaska grants: Library grants - 7,000 7,000 - Police grants - 14,348 3,819 (10,529) PERS relief 405,385 405,385 356,517 (48,868) Total intergovernmental revenues 699,930 720,516 745,058 24,542 Charges for services: Fees and charges: Ambulance fees 875,000 875,000 1,561,181 686,181 Multipurpose facility charges 120,000 120,000 141,642 21,642 Administrative and service fees 1,834,200 1,834,200 1,834,200 - Other 88,600 88,600 164,510 75,910 Total fees and charges 2,917,800 2,917,800 3,701,533 783,733 Licenses and permits: Building permits 140,000 140,000 203,699 63,699 Animal control licenses and fees 93,795 93,795 100,821 7,026 Other 8,100 8,100 12,773 4,673 Total licenses and permits 241,895 241,895 317,293 75,398 Fines and forfeits: Court fines 50,000 50,000 74,214 24,214 Library fines 100 100 533 433 Other forfeitures 24,100 24,100 435 (23,665) Total fines and forfeits 74,200 74,200 75,182 982 Total charges for services 3,233,895 3,233,895 4,094,008 860,113 See accompanying notes to required supplementary information. 65 CITY OF KENAI, ALASKA GENERALFUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Original Final Variance With Budget Budget Actual Final Budget Revenues, continued: Investment earnings $ 475,000 $ 475,000 $ 1,017,824 $ 542,824 Miscellaneous revenues: Rents and leases 231,870 231,870 175,612 (56,258) Lease interest - - 52,727 52,727 Oil and gas royalties 47,000 47,000 37,541 (9,459) Special assessments 10,500 10,500 3,014 (7,486) Other 74,650 124,031 119,118 (4,913) Total miscellaneous revenues 364,020 413,401 388,012 (25,389) Total revenues 19,323,659 19,393,626 21,282,278 1,888,652 Expenditures: General government: Legislative: Personal services 51,768 51,768 51,787 (19) Supplies 12,690 12,690 6,836 5,854 Other services and charges 129,300 151,300 122,337 28,963 Total legislative 193,758 215,758 180,960 34,798 City clerk: Personal services 323,571 323,571 298,515 25,056 Supplies 29,045 29,045 23,016 6,029 Other services and charges 42,470 42,470 27,606 14,864 Total city clerk 395,086 395,086 349,137 45,949 City attorney: Personal services 418,259 418,259 401,074 17,185 Supplies 2,325 2,325 1,512 813 Other services and charges 33,150 33,150 19,389 13,761 Total city attorney 453,734 453,734 421,975 31,759 City manager: Personal services 445,008 445,008 434,511 10,497 Supplies 3,230 3,230 2,277 953 Other services and charges 61,500 62,000 52,643 9,357 Total city manager 509,738 510,238 489,431 20,807 Human resources: Personal services 173,908 173,908 166,738 7,170 Supplies 6,876 6,876 7,126 (250) Other services and charges 34,510 34,510 22,802 11,708 Total human resources 215,294 215,294 196,666 18,628 Finance: Personal services 809,933 809,933 807,097 2,836 Supplies 67,930 68,730 59,025 9,705 Other services and charges 141,825 141,025 117,268 23,757 Total finance 1,019,688 1,019,688 983,390 36,298 See accompanying notes to required supplementary information. 66 CITY OF KENAI, ALASKA GENERALFUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Original Final Variance With Budget Budget Actual Final Budget Expenditures, continued: General government, continued: Non -departmental: Personal services $ 421,192 $ 421,192 $ 361,152 $ 60,040 Supplies 53,250 80,480 72,187 8,293 Other services and charges 746,443 717,980 561,307 156,673 Capital outlays 4,632 4,632 - 4,632 Total non -departmental 1,225,517 1,224,284 994,646 229,638 Planning and zoning: Personal services 323,255 321,755 291,503 30,252 Supplies 12,970 13,760 12,509 1,251 Other services and charges 46,170 34,912 25,029 9,883 Total planning and zoning 382,395 370,427 329,041 41,386 Safety: Supplies 1,100 1,100 383 717 Other services and charges 2,400 2,400 2,418 (18) Total safety 3,500 3,500 2,801 699 Land administration: Supplies 200 200 - 200 Other services and charges 93,200 147,306 67,396 79,910 Capital outlays - 113 - 113 Total land administration 93,400 147,619 67,396 80,223 Total general government 4,492,110 4,555,628 4,015,443 540,185 Public safety: Police: Personal services 3,482,936 3,497,284 3,406,226 91,058 Supplies 159,290 164,903 139,570 25,333 Other services and charges 263,243 263,243 210,464 52,779 Total police 3,905,469 3,925,430 3,756,260 169,170 Fire: Personal services 3,384,911 3,469,911 3,423,972 45,939 Supplies 119,188 135,851 127,608 8,243 Other services and charges 421,728 426,528 413,727 12,801 Capital outlays 21,463 - - - Total fire 3,947,290 4,032,290 3,965,307 66,983 Communications: Personal services 953,792 953,792 943,766 10,026 Supplies 27,470 11,470 8,484 2,986 Other services and charges 58,160 58,160 47,892 10,268 Capital outlays - 16,000 14,283 1,717 Total communications 1,039,422 1,039,422 1,014,425 24,997 See accompanying notes to required supplementary information. 67 CITY OF KENAI, ALASKA GENERALFUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Original Final Variance With Budget Budget Actual Final Budget Expenditures, continued: Public safety, continued: Animal control: Personal services $ 340,606 $ 340,606 $ 318,051 $ 22,555 Supplies 19,345 22,344 20,991 1,353 Other services and charges 139,718 140,424 124,936 15,488 Total animal control 499,669 503,374 463,978 39,396 Total public safety 9,391,850 9,500,516 9,199,970 300,546 Public works: Public works administration: Personal services 191,878 248,874 242,225 6,649 Supplies 7,432 6,432 5,559 873 Other services and charges 4,585 5,585 3,079 2,506 Total public works administration 203,895 260,891 250,863 10,028 Shop: Personal services 433,904 433,904 423,865 10,039 Supplies 195,640 195,640 143,140 52,500 Other services and charges 118,718 118,718 96,654 22,064 Capital outlays 31,380 31,380 30,925 455 Total shop 779,642 779,642 694,584 85,058 Streets: Personal services 705,605 705,605 611,349 94,256 Supplies 154,970 143,620 133,779 9,841 Other services and charges 299,000 310,350 280,338 30,012 Total streets 1,159,575 1,159,575 1,025,466 134,109 Dock: Personal services 37,293 37,293 19,347 17,946 Supplies 6,550 6,550 4,615 1,935 Other services and charges 19,846 19,846 15,418 4,428 Total dock 63,689 63,689 39,380 24,309 Buildings: Personal services 330,852 330,852 312,984 17,868 Supplies 50,935 50,935 25,387 25,548 Other services and charges 95,764 95,764 73,755 22,009 Total buildings 477,551 477,551 412,126 65,425 Street lighting: Other services and charges 237,097 237,097 198,468 38,629 Total public works 2,921,449 2,978,445 2,620,887 357,558 See accompanying notes to required supplementary information. 68 CITY OF KENAI, ALASKA GENERALFUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Expenditures, continued: Parks, recreation, and cultural: Library: Personal services Supplies Other services and charges Total library Visitors center: Supplies Other services and charges Total visitors center Parks, recreation & beautification: Personal services Supplies Other services and charges Capital outlays Total parks, recreation & beautification Total parks, recreation, and cultural Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Net other financing sources (uses) Net change in fund balance Fund balance - July 1 Fund balance - June 30 Original Final Variance With Budget Budget Actual Final Budget $ 801,417 $ 801,417 $ 761,396 $ 40,021 23,017 33,580 28,953 4,627 185,984 198,521 179,276 19,245 1,010,418 1,033,518 969,625 63,893 10,500 11,233 10,866 367 198,953 198,953 193,752 5,201 209,453 210,186 204,618 5,568 797,764 797,764 806,343 (8,579) 105,480 133,480 120,155 13,325 379,127 353,377 317,289 36,088 11,476 37,226 9,976 27,250 1,293,847 1,321,847 1,253,763 68,084 2,513,718 2,565,551 2,428,006 137,545 19,319,127 19,600,140 18,264,306 1,335,834 4,532 (206,514) 3,017,972 3,224,486 226,278 343,831 336,869 (6,962) (1,094,136) (1,131,362) (1,140,730) (9,368) (867,858) (787,531) (803,861) (16,330) $ (863,326) $ (994,045) 2,214,111 $ 3,208,156 16,474,836 $ 18,688,947 See accompanying notes to required supplementary information. 69 CITY OF KENAI, ALASKA AIRPORT SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Original Final Variance With Budget Budget Actual Final Budget Revenues: Intergovernmental revenues $ 37,700 $ 37,700 $ 27,540 $ (10,160) Charges for services - landing fees 384,855 384,855 382,293 (2,562) Investment earnings 120,000 120,000 299,351 179,351 Miscellaneous revenues: Rents and leases, including penalty and interest 1,272,925 1,272,925 1,151,965 (120,960) Parking fees 225,000 225,000 303,543 78,543 Car rental commissions 185,000 185,000 184,691 (309) Advertising commissions 28,000 28,000 32,384 4,384 Fuel flowage 17,000 17,000 16,325 (675) Other 218,000 178,000 149,063 (28,937) Total miscellaneous revenues 1,945,925 1,905,925 1,837,971 (67,954) Total revenues 2,488,480 2,448,480 2,547,155 98,675 Expenditures: Maintenance and operation: Personal services 422,354 422,354 344,486 77,868 Supplies 251,480 245,480 139,230 106,250 Other services and charges 457,004 463,004 399,121 63,883 1,130,838 1,130,838 882,837 248,001 Expenditures chargeable from other funds 1,094,800 1,094,800 1,094,800 - Total maintenance and operation 2,225,638 2,225,638 1,977,637 248,001 Administration: Personal services 250,378 250,378 246,242 4,136 Supplies 3,040 3,040 2,031 1,009 Other services and charges 60,952 60,952 82,086 (21,134) 314,370 314,370 330,359 (15,989) Expenditures chargeable from other funds 64,000 64,000 64,000 - Total administration 378,370 378,370 394,359 (15,989) See accompanying notes to required supplementary information. 70 CITY OF KENAI, ALASKA AIRPORT SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Original Final Variance With Expenditures, continued: Budget Budget Actual Final Budget Land: Personal services $ 106,117 $ 106,117 $ 85,872 $ 20,245 Supplies 60,000 60,000 42,874 17,126 Other services and charges 58,761 58,761 37,940 20,821 Total land 224,878 224,878 166,686 58,192 Training facility: Supplies 2,000 2,500 1,231 1,269 Other services and charges 166,237 165,737 164,667 1,070 Total training facility 168,237 168,237 165,898 2,339 Terminal: Personal services 218,057 218,057 210,354 7,703 Supplies 21,650 21,650 14,791 6,859 Other services and charges 391,766 379,066 319,440 59,626 Capital outlays - (27,300) - - 631,473 591,473 544,585 74,188 Expenditures chargeable from other funds 61,800 61,800 61,800 - Total terminal 693,273 653,273 606,385 74,188 Total expenditures 3,690,396 3,650,396 3,310,965 366,731 Excess of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Net other financing sources (uses) Net change in fund balance Fund balance - July 1 Fund balance - June 30 (1,201,916) (1,201,916) (763,810) 438,106 1,090,387 1,090,387 1,094,116 3,729 (25,817) (43,237) (43,237) - 1,064,570 1,047,150 1,050,879 3,729 $ (137,346) $ (154,766) 287,069 $ 441,835 2,801,213 $ 3,088,282 See accompanying notes to required supplementary information. 71 CITY OF KENAI, ALASKA WATER AND SEWER SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Original Final Variance With Budget Budget Actual Final Budget Revenues: Intergovernmental revenues - State grant $ 35,719 $ 35,719 $ 31,019 $ (4,700) Charges for services: Residential water 1,044,170 1,044,170 1,020,510 (23,660) Commercial water 402,293 402,293 392,540 (9,753) Residential sewer 1,464,918 1,464,918 1,452,174 (12,744) Commercial sewer 543,598 543,598 524,536 (19,062) Hook-up fees 10,297 10,297 15,689 5,392 Other (6,552) (6,552) 43,913 50,465 Total charges for services 3,458,724 3,458,724 3,449,362 (9,362) Investment earnings 75,000 75,000 256,882 181,882 Miscellaneous revenues 5,000 5,000 347,199 342,199 Total revenues 3,574,443 3,574,443 4,084,462 510,019 Expenditures: Water: Personal services 404,285 404,285 357,017 47,268 Supplies 178,320 213,320 194,829 18,491 Other services and charges 376,976 341,976 309,908 32,068 Capital outlays 72,500 72,500 14,911 57,589 1,032,081 1,032,081 876,665 155,416 Expenditures chargeable from other funds 112,400 112,400 112,400 - Total water 1,144,481 1,144,481 989,065 155,416 Sewer: Personal services 398,798 398,798 357,160 41,638 Supplies 31,250 31,250 12,574 18,676 Other services and charges 93,359 93,359 54,108 39,251 Capital outlays 172,500 172,500 - 172,500 695,907 695,907 423,842 272,065 Expenditures chargeable from other funds 65,600 65,600 65,600 - Total sewer 761,507 761,507 489,442 272,065 See accompanying notes to required supplementary information. 72 CITY OF KENAI, ALASKA WATER AND SEWER SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Expenditures - continued: Sewer treatment plant: Personal services Supplies Other services and charges Capital outlays Expenditures chargeable from other funds Total sewer treatment plant Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Net other financing sources (uses) Net change in fund balance Fund balance - July 1 Fund balance - June 30 Original Final Variance With Budget Budget Actual Final Budget $ 443,599 $ 443,599 $ 442,470 $ 1,129 137,690 137,690 85,634 52,056 536,905 536,905 459,074 77,831 1,118,194 1,118,194 987,178 131,016 118,900 118,900 118,900 - 1,237,094 1,237,094 1,106,078 131,016 3,143,082 3,143,082 2,584,585 558,497 431,361 431,361 1,499,877 1,068,516 - 155,166 155,166 - (622,390) (652,389) (652,389) - (622,390) (497,223) (497,223) - $ (191,029) $ (65,862) 1,002,654 $ 1,068,516 1,960,354 $ 2,963,008 See accompanying notes to required supplementary information. 73 CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - PENSION PLAN SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Years Ended June 30 City's proportion of the net pension liability City's proportionate share of the net pension liability State of Alaska proportionate share of the net pension liability Total net pension liability City's covered payroll City's proportionate share of the net pension liability as a percentage of payroll Plan fiduciary net position as a percentage of the total pension liability 2025 2024 2023 2022 2021 2.60340% 0.26850% 0.28278% 0.31776% 0.24754% $ 14,278,378 $ 13,922,381 $ 14,412,658 $ 11,657,104 $ 14,607,516 5,337,152 4,641,160 3,987,974 1,577,585 6,046,118 $ 19,615,530 $ 18,563,541 $ 18,400,632 $ 13,234,689 $ 20,653,634 $ 9,737,798 $ 9,176,906 $ 8,407,454 $ 8,462,834 $ 8,382,999 146.63% 151.71 % 171.43% 137.74% 174.25% 67.81 % 68.23% 67.97% 76.46% 61.61 % CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - PENSION PLAN SCHEDULE OF THE CITY'S CONTRIBUTIONS Years Ended June 30, 2025 2024 2023 2022 2021 Contractually required contributions $ 1,514,751 $ 1,491,437 $ 1,384,812 $ 1,127,512 $ 1,101,645 Contributions relative to the contractually required contributions 1,514,751 1,491,437 1,384,812 1,127,512 1,101,645 Contribution deficiency (excess) $ - $ - $ - $ - $ - City's covered payroll $ 9,966,972 $ 9,737,798 $ 9,176,906 $ 8,407,454 $ 8,462,834 Contributions as a percentage of covered payroll 15.20% 15.32% 15.09% 13.41 % 13.02% See accompanying notes to required supplementary information. 74 2020 2019 2018 2017 2016 0.22960% 0.25988% 0.25468% 0.30898% 0.26181 % $ 12,568,996 $ 12,913,450 $ 13,165,767 $ 17,270,846 $ 12,697,944 4,992,668 3,738,518 4,904,181 2,174,127 3,401,936 $ 17,561,664 $ 16,651,968 $ 18,069,948 $ 19,444,973 $ 16,099,880 $ 8,087,981 $ 7,992,166 $ 7,663,488 $ 4,180,200 $ 4,415,909 155.40% 161.58% 171.80% 413.16% 287.55% 63.42% 65.19% 63.37% 59.55% 63.96% 2020 2019 2018 2017 2016 $ 948,738 $ 1,020,687 $ 1,048,639 $ 891,552 $ 811,111 948,738 1,020,687 1,048,639 891,552 811,111 $ 8,382,999 $ 8,087,981 $ 7,992,166 $ 7,663,488 $ 4,180,200 11.32% 12.62% 13.12% 11.63% 19.40% See accompanying notes to required supplementary information. 75 CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - OPEB ARHCT PLAN SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY (ASSET) Years Ended June 30. City's proportion of the net OPEB liability (asset) City's proportionate share of the net OPEB liability (asset) State of Alaska proportionate share of the net OPEB liability (asset) Total net OPEB liability (asset) City's covered payroll City's proportionate share of the net OPEB liability (asset) as a percentage of payroll Plan fiduciary net position as a percentage of the total OPEB liability (asset) Years Ended June 30, Contractually required contributions Contributions relative to the contractually required contributions Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll ARHCT 2025 2024 2023 2022 2021 2020 2019 2018 0.26097% 0.26790% 0.28093% 0.31913% 0.24748% 0.22969% 0.25984 % 0.02548% $ (5,746,996) $ (6,164,106) $ (5,527,506) $ (8,186,916) $ (1,120,744) $ 340,818 $ 2,666,667 $ 2,117,245 (2,134,859) (2,075,377) (1,578,141) (1,073,049) (465,221) 135,484 773,478 801,210 $ (7,881,85J5 $ (8,239,48J3 $ (7,105,64J7 $ (9,259,96J5 $ (1,585,965) $ 476,302 $ 3,440,145 $ 2,918,455 $ 2,618,338 $ 2,560,073 $ 2,420,380 $ 2,831,344 $ 3,137,494 $ 3,311,701 $ 3,629,421 $ 3,646,870 -219.49% -240.78% -228.37% -289.15% -35.72% 10.29% 73.47% 58.06% 130.59% 133.96% 128.51 % 135.54% 106.15% 98.13% 88.12% 89.91 % CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - OPEB ARHCT PLAN SCHEDULE OF THE CITY'S CONTRIBUTIONS ARHCT 2025 2024 2023 2022 2021 2020 2019 2018 $ 1,069 $ 25 $ 1,564 $ 155,945 $ 209,727 $ 378,968 $ 369,797 $ 298,905 1,069 25 1,564 155,945 209,727 378,968 369,797 298,905 $ 2,373,678 $ 2,618,338 $ 2,560,073 $ 2,420,380 $ 2,831,344 $ 3,137,494 $ 3,311,701 $ 3,629,421 0.045% 0.001 % 0.061 % 6.443% 7.407% 12.079% 11.166% 8.236% See accompanying notes to required supplementary information. 76 CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - OPEB RMP PLAN SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY (ASSET) Years Ended June 30, City's proportion of the net OPEB liability (asset) City's proportionate share of the net OPEB liability (asset) State of Alaska proportionate share of the net OPEB liability (asset) Total net OPEB liability (asset) City's covered payroll City's proportionate share of the net OPEB liability (asset) as a percentage of payroll Plan fiduciary net position as a percentage of the total OPEB liability (asset) Years Ended June 30, Contractually required contributions Contributions relative to the Contractually required contributions Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll RMP 2025 2024 2023 2022 2021 2020 2019 2018 0.37313% 0.38954% 0.37723% 0.38386% 0.38559% 0.39578% 0.38325% 0.38843% $ (173,936) $ (184,969) $ (131,012) $ (103,035) $ 27,350 $ 94,686 $ 48,769 $ 20,257 $ (173,936) $ (184,969) $ (131,012) $ (103,035) $ 27,350 $ 94,686 $ 48,769 $ 20,257 $ 7,119,460 $ 6,616,834 $ 5,987,074 $ 5,631,491 $ 5,246,705 $ 4,776,280 $ 4,362,745 $ 4,016,618 -2.44% -2.80% -2.19% -1.83% 0.52% 1.98% 1.12% 0.50% 119.87°% 124.29% 120.08% 115.10% 95.23% 83.17% 88.71% 93.98% CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - OPEB RMP PLAN SCHEDULE OF THE CITY'S CONTRIBUTIONS RMP 2025 2024 2023 2022 2021 2020 2019 2018 $ 63,214 $ 71,808 $ 73,051 $ 63,827 $ 71,241 $ 68,781 $ 46,446 $ 44,678 63,214 71,808 73,051 63,827 71,241 68,781 46,446 44,678 $ 7,593,294 $ 7,119,460 $ 6,616,834 $ 5,987,074 $ 5,631,491 $ 5,246,705 $ 4,776,280 $ 4,362,745 0.832% 1.009% 1.104% 1.066% 1.265% 1.311% 0.972% 1.024% See accompanying notes to required supplementary information. 77 CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - OPEB ODD PLAN SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY (ASSET) Years Ended June 30, City's proportion of the net OPEB liability (asset) City's proportionate share of the net OPEB liability (asset) State of Alaska proportionate share of the net OPEB liability (asset) Total net OPEB liability (asset) City's covered payroll City's proportionate share of the net OPEB liability (asset) as a percentage of payroll Plan fiduciary net position as a percentage of the total OPEB liability (asset) Years Ended June 30, Contractually required contributions Contributions relative to the contractually required contributions Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll ODD 2025 2024 2023 2022 2021 2020 2019 2018 0.47420% 0.49246% 0.47759% 0.50193% 0.53960% 0.57178% 0.38325% 0.38843% $ (283,097) $ (252,650) $ (209,365) $ (221,216) $ (147,094) $ (138,628) $ (74,435) $ (55,114) $ (283,097) $ (252,650) $ (209,365) $ (221,216) $ (147,094) L (138,628) $ (74,435) $ (55,114) $ 9,737,798 $ 9,176,906 $ 8,407,454 $ 8,382,999 $ 8,087,981 $ 8,087,981 $ 7,992,166 $ 7,663,488 -2.91 % -2.75% -2.49% -2.61 % -1.75% -1.71 % -93.00% -72.00% 346.81 % 349.24% 348.80% 374.22% 283.80% 297.43% 270.62% 212.97% CITY OF KENAI, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) - OPEB ODD PLAN SCHEDULE OF THE CITY'S CONTRIBUTIONS ODD 2025 2024 2023 2022 2021 2020 2019 2018 $ 33,230 $ 32,540 $ 30,167 $ 27,554 $ 26,773 $ 23,663 $ 23,345 $ 3,508 33,230 32,540 30,167 27,554 26,773 23,663 23,345 3,508 $ 9,966,972 $ 9,737,798 $ 9,176,906 $ 8,407,454 $ 8,462,834 $ 8,382,999 $ 8,087,981 $ 7,992,166 0.333% 0.334% 0.329% 0.328% 0.316% 0.282% 0.289% 0.044% See accompanying notes to required supplementary information. 78 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION CITY OF KENAI, ALASKA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2025 Public Employees' Retirement System Pension Plan Schedule of the City's Proportionate Share of the Net Pension Liability This table is presented based on the Plan measurement date. For June 30, 2025, the Plan measurement date is June 30, 2024. Changes in Assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2023, rolled forward to the measurement date of June 30, 2024. The actuarial assumptions used in the June 30, 2023 actuarial valuation were based on results of an actuarial experience study for the period from July 1, 2017 to June 30, 2021, resulting in changes in actuarial assumptions effective for June 30, 2022 actuarial valuation, which were adopted by the Board to better reflect expected future experience. In 2022, the discount rate was lowered from 7.38% to 7.25%. Amounts reported reflect a change in assumptions between 2016 and 2017 in the method of allocating the net pension liability from actual contributions to present value of projected future contributions. Schedule of the City's Contributions This table is based on the City's contributions for each fiscal year presented. These contributions have been reported as a deferred outflow of resources on the Statement of Net Position. 79 CITY OF KENAI, ALASKA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION CONTINUED 2. Public Employees' Retirement System OPEB Plans Schedule of the City's Proportionate Share of the Net OPEB Liability (Asset) These tables are presented based on the Plan measurement date. For June 30, 2025, the Plan measurement date is June 30, 2024. Changes in Assumptions: The total OPEB liability for each plan was determined by actuarial valuations as of June 30, 2023, rolled forward to the measurement date of June 30, 2024. The actuarial assumptions used in the June 30, 2023 actuarial valuation were based on the results of an actuarial experience study for the period from July 1, 2017 to June 30, 2021, resulting in changes in actuarial assumptions effective for the June 30, 2022 actuarial valuation, which were adopted by the Board to better reflect the expected future experience. For the ARHCT and RMP plans, the per capita claims costs were updated to reflect recent experience for the June 30, 2023 actuarial valuation. In 2022, the discount rate was lowered from 7.38% to 7.25% In 2019, an Employer Group Waiver Plan (EGWP) was implemented effective January 1, 2019. This arrangement replaced the Retiree Drug Subsidy (RDS) under Medicare Part D and resulted in larger projected subsidies to offset the cost of prescription drug coverage. GASB requires ten years of information be presented. However, until a full 10 years of information is available, the City will present only those years for which information is available. Schedule of the City's Contributions This table is based on the City's contributions for each fiscal year presented. These contributions have been reported as a deferred outflow of resources on the Statement of Net Position. GASB requires ten years of information be presented. However, until a full ten years of information is available, the City will present only those years for which information is available. 80 OTHER GOVERNMENTAL FUNDS This section includes the Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual, for the Airport Land Sales Permanent Fund, which is a major fund, as well as the Nonmajor Governmental Funds Combining Balance Sheet and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances. It also includes a Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual for each nonmajor governmental fund that adopted an annual budget. Special Revenue Funds Special Revenue Funds are used for specific revenues that are legally restricted to expenditures for a specific purpose. Cone Memorial Trust Fund — This fund accounts for the proceeds received from the Tamara Diane Cone Testamentary Trust. Trust language requires the funds be used for the use and benefit of the Kenai Senior Center. Personal Use Fishery Fund — This fund accounts for the activities responding to the State of Alaska Personal Use Fishery where thousands of Alaskans harvest salmon at the mouth of the Kenai River. The primary source of revenue is from user fees. Activities include public safety, parks, recreation and culture, and public works. Senior Citizen Fund - This fund accounts for the activities of the Senior Citizen Title III Grant Program which is substantially financed by intergovernmental revenues. Activities include social services and a nutrition program. Capital Project Funds Capital Project Funds are established to account for the resources expended to acquire assets of a relatively permanent nature. These funds evolved from the need for special accounting for bond proceeds, grants and contributions for the acquisition of capital assets. Capital Project Funds provide a formal mechanism which enables administrators to ensure that revenues dedicated to a certain purpose are used only for that purpose and further enables them to report to creditors and other grantors of capital projects fund revenue, that their requirements regarding the use of the revenue were fully satisfied. Streets Fund — This fund accounts for capital improvements to City streets, sidewalks, curbs and gutters, or street lighting systems. Financing is primarily by state grants and transfers from the General Fund. Airport Improvement Fund — This fund accounts for capital projects of the City's airport. The primary funding source is federal grants. Parks and Recreation Fund — This fund accounts for capital projects within the City's Parks, Recreation Center, Multipurpose Facility (Ice Rink), Visitor Center, Fine Arts Center, Cemetery, Personal Use Fishery, and Trail Construction. The primary funding sources for this fund are the General Fund, state grants and donations. Water & Sewer Fund — This fund accounts for capital improvements to the City's water and sewer system. Financing is primarily by federal and state grants and transfers from the Water and Sewer Special Revenue Fund. Miscellaneous Fund — This fund accounts for capital projects which do not fit in one of the other fund categories. These projects are generally smaller projects, which may be funded through transfers from other funds or by state or federal grants. Debt Service Fund Debt Service Fund — This fund accounts for the accumulation of monies for payment of advance refunding bonds issued in 2020 for the advance refunding of general obligation bonds issued for the 2010 expansion of the Kenai Community Library. Permanent Fund Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used. General Government Land Sales Fund — This fund accounts for the proceeds of general government land sales, including principal and interest on long-term notes. By City Charter, the principal cannot be spent. Interest revenue is transferred to the General Fund in the amount of 5% of the fund balance or calendar year actual earnings as measured at December 31It of each year. This page intentionally left blank 81 CITY OF KENAI, ALASKA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET June 30, 2025 ASSETS Equity in central treasury (cash and investments) Intergovernmental receivables Other accounts receivable, net Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and payroll liabilities Other liabilities Unearned revenue Total liabilities Deferred inflows of resources: Land sales unavailable Fund balances: Nonspendable Restricted Committed Assigned Unassigned (deficit) Total fund balances Total liabilities and fund balances Special Revenue Funds Cone Personal Memorial Use Senior Trust Fishery Citizen $ 955,538 $ 314,679 $ (125,496) - - 15,217 2,515 129,758 $ 958,053 $ 314,679 $ 19,479 $ 118 $ 19,243 $ 45,024 - - 8,471 5,030 15,925 118 19,243 74,450 957,935 295,436 - (54,971) 957,935 295,436 (54,971) $ 958,053 $ 314,679 $ 19,479 82 Debt Service Capital Project Funds Fund Permanent Fund Airport Parks and Streets Improvement Recreation Water and Sewer M scellaneous Debt Service Total General Nonmajor Government Governmental Land Sales Funds $ 1,229,125 $ 3,467,349 $ 974,419 $ 2,767,042 $ 723,941 $ $ 4,005,764 $ 14,312,361 16,267 603,177 21,769 - 119,713 - 776,143 - - - - 206,040 338,313 $ 1,245,392 $ 4,070,526 $ 996,188 $ 2,767,042 $ 843,654 $ $ 4,211,804 $ 15,426,817 $ 35,368 $ 160,978 $ 74,275 $ 16,501 $ 35,324 $ 59,607 35,368 220,585 74,275 16,501 35,324 $ $ 386,831 8,471 5,030 75,532 475,864 195,278 195,278 4,016,526 4,016,526 - - - - - - 957,935 1,210,024 3,849,941 921,913 2,750,541 808,330 9,540,749 - - - - - 295,436 (54,971) 1,210,024 3,849,941 921,913 2,750,541 808,330 4,016,526 14,755,675 $ 1,245,392 $ 4,070,526 $ 996,188 $ 2,767,042 $ 843,654 $ $ 4,211,804 $ 15,426,817 83 CITY OF KENAI, ALASKA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2025 Special Revenue Funds Cone Personal Memorial Use Senior Trust Fishery Citizen Revenues: Intergovernmental revenues $ $ 1,104 $ 445,635 Charges for services 504,857 - Investment earnings 92,679 25,066 - Miscellaneous revenues - - 353,210 Total revenues 92,679 531,027 798,845 Expenditures: General government - - - Public safety 120,245 Water and sewer services - - Social welfare services - 1,062,876 Parks, recreation and cultural 229,688 - Public works 59,735 Debt service: Principal - Interest Capital outlay - - Total expenditures 409,668 1,062,876 Excess of revenues over (under) expenditures 92,679 121,359 (264,031) Other financing sources (uses): Transfers in - - 217,467 Transfers out (75,000) Net other financing sources (uses) - (75,000) 217,467 Net change in fund balances 92,679 46,359 (46,564) Fund balances (deficits) - July 1 865,256 249,077 (8,407) Fund balances (deficits) - June 30 $ 957,935 $ 295,436 $ (54,971) 84 Capital Project Funds Water Airport Parks and and Streets Improvement Recreation Sewer $ 46,644 $ 905,424 $ 109,571 $ - - 8,997 46,644 905,424 118,568 Debt Service Permanent Total General Nonmajor Government Governmental M scellaneous Debt Service Land Sales Funds $ 144,765 $ $ $ 1,653,143 - 504,857 403,698 521,443 - 67,397 429,604 144,765 471,095 3,109,047 1,550 - 144,765 151 - 27,855 100,000 - - - - - 30,750 793,445 1,517,277 276,282 297,384 157,522 - 793,445 1,517,277 304,137 297,535 303,837 130,750 1,550 265,010 151 1,062,876 257,543 59,735 100,000 30,750 3,041,910 4,819,525 (746,801) (611,853) (185,569) (297,535) (159,072) (130,750) 471,095 (1,710,478) 422,889 43,237 169,625 497,223 199,999 130,750 - 1,681,190 (108,185) - - (153,684) (336,869) 314,704 43,237 169,625 497,223 199,999 130,750 (153,684) 1,344,321 (432,097) (568,616) (15,944) 199,688 40,927 - 317,411 (366,157) 1,642,121 4,418,557 937,857 2,550,853 767,403 3,699,115 15,121,832 $ 1,210,024 $ 3,849,941 $ 921,913 $ 2,750,541 $ 808,330 $ $ 4,016,526 $ 14,755,675 85 CITY OF KENAI, ALASKA PERSONAL USE FISHERY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Final Variance With Budget Actual Final Budget Revenues: Intergovernmental revenues - State grant $ 1,861 $ 1,104 $ (757) Charges for services - Parking, camping, and boat launch 481,538 504,857 23,319 Investment earnings 5,000 25,066 20,066 Total revenues 488,399 531,027 42,628 Expenditures: Public safety: Personal services 39,043 37,987 1,056 Other services and charges 14,938 958 13,980 53,981 38,945 15,036 Expenditures chargeable from other funds 81,300 81,300 - Total public safety 135,281 120,245 15,036 Public works: Streets: Personal services 20,250 12,355 7,895 Supplies 2,800 1,857 943 Other services and charges 12,752 7,728 5,024 35,802 21,940 13,862 Expenditures chargeable from other funds 3,500 3,500 - Total streets 39,302 25,440 13,862 Dock: Personal services 30,783 24,568 6,215 Supplies 1,430 70 1,360 Other services and charges 6,132 5,657 475 38,345 30,295 8,050 Expenditures chargeable from other funds 4,000 4,000 - Total dock 42,345 34,295 8,050 Total public works 81,647 59,735 21,912 86 CITY OF KENAI, ALASKA PERSONAL USE FISHERY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Expenditures, continued: Parks, recreation and cultural: Personal services Supplies Other services and charges Expenditures chargeable from other funds Total parks, recreation and cultural Total expenditures Excess of revenues over (under) expenditures Other financing uses: Transfers out Net change in fund balance Fund balance - July 1 Fund balance - June 30 Final Budqet $ 89,584 28,250 106,234 224,068 21,800 245,868 462,796 25,603 (75,000) $ (4%397) Actual $ 65,728 25,219 116,941 207,888 21,800 229,688 409,668 121,359 (75,000) 46,359 249,077 $ 295,436 Variance With Final Budget $ 23,856 3,031 (10,707) 16,180 16,180 53,128 95,756 $ 95,756 87 CITY OF KENAI, ALASKA CONE MEMORIAL TRUST SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Variance With Actual Final Budget Revenues: Investment earnings 92,679 92,679 Total revenues 92,679 92,679 Expenditures: Social welfare services Other services and charges - - Net change in fund balance 92,679 $ 92,679 Fund balance - July 1 865,256 Fund balance - June 30 $ 957,935 88 CITY OF KENAI, ALASKA SENIOR CITIZEN SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Final Variance With Budget Actual Final Budget Revenues: Intergovernmental revenues: State grants $ 306,567 $ 237,724 $ (68,843) Federal grants 22,000 21,768 (232) Kenai Peninsula Borough grant 186,143 186,143 - Total intergovernmental revenues 514,710 445,635 (69,075) Miscellaneous revenues: Choice Waiver reimbursement 80,000 106,395 26,395 Rents and leases 10,000 9,688 (312) Donations 245,150 234,017 (11,133) Other 4,538 3,110 (1,428) Total miscellaneous revenues 339,688 353,210 13,522 Total revenues 854,398 798,845 (55,553) Expenditures - social welfare services: Social services: Personal services 155,049 157,238 (2,189) Supplies 3,256 3,499 (243) Other services and charges 30,470 29,787 683 188,775 190,524 (1,749) Expenditures chargeable from other funds 44,117 44,117 - Total social services 232,892 234,641 (1,749) Congregate meals: Personal services 110,613 104,362 6,251 Supplies 40,476 37,545 2,931 Other services and charges 46,127 23,198 22,929 197,216 165,105 32,111 Expenditures chargeable from other funds 29,177 29,177 - Total congregate meals 226,393 194,282 32,111 Home delivered meals: Personal services 205,922 220,799 (14,877) Supplies 139,313 135,374 3,939 Other services and charges 37,001 34,798 2,203 382,236 390,971 (8,735) 89 CITY OF KENAI, ALASKA SENIOR CITIZEN SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL, continued Expenditures - social welfare services - continued Home delivered meals - continued: Expenditures chargeable from other funds Total home delivered meals Transportation: Personal services Supplies Other services and charges Expenditures chargeable from other funds Total transportation Choice Waiver: Personal services Supplies Other services and charges Expenditures chargeable from other funds Total Choice Waiver Total expenditures Excess of revenues over (under) expenditures Other financing sources - Transfers in Net change in fund balance Fund deficit - July 1 Fund deficit - June 30 Final Budget $ 59,141 441,377 80,371 6,544 16,612 103,527 27,069 130,596 45,295 22,092 10,307 77,694 7,796 85,490 1,116,748 (262,350) 217,467 $ (44,883) Actual $ 59,141 450,112 75,464 6,053 13,562 95,079 27,069 122,148 26,190 18,105 9,602 53,897 7,796 61,693 1,062,876 (264,031) 217,467 (46,564) (8,407) $ (54,971) Variance With Final Budget (8,735) 4,907 491 3,050 8,448 8,448 19,105 3,987 705 23,797 23,797 53,872 (1,681) $ (1,681) 90 CITY OF KENAI, ALASKA DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Final Variance With Budget Actual Final Budget Expenditures - debt service Principal $ 100,000 $ 100,000 $ - Interest 30,750 30,750 - Total expenditures 130,750 130,750 - Excess of revenues over (under) expenditures (130,750) (130,750) - Other financing sources: Transfers in 130,750 130,750 - Net change in fund balance $ - - $ - Fund balance - July 1 - Fund balance - June 30 $ - 91 CITY OF KENAI, ALASKA GENERAL GOVERNMENT LAND SALES PERMANENT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Revenues: Investment earnings Land sales Total revenues Excess of revenues over expenditures Other financing uses: Transfers out Net change in fund balance Fund balance - July 1 Fund balance - June 30 Final Budget $ 213,926 213,926 213,926 Actual $ 403,698 67,397 471,095 471,095 Variance With Final Budget $ 189,772 67,397 257,169 257,169 (151,278) (153,684) (2,406) $ 62,648 317,411 $ 254,763 3,699,115 $ 4,016,526 92 Revenues: Investment earnings Land sales Total revenues Other financing uses: Transfers out Net change in fund balance Fund balance - July 1 Fund balance - June 30 CITY OF KENAI, ALASKA AIRPORT LAND SALES PERMANENT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2025 Final Budget $ 1,665,560 1,665,560 Actual $ 3,065,564 397,077 3,462,641 Variance With Final Budget $ 1,400,004 397,077 1,797,081 (1,090,387) (1,094,116) (3,729) $ 575,173 2,368,525 $ 1,793,352 28,888,731 $ 31,257,256 93 This page intentionally left blank 94 INTERNAL SERVICE FUNDS This section includes the Combining Statement of Net Position, Combining Statement of Revenues, Expenses, and Changes in Net Position, and the Combining Statement of Cash Flows for the Internal Service Funds. Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City, on a cost reimbursement basis. Equipment Replacement Fund — This fund accounts for the purchase of equipment costing more than $50,000 that will be used by the General Fund departments on a cost -reimbursement basis. Fleet Replacement Fund — This fund accounts for the purchase of fleet vehicles that will be used by the General and Senior Citizen Special Revenue Funds' departments on a cost -reimbursement basis. Employee Health Care Fund — This fund accounts for the cost of administering and providing healthcare to all eligible City employees. Charges to City departments are on a cost -reimbursement basis. CITY OF KENAI, ALASKA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2025 Governmental Activities - Internal Service Funds Total Equipment Fleet Employee Health Internal Service Replacement Replacement Care Funds ASSETS Current assets: Equity in central treasury (cash and investments) $ 1,926,673 $ 441,049 $ 3,053,707 $ 5,421,429 Deposits with others - - 6,371 6,371 Total current assets 1,926,673 441,049 3,060,078 5,427,800 Noncurrent assets: Property and equipment in service, at cost: Equipment 5,133,658 1,773,646 - 6,907,304 Less accumulated depreciation (2,718,821) (1,250,885) (3,969,706) Construction in progress 64,275 261,873 326,148 Total noncurrent assets 2,479,112 784,634 3,263,746 Total assets $ 4,405,785 $ 1,225,683 $ 3,060,078 $ 8,691,546 LIABILITIES Current liabilities: Accounts payable $ $ - $ 4,348 $ 4,348 Accounts payable capital and related financing activities 148 443 - 591 Total current liabilities 148 443 4,348 4,939 NET POSITION Investment in capital assets 2,479,112 784,634 - 3,263,746 Unrestricted 1,926,525 440,606 3,055,730 5,422,861 Total net position 4,405,637 1,225,240 3,055,730 8,686,607 Total liabilities and net position $ 4,405,785 $ 1,225,683 $ 3,060,078 $ 8,691,546 95 CITY OF KENAI, ALASKA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2025 Governmental Activities - Internal Service Funds Total Equipment Fleet Employee Health Internal Service Replacement Replacement Care Funds Operating revenues: Other revenue $ 457,191 $ 153,990 $ 3,184,015 $ 3,795,196 Operating expenses: Depreciation 238,131 60,974 - 299,105 Insurance/benefits - - 2,708,328 2,708,328 Miscellaneous 1,101 341 - 1,442 Administration - - 59,130 59,130 Total operating expenses 239,232 61,315 2,767,458 3,068,005 Operating income 217,959 92,675 416,557 727,191 Nonoperating revenues: Investment earnings 86,162 29,794 136,742 252,698 Change in net position 304,121 122,469 553,299 979,889 Net position - July 1 4,101,516 1,102,771 2,502,431 7,706,718 Net position - June 30 $ 4,405,637 $ 1,225,240 $ 3,055,730 $ 8,686,607 96 CITY OF KENAI, ALASKA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2025 Cash flows from operating activities: Receipts for interfund services Receipts for services from others Payments to suppliers Net cash provided by operating activities Cash flows for capital and related financing activities: Financing activities Acquisition of capital assets Net cash used by capital anc related financing activities Cash flows from investing activities: Investment earnings Net increase in cash and cash equivalents Cash and cash equivalents - July 1 Cash and cash equivalents - June 30 Reconciliation of operating income to net cash provided by operating activities: Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Miscellaneous expense Accounts payable Net cash provided by operating activities Governmental Activities - Internal Service Funds Total Equipment Fleet Employee Health Internal Service Replacement Replacement Care Funds $ 457,191 $ 153,990 $ 2,832,897 $ 3,444,078 - - 351,118 351,118 - - (2,771,975) (2,771,975) 457,191 153,990 412,040 1,023,221 (953) 102 - (851) (578,713) (391,037) $ (969,750) (579,666) (390,935) - (970,601) 86,162 29,794 136,742 252,698 (36,313) (207,151) 548,782 305,318 1,962,986 648,200 2,504,925 5,116,111 $ 1,926,673 $ 441,049 $ 3,053,707 $ 5,421,429 $ 217,959 $ 92,675 $ 416,557 $ 727,191 238,131 60,974 299,105 1,101 341 1,442 - - (4,517) (4,517) $ 457,191 $ 153,990 $ 412,040 $ 1,023,221 97 This page intentionally left blank 98 FIDUCIARY FUNDS Kenai Senior Connection - Through a management agreement, the City manages the donations of the Kenai Senior Connection, a 501(c)(3) not -for -profit entity, whose purpose is to support senior citizen activities within Kenai's city limits. The City's sole purpose is management of the Connection's donations; all decisions regarding the Connection's awards are made by the Connection and not the City. Kenai Community Foundation - Through a management agreement, the City manages the donations of the Kenai Community Foundation, a 501(c)(3) not -for -profit entity, whose purpose is to support museums, parks and recreation, music, fine arts, library, and historic purposes within Kenai's city limits. The City's sole purpose is management of the Foundation's donations; all decisions regarding Foundation's awards are made by the Foundation and not the City. CITY OF KENAI, ALASKA FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2025 ASSETS Equity in central treasury (cash and investments) Interest receivable Total assets LIABILITIES Accounts payable NET POSITION Restricted for organizations Total liabilities and net position Kenai Kenai Senior Community Total Connection Foundation Custodial Funds $ 1,391,261 $ 249,970 $ 1,641,231 3,695 650 4,345 $ 1,394,956 $ 250,620 $ 1,645,576 $ 174 $ 35 $ 209 1,394,782 250,585 1,645,367 $ 1,394,956 $ 250,620 $ 1,645,576 99 CITY OF KENAI, ALASKA FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2025 Additions: Investment earnings Less investment management fees Net investment earnings Total additions Deductions: Payments to others Net increase in fiduciary net position Net position -July 1 Net position - June 30 Kenai Kenai Senior Community Total Connection Foundation Custodial Funds $ 137,598 $ 26,641 $ 164,239 2,052 412 2,464 135,546 26,229 161,775 135,546 26,229 161,775 - 36,997 36,997 135,546 (10,768) 124,778 1,259,236 261,353 1,520,589 $ 1,394,782 $ 250,585 $ 1,645,367 100 STATISTICAL SECTION CITY OF KENAI, ALASKA This part of the City of Kenai's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Table I Net Position by Component Table 11 Change in Net Position Table III Governmental Activities Tax Revenues by Source Table IV Fund Balances of Governmental Funds Table V Changes in Fund Balances of Governmental Funds Table VI General Governmental Tax Revenues by Source Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the sales tax. Table VI Taxable Sales by Category Table VIII Sales Tax Rates — Direct and Overlapping Governments Debt Capacity These schedules present information to help the reader assess the affordability of the City's current level of outstanding debt and the City's ability to issue additional debt in the future. Table IX Ratio of Outstanding Debt by Type Table X Computation of Direct and Overlapping Debt Table XI Legal Debt Margin Information Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Table XI Demographic and Economic Statistics Table XIII Principal Employers Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the government provides and the activities it performs. Table XIV Full-time Equivalent City Government Employees by Fund Table XV Operating Indicators by Function Table XVI Capital Asset Statistics by Function Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. 17J O N O L0 O O O N O (O J (0 O M O O M (0 O O O M I— O Q O Lo ZT M N N N M fo M N N H N — N N V3 1 6PNI GrT 161311 ER 1 (R L1) O M L() N LL) L2 O O M Lo I� � O M B 00 M V ' V MO (00 � NO M N N M Lf) O N � � � N Ll7Ll7I�Ln lfi Cn LC) L(nO O M 00 N m 7 N 00 N hI� V (OON O O N NM V N M M N N O N N �N � N N O N W LO � N O O N 00 V O M N N O N M M N N O N N N M Ln LL) 7 O t` V Ln r— co (O �t O O Lo 00 O r- 00 -'1- 11 co 6) O O M N 00 N O O v N M m 00 O N M M() 0 00 N LN L�f) N � N EA EA ER ER EA ER N M O L() M 00 co 11 C7 Z 7 V - O M O (fl (O Ln V� (O Oil p V O 7 C I— V 1— 00 O) V (O O W N N Lo N M N Q N Z? 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I� c) I-- O lO -It 00 (0 M m M N V O 7 (D V V O r m Il- (n V m m h OD O M m CDm W r m (0 r m h V m (O (D P- O V (D V N N N 00 M N N M (O Cn N N r (0 V N N 6s (A EH In (O O h Cl) 0 I-- Cl) O co (D (O (0 N M CO M O V I-- N m v (O V V m N m CD r Ln N m OM M M m O N O (O co c0 m Cn O (O V V N M� m V N Ln O Cn � 00 N MrN CD M (O m co (O I� O N M (D (O (0 V O O V I-- N M I ( N M M W CD I (O m It r (O 00 0) r(D r (O D CDmOm m V l!7 N N 00 Ce) N N M 7 V N r N h lO N N Ef3 ER Ef3 N Cn l4 c N O (D O U)m Q N 0) O N 7 L) 7 N a) U U O 7 N L N x Z U c C N U U -00 N a) a) (6 U) U a) a) f/1 C C a) U _ > N N E C N O C 0 a) a) (6 N w Z E U Ca U 0 CO c o N .> f6 N (D d Co a) > 3 (T U is m U m > �U m o w i 2 (n c c' a) � N a) p� m c C co (n m (L O N C N� .N. � m c N o Y w �o o m 3 (o 3 m a) a>i c 0 E a)d c Y o �o e c . 3� m 3 CD c m r' m L Z O U E 0 E a) U V Y a) O ns > N O E >>� £ E E'ca a� LL' LL> Q Cn '6 > W L E c 7 a 0 m O a) O- E L O. N m 0 7 05 0 c� �cn a)>U oU m a a>c9adCL w C7 H m F IL (9 H N O u f- Cl) O �t O N Lz N V N OD O O Cl) M Lz O (D O (O L-- 7 CO O Cl) r 0) V '" V Cl) (O O C'!I� Cl) O O LOO I� Q) N O C)oc M O O N M M Cl) O O O I- M N N Cl) I� N 7 N U')O O O It O M Cl) 00 V N N O O O N Ll O' V V 7 r- r- N V O O V O O O N O N V V 613 V) 69 v3 00 00 N O o0 O N 00 0) 0)C, 7 V Cl) N N V O 7 O N oc LO It O LQ 00 Cl)— O N Cl) V O N U') Cl! 0) (O 00 O M_ OD 00 (D (O V N CO O O O OO Cl) N N O OD O N 00 00 N V W O R f- O O O O LO CO M O O N V 7 M V V oD G? V O) 00 R 0) V M S M S S O It O O dj V) 613 V) V) V) V) V) 7 O N O It N 7 0 00 00 OD O M f- 7 CO M O 0) r f— M O , O N O oD V N 7 00 Cl) O CD S N Ih (0 Cl) V 0) N O (D I- S W N O CO W O O r— N V r N Cfl (O M r-- N OO N(l) V N C) R It S M 7 (M o0 L-i 0) 0) O O N M W W V 0) N CO (O 00 O0 V) 61) V3 V? 69 69 69 Vj N LO V O S I-- V V O O t 0 0 O W N OD V O M co N- O O N N O V O M O CO CO O 7 L� O (fl O (O 0) O It O O O 00 (O N co Cl) O (O 00 V 0) (O 7 N N N 00 O I- N V LO O L C T. M W `-' N (O CO O N 7 O W (NO W M O) V O 00 00 � dj V) V) V) dj V) V) V) I, LO N O CO L: LO (0 N O O N — CO O (0 0) S o0 (O 00 LO M d) 0) o0 0) 00 W W OD N C 0) 0) CA 00 co(O O O LO 0) C,Cl)(0 O 0) O co O N OD O V (0 O (O V O (D V N M Cl) S h O M O O N 0) 0) O O O R t (fl N M 0) O O S 0) O N W S S Cl) OD (O W o0 O (0 64 V) VT 69 69 69 69 69 70 O O Cl) S V O 0) 7 (0 Cl) Cl) N N O I- M V N (� f-- O 00 (M 7 N 00 O O O O O It M O Z 7 C V N L- W S 7 O) V O O O M O M N = O N Cl) O 0) O O V 0 0 7 0 I-- n 00 O co F OZ C) O -It7 O O O 0) W O O O O 0) O O CO (O O M N N N M S O co M of N N N(l) f— M Cl) U� LO V a 0 N } O U F J Q (n (n V) (» V) V) (» va N U LL 0 N O 00 O OD O) Cl) OD O CO CO O O OD V r- V OD S O N Cl) O Cl) O CO N (O co O O N d LL L a1 oD Lq (V co O O 7 (O CO CO N O (O V LU Z V% O O � M 0)S M S-It N O W W O � OO W d) o o S 0) Z F m N V h I� M n— Cl) M LO LC) L J 69 V) 69 V3 69 fi) 69 EA Z U a U OD Cl) M O S V LO Cl) iz 0) OD 00 n = Q O h L-- N O -It LO I� (O O O N O h I- U M V CO OD OD VL Cl! O Cl! O O OD (O Cl! o0 00 U) M L- 0) (` 00 V N U) N N I� N h 0) p 0) Cl) C) M O S (O t N V Cl) (D O O oc OD I- L.- I- 0) v O M N O M M Cl) CO — N N V) V) V) V) V) V) V) V) 00 O OD O ;:, O O r- E O OD N W 7 NC, f- CO C,OD f� r OD Cl) S S V O Cl)S h O M Ih O M N O N V o0 O Ih N C) 0) Cl) r-- O O O CO OD N 00 0))I-- S O V CAC) M C 00 Cl)co OO C) (fl O O O O 7 S f� M r S 00 0) N O S O N V Cl) O N N N 69 V) 69 V) 69 69 69 V) O 1� r V M S N OD OD 0) O O O O N S M M L.- M Cl O V CO O N f- O O O (O Cl) M (O O S O 7 O 00 W 00 O N S N 0) O O N M O N N OD 7 O 00 N 0) N 7 O L- N I-- O 00 R O M M Cl) 7 Cl) N h O M V O Cl) Cl) S O O h N (O (O O CO O N O S S Cl) I- N N V) V) V) V) V) V) V) V) W N C O _ C (U 7 d _ a X CU C U) N t w U) N U) U Y C O Y O Y fA N C '> O O U) U) (U L •O V) U) '� U) U) .0 (U w N N N N U S c6 V ul E ul O N (U E C C d N A 0) 0) U N C (6 N (U •6) C U) N C N F. F. C :E N N (0 F+ C i- w C .� N 7 C ul 6 O. C N C > Z Z (O N D1 � x N (0 > Q ` CU d N co L > O> S` m co O S C C N 'N T m N N N O S N co N O S N O) N 0) (U 41 @ W C N C U) N Z N a) T y .N E @ N T (6 Oi CO E 4) T£ w (6 - T @ •W N O S E O o_ E N c 0) d O W > N N w C N E (A E N E ur co (U W a O O a ur E u a N (a X E N > O m ur N u> O a a w rn E a t () 0 .0 O- o a OX t m U> F C s F y (0 N > y (0 C N y (0 N LO > y CO m F F Z(7M F (7 C7 F m F F 0(9m F Cl) C) CITY OF KENAI, ALASKA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year Property Tax 2016 $ 3,782,538 2017 3,919,797 2018 3,868,445 2019 3,890,087 2020 3,955,484 2021 3,906,981 2022 3,989,661 2023 4,316,204 2024 4,440,189 2025 4,540,042 Sales Tax Total 7,247,938 $ 11,030,476 6,715,501 10,635,298 6,854,253 10,722,698 7,159,094 11,049,181 7,690,916 11,646,400 8,560,985 12,467,966 9,191,637 13,181,298 9,818,482 14,134,686 9,975,032 14,415,221 10,497,334 15,037,376 Table III 104 d Q F Q J Q zz W Y LL 0 W N 00 00 O) (0 Lf) CO Lf) O) (O O � O LO lf) N O Iq 00 N LO O') O) V N 00 � (O N O N O) L- 'IT LO O N O r r V W V N M N (D 00 00 (D LO t- r LO O (D 00 C6 V LO O W O W 00 V CO LO Lf) V V V O (D N O) Cl) O) -�t N CO N (O (3) O r V O Ln N 0 M N LO O) Cl) (O O) �... O N O � ccq M O (D I� O LO lf) coI-- N V O r M Lf) I" (D (Ocq 0 V M LO N 00 O) O) h CD O O V V O 00 't � LO OM Cl) W N OD LO Cl) (0 O M 00 ; N V N O) O Lf) N 00 r M to M O M (O Cl) O O (O CD W LO r M O CO M M I- L� N O M— N M CO co 0)N O Lo N N00 N (� fA fA fA M N LO N V T 01 W 00 O M ' N Lf) r I" N M M 00 O (D N OO N O) O M h O) CD O1 M LO N LO Lf) U') � O) Li) N Cl) W Q) (O O h co LO 00 I" 00 V 00 00 V L� N o0 V O) N OD N M M M 1- N r N O r V (D 613 1 69H 61311 to I 1 1 fA V Lo co LO (3) N Lf) 00 N h_ N r O M O Cl) LO 00 00 I� ' O O O O (O LO � N L� (O 't V Ll 't P') N Cl) 7 L- W W W M Cl) V co M M O NO ((DD co O N N N N p0 0 � N O M M CO (D N (D N O) U) V V 613 1 69H ON to I 1 1 fA Ln N (D O) Lf) N O O (D O co LO LO LO LO N_ V O ' O 7 N L- V M M r h r N O N 1- O O 7 V Cl) O O) N 7 W mO) O) M P') O U) r p N (D coI� (O 00 N N O M O Cl) V V (O 00 N Ln M Z c0� c0� V Z(A (A rfl (A I Q O(D 00 V 00 OD O O) M (D (C OD 7 I� CD O CD O M U O Ln CO N N ( O fD O N N M Q Q N V M N a M M — O t W LL 0 00 O N O) O LO (O N O) 00 0 N (6 N V N N Lf) Lf) co CO 00 J N N Cl) U) ;NQ 613, 61. 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O O � O d a5 > X °� °> a) m° c O m 0 co a) c a) a) N p) w > > N " a) U .0 N a) O C d O m C V m N N c) `co C 7 Q a) a) O L .OD - C z 4 i O_ U O_ , LL _ X N -O w C U A m C (tt a) C -0 OL a) > = N 7 7 a) O CU a) d rn O L (6 O a) (6 O L co >LLU) s � m aC�LLLLLL�¢U)00 ma -D 7 ° c w w w 0 z o CITY OF KENAI, ALASKA TABLE VI GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year Ended Total Property Sales June 30 Taxes Taxes Tax 2016 $11,030,477 $3,782,539 $ 7,247,938 2017 10,635,298 3,919,797 6,715,501 2018 10,722,698 3,868,445 6,854,253 2019 11,049,181 3,890,087 7,159,094 2020 11,646,400 3,955,484 7,690,916 2021 12,467,966 3,906,981 8,560,985 2022 13,181,298 3,989,661 9,191,637 2023 14,134,686 4,316,204 9,818,482 2024 14,415,221 4,440,189 9,975,032 2025 15,037,376 4,540,042 10,497,334 107 CITY OF KENAI, ALASKA Table VII TAXABLE SALES BY CATEGORY CURRENT FISCAL YEAR Administrative & Waste Management $ 1,504,559 Agriculture, Forestry, Fishing & Hunting 26,622 Arts and Entertainment 1,732,078 Construction Contracting 1,144,976 Educational Services 1,188,010 Finance and Insurance 193,058 Guiding 518,735 Health Care and Social Assistance 10,199 Hotel/Motel/Bed & Breakfast 6,120,786 Information 2,324,478 Manufacturing 1,268,041 Mining/Quarrying 435,203 Other 11,178,788 Professional, Scientific and Technical Services 4,067,544 Public Administration 4,202,300 Rental Commercial Property 405,077 Rental Non -Residential Property 1,713,638 Rental Personal Property 1,941,291 Rental Residential Property 6,366,044 Restaurant/Bar 2,595,169 Retail Trade 242,406,095 Services 6,139,683 Telecommunications 1,995,880 Transportation and Warehousing 501,887 Wholesale Trade 2,808,682 Total 302.788.823 City direct sales tax rate 3.00% Source: The Kenai Peninsula Borough Sales Tax Department. 108 Fiscal Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2024 2025 CITY OF KENAI, ALASKA SALES TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS City of Kenai 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Overlapping Rates Kenai Peninsula Borough 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Source: The Kenai Peninsula Borough Sales Tax Department. Total 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 TABLE VIII 109 Fiscal Year ZU"Ib 2017 2018 2019 2020 2021 2022 2023 2024 2025 CITY OF KENAI, ALASKA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General Obligation Bonds $ 1,530,000 1,445,000 1,355,000 1,260,000 1,165,000 935,000 850,000 760,000 665,000 565,000 Estimated Percentage of Personal Income 0.39% 0.35% 0.39% 0.34% 0.32% 0.25% 0.19% 0.17% 0.14% 0.12% Percentage of Estimated Actual Taxable Value of Property 0.18% 0.17% 0.16% 0.14% 0.13% 0.11% 0.09% 0.08% 0.07% 0.06% Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Personal income is estimated by using Kenai Peninsula Borough income to calculate per capita income and total income for City of Kenai. * Population data can be found on Table XII. CITY OF KENAI, ALASKA COMPUTATION OF DIRECT AND OVERLAPPING DEBT JUNE 30, 2025 Name of Governmental Unit Direct debt: City of Kenai, Alaska Overlapping debt: Kenai Peninsula Borough Central Peninsula Hospital Total overlapping debt Total Direct and Overlapping Source: The Kenai Peninsula Borough. Net Debt Outstanding $ 565,000 50,532,630 35, 595, 911 86,128, 541 $ 86,693,541 Percentage Applicable to this Governmental Unit M 100.00% 10.53% 13.95% TABLE IX Debt Per Capita $ 202.17 186.57 192.53 180.03 166.45 125.94 111.99 99.31 87.24 74.72 TABLE X City of Kenai's Share of Debt $ 565,000 5,321,086 4,965,630 10,286,716 Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Kenai. (1) The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by dividing the City's taxable assessed property values by those of the Borough. 11us R W J Lr) O LO LO CD LO LO 00 Lf) N OLO N NO N N 0) M CO G� N O N — O O O EH 619- m LO It 00 CD f- 00 O CN N � d7 EH (f} Gfl LO d7 N CN 00 00 00 O C N EH (f} Cn � LO M O O O (V EH (f} Z p LO LO o0 L" (0 O 0")_O (.0 Z ~ fn N Cc,W Y O Q 60- Q 0 w ? Z O CM O N co O— Q J Q p L) W Z V' rncyi o fA (q W LL CLOU N LL 2 w w60- L m ~ X ~ LLI LO Lf) O W p Q U) U J 00 N LO M cD O Z a N W O J Q �. 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