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2012-01-18 Council Packet
COUNCIL PACKET DISTRIBUTION MAKE 19 PACKETS Mayor City Manager Library ✓ Kebschull Council - 4 packets City Attorney Fire Department Student Rep. Clerk Finance ✓" Cunningham ='/ Hall Binder './ Clarion Schmidt KSRM Mellish v' 1< ELECTRONIC COPY NOTICE Send out notice to All with link to Council Packet DELIVER Council and Student Rep packets to Police Department Dispatch Desk. Clarion, KSRM, Mellish & Schmidt pick up their packets in the Clerk's Office. COUNCIL MEETING OF: Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY S V f, CM NAVARRE SR DALY M S W Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY Page M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE i' SR DALY M S Y Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE i' SR DALY COUNCIL MEETING OF: M S Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY Page M S Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V_ Mayor PORTER CM BOOKEY CM BOYLE l CM GABRIEL 7C VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY Page M S Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V_ Mayor PORTER CM BOOKEY CM BOYLE l CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY Page M S Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY ICM NAVARREi` SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY COUNCIL MEETING OF: Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY M S IV CM NAVARRE SR DALY Page 1 of M Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY S CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOOKEY CM BOYLE CM BOYLE CM GABRIEL CM GABRIEL VM MARQUIS VM MARQUIS CM MOLLOY CM MOLLOY CM NAVARRE CM NAVARRE SR DALY SR DALY Page 1 of M Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY S CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S ,V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY Page 1 of M Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY S CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY M S V Mayor PORTER CM BOOKEY CM BOYLE CM GABRIEL VM MARQUIS CM MOLLOY CM NAVARRE SR DALY AGENDA KENAI CITY COUNCIL - REGULAR MEETING JANUARY 18, 2012 7:00 P.M. KENAI CITY COUNCIL CHAMBERS http: / / www. ci. kenai. ak. u s A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval 4. Consent Agenda (Public comment 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 not nlal sequence on the agenda as part of the General Orders. B. SCHEDULED PUBLIC COMMENTS (Public comment limited to ten (10) minutes per speaker) 1. Dr. Henry Krull, Kahtnu Ventures - Ambulatory Surgery Center 2. Robert Ruffner, Executive Director Kenai Watershed Forum - Progress on Collaborative Efforts Between the City of Kenai and Kenai Watershed Forum C. UNSCHEDULED PUBLIC COMMENTS (Public comment Iimited to three (3) minutes per speaker; thirty (30) minutes aggregated) D. PUBLIC HEARINGS (Testimony limited to three (3) minutes per speaker; thirty (30) minutes aggregated) 1. Resolution No. 2012 -03 - Pertaining to the Authorized Investments of, the Investment Allocations of, and Establishing Appropriate Benchmarks to Measure Performance of the City's Permanent Funds. (Alaska Pet ntanent Capital Consultant Bert Wagnon requests 15 -30 minute review and discussion) Pg 1 2. Resolution No. 2012 -02 - Accepting a Grant Award from the State of Alaska, Department of Environmental Conservation - Division of Water in the Amount of $1,557,000 and Requiring a Local Match of $667,286 for the Installation of a Water Main from Lawton Drive to Angler Drive along Beaver Loop Road. Pg 25 City of Kenai Council Meeting Agenda Page 1 of 3 January 18, 2012 3. Ordinance No. 2603 -2011 - Amending Kenai Municipal Code Chapter 7.05, "Taxation of Real and Personal Property" by Adding a New Section "Property Tax Credit - Residential Sprinkler Systems," to Provide a Tax Credit to Owners of Residential Structures who Install Certain Qualifying Sprinkler Devices Pg 99 (Clerk's Note: At its December 21, 2011 meeting, Council postponed Ordinance No. 2603 -2011 to the January 18, 2012 meeting; motion to approve the ordinance is on the floor.] 4. Ordinance No. 2605 -2012 - Increasing Estimated Revenues and Appropriations by $6,046.52 in the General Fund for Police Training Reimbursements from Internet Crimes Against Children (ICAC). Pg 115 E. MINUTES 1. *Regular Meeting of January 4, 2012 Pg 119 2. *Amend Regular Meeting Minutes of December 7, 2011 (Clerk's Note: motion to "amend something previously adopted" is noticed) F. UNFINISHED BUSINESS G. NEW BUSINESS 1. *Ordinance 2606 -2012 - Increasing Estimated Revenues and Appropriations by $3,214.81 in the General Fund for State Traffic Grant Overtime Expenditures Pg 127 2. *Ordinance 2607 -2012 - Increasing Estimated Revenues and Appropriations by $10,990.27 in the General Fund for State Bureau of Highway Patrol Overtime Expenditures. Pg 131 3. Amend Resolution No. 2011 -74 - Adopting The City Of Kenai Capital Improvements Plan Priority Lists For State And Federal Funding Requests For The Fiscal Year 2013. Pg 137 (Clerk's Note: motion to "amend something previously adopted" is notice) 4. Action /Approval - Commission /Committee Reappointments. Pg 143 5. Action /Approval - Purchase and Sale Agreement between the City of Kenai and Ma & Pa Alaskan Treasures, Inc. for Lot 2, Block 1, Gusty Subdivision Pg 145 6. Action /Approval - Bills to be Ratified Pg 157 7. Action /Approval - Purchase Orders Exceeding $15,000 Pg 159 8. *Liquor License Renewal - Country Liquor, License #1308. Pg 161 City of Kenai Council Meeting Agenda Page 2 of 3 January 18, 2012 H. COMMISSION /COMMITTEE REPORTS 1. Council on Aging 2. Airport Commission 3. Harbor Commission 9. Library Commission Pg 163 4. Parks and Recreation Commission 5. Planning and Zoning Commission Pg 167 6. Beautification Committee I. REPORT OF THE MAYOR J. ADMINISTRATION REPORTS 1. City Manager Pg 175 2. City Attorney 3. City Clerk K. ADDITIONAL PUBLIC COMMENT 1. Citizens Comments (Public comment limited to five (5) minutes per speaker) 2. Council Comments L. EXECUTIVE SESSION - Regarding Matters the Immediate Knowledge of Which Could Have an Adverse Impact on the Finances of the City and to Give Direction to Administration: Cook Inlet Natural Gas Storage Alaska (CINGSA) - Mineral Rights, Easements and Pore Space. [AS 44.62.310(c) (1)] M. PENDING ITEMS 1. Ordinance No. 2597 -2011 - Amending Kenai Municipal Code 14.22.010, Land Use Table, to Make Comprehensive Changes to the Uses Allowed in the Suburban Residential (RS), Suburban Residential 1 (RS1), Suburban Residential 2 (RS2), Rural Residential (RR), Rural Residential RR -1, and the Urban Residential (RU) Zoning Districts. [Clerk's Note: At its November 16, 2011 meeting, Council postponed Ordinance No. 2597 -2011 to the August 1, 2012 meeting and the ordinance was referred back to the Planning and Zoning Comrnission so the Commission could continue to consider the changes proposed in this work product during the Comprehensive Plan process.] N. ADJOURNMENT ****************************************************** * * * * * ** * * * * * * * ** * * * * * * * * * * * * * ** INFORMATION ITEMS 1. Purchase Orders between $2,500 and $15,000 for Council Review.. Pg 221 2. Budget Transfer in Capital Projects in Excess of $5,000 - None 3. 2012 Gaming Permit - Our Lady of Angels Pg 223 City of Kenai Council Meeting Agenda Page 3 of 3 January 18, 2012 Leaden* to tuba urvi promote eomerrnlr "Renaissance of the Kenai Peninsula' SPONSORED BY: Peninsula Economic Development District and Kenai Peninsula Chapter of The Alliance Soldotna Sports Center, Soldotna, Alaska Thursday January 26th, 2012 8:30 Registration and Contineptal Breakfast 9:00 Welcome Niodu ator: Hal Smalley Kenai Peninsula Borough Assembly/KPEDD Board of Directors Cheryle James President of the Kenai Peninsula Economic Development District Owner: Wildman s, Cooper Land, Alaska Robert Favretto President of the Kenai Peninsula Chapter of the Alliance President of Favretto Consulting & Business Development 9:15 Workforce Development and Economic Overview Alyssa Shanks Economist III, Alaska Department of Labor and Workforce Development 9:45 Networking Break 10:00 Community Economic Outlook Mike Navarre, Mayor of Kenai Peninsula Borough Peter Micciche, Mayor of Soldotna Pat Porter, Mayor of Kenai David Seaward, Mayor of Seward Jim Hornaday, Mayor of Homer Keith Gain, Mayor of Seldovia 12:00 Lunch Keynote Speaker: Dan Fauske President, Alaska Gasliru Development Corporation 1:15 Legislative Update: Representative Representative Senator Mike Chenault (invited) Kurt Olson (invited) Torn Wagoner (invited) 2:00 1<enai Pcntn,aula'Native Corporations: Project Updates 2:45 Networking Break 3'00 State of Alaska Marc Luilcen,; Comniissioiir Department of Transportation Depariment of Natural Resources (invited) Department of Revenue (invited) 3:45 Peninsula Utility Updates the Gallagher, Homer Electric Association Enstai' (invited) 4:30 Reception/ No Host Bar 6:00 Dinner Guest Speaker: To be announced drfl OHO a INDUSTRY OUTLOOK FORU "Renaissance of the Kenai Peninsula" SPONSORED BY: Kenai Peninsula Economic Development District and Kenai Peninsula Chapter of The Alliance Soldotna Sports Center, Soldotna, Alaska Friday January 27th, 2012 8:30 Registration and Continental Breakfast 9:00 Welcome Moderator Peter Micciche Mayor, City of Soldotnu /KPEDD Board of Directors 9:15 Kenai Peninsula Resource Development Buccaneer Nordaq Energy Cook Inlet Drilling XTO Energy Furze Tesoro 10:30 Networking Break 11:45 Kenai Peninsula Resource Development (cont'd) Conoco Phillips 1-11/corp Energy Marathon Oil Pioneer Natural Resources Apache Oil & Gas Armstrong 12:00 Lunch To be announced Keynote Speaker: 1:15 Mining Lease Updates Dan Graham PacRim Coal ORMAT Geothernial Project, invited The Pebble Parhiershtp, invited .; PacRim Coal, Invited Don lin Creek Mtne, invited 3:00 Closing Remarks Agenda subject to change. 6 8 6 Sandra Modigh From: Robert Ruffner [robert @kenaiwatershed.org] Sent: Monday, January 09, 2012 8:42 PM To: Sandra Modigh Subject: Re: FW: Next council mtg Ms. Modigh, Here is my response to the questions in the fmm: Robert Ruffner - Executive Director Kenai Watershed Forum 44129 Sterling Hwy Soldotna, AK 99669 (907) 394-4664 Request 5 minute (total) for an update on the following topics (these could all be lumped into progress on collaborative efforts between the City and KWF: 1) Water Quality Monitoring 2) Fence at the Kenai Bird Viewing Platform 3) Culvert "touch -up" on Boat Launch Road 4) Educational Signage Next Council Mtg No equipment necessary 1/9/12 On Mon, Jan 9, 2012 at 12:21 PM, Sandra Modigh <smodigh(ilici.kenai.ak . us Good afternoon Mr. Ruffner; ote: Please complete the attachsed form to be placed on the city council meeting agenda for January i8 "', and return it to me, You can complete the actual form or provide the inform ation Ina response email. Let me knowi ou have any questions. Thanks; Sandra Modigh, CMC City Clerk City of Kenai ADD TO: January 18, 2012 REGULAR COUNCIL MEETING REQUESTED ADDITIONS /CHANGES TO THE PACKET REQUESTED BY: J -1: City Manager Report City Manager • Industry Outlook Forum "Renaissance of the Kenai Peninsula" Agenda CONSENT AGENDA E -2: Minutes • December 7, 2011 Meeting Minutes as Amended City Clerk spunafbledevelopment of Alaska!s Cal, Gas & Mineral Resources INDUSTRY OUTLOO "Renaissance of thee` SPONSORED BY' Kenai Peninsula Eco Soldotna:'Sports Center, Soldotna, Alaska S $0 ' t Registrailonand Conttneptal Breakfast }Y: 9:00 Welcome M derator b1; al Smalley Kenai Peninsula Boroughs Assembly /KPEDD Board of Directors Cheryle James President of the Kenai Peninsula Economic Development District Owner: Wildman's, Cooper Land, Alaska Robert Favretto President of the Kenai Peninsula Chapter of the Alliance President of Favretto Consulting & Business Development 9:15 Workforce Development and Economic Overview Alyssa Shanks Economist III, Alaska Department of Labor and Workforce Development §Q 6 El 9 :45 Networking Break 10:00 12:00 Community Economic Outlook Mike Navarre, Mayor of Kenai Peninsula Borough Peter Micciche, Mayor of Soldotna Pat Porter, Mayor of Kenai David Seaward, Mayor of Seward Jim Hornaday, Mayor of Homer Keith Gain, Mayor of Seldovia Lunch Keynote Speaker: Dan Fauske President, Alaska Gh 'Development Corporation 1:15 Legislative Update: Re eentative Mike Chenault (invited) Repxesentati t Kurt Olson.(invited) SenatorTomlla otter- (invited) 2:00 2:45 Kenai Peitz ve Corporafivils: Project ldpdates Marc Lui en Commissioner Departrnent of Transportatioi DepartmerifNatura t`Resources (invited) Departmento evenue (invited) 3:45 eninsula inlay Updates Joe Gating' her, Homer Electric Association Enstax (invited) 4:30 Reception /No Host Bar 6:00 Dinner Guest Speaker: To be announced. 7-4s 1--11* la TONG Ga GNOanfl IfaV130Palaa1r GIs Leaderddo to enitapte oiteter and promote eronotode development SW! -Jan responsible developroant of Alaska's 011, Gas E. Mineral 5 esourcts 4 di% INDUSTRY OUTLO IC FORUM "Renaissance of the Kenai eninsula" SPONSORED BY: Kenai Peninsula Ecommic an Kenai entitsula Chapter of The Alliance velopment District Sipldotna Sports Center, Saldotna, Alaska Friday, Janiiaty 27th, 2012 8:30 Zegistration and Continental Breakfast 9:00 'kW` Jr Wel.C4e, Moderator Peter Micciche Mayor, City of Soldotna/KPEDD Board of Directors 9:15 Kenai Peninsula Resource Development Buccaneer Nordaq Energy Cook Inlet Drilling XTO Energy Fade Tesoro 10:30 Networking Break 11:45 Kenai Peninsula Resource Development (cont'd) ConocoPhillips Hilcorp Energy Marathon Oil Pioneer Natural Resources Apache Oil. & Gas Armstrong 12:00 Lunch Keynote Speaker: To be announced Mining Lease Updates Dan Graham PacRim Coal ORMAT Geothermal Project, inutte The Pebble Partnership, invited PacRim Coal, invited Donlin Creek.Mi e, invited 3:00 Agenda subject to change. I e.iiy ° KEN AI, ALASKA MEMORANDUM TO: FROM: DATE: l illage with a Past a with a Future 17 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 V I I I 1992 Honorable Mayor and City Council. Members Sandra Modigh, City C January 17, 2012 Ak RE: Amending City Council Meeting Minutes of December 7, 2011 Adopted on December 21, 2011. The December 7, 2011 city council meeting minutes are provided for approval as amended on the January 18, 2012 council meeting consent agenda. A roll call vote, unanimously passed in favor of amendment by Substitution C to Ordinance 2587 -2011, was omitted and has been inserted. Amended language is underlined on page 3. For future reference, Pursuant to Robert's Rules of Order, to amend something previously adopted notice is required and can be fulfilled by notice of a meeting. However, without prior notice, a super majority vote is required. KENAI CITY COUNCIL - REGULAR MEETING DECEMBER 7, 2011 7:00 P.M. KENAI CITY COUNCIL CHAMBERS httn:/ /www.ci.kcnai.ak.us MAYOR PAT PORTER, PRESIDING MINUTES A. CALL TO ORDER Mayor Porter called the meeting to order at approximately 7:00 p. 1. Pledge of Allegiance Mayor Porter led those assembled in the Pledge of Allegiance. 2. Roll Call There were present: Mayor Pat Porter, Vice Mayor Ryan Marquis, Robert Molloy, Tim Navarre, Brian Gabriel, Mike Boyle and Terry Bookey, comprising a quorum of the Council. Also present were City Manager Rick Koch, Deputy City Clerk Corene Hall and Student Representative Austin Daly. 3. Agenda Approval Mayor Porter read the following changes to the agenda: ADD TO: Item D -1: Ordinance No. 2587 -2011 Emails from John Landua, Patricia Falkenberg, and Kristine Schmidt MOTION: Council Member Molloy MOVED to approve the amended agenda and requested UNANIMOUS CONSENT. Council Member Marquis SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 4. Consent Agenda MOTION: Council Member Marquis MOVED to approve the consent agenda and requested UNANIMOUS CONSENT. Council Member Bookey SECONDED the motion. There were no public comments. KENAI CITY COUNCIL MEETING December 7, 2011 Page 2 VOTE: MOTION PASSED UNANIMOUSLY. B. SCHEDULED PUBLIC COMMENTS 1. John Bost, Mikunda Cottrell -- FY2011 Comprehensive Annual Financial Statements. Mr. Bost reviewed the Report to City Council, Federal and State Single Audits, and the Comprehensive Annual Financial Report for fiscal year 2011. 2. Janna Hancock, Christian Mission Ministry -- Overview of Possible Services to the Kenai Area. Ms. Hancock reviewed the information included in the packet, noting the property being considered was the old Katmai Hotel, and noting the minis would include housing, counseling and job training. Porter asked what the kitchen would be used for. Hancock replied the kitchen would used as training and open as a restaurant to allow for income for maintenance of the building. ry Navarre asked about housing options. Hancock noted there were 33 rooms, half of which would house staff and businesses, and the other half for the men they were mentoring. City Manager Koch reported the Airport owned the land the building sits on, and the transfer of the lease would need Council approval. Porter asked about the schedule. Hancock noted once the lease was signed, there would be approximately 3 months for start up and door should be open in May or June 2012. C. UNSCHEDULED PUBLIC COMMENTS Mark Schrag, 312 Princess -- Mr. Schrag spoke in favor of a more balanced view on the Planning and Zoning Commission and noted his concerns with work on the Comprehensive Plan D. PUBLIC HEARINGS 1. Ordinance No. 2587-2011 -- Amending the Kenai Municipal Code, Chapter 14.05, Planning and Zoning Commission, to Add a New Section 14.05.015 Entitled "Appointment to Planning and Zoning Commission," Requiring Public Advertisement of Notice of Vacancies and Requests for Applications, and Establishing a New Procedure for Application, Nomination and Confirmation of Commission Members, and Defining the Term of Office. KENAI CITY COUNCIL MEETING December 7, 2011 Page 3 (Clerk's Note: At the November 2, 2011 meetirtg, the Council postponed Ordinance No. 2587 -2011 until the December 7, 2011 meeting, and will hold a work session on Monday, November 28, 201] at 6:00 p.m. Main motion to aonroue is on the floor) 2. Ordinance No. 2587 -2011 Substitute C -- Amending the Kenai Municipal Code, Chapter 14.05, Planning and Zoning Commission, to Add a New Section 14.05.015 Entitled "Appointment to Planning and Zoning Commission," Requiring Public Advertisement of Notice of Vacancies and Requests for Applications, and Establishing a New Procedure for Application, Nomination and Confirmation of Commission Members, and Defining the Term of Office. MOTION TO AMEND BY SUBSTITUTE C: Council Member Bookey MOVED to amend Ordinance No. 2587 -2011 by Substitution C. Council Member Marquis SECONDED the motion. Mayor Porter opened the meeting to public hearing. Colleen Ward, 708 Magic -- spoke in support of Substitute C with no amendments. There being no one else wishing to speak, the public hearing was closed. VOTE ON AMENDMENT BY SUBSTITUTE C: PASSED UNANMIOUSLY. Council Member Gabriel reviewed the history of the issue. MOTION TO AMEND: Council Member Gabriel MOVED to amend Ordinance No. 2587 -2011, Section 2(a)(3) by replacing "all" in the second sentence with "only", , and replacing everything after "shall be in the same sentence with considered for nomination ". Council Member Navarre SECONDED the motion. Bookey spoke against the amendment. Navarre spoke in favor of the amendment. Gabriel noted all applications are kept in the Clerks office and could be seen by the public through that office. VOTE ON AMENDMENT: Council Members voting YES: Council Members voting NO: MOTION FAILED. Porter, Navarre, Gabriel Molloy, Boyle, Bookey, Marquis KENAI CITY COUNCIL MEETING December 7, 2011 Page 4 Student Representative Daly voted YES. MOTION TO AMEND: Council Member Marquis MOVED to amend Ordinance No. 2587 -2011, Section 2(a)(3) by adding a period after "made" in the second sentence and deleting everything after. Council Member Bookey SECONDED the motion. VOTE ON AMENDMENT: MOTION PASSED. Council Members voting YES: Molloy, Porter, Navarre, Gabriel, Bookey, Marquis Council Members voting NO: Boyle Student Representative Daly voted YES. Marquis noted concerns about sunsetting applications after a certain time frame and noted all commission and committee applications should be sunsetted so he would not be amending the ordinance in that regard. VOTE ON MAIN MOTION AS AMENDED: MOTION PASSED. Council Members voting YES: Molloy, Boyle, Bookey, Marquis Council Members voting NO: Porter, Navarre, Gabriel Student Representative Daly voted YES. 3. Resolution No. 2011 -77 -- Approving the Purchase of Datacenter Equipment from Government Computer Sales, Inc. MOTION: Council Member Bookey MOVED to approve Resolution No. 2011 -77 and requested UNANIMOUS CONSENT. Council Member Molloy SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. (Clerk's Note: Council Member Marquis excused himself from the rest of the meeting at 8:09 p.m.) 4. Resolution No. 2011 -78 -- Authorizing a Fixed Interest Rate of 7.5% per Annum for Financing of the Sale of City -Owned Land Identified as Lot 2, Block 1, Gusty Subdivision to Ma & Pa Alaskan Treasures, Inc. MOTION: KENAI CITY COUNCIL MEETING December 7, 2011 Page 5 Council Member Bookey MOVED to approve Resolution No. 2011 -78 and requested UNANIMOUS CONSENT. Council Member Gabriel SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 5. *Liquor License Renewal • Uptown Motel /Louie's -- 1859 • Uptown Motel /Back Door Lounge -- 2237 • Acapulco Mexican Restaurant -- 4740 • Wal -Mart Supercenter #4474 -- 4878 APPROVED BY CONSENT AGENDA. E. MINUTES 1. *Regular Meeting of November 16, 2011 APPROVED BY CONSENT AGENDA. 2. *Work Session Notes of November 28, 2011 APPROVED BY CONSENT AGENDA. F. UNFINISHED BUSINESS -- None. G. NEW BUSINESS 1. Bills to be Ratified. MOTION: Council Member Bookey MOVED to ratify the bills and requested UNANIMOUS CONSENT. Council Member Molloy SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 2. Approval of Purchase Orders Exceeding $ 15,000. MOTION: Council Member Bookey MOVED to approve purchase orders exceeding 515,000 and requested UNANIMOUS CONSENT. Council Member Molloy SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. KENAI CITY COUNCIL MEETING December 7, 2011 Page 6 3. *Ordinance No. 2600 -2011 -- Increasing Estimated Revenues and Appropriations by $2,285 in the General Fund for Training Funds Provided by the Alaska Police Standards Council. INTRODUCED BY APPROVAL OF CONSENT AGENDA. 4. *Ordinance No. 2601 -2011 -- Increasing Estimated Revenues and Appropriations by $46,000 in the Personal Use Fishery Capital Project Fund. INTRODUCED BY APPROVAL OF CONSENT AGENDA. 5. *Ordinance No. 2602 -2011 -- Increasing Estimated Revenues and Appropriations by $618.50 in the General Fund for the Police Department to Purchase Equipment from Asset Forfeiture Funds Provided to the City Of Kenai. INTRODUCED BY APPROVAL OF CONSENT AGENDA. 6. *Ordinance No. 2603 -2011 -- Amending Kenai Municipal Code Chapter 7.05, "Taxation of Real and Personal Property" by Adding a New Section "Property Tax Credit — Residential Sprinkler Systems," to Provide a Tax Credit to Owners of Residential Structures Who Install Certain Qualifying Sprinkler Devices. INTRODUCED BY APPROVAL OF CONSENT AGENDA. 7. Action /Approval -- Reappointment to Commissions /Committees. MOTION: Council Member Bookey MOVED to confirm all appointments and requested UNANIMOUS CONSENT. Council Member Gabriel SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 8. Action /Approval -- Appointment to CIRCAC. MOTION: Council Member Bookey MOVED to confirm John Williams and requested UNANIMOUS CONSENT. Council Member Gabriel SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. II. COMMISSION/ COMMITTEE REPORTS KENAI CITY COUNCIL MEETING December 7, 2011 Page 7 1. Council on Aging -- No report. 2. Airport Commission MOTION: Council Member Bookey MOVED to confirm Kathy Roser to the Airport Commission and requested UNANIMOUS CONSENT. Council Member Gabriel SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 3. Harbor Commission -- No report. 4. Library Commission -- No report. S. Parks and Recreation Commission -- Bookey reported trail signage was discussed at the December 1, 2011 meeting. 6. Planning and. Zoning Commission -- Navarre noted the next meeting would be December 14, 2011. 7. Beautification Committee -- No report. I. REPORT OF THE MAYOR Mayor Porter reported the following: • She visited new business Legacy Beauty Salon. • She attended Christmas Comes to Kenai. • She completed mentorship with a student at Kenai Alternative High School. • She swore in new police officer Kevin Mepsted. • She met with the Chamber of Commerce and the Kenai Convention and Visitors Bureau regarding town lighting during the holidays. • She met with the general manager of Apache and noted seismic work would be done in the area. • She recommended review of the City Charter • She presented each Council Member with a gift certificate to "gift forward." J. ADMINISTRATION REPORTS 1. City Manager -- Koch reported the following: • Noted the date was Pearl Harbor Day. • Reminded Council Members about the December 19 work session with Legislators. KENAI CITY COUNCIL MEETING December 7, 2011 Page 8 Noted his excitement over Ordinance No. 2603 -2011 regarding a tax credit for residential sprinklers. • Met wi.th the Mayor, Parks and. Recreation Director Frates, Police Chief Sandahl and local skate park users to discuss skate park issues. Met with the Mayor and Borough Mayor Navarre regarding joint business issues. 2. City Attorney -- No report. 3. City Clerk -- Deputy City Clerk Hall reviewed the destruction of records memo included in the packet and noted this meeting was the "test tun" for the new Granicus web streaming software. K. ADDITIONAL PUBLIC COMMENT 1. Citizens Comments -- None. 2. Council Comments Bookey -- No report. Molloy -- Thanked. Deputy City Clerk Hall for her work in the Clerk's office during the past 6 months, thanked John Bost for his presentation, and recognized Finance Director Eubank for his work to make the audit a success, Daly -- Presented infoiuiation regarding Kenai Central High School, including holiday events. Bookey -- Thanked Hall for her service and thanked Mayor Porter for the "pay it forward" gift. Gabriel -- Echoed the sentiments of Molloy and Bookey regarding Hall and Bost, and noted the Alumni Hockey game would be December 23 at 7:00 p.m. at the Soldotna Sports Center. Navarre -- Reported the Mayor made a wreath for the National Guard Armory, thanked Eubank and his staff for a successful audit, requested an excused absence from the December 21 meeting, thanked Hall for her work in the Clerk's Office and wished all Merry Christmas. L. EXECUTIVE SESSION — None Scheduled. M. PENDING ITEMS 1. Ordinance No. 2597 -2011 -- Amending Kenai Municipal Code 14.22.010, Land Use Table, to Make Comprehensive Changes to the Uses Allowed in the Suburban Residential (RS), Suburban Residential 1 (RSI), KENAI CITY COUNCIL MEETING December 7, 2011 Page 9 Suburban Residential 2 (RS2), Rural Residential (RR), Rural Residential RR -1, and the Urban Residential (RU) Zoning Districts. (Clerk's Note: At its November 16, 2011 meeting, the Council postponed Ordinance No. 2597 -201 1 to the August 1, 2012 meeting and the ordinance was referred back to the Planning and Zoning Commission so the Commission could continue to consider the changes proposed in this work product during the Comprehensive Plan process.) N. ADJOURNMENT There being no further business before the Council, the meeting was adjourned at approximately 8:34 p.m. Minutes prepared and submitted by: Lorene Hall, CMC, Deputy City Clerk Village with a Past, Ci y with a Future" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 !r'I Telephone: 907- 283 -7535 / FAX: 907 - 283 -3014 III k EM© N DUM TO: Mayor Porter and City Councilors CC: Rick Koch, City Manager FROM: Krista S. Stearns, City Attorney DATE: January 18, 2012 SUBJECT: Agenda Item G.5, January 18, 201.2 Land Sale Agreement with Ma & Pa Alaskan Treasures, Inc. 1992 Ma & Pa Alaskan Treasures, Inc. has requested City financing for its purchase of Lot 2, Block 1, Gusty Subdivision. Administration is recommending that the City proceed with City finance which requires the City to accept a promissory note secured by a second deed of trust. The City Code allows the City to take a second position in a land sale if the there is sufficient equity in the property to cover the balance of the City's note. KMC 21.15.200(a)(1). Although this process is provided ,for in City Code, I strongly recommend against the City selling any City- owned property subject to a second deed of trust. This is an opinion I have previously shared with Administration and indicated that 1 would share with Council when the matter arose. If the Council wants to authorize this transaction, and it is within the Council and Manager's authority to do so, it should do so only under the standards that a commercial lending institution would do so. This recommendation is consistent with a line of City Attorney opinions recommending against the City taking security in property sold under a second deed of trust. Both Tiin Rogers and Cary Graves issued similar opinions with respect to different transactions, Former City Attorney Tim. Rogers correctly observed that "[t]he City is dealing with public assets and funds and does not have the same freedom and latitude that a [sic] private entity such as a private lending institution. The City is held to a higher standard of fiscal responsibility than is the case in the private sector since it is charged with a public trust." Former Finance Director Charles Brown also made a similar recommendation. 1 have attached copies of a few of these older memos for your review and information. Being in second position means that the City is at risk if the Ma & Pa Treasures cannot make payments under one or both deeds of trust. if Ma & Pa Alaskan Treasures Mayor Porter and City Councilors January 18, 2012 Page 2 of 2 defaulted, and the creditor under the first deed of trust forecloses, the City would have two choices: ignore the security and try to obtain a personal judgment from the buyer or preserve the security by re- purchasing the property at the foreclosure sale. Under the first option, a personal judgment is only worth as much as the buyer can pay. If the corporation is not adequately capitalized or funded, a personal judgment could be worthless. I have no information about the corporate value and stability of Ma & Pa Alaskan Treasures. Some of this concern could be reduced if the Lovealls, the officers and shareholders of the corporation, personally guaranteed the debt. Under the second option, the City would have to spend money to preserve its interest in the property. Regardless of any equity in the property, the City would might have to come up with a substantial sum to buy out the first deed of trust in the event of default. That sum could he in excess of $300,000 dollars. (It appears that the amount of the original deed of trust from 2006 secured a debt of $355,000. The public information does not indicate what the payment terms are or whether payments have been timely made.) It is exactly for these reasons that holders of first deeds of trust are reluctant to subordinate their interest in a property to a new lender. Another potential situation is that the buyer defaults only on the City's deed of trust. The City could foreclose its second position deed of trust or, perhaps, work out a deal with the buyer to transfer back the property to the City. But, the City would still have to make payments to the beneficiary of the first deed of trust and/or pay off that debt to have clear title to the property, assuming the buyer was also no longer making payments under the first deed of trust. This is not to suggest that the deal would, in the end, turn out badly. I have Little knowledge about the financial strength of the buyer and its ability to pay. My understanding is that it has provided the Administration with documents and information requested. But, as a legal matter, taldng a second position is to take an unenviable position with respect to the City's rights vis -a -vis the priority creditors. L:Council\MaPa Memo Second DOT 011812 TO: FR Council Members /City of Kenai i/ Tim Rogers, City Attorney City of Kenai DATE: MEMORANDUM, May 20, 1987 CITY OF KENAI oi 4 210 FIDALGO KENAI, ALASKA 89611 TELEPHONE 283 - 7535 RE: Remedies Upon Land Sale Defaults This memo discusses alternate remedies upon default by purchasers of City lands especially where the City is in other than a first secured position. SUIT ON Tiff NOTE One alternative would be a suit on the note. Suing on the note means that the City would forego a return of the property and look to the trustors for full payment of the note. In lieu of a suit on the note, we could accept of the trustors a confession of judgment. The problem with filing a suit on the note is that it is a civil complaint and it could take time to get through the court system. In the interim we could attempt prejudgment attachment of assets. Once this action starts though, the sharks will start circling and the inevitable result may be a bankruptcy proceeding.. Another problem with a suit on the note is that there have been very few done in Alaska and there is little court guidance and/or Alaska case law as to how to proceed. It is also important to remember that the trustors are liable individually. Generally, suits on the notes are recommended where the security is marginally adequate and the trustor is extremely solvent. In order to make this determination, we would need to hire an appraiser to determine how adequate our security is. We might also want to elicit responses from the trustor as to their solvency. DEED IN LIEU OF FORECLOSURE The trustor could simply deed the property back to the City in lieu of foreclosure. This might require some consideration from the City to the debtors. If the property were deeded back to the City, the City would essentially be in the position it was in before selling the property to the debtor. The problem will be if any senior lien holders decide to foreclose on their interests, they could possibly end up owning" the property if the City fails to act to secure its position. Pfl.PPF.,7AMPT_Mggclg.P.P.u.M. The non-judicial foreclosure is the most widely used remedy by beneficiaries faced with defaulting trustors. No court action is required and it results in a public auction of the property. The action concludes with the trustor being immune from a personal judgment for any deficiency should the sale of the property be insufficient to satisfy the debt owed to the beneficiary. Unlike judicial foreclosure, no right of redemption arises in the truster nor junior beneficiaries. If the City foreclosed, only those liens on the property subsequent to that of the City's would be removed, as clouds on the title, There would still be any senior deeds of trust. If those entities decided to foreclose, the City would have to, in essence, buy the senior deeds of trust in order to secure its position. Another alternative for the City is to do nothing. If the City did nothing, the City would essentially be waiting for any senior lienholders to foreclose. At that time the City would have to step in and protect its position by paying off any two senior deeds of trust. This could be expensive and it is uncertain how long this could take. In the interim, of course, we could hope for a workout, but this is not a guaranteed offering. PANWflcY If a bankruptcy was filed there would be certain impacts, The bankruptcy code provides for three different types of bankruptcy proceedings. Chapter 7, also referred to as straight bankruptcy, Chapter 11, also referred to as reorganization., and Chapter 13, commonly referred to wage-earner plan. In City land sales, it could. be any one of the three. If the matter goes into bankruptcy, there will be an automatic stay and all remedies of creditors will be postponed until the bankruptcy proceeding is terminated or there is an appropriate court order* If the debtors filed a Chapter 11 reorganization, they would be allowed to stay in possession of the property. This may be of benefit to the City rather than having a foreclosure battle, A Chapter 13 wage-earner play might also be invoked where the trustors individually liable as partners. If the matter went into bankruptcy court, it would be up to the Court to sort out the lien amounts and effect a final distribution. Once in bankruptcy the City could attempt to get a relief from the stay for foreclosure based upon inadequate protection. This relief from the stay may be available where there is lack of adequate protection such as keeping insurance current or a lack of "equity cushion" in the mortgage real estate. While the Legal Department has proceeded in the past with deed of trust foreclosures, the City was always in first position. That may not he the case in the future. The Council should consider a course of action which will allow for consistency in future similar situations. The City Attorney would again advise the Council not to subordinate its position in land sales. TR/cif 3 M E M O TO: Kenai City Council FROM: Charles A. Brown, Finance Director eQQ DATE: March 14, 1989 SUBJECT: Pizza Hut /Dan Roberts H -7 of March 15, 1989 Agenda Dan Roberts is requesting to purchase Lots 3A and 3B, Baron Park Subd., Lot 3 Addn_ He is requesting that the City accept a note that would be in second position to an existing bank loan. The City Code provides for this if adequate security exists. The numbers, based upon information given to me, work out as follows: Fair market value of Lot 3A Fair market value of Lot 38 Fair market value of Building Bank Mortgage (estimate) Excess Security Available $ 92,800 63,800 211,000 367,600 (95,000) 272,600 City note [($92,800 + $63,800) X .85] 3 133,110 Therefore, it appears the City could accept a second (refer to any Attorney opinion). Based upon recent experiences, 1 advise the Council to accept a second position note under absolutely no circumstances. CAB /tmh AGENDA KENAI CITY COUNCIL - REGULAR MEETING JANUARY 18, 2012 7:00 P.M. KENAI CITY COUNCIL CHAMBERS http: / /www.ci.kenai.ak.us A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval 4, Consent Agenda (Public comment limited to three (3) minutes per speaker; thirty (30) minutes aggregated) *A11 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 PUBLIC COMMENTS (Public comment limited to ten (10) minutes per speaker) 1. Dr. Henry Krull, Kahtnu Ventures - Ambulatory Surgery Center 2. Robert Ruffner, Executive Director Kenai Watershed Forum - Progress on Collaborative Efforts Between the City of Kenai and Kenai Watershed Forum C. UNSCHEDULED PUBLIC COMMENTS (Public comment limited to three (3) minutes per speaker; thirty (30) minutes aggregated) D. PUBLIC HEARINGS (Testimony limited to three (3) minutes per speaker; thirty (30) minutes aggregated) 1. Resolution No. 2012 -03 - Pertaining to the Authorized lnvesiments of; the Investment Allocations of, and Establishing Appropriate Benchmarks to Measure Performance of the City's Permanent Funds. (Alaska Permanent Capital Consultant Bert Wagnon requests 15 -30 minute review and discussion) Pg 1 2. Resolution No. 2012 -02 - Accepting a Grant Award from the State of Alaska, Department of Environmental Conservation - Division of Water in the Amount of S1,557,000 and Requiring a Local Match of $667,286 for the Installation of a Water Main from Lawton Drive to Angler Drive along Beaver Loop Road Pg 25 .ry of Kenai Council Meeting Agenda Page 1 of 3 January 18, 2012 3. Ordinance No. 2603 -2011 - Amending Kenai. Municipal Code Chapter 7.05, "Taxation of Real and Personal Property" by Adding a New Section "Property Tax Credit - Residential Sprinkler Systems," to Provide a Tax Credit to Owners of Residential Structures who Install Certain Qualifying Sprinkler Devices. Pg 99 [Clerk's Note: At its December 21, 2011 meeting, Council postponed Ordinance No, 2603 -2011 to the January 18, 2012 meeting; motion to approve the ordinance is on the floor./ 4. Ordinance No. 2605 -2012 - Increasing Estimated Revenues and Appropriations by $6,046.52 in the General Fund for Police Training Reimbursements from Internet Crimes Against Children (ICAC). Pg 115 E. MINUTES 1. *Regular Meeting of January 4, 2012. Pg 119 2. *Amend Regular Meeting Minutes of December 7, 2011 (Clerk's Note: motion to "amend something previously adopted" is noticed) F. UNFINISHED BUSINESS G. NEW BUSINESS 1. *Ordinance 2606 -2012 - Increasing Estimated Revenues and Appropriations by 33,214.81 in the General Fund for State Traffic Grant Overtime Expenditures.. Pg 127 2. *Ordinance 2607 -2012 - Increasing Estimated Revenues and Appropriations by $10,990.27 in the General Fund for State Bureau of Highway Patrol Overtime Expenditures. Pg 131 3, Amend Resolution No. 2011 -74 - Adopting The City Of Kenai Capital Improvements Plan Priority Lists For State And Federal Funding Requests For The Fiscal Year 2013 Pg 137 (Clerk's Note: motion to "amend something previously adopted' is notice) 4. A n /Approval - Com fission/ om to Rea pointments eakir 5. Action /Approval - Purchase and Sale Agreement between the City of Kenai and Ma & Pa Alaskan Treasures, Inc. for Lot 2, Block 1, Gusty Subdivision J�i orvC,(n, ma=r 6. Action /Approval - Bills to be Ratified 7. Action /Approval - Purchase Orders Exceeding $15,000.. 8. *Liquor License Renewal- Country Liquor, License 41308 Pg 143 Pg 145 Pg 157 Pg 159 Pg 161 City of Kenai Council Meeting Agenda Page 2 of 3 January 18, 2012 H. COMMISSION /COMMITTEE REPORTS 1. Council on Aging 2. Airport Commission 3. Harbor Commission 9. Library Commission.. Pg 163 4. Parks and Recreation Commission 5. Planning and Zoning Commission.. Pg 167 6, Beautification Committee I. REPORT OF THE MAYOR J. ADMINISTRATION REPORTS 1. City Manager.. Pg 175 2. City Attorney 3. City Clerk ADDITIONAL PUBLIC COMMENT 1. Citizens Comments (Public comment limited to five (5) minutes per speaker) 2. Council Comments L. EXECUTIVE SESSION - Regarding Matters the Immediate Knowledge of Which Could Have an Adverse Impact on the Finances of the City and to Give Direction to Administration: Cook Inlet Natural Gas Storage Alaska (CINGSA) - Mineral Rights, Easements and Pore Space. [AS 44.62.310(c)(1)] PENDING ITEMS Ordinance No. 2597 -2011 - Amending Kenai Municipal Code 14.22.010, Land Use Table, to Make Comprehensive Changes to the Uses Allowed in the Suburban Residential (RS), Suburban Residential 1 (RS1), Suburban Residential 2 (RS2), Rural Residential (RR), Rural Residential RR -1, and the Urban Residential (RU) Zoning Districts. (Clerk's Note: At its November 16, 2011 meeting, Council postponed Ordinance No. 2597 -2011 to the August 1, 2012 meeting and the ordinance was referred back to the Planning and Zoning Commission so the Commission could continue to consider the changes proposed in this work product during the Comprehensive Plan process" N. ADJOURNMENT ***************** AASJ c********* k* * * * *** **k *** *** *RAA1.*** * * ****A AA k * * *** * ***** ***Ahi. A ** INFORMATION ITEMS 1. Purchase Orders between $2,500 and $15,000 for Council Review Pg 221 2. Budget Transfer in Capital Projects in Excess of $5,000 - None 3. 2012 Gaming Permit - Our Lady of Angels. Pg 223 ezty of Kenai Council Meeting Agenda January 18, 2012 Page 3 of 3 EM. ALL U RESOLUTION NO. 2012 -03 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, PERTAINING TO THE AUTHORIZED INVESTMENTS OF, THE INVESTMENT ALLOCATIONS OF, AND ESTABLISHING APPROPRIATE BENCHMARKS TO MEASURE PERFORMANCE OF THE CITY'S PERMANENT FUNDS. CITY OF KENAI Suggested by: Administration WHEREAS, the City of Kenai Council is authorized to establish investment policies for the City's Permanent Funds; and, WHEREAS, the KMC 7.30.020 (b) permits investment of the Permanent Funds in various asset classes and the Council believes that establishing asset allocation criteria for these various asset classes is in the best interest of the City of Kenai; and, WHEREAS, the Council intends to annually review the asset allocations and performance of the Permanent Funds; and, WHEREAS, providing benchmarks to measure the performance of the fund is prudent. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the Council designates the following investments for the City's Peiuianent Funds: AUTHORIZED INVESTMENTS FOR THE AIRPORT PERMANENT FUND (1) Investments authorized by KMC 7.22.030 (2) Corporate obligations of investment grade quality as recognized by a nationally recognized rating organization. If, after purchase, these obligations are downgraded below investment grade, they shall be sold in an orderly manner within ninety days of downgrading. (3) Domestic Equities, which taken as a whole, attempt to mirror the characteristics et replicate the Standard &, Poor's 500 Index, including both mutual funds and exchange traded funds (ETF's). (4) Domestic Equities, which taken as a whole, attempt to replicate the Standard & Poor's 400 Mid -Cap Index, including both mutual funds and exchange traded funds (ETF's). (5) Domestic Equities, which taken as a whole, attempt to replicate the Standard & Poor's 600 Small-Cap Index, including both mutual funds and exchange traded funds (ETF's). (6) International Equities, which taken as a whole, attempt to replicate the Vanguard Europe, Australasia, Fax East (EAFE) Index, including both mutual funds and exchange traded funds (ETF's). (7) Equities, which taken as a whole, attempt to replicate the universe of domestic real - estate investment trusts as represented by the Vanguard REIT composite index, including both mutual funds and exchange traded funds (ETF's). Resolution No 2012 -03 Page 2 of 3 (8) Emerging Market Equities, which taken as a whole, attempt to replicate the Vanguard Emerging Market index including both mutual funds and exchange traded funds (ETF's). BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the Council adopts the asset allocations and performance measurement standards as follows: AIRPORT PERMANENT FUND ASSET ALLOCATION PLAN AND PERFORMANCE MEASUREMENT TARGETS Section 1: The Asset Allocation Plan and Target Weightings with range restrictions are as follows: ASSET CLASS TARGET % WEIGHTING RANGE % Fixed Income 45 40 -65 Large -Cap Domestic Equity 20 15 -25 International Equity 10 5 -15 Mid -Cap Equities 10 5 -15 Small -Cap Equities 5 0 -10 international Emerging Markets 5 0 -10 Real- estate equities 5 0 -10 Section 2: The performance of the Fund and investment managers will be measured as follows: Performance measurement of the Fixed Income allocation will be measured against the Target weighting, using the Bareleys Intermediate Government/Credit Index for the benchmark. Performance measurement of the Large -Cap Domestic Equity allocation will be measured. against the Target weighting, using the Standard & Poor's 500 Index for the benchmark. Performance measurement of the International Equity allocation will be measured against the Target weighting, using the Vanguard Europe, Australia, Far East (EAFE) Index for the benchmark. Performance measurement of th.e Mid -Cap Equity allocation will be measured against the Target weighting, using the Standard & Poor's 400 Mid -Cap Index as the benchmark. Performance measurement of the Small -Cap Equity allocation will be measured against the Target weighting, using the Standard & Poor's 600 Small-Cap Index as the benchmark. 2 Resolution No. 2012 -03 Page 3 of 3 Performance measurement of the International Emerging Markets allocation will be measured against the Target weighting, using the Vanguard Emerging Markets index as the benchmark. Performance measurement of the Real- Estate Equities allocation will be measured against the target weighting, using the Vanguard. REIT Composite Index as the benchmark. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day of January 2012. ATTEST: Sandra Modigh, City Clerk Approved by Finance: J 3 PAT PORTER, MAYOR KENAI, ALASKA �i Rick Koch, City Manager r /Aorta: Terry Eubank. Date: January 12, 2012 Re: Permanent Fund Authorized Investments and Asset Allocation Plan for CY2012. "Villas" with a Past, Ci with a Mare' FINANCE DEPARTMENT 210 Fidalgo Avenue, Kenai, Alaska 9 961 1 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014 Pursuant to KMC 7.30.020 the Council shall annually designate by resolution the authorized investments and allocation plan for the City's Permanent Funds. Resolution 2012 -03 reauthorizes the authorized investments and allocation plan used by the Fund since inception in September 2008. In April 2011, the City's General Land Sale Permanent Fund's investment methodology was ehanged to mirror that of the Airport Permanent Fund and $2,526,702 was transferred into the permanent fund account. S17,281,883, the Airport Permanent Fund Balance was invested in September 2008 and since the fund has transferred 82,174,288 to the Airport Special Revenue Fund for operations and had a market value of $20,920,217 at December 31, 2011. The portfolio has returned nearly 9.52% since September 2008. In contrast the City's investment portfolio has yielded between 3.0% and 0.34% for the same period. When originally adopted the investment model being used was projected to return 8.0% annually. Due to depressed rates in the fixed income portion of the portfolio (which constitutes 40 -65% of the portfolio's value) the current projected rate of return for the portfolio is 7.1% annually. This is the same rate of return that was projected this time last year. Risk of the portfolio is measured in standard deviation from the expected rate of return. One standard deviation is equal to about 66% of all possible outcomes and two standard deviations is equal to about 95% of all possible outcomes. 66% (one standard deviation) of the time, the portfolio is expected to return between (5.0) and 19.2 %, with an average return of 7.1%. 95% (two standard deviations) of the time, the portfolio is expected to return between (12.3) and 26.5 %. At this time it is not being recommended to change the portfolio's investments or their allocations. Over time it is expected that the fixed income markets will return to historic rates of return and should return the portfolios performance to the 8% level. 5 NYE'S E N 1 E V 1 E City of Kenai Airp t Endowment Fund for period ending December 31, 2011 ALASKA E .a APCM CAPITAL MRPtRVE1 EHT Agenda Portfolio Review & Per ance Appendix — Economy fat Financial Markets — Expenses Matter — Portfolio Appraisal PENT N HT. APC CAPITAL MAN R ME14T! PERMAN AP Portfolio Review • The account was established in September of 2008 with a deposit of $17 ..4 million in securities and cash. wlthdS ..i.s June 2009: $289,136 June 2010: $891,268 June 2011: $999,976 ➢ Market value of the fund as of December 31, 2011: $23,348,815 » Average annual return since inception: +9.52% • 2011 was a very volatile year. Equities had large price movements as political events, natural disasters, international turmoil, and the European situation all unsettled the markets. The fixed income rnarkets were impacted by the above, with a "flight to safety" move in U.S. Treasury securities driving very low rates even lower. The 10 year Treasury now yields less than 2 %. April 2011: $2,526,702 CAPITAL MANAGEME 2 Q Portfolio Revie Asset Allocation for City of Kenai Airport Endowment Fund as of December 31, 2011 Fixed Income US. Bonds 42.2% 45 %, 40-65 Equities 57.8% 55% Large Cap Equity 24.5% 20% 15 -25 N6d Cap Equity 8.9% 10% 5-15 Small Cap Equity 4.5% 5% O 10 International Equity 9.7% 10% 5 -15 Eruurging Ndlicets Equity 5.9% 5% 0-10 ea WS Bonds Large Cap Equity Real Estate Equity ° Mid Cap Equity M Suns ll Cap Equity ka Intern atiaral Equity 5 Emerging Markets Feuey Teta! 3 Real Estate Equity ALASKA PEnrvIANEfir. APCM CAPitAL MANAGEMENT 44% 5% 0-10 $9,849,456 $13,499,359 $5,710,752 $2,079,073 $1,056,533 $2,259,483 $1,369,064 $1.,024,454 348,815 PEfiiiiAN CAPITAL MA Portfolio Review Total Return 15% 5% -5% -15% -25% 1.45 -0.14 9.99 1 5.80 Account Performance Previous Year as of December 31, 2011 2.07 2.11 -2.08 -173 0.54 1.02 -78.85 -18.42 8-57 8,48 Total Account Eixed Income Large cap Equity Mid Cap EquHN 5malf Gap Equity Intl Equity Eme efng Markets Reel Estate Barclays Int GJC 5 6P 500 S &P 900 S &P 600 MSC! EASE MSCi Enters!ng S &P 0.5. REEF Performance is gross of fees. iitot Po 15% 10% c cc 5% ALASKA PERMANENT SNPITAL MMNROEMENY 0% -5% olio Review 1.45 -0.14 1 Year Account Performance as of December 31, 2011 929 9.85 3 Year m Kenai Airport Benchmark Performance fs gross of fees and annualized for periods greater than one year. Inception performance begins September 30, 2008. 9.52 10.04 Since Inception 5 r W Portfolio Review • Despite the high volatility, the overall portfolio ended the year approximately unchanged on a return basis. • On a relative basis, we did not perform well in 2011. In hindsight, our biggest shortfall was being worried about rising interest rates and watching them fall even further. The fixed income portfolio was positioned below benchmark duration and underweight U.S. Government securities which hurt relative performance. • Equity allocations were overall a detractor (overweight to emerging markets). • For 2012, we believe equities will outperform fixed income. With the U.S. Treasury 10-year note below 2% and the 2 -year at % of 1 %, the pricing appears very expensive. Corporate securities have relative value, offering higher yields and good supporting financials. num APCM CAFIFAL MANAGEMENT 6 ALASKA P1-R\ NEN 1 CAPITAL NAGEMENT CONWANY IS RELATIONSHIP DRIVEN AND VIEWS ITSELF AS A LONG:I-ERNI PARTNER. WITH ITS CLIENTS YOUR BUSINESS IS INWORA AN 10 US! VISIT US AT OUR WEBSITE: APCM.NE- PERMANENT APCM CAMnmrolormEM a1 ALASKA. . PERMANENT APCM CAPITAL MRNhOEMENT AU1 %A PERMANENT A CAM r4nIAL IA ■11•M.fN1 Economy & Financial arkets -9% Q3 2008 01 Q3 2009 Gross Domestic Product 01 032010 Q1 032011 Bloomberg Oil Price - West Texas Intermediate 1997 1999 2001 2003 2005 2007 2009 2011 Blnon1b rg 600 400 200 0 -200 -400 -600 Job Growth and Unemployment Rate Sep 10 Dec 10 Mar 11 Jun 11 Sep 3.1 Dec 11 __. Change in Payrolls jQ0's) """"":.-- .vl., lc' - .n<F�,e Bureau o Consumer Price Index (MY) 4% .l 11.0% 10.5% 10.0% 9.5% 90% 8.5% 8.0% Through ' Nov 30th 0% _. 2001 2003 2005 2007 2009 2011 Less Foal and Energy Bureau of tabor Statistics PWEIMAIISMI APCM meat enxnr tab r Econo y Financia UCiirkSti tame Cap S&P WO Mid cap S&P 400 Snail Cap 563 600 lnteinattottal Fgliities Aevernped M£Bf4'E Emerging 31.01 -r err, mi%Y 11.8 13.0 2.1 -17 1.0 14.1 145 17.0 7.7 -0.3 3.5 20.1 2.4 Commercial 3roperty Pev U5 REli 15.3 8.5 21.5 C,nrnaditivr pirrasrammohy 04 .138 6.4 10331 Bond Market n +rcrgm p?9ngar- 11 78 63 65 1 -3 yr US. IreamryfAgency pm.rc5 -.1-3 5:w 6.2 16 1.8 18 tat'ITreasury (neeer Ginfra syex -us 0.1 4.3 5.3 7.2 pings Yiek]'vs. Boa Bond Yield 7 e 411 .1 Meld: 5.3" S&P SOO Index Dec 31st 1,257.60 1600 400 1200 1000 00 00 1996 1998 2000 2002 2004 2006 2008 2010 2012 Bloomberg Source: £P- Morgan Asset Management Average asset allocation investor return Is hared op an analysis by 0alber int. - All returns are amnmlded land total return vrhere emelt- ble) and represent the '9A 96 '99 09 132 b4 '06- 'lib `'f0 '12 20 -year period ending 12/31110M match Dalbads most recent analysis. Sources: Standaz'd & Pools, Moody's, 1.P, Morgan Asset Management Data as of 12/31/2011. 10 Economy & Financial arkets Yield Curve Comparison 0% M 0 5 10 15 20 25 Bond Maturity Diu MA rERMAAr4S C4PRit MdMM:f WWT Bloomberg 12/312019 ++m±aa12 /31/2911 2011 Bond Total Return as of December 31, 2011 Barclays 6.23% 4.86% 30 6.02% Treasuries UPS Agencies MRS Munis Corporates CMOS 10 Year Treasury Note Yield 1% 2000 2002 2004 2006 2008 2010 2012 Bloomberg Corporate A Spread /10 Year Treasury 3% 2% 0% ' 1994 itMoorcucrg 1996 1998 2000 2002 2004 2006 Dec 31st 252 bps 2008 2010 2012 Current Outlook Economic Outlook The 11.5. economy is expanding modestly, but still faces major headwinds from the ongoing delevereging of consumer and financial balance sheets. The unemployment rate dropped to 8.5% last month. Job gains jumped to ÷202000 in December. Both the residential and commercial property markets remain sluggish GDP growth was +12% in Q3, up from +13% in 02. Q4 growth may be is the +34 %range. The consensus outlook cans for about +2-3% growth and a moderation of inflation In 2012. Fears of a double dip recession in the U.S. have receded. Worldwide GDP declined - 0.7% in 2009 and was +5.1 %in 2010. The IMFtorecests(5eptember 2011)world growth of +4.0% for 2011. This growth will likely be led by the emerging markets — many of which have had economies that continued to grow throughout the financial crisis_ The OECD (November 2011) said that growing doubts about the survival of Europe's monetary union has caused global growth to stall and represents the main risk to the world economy. It expects the 34 OECD nations to grow +L9% in 201.1 and +1.6 % in 2012, down from its +2.3 %and +2.8% prediction in May, Europe may experience a mild recession in 2017. Inflation Outlook inflation is up +3.4% year-over-year and the "core" rate is +2.1 %. 5011, inflationary pressures are likely to be rnuted given substantial unused capacity in the labor and product markets. However, volatile oil and commodity prices are a threat to the inflation outlook. WTI crude increased $7 last year and finished 2011 near $100 per barrel. Commodity prices have heen range bound for the past few months, but the Dow Jones UBS Commodity Index lost-13.3% in 2011. APC PEERMAlNE- ca,mt .nxnarnr Policy Actions The Federal Reserve is worried about slow economic growth and is maintaining a ZtRP (zero interest rate policy), committing to a federal funds rate close to zero until 2013. The Fed ended its $600 billion 0E2 bond buying program in June. They initiated "Operation Twist" io September to keep long rates low and announced that maturing MPS would be reinvested back into the mortgage market. The debt ceiling was raised this summer, hut not before a downgrade by sat of U.S. deht to AA +. The congressional "super committee" failed to achieve a consensus on reducing the deficit, so $1.7 trillion of "automatic" cuts will begin in 2013. Congress and the President extended last year's "temporary" payroll tax cuts and more unemployment benefits through February. This election is going to be a doozy fought over the economy and debt. Overseas, Europe continues to grapple with a banking "system that was more levered than the U.S. The ECB (extending 3 year loans at 1 %) and the IMF have taken significant steps to shore up confidence and provide liquidity to EU governments struggling with deficit/debt problems. Greece, Ireland, and now Portugal have accepted bailouts. Italy is now in the crosshairs as bond yields have shot up. Many countries have undertaken "austerity' measures to dose their budget gaps, but the market remains skeptical. Europe remains the major "wildrard" in the outlook! Bond Outlook Interest rates have traded in a narrow range for several months as signs of better economic growth offset a safe haven bid for high quality bonds. For the year, Treasuries were the best performers posting a +92% return, while the gains of spread product were In the +6-7% range. We remain short our benchmarks and overweight spread product. Treasuries are unattractive. Equity Outlook The equity markets recovered in the fourth quarter. For 2071, the S &P500 gained +2.d %while developed international stocks (EAFE) lost -12.11. Volatility retrains high. We generally like domestic large company stocks over smaller names. Globally we favor emerging markets over developed international (SAFE)_ IEITs have performed well, but they are overvalued in our judgment. Very low interest rates and reasonable valuations (the S&P 500 trades at 12x forward arnings) offset uncertainties in the Middle East, Europe, and budget pressures in the U.S. Junuory 2012 7.2 0 Expenses Matter ALASKA. PERMANENT APCM. CAPI1 L MM fflEMEfll APCM costs the City of Kenai 30 basis points on the first $10 million And 25 basis points on any amount over $10 million On a $20 million dollar portfolio: 30 bp x $10 rniliion 25 bp x $10 million Paid monthly in arrears 530,000 $25,000 $55,000 per year 13 Portfolio Appraisal CITY OF KENAI - AIRPORT PERMANENT FUND December 31, 2 011 ALASKA PEH.IYIANENT APCM CAPnAL MAnAOEMENT Yield Average Total Market Pct. Annual Accrued to Quantity Security Cost Average Cost Prke Value Assets Income Interest Maturi U.S. TREASURY 600,000 US TREASURY NOTES 0.628 %Due 12 -31 -12 400,000 0510635007 NOTES 1.250% Dun 10-31 -15 1,075,000 05 TREASURY NOTES 2.625% Due 11 -15 -20 Accrued interest AGENCIES 500,000 PNC FUNDING CORP - FDIC 60018ANTE10 2.30049 Due 06 -22-12 501)000 KNMA 2.87596 Due 12 -11 -13 500,000 FHLB 5.375% Due 05 -18 -16 250,000 FNMA 0.750% Due 11 -29 -16 450,000 VHLMC 4.875% Doe 0 813 -18 Accrued interest FNMA & FNLMC 211,834 FHLMC 4.00% 001710 4000 %Due 04 -01 -26 Accrued interest 4 CORPORATE BONDS 200,000 JOHN DEERE CAPITAI. CORP 4.950°6 Due 12 -17 -12 200,000 88085) 1011141RAWAY !NC 2.12596 Due 02.11 11 200,000 GLAXOSM)THKLINE CAP RIC 4.85016 Dos 05 -15-13 200,000 30YOTA MOTOR CREDIT 1.375% Due 08 -12 -13 200,000 240538K GOLD FINANCE CO. 6.125 %Due09 45-13 100.52 603,141 100.47 602,812 2.55 3,750 10 016 96.15 392,586 10256 410,252 176 5,000 852 057 101.12 1,087,030 107,66 1,157,302 4.96 28,219 3,544 1.69 4,506 002 2,082,756 2.174,872 931 4,506 10022 504,100 101.00 504,982 2.16 11,500 287 020 102.07 510,339 104.80 523,977 2.24 14,375 799 0.40 110.35 551,726 118.60 592,996 2.54 26,375 3.210 1.02 100.00 250,000 99.98 249,947 1,07 1,875 167 0.75 119.66 497,970 120.49 542,214 2.32 21,937 1,097 1,53 104.56 5,560 0,02 2,314,135 2,419,677 10.36 5,560 221,499 104.98 93.99 187,988 104.18 100.16 2111,312 101.69 93.74 187,474 105.83 101.03 202,052 100.93 111.45 222,898 108.07 222,388 0.95 8,473 706 2.06 706 0.00 ,094 0.96 706 208,351 D.89 9,900 385 0,58 203,390 0.87 4,250 1,653 039 211,666 0.91 9,700 1,239 0.57 201,860 0.86 2.750 1,062 0.79 216,138 0.93 12,250 3,607 1 -32 Portfolio Appraisal CITY OF KENAI - AIRPORT PERMANENT FUND December 31, 2 011 Quantity Security 200,000 IBM CORP 6,500% Due 10-15 -13 200,000 MERRILL LYNCH & CO 5.450'% Due 07 -15 -14 200,000 58 MORGAN 0145E & CO 4.750% Due 03-01-15 200,000 MORGAN STANLEY 6.000% Due 04- 28-15 200,000 HSBC FINANti CORP 5.500% Due 01 -19 -16 250,000 BRITISH COLUMBIA PROV OF 2.100% Due 05 -18 -16 200,000 CONOCOPHILUPS CI)A F00 FDG CO to 5.62591 Dne 10- 15 -16 tSi 200,000 STATOIL ASA 3.125% Due 08-17 -17 200,000 WACJIOVIA CORP 6L0841 MEDIUM 5.750% Due 02 -01 -18 200,0410 MCOONA -0S CORP0A /TJN 5.30091 'hie 03 -01 -18 200,000 GENERAL ELECTRIC CAP CORP. 5,625% Due 05 -01 -18 500,000 GOLDMAN SACIt5 GROUP 1NC 7.500% flue 02 -15 -19 Accrued Interest DOMESTIC LARGE CAP EQUITY FUNDS/Elf 45,504 SPDR 569 500 548 TRUST DOMESTIC MID CAP EQUITY FUNDS /ETF 23,731 I5HARESSP&P MIOCAP400 DOMESTIC SMALL CAP EQUITY FUNDSJETF 15,469 )SHARES S &P SMALLCAP 600 008X INTERNATIONAL FUNDS /ETF 73,767 VAt4G11490 MSC EAFE 537 EMERGING MARKET FUNDSJETF 35,830 VANGUARD EMERGING MARKET 578 'PERMANENT APCM CRPRM. MPRRREMENT Yield Average Total Market Pct., Annual Accrued to Cost Average Cost Price Value Assets Income interest Maturity 103.71 207,422 110.28 220,560 0.94 13,000 2;744 0.70 98.47 196,946 99.16 198,314 0.85 10,900 5,026 5.80 88.88 177,764 106.36 212,714 0.91 9,500 3,167 2.64 84.00 168,000 100.17 200,348 0.86 12,000 2,100 5.93 96.28 192,568 102.33 204,656 0.88 11,000 4,950 4.86 99.98 249,952 10405 260,120 1.11 5.250 627 1.15 89.87 175,748 116.75 233,506 1.00 11,250 2,375 1.94 10911 202,212 105.47 210,940 0.90 6,250 2,326 2.09 85.50 311,000 113.60 227,204 0.97 11,500 4,792 3.26 104.35 208,698 119.49 238,980 1.02 10,700 3,567 198. 84.71 169,416 112.00 224,000 0.96 11,250 1,875 3.49 116.51 582,570 110.44 552,205 7.37 37,500 14,167 5.69 55,662 024 - 3,707,020 4,080,614 17.48 55,662 98.88 4,499,556 125.50 0,710,757 24.46 NA 54.42 1,291,545 87.61 2,079,073 8.90 NA 47.91 741,084 63.30 1,056,533 4.52 NA 29.15 2,149,994 30.63 2,759,483 9.68 NA 28.67 1,027,402 38.21 1,369,064 5.85 NA Portfolio Appraisal CITY OF KENAI - AIRPORT PERMANENT FUND December 31, 2011 PEPMANENT CAPCM CAPITAL MnXMTMEMr Yield Average Total Market Pct. Annual Accrued to Quantity Security Cost Average Cost Price Value Assets Income Interest REAL ESTATE 17,653 VANGUARD REIT FT TREASURY BILLS 500,000 U5 TREASURY BUS 0.0005513 Due 05 -31 -12 31.37 554,025 58.00 1,024,454 4.39 NA 99.33 499,165 99.98 499,915 2.14 NA 0 0.04 CASH ANO EQUIVALENTS U.5II RECEIVABLE 1,875 1,875 4.01 NA Oiv�dend Anrnml 36,461 36,461 0.15 Wells Fargo Se■rted MoneyMarket Aron nt 412,948 412,948 1.77 451,284 451,284 123 TOTAL PORTFOLIO 19,539,465 23,348,815 100 310,955 66,433 W 'u. the ity CITY OF KENAI Ma ALQSKft RESOLUTION NO. 2012 -02 Suggested by Administration A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA ACCEPTING A GRANT AWARD FROM THE STATE OF ALASKA, DEPARTMENT OF ENVIRONMENTAL CONSERVATION - DIVISION OF WATER IN THE AMOUNT OF $1,557,000 AND REQUIRI,NG A LOCAL MATCH OF $667,286 FOR THE REPLACEMENT OF A WATER MAIN ALONG THE KENAI SPUR HIGHWAY AND TO INSTALL AN INTERTIE BETWEEN THE KENAI SPUR HIGHWAY AND LAWTON DRIVE WATER MAINS. WHEREAS, the City has received a grant from the State of Alaska, Department of Environmental Conservation - Division of Water for the replacement of aging water rnain along the Kenai Spur Highway and to install an intertic between the Kenai Spur Highway and Lawton Drive water mains; and WHEREAS, this is a 70% municipal matching grant in the amount of $1,557,000 requiring a local match of $667,286 for total project cost of $2,224,286; and WHEREAS, by acceptance of this grant, the Kenai City Council agrees to accept responsibility for the City to operate and maintain the proposed water utility improvements and the attached terms and conditions of the grant offer. NOW, T HEREFORE, BE IT RESOLVED BY TEIE COUNCIL OF THE CITY OF KENAI, ALASKA, the City accepts the grant award for Kenai - Water Transmission Main Phase III (MMG# 47552). BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, the City agrees to accept responsibility for the City to operate and maintain the proposed water utility improvements and the attached terms and conditions of the grant offer, PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day of January, 2012. ATTEST: Sandra Modigh, City Clerk PAT PORTER, MAYOR 25 o: c with a Past Cc t with a Fatuye 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 i1111l 1992 TO: City Council FROM: Rick Koch DATE: December 28, 2011 SUBJECT: Resolution 2012-02, Acceptance of Alaska Department of Environmental Conservation (ADEC) Municipal Matching Grant (MMG) The purpose of this correspondence is to discuss and recommend Council approval of Resolution 2012 -02. The project funded by this MMG is to replace approximately 3,200 lineal feet of aging 10' AC water transmission main, construct 2,500 lineal feet of new distribution main in the Swires Road right -of -way, and other related improvements. The grant is for $1,557,000, requiring a local match of $667,286 (30 %), resulting in total estimated project costs of $2,224,286. The funding source for the local match Is the Water and Sewer Fund. The fund balance for the Water and Sewer fund is approximately $1 million, or the amount identified as required to be on -hand to respond to two catastrophic incidents. The local funding for this project will be generated by the proposed increase in water and sewer fees beginning in FY 2013. This project is scheduled for design in FY 2013 with construction in FY 2014 and FY 2015. Thank you for your attention in this matter. If you have any questions, please contact me at your convenience,' 27 DEPT. OF ENVIRONMENTAL CONSERV'ATIO IVISION OF WATER MUNICIPAL GRANTS & LOANS PROGRAM Mr. Rick Koch City Manager City of Kenai 210 Fidalgo Avenue Kenai, AK 99611 SEAN PARNELL, GOVERNOR 555 Cotdava Street Anchorage, AK 99501 PHONE: (907) 269.7502 FAX: (9071209 -7509 http :/ /www.state .ak.us/ dec December 7, 2011 Received DEC 1 9 tm(s Dear Mr. Koch: Grant Offer: Kenai - Water Transmission Main Phase III (MMG #47552) In accordance with AS 46.03.030, the Department of Environmental Conservation (Department) is pleased to offer the City of Kenai (Grantee) a grant of funds not to exceed 31,557,000. This grant will design and construct approximately 2,500 linear feet of 10 -inch distribution main, replace approximately 3,200 linear feet of failing 10 -inch AC pipe, install needed appurtenances, and provide other related upgrades. This work is needed to replace failing AC pipe which is the sole connection to the water production facilities meeting the EPA arsenic rule, add redundancy to the system, and extend. service to residential areas served by wells contaminated with arsenic. The estimated cost of this project, as provided by the grantee, is $2,225,000. However, the grant amount is limited to the available appropriation of $1,557,000, and, pursuant to AS 46.03.030(e), 70 percent of eligible project costs. Therefore, eligible project costs under this agreement are limited to a total of $2,224,286 (70 percent of this amount is equal to the funding provided by this agreement). This grant will be administered by the Department using funds which were included in the State fiscal year 2012 capital budget bill (SS #46) allocation for this project. This offer is expressly conditioned upon the Grantee accepting the offer and agreeing to comply with the terms and Iimitations contained herein, in 2 AAC 45.010 (enclosed), in 18 AAC 73 (enclosed), and is based upon estimated eligible project costs as itemized below: I Total Estimated Eligible Project Costs 1. Administrative 1 30,000 2. Engineering Planning & Design 166,000 3. Construction Eng. & Management 199,000 1 29 City of Kenai MMG #47552 Page 2 of 5 4. Construction 1,658,000 5. Contingencies 172,000 f 6. Total Estimated Eligible Costs $ 2,225,000 7. State Grant $ 1,557,000 Adjustment of expenditures within the budgeted cost items is allowed, however, if actual project costs exceed the total estimated eligible costs; a revised grant application must be submitted before additional funding can be committed, If actual project costs are less than the estimated costs, the grant will be reduced to the extent necessary to comply with the percentage limitation set forth in this offer. Grant payments will be made when expenses have been incurred and documentation has been provided to the Department along with the payment request form, unless a payment schedule is established as a special condition of this grant. Payments will normally be made monthly, but no more frequently than twice per month. All requests for payment must be submitted on the enclosed Request for Payment form. GENERAL GRANT CONDITIONS 1. Plan Approval: The Grantee agrees to obtain plan and specification approval from the Department in accordance with 18 AAC 73.020 prior to issuing a Notice to Proceed with Construction to a contractor. 2. Contract Award and Contractor Bonding Requirements: a. The Grantee agrees to bid construction contracts exceeding $50,000. Adequate time (not less than 30 days) shall be allowed between the date of formal advertisement and the date the bids must be submitted. b. The Grantee agrees to submit procedures for award of cons t action contracts of less than $50,000 to the Departrnent for prior approval when means other than the competitive bidding process are proposed. c. The Grantee must require the contractor to furnish performance and payment bonds in accordance with AS 36.25.010. d. If local or federal ordinances or regulations also apply to the contract award or contractor bonding requirements for this project, the most stringent requirements shall apply. e. The Grantee agrees to provide the Department with a summary of itemized bid tabulations, a copy of the Notice to Proceed, and a copy of the construction contract. 3. Change Orders: The Grantee agrees that all project change orders will be submitted to the Department for approval in accordance with 18 AAC 73.020(e). 30 City of Kenai MMG #47552 Page 3 of 5 4. Project Completion: The Grantee agrees to provide sufficient local funding to match State and federal grant assistance and to ensure the completion of a properly functioning project in accordance with 18 AAC 73.020(j). 5. Operation and Maintenance: The Grantee agrees to operate and maintain the completed project. 6. Titles and Easements: The Grantee agrees to obtain all titles and easements necessary to provide clear title or authority to construct and maintain the proposed project. 7. Eligibility: The Grantee acknowledges that disbursement of progress payments by the State does not constitute acceptance of any item as an eligible project cost until all project costs are audited and determined to be eligible. Ineligible project costs must be included in the final audit report. 8. Inspection: The Grantee agrees to allow, at any reasonable time, Department inspection of all project work and audit of related records and data for which thr grant is offered. 9. Records: The Grantee agrees to maintain project accounts and r ecords which verify the grant eligibility of project expenditures. These accounts and records shall be kept apart from non -grant eligible local records and from those records maintained for the purpose of other State or federal grant programs involved in the project. 10. Progress Reports: The Grantee agrees to submit progress reports on the proposed project with each payment request or at a minimum, quarterly. 11. Project Start Date: The department will in its discretion, withdraw an accepted grant if construction has not been started within one year after the date of the offer was extended in accordance with 18PAC 73.030 (I). 12. Project End Date: Funds made available to a grantee under a fully executed, signed grant agreement by the department shall be expended within two (2) years from the effective offer date. The Department may cancel the project and seek to have the funds re- appropriated for other projects. An extension may be granted by the department upon written request and good cause shown by the grantee. 13. Remaining Funds after Project Completion: If the entire grant amount is not utilized for the original scope of work, the Department may seek to have the remaining funds re- appropriated for other projects on priority list. 14. Americans with Disabilities Act: The Grantee must certify that projects and services provided under this grant are made available to the general public in compliance with the Americans with Disabilities Act of 1990. 31 City of Kenai MMG"47552 Page 4 of 5 15. Discrimination: The Grantee agrees to administer this grant in a non- discriminatory manner. No person shall be discriminated against based on race, religion, color, national origin, gender or disability. 16. Damages: The Grantee shall hold and save the Department, its officers, agents, and employees harmless from liability of any kind, including costs and expenses, for or on account of any and all suits or damages of any nature, sustained by any person or persons or property, by virtue of performance of the grantee, or any person or entity acting in place of or for the Grantee for this project. 17. Grant Cancellation: The Grantee acknowledges the right of the Department to rescind this grant and seek recovery of payments already made if the Grantee has provided incorrect or misleading information to the Department or if a grant condition contained herein or in 18 AAC 73 is violated. This grant offer may be terminated at any time it is in the best interest of the State to do so. SPECIAL GRANT CONDITIONS None. Please carefully review this grant offer, the related grant conditions, and the enclosed regulations. If satisfactory, sign and return the original, along with a formal resolution accepting the grant enacted by the Kenai City Council. In the resolution the Grantee must agree to accept responsibility to operate and maintain the proposed water utility improvements and agree to the terms and conditions of this grant offer. Acceptance of the grant is required within six months to prevent revocation of the offer. No progress payments can be made until this grant offer is signed by the Grantee and returned to the Department. Nothing in this offer, whether or not accepted, may be deemed to constitute a contractual obligation on the part of the Department until a resolution of acceptance has been received. The Department is pleased to offer this assistance to the people of Kenai. Sincerely, „t rLJ Michelle Bonnet Director Enclosures: 2 AAC 45.010 18 AAC 73,010 Construction Grant Project Eligibility Request for Payment 32 cc: Senator Thomas Wagoner Representative Mike Chenault Accepted on behalf of the by: Typed Name City of Kenai M4MG447552 Page 5 o`5 Title Date Signature 33 Grantee STATE OF ALASKA MUNICIPAL GRANTS PROGRAM REQUEST FOR PAYMENT Grantee Address Project Name Grant Type: Grant No. Grant Period covered under this Payment Request Pay Request No Li Final Pay Request: Check box if ail project expenses are declared below. SUMMARY OF EXPENSES CLAIMED COST - CLASSIFICATION Awarded Grant Amount Cumulative Past Pay Requests Current Pay Request Total Eligible Expenditures 1. Administration 2. Legal 3. Engineering Design 4. Engineering Construction 5. Construction 6. Equipment 7. Other 8. Contingencies 9. Total ADEC Eligible Costs 10. Other Funding Sources 11. ADEC Eligible Grant (Percentage of Line 9): 50 %70 %85% i certify to the best of my knowledge and belief that the amount of this reimbursement Is in accordance with the terms of the grant offer; that this request for payment represents the correct ADEC Grant share due which has not beer previously paid; and that the work has been completed in accordance with approved Plans and Specifications, The subject project Is now approximately VG complete. Typed or printed name Tate Signature G3WwRM1FM.ILITIEV;m -1 Ciaat Grants and Lo ,S Pia Date DEP .: \.i NT OF ENVIRONMENT AL CONSERVATION Walter J. Hickel Governor John A. Sander Commissioner 18 AAC 73 CONSTRUCTION GRANTS As amended through November 24, 1994 35 Register 132, January 1995 ENVIRONMENTAL CONSERVATION CHAPTER 73. CONSTRUCTION GRANTS Section 10. Construction grant project eligibility 20. Terms and conditions of grant awards 30. Application procedures 40. State grant share 50. Grant payment procedures 60. Definitions 18 AAC 73.010. CONSTRUCTION GRANT PROJECT ELIGIBILITY. (a) An Alaslca municipality, or a combination of municipalities, may apply to the deponent, if money is available, for a grant for a public (1) water quality enhancement proiec (2) water supply, treatment, or distribution system; (3) wastewater collection, treatment, or discharge system; or (4) solid waste processing, disposal, or resource recovery system. (b) Grants administered under this chapter are available for new construction, in.clu replacement, upgrade, expansion, and extension of service lines. (c) Grants administered under this chapter are not available for (1) the operation, maintenance, and repair of an existing system; of (2) the construction of a storm sewer system, unless the system (A) is part of an approved water quality enhancement project; or (B) separates storm water runoff from a sanitary sewer system. g (d) A project to construct a public water supply system is eligible for a grant under this chapter only if the area to he served has either a sewage disposal system or a department- approved construction plan and schedule for a sewage disposal system. An approved sewage disposal system may include onsite disposal if the system conforms with standards established in 18 AAC 72. 36 Register 132, January 1995 ENVIRONMENTAL CONSERVATION (e) A project to construct sewage collection lines, trunk tines, interceptors, force mains, or pump stations is eligible for a grant under this chapter only if adequate sewage treatment facilities exist, or will exist, after the project is complete, For purposes of this subsection, an "adequate sewage treatment facility" is one that confom-is, or is on an approved schedule to conform, with the standards established in 18 AAC 70 and 18 AAC 72 and that has sufficient capacity to treat the increase in flow that will result from the project for which a grant is sought. (f) Grant-eligible. costs may be incurred up to 120 days before the date of the state grant offer. Grant- eligible costs include construction, equipment, engineering, legal, and administrative expenses that are incurred as a direct result of the project, or that are otherwise directly attributable to the project, with the following conditions: (1) if approved by the department, the costs of engineering design, construction management, inspections, and actual construction performed in -house are eligible for grant reimbursement; force account labor and equipment charge rates must be approved by the depaatL .ent before expenses are incurred against the grant; force account rates may include salaries except as provided in (g) of this section, benefits, and vacation and sick leave, and must be submitted in a format specified by the department; (2) the capital costs of landfill operating equipment are eligible for grant reimbursement; the department will determine the eligibility of equipment costs, based on the size and type of equipment required to perform the work and the percentage of time the equipment is to be used for activities other than operation of the Landfill; (3) the costs of preparing project. speck facility plans and feasibility studies, planning reports, as -built drawings, and operation and maintenance manuals are eligible for grant reimbursement; and (4) for a water quality enhancement project, the costs of preparing reports, testing, research, education, enforcement, and cleanup programs directed toward discovering or solving potential or existing water pollution problems are eligible; before a grant will be made for these expenditures, a grantee must have a department- approved program plan. (g) Grant- ineligible costs include expenditures associated with acquisition of land and rights -of -way; purchase of privately -owned water, wastewater, and solid waste facilities; interest and financing; formation of local improvements districts; operation, maintenance, or system repair; preparation of grant applications; salaries of existing administrative staff working normally- scheduled hours; and vehicles used to collect and transport solid waste from its point of generation to a point of disposal. Notwithstanding the provisions of this subsection, the following costs are eligible for grant reimbursement_ (1) the cost of land when used for a solid waste landfill site or as an integral part of a treatment process; 37 Register 132, January 1995 ENVIRONMENTAL CONSERVATION (2) portable compaction units, if part of a solid waste transfer system, and the vehicles necessary to transport these units to a landfill or processing site; (3) the cost of a one -time closure of a solid waste disposal site or conversion of a disposal site to a. landfill that meets the standards in 18 AAC 60; eligible costs inay include fencing, access roads, covering of waste, signs, scales, trenches, and monitoring wells, but not cover material in excess of the amount generated during construction of the facility; and (4) water and sewer service connections, but only for those portions constructed on public property or within a utility easement reserved iu th.e public domain. (Eff. 12/10(77, Register 64; am 6/11/81, Register 78; am 12/23/88, Register S08; am 11124/94, Register 132) Authority: AS 46.03.020(10) AS 46.03.030 AS 46.03.090 AS 46.03.720 18 AAC 73.020. TERMS AND CONDITIONS OF GRANT AWAR.DS. (a) The grantee shall submit plans and specifications that define a proposed project under this chapter to the department for review and approval before the start of construction. A project will not be eligible for a grant under this chapter if the grantee issues a notice to proceed with construction to a contractor before obtaining departmental approval of construction -ready plans and specifications. (b) The department will review plans and specifications based on. generally accepted engineering design standards, including those specified in 18 AAC`. 60, 18 AAC 72, and 18 .A.AC 80. The department will, in its discretion, waive the requirements to prepare project= specific facility plans and feasibility studies, planning reports, as -built drawings, and operations and maintenance manuals for less complex projects. (c) The grantee shall obtain. the services of a registered engineer to inspect work performed under contract and to supervise or direct work performed under force account procedures approved by the department under 18 AAC 73.0100)(1.). (d) The plans and specifications for a construction project receiving grant asststance under this chapter must be prepared and signed. by a registered engineer. (e) The grantee shall submit copies of all change orders to the department for approval. Change orders need not be submitted before work begins. A change order is eligible for grant reimbursement only if approval, is obtained before the department conducts the project field audit. 38 Register 132, January t995 ENVIRONMENTAL CONSERVATION (f) Construction contracts for work that is estimated to exceed £50,000 in cost may he awarded only through a competitive bidding process with at least 30 days advertising before award, unless an alternative method is approved by the department. Cuust uction contracts for less than $50,000 may be negotiated if the department approves the grantee's solicitation and negotiating procedures. (g) The grantee shall submit to the department, for review and concurrence, a tabulation of all bids received, a complete copy of the lowest bid, a copy of the notice to proceed with construction, and a copy of the constriction. contract. The contract. must he awarded to the lowest responsive, responsible bidder, unless the depattntent waives this requirement. The department will withhold grant payments pending review of and concurrence with the bid tabulation, the notice to proceed, and construction contract. (h) Project sites, materials, and records are subject to inspection and audit by the department. The department will give adequate notice to the grantee and will schedule inspections at a reasonable time. (i) A grantee shall maintain project accounts and records supporting the grant eligibility of project expenditures. These records must clearly separate eligible and ineligible project costs. The grantee shalt maintain project accounts and records until the project field audit has been performed and the findings of and exceptions to the audit have been resolved. (j) The grantee, by accepting grant assistance under this chapter, agrees to construct and operate a system or construct a project awarded a grant under this chapter in accordance with the approved plans and. specifications. Failure to meet the requirements of this subsection may result in withdrawal of grant assistance. (k) The department will, in its discretion, include other terms and conditions in a grant offer that it considers necessary to ensure compliance with this chapter. (1) The grantee shall submit to the department for review and concurrence copies of all professional services contracts associated with the project. A professional services contract need not be submitted before work begins under that contract, A. professional services contract is eligible for grant reimbursement only if concurrence is obtained before the department conducts the project field audit. (Eff. 12/10/77, Register 64; am 6111181., Register 78; am 11/24/94, Register 132) Authority: AS 46.03.020(10) AS 46.03.030 AS 46.03.090 AS 46.03.720 39 Register 132, January 1995 ENVIRONMENTAL CONSERVATION app 18 AAC 73.030. APPLICATION PROCEDURES. (a) A grantee shall submit a grant at on package that consists of the following: (1) a. completed grant application request on a farm provided by the department; (2) a narrative statement of the general nature of the project that identifies project scope, Location, and costs; (3) a copy of any other state or federal grant application or notice of grant award to be used for financing the project; (4) a copy of a contract between the grantee and the architectural and engineering consultant who will be performing work on the project if available; this contract may be submitted at a later date and. is not required. to receive a grant; and (5) for water quality enhancement project, a program plan that describes (A) the project to be funded; (B) why the project is needed; (C) how the project will enhance the waters involved; (D) how the project will be accomplished; (13) an estimate of project cost, with a projection of'future costs caused by or related to the project; and (r) the specific results expected from th.. project. (b) Repealed November 24, 1994. (c) The department wilt make a grant offer for eligible project costs after it (1) reviews and approves the grant application under the cri teria established in this chapter; (2) determines that the costs for which a grant is requested are reasonably necessary to complete the project; and (3) determines that there is enough financing to complete the project. 40 Register 132, January 1995 ENVIRONMENTAL CONSERVATION (d) The grantee shall submit a resolution accepting the grant offer, adopted by the governing body of the municipality, or by the governing body of each municipality if the project is a joint venture of municipalities. In the resolution, the municipality must agree to accept responsibility to operate and maintain the proposed water, wastewater, or solid waste processing, disposal, or resource recovery system or to conduct the water quality enhancement project and must agree to the teuus and conditions of the grant offer. No action by the department will be considered as creating a contractual obligation on the part of the state until the resolution has been submitted td the department. (e) The department will, in its discretion, withdraw any grant offer that is not accepted within 180 days after the date the grant offer is extended. (f) The department will, in its discretion, withdraw an accepted grant if construction has not been started within one year after, the date the grant offer was extended. (Eff. 12/10/77, Register 64; am 6/11/81, Register 78; am 12/13/88, Register 108; am 11/24/94, Register 132) Authority: AS 46.03.020(1.0) AS 46.03.030 18 AAC 73.040. STATE GRANT SW .RE. (a) For the purpose of calculating grant share percentages under AS 46.03.030(e), the department will use population figures determined by the Department of Community and Regional Affairs, based on the most recent figures available from the United States Bureau of the Census or other reliable population data. If a grant application is made by a borough or unified municipality on behalf of a city, service district, or other entity within the borough or unified municipality, the grant percentages will. be based on the population of the borough or unified. municipality, (b) If the award of a grant under AS 46.03.03O(e) would result in a grantee obtaining financing in excess of 100 percent of eligible costs, the state grant will be limited to the amount required to complete 100 percent financing of eligible project costs. (c) A grantee may match the state grant share with any combination of (1) local money; (2) federal money; and (3) state money other than money received under this chapter or AS 37.06. (Eff 12/10/77, Register 64; arm. 6/11/81, Register 78; am I2/23/88; Register 108; am 11/24/94, Register 132) Authority: AS 46.03.020(10) AS 46.03.030 41 Register 132, January 1995 ENVIRONMENTAL CONSERVATION 18 AAC 73.050. GRANT PAYMENT PROCEDURES. (a) The department will make progress payments in. conformity with the procedures established in this section. The grantee shall request payments on fortes provided by the department and shall include supporting documentation. as part of each payment request. (b) A request for final payment of the grant must be accompanied by a final cost statement. and certification by the grantee that the system is complete and operable or that the project is complete. Expenses incurred of reported after this certification will not be eligible for reimbursement under the grant. After reviewing a request for final. payment, the department will process a payment equal to 90 percent of total eligible reported costs, less any progress payments made under (a) of this section. The department will withhold 10 percent of the grant payment pending an audit under (c) of this section. For good cause shown, the department will, in its discretion, waive the requirement to withhold the final. 10 percent of a grant. (c) Final payment of the grant will be based. upon actual eligible project costs, as determined by audit and will be limited to those costs reported on the final payment request. The department will, in its discretion, waive the requirement for an audit under this subsection. (d) Before final payment is made, (1) the grantee shall submit to the department a copy of the as -built drawings of the completed project prepared by the grantee under 18 AAC 60, 18 AAC 72, or 18 AAC 80; and. (2) the department will, in. its discretion, conduct a final project inspection to inc construction compliance with the as-built drawings submitted under (a) of this section. 12/10177, Register 64; am 6/11/81, Register 78; am 11/24/94, Register 132) Authority: AS 46.03.020(10) AS 46.03.030 AS 46.03.090 AS 46.03.720 18 AAC 73. 060. DEFLNITI.ONS. Unless the context indicates otherwise, in this chapter (1) "as -built drawings" means the original plans and specifications prepared for construction or installation and approved by the department, corrected to reflect how a facility was actually constructed or installed; (2) "change order" means a written order to the contractor authorizing (A) an addition, deletion, or revision in the work within the scope o contract documents; or 42 the Register 132, January 5995 ENVIRONMENTAL CONSERVATIO (B) an adjustment in contract price or tune; (3) "construction- ready" means plans and specifications that are signed and sealed by a registered engineer and are ready for bidding purposes; (4) "department" means the Department of Environmental Conservation; (5) "eligible project costs" means those project costs that conform to the requirements of AS 46.03.030(d) and this chapter; (6) "final cost statement" means an itemized list of all eligible and ineligible project costs and a statement of total funding for the project; (7) "force account" means work performed by the grantee with its employees; (8) "grantee" means a municipality, or combination of municipalities, that has received a construction grant offer under this chapter; (9) 'registered engineer" rneans an engineer registered under AS 08.48.21 1; (10) "sanitary sewer system" means pipelines or conduits, pumping stations, and force Trains, and all other appurtenant construction, devices, and appliances used. to convey human or industrial waste to a point of treatment and discharge; (11) "start of construction" means the effective date set out in a notice to proceed construction issued to a contractor; (12) "storm sewer system" means pipelines or conduits, pumping stations, and force mains; and all other appurtenant construction, devices, and. appliances used for conveying storm water drainage and runoff to a point of ultimate disposal or discharge; (13) "water supply system" rneans any source of water, intake works, collection system, treatment works, storage facility, or distribution system from which potable water is available for two or more individual. dwellings or business establishments. (Eff. 12/10/77, Register 64; am 6/11/81, Register 78; ana 12/23/88, Register 108; ant 11/24/94, Register 132) Authority: AS 46.03.020(10) AS 46.03.030 AS 46.03.090 AS 46.03.720 -8- 43 132, January 1995 ENVIRONMENTAL CONSERVATION Editor's notes. - AS 46.03.900 contains additional definitions that apply to this chapter. Sae of Alaska Audit Guide and Compliance Supplement for State Single Audits Department of Administration Division of Finance May 2011 4b TABLE OF CONTENTS SECTION 1`INTRODUCTION 3 Overview 3 |n& '' �ic�thoGu��p� � Effective Date 3 Purpose for the State Single Audit Regulation 2AAC45.010^.V8V 4 Definitions 4 Future Improvements 5 SECTION 2`REQUIREMENTS 6 State Singe Audit and Major Frograni Threshoids 6 Total Adjusted Expenditures Cornputation 6 Federa Pass-through Funds 6 State Programs identified io2A8C458lO(m) 7 Non-cash State Financial Assistance 7 Professional Standards 7 Audit Requirements 8 SECTION 3^REPORTING 9 Reporting Package 8 Schedule of State Finandal Assistance 10 Aoditu/sRepvrts 11 E_xamp|e: Schedule uf Findings and Questioned Costs 13 Summary Schedula of Prior Audit Findirigs and Correctve Acton Ptan 14 Exampte: Summary Schedule of Prior Audfl Findings 15 Example: Corrective Action Plan 16 II!ustrative Auditors Reports 17 SECTION 4' SUBMITTING SINGLE AUDITS 35 Where to Serid Audits 35 What m Submit for nCompioto Reporting Package 35 L.istirig of State of Ataska Agencies 35 SECTION 5 - QUESTIONS MW ANSWERS 37 SECTION V' REPRINT VF24AC 45 ..... ..~ ............ ~.~ .......... .... ......... ..._.. ............ .... ... 44 SECTION 7^ COMPLIANCE SUPPLEMENT ..~~."~^ 49 Compliance Supplement Overview. • 49 Granting Agency Contact Lisi 49 Genera Conipiiance Requirements 51 Page 2 46 May 2011 SECTION 1 - INTRODUCTION OVERVIEW The State of Alaska Audit Guide and Compliance Supplement for State Single Audits (the Guide) has been prepared to assist entities and auditors with state single audit preparation. It contains two major sections: Audit Guide: Covers general information, audit, and reporting requirements. It is prepared by the single audit coordinator's off ce with the State of Alaska. This once is located in the Department of Administration, Division of Finance. Compliance Supplement: Contains both the general compliance requirements, which are prepared by the single audit coordinator's office; and the specific requirements, which are prepared by the various State of Alaska agencies administering the state financial assistance programs. INTENT OF THE GUIDE To a significant extent, the State of Alaska Audit Guide and Compliance Supplement for State Single Audits is intended to parallel the federal Single Audit Act Amendments of 1996, and federal Office of Budget and Management (Federal OMB) Circular A -133 Audits of States and Local Governments, and Non -Profit Organizations (June 2007 Revision). EFFECTIVE DATE This Guide is effective for audits of fiscal years beginning July 1, 2010 and after, and supersedes the State of Alaska Audit Guide and Compliance Supplement for State Single Audits issued in May 2010. NONE OF THE MATERIAL IN THIS GUIDE SUPERSEDES OR REDUCES FEDERAL AUDIT REQUIREMENTS, Page 3 May 2011 47 PURPOSE FOR THE STATE SINGLE AUDIT REGULATION 2 AAC 45.010 - .090 The intent of the adoption and subsequent revisions to Alaska's single audit regulation 2 AAC 45 is to parallel the federal Single Audit Act Amendments of 1996 and OMB Circular A -133 to a significant extent. This enables the State to receive audits conducted for the federal government that also meet state agency information needs, resulting in an efficient and effective method of gathering information. State single audits are intended to meet the basic audit needs for all state agencies in a non - duplicative way. However, single audits do not entirely eliminate the possibility that some additional or different audit work may still be conducted on state awards. In some cases, agencies may need to conduct or request a program evaluation. Any follow -up work should build on the original single audit work. Prior to the single audit regulation: • Entities were frequently subject to multiple audits that were time- consuming, duplicative, and incomplete. • The overall state view was narrowed to a department level and some grants were never audited. Reasons for the state single audit regulation: • To promote accountability of state financial assistance. ▪ To increase the efficiency of the monitoring process. DEFINITIONS Audit Period — The entity's fiscal assistance. r in which the entity expended financial Department — Refers to the single audit coordinator's office in the Department of Administration, Division of Finance (the department). The department receives copies of all single audit reporting packages. After reviewing the reporting packages for timely submission; inclusion of required opinions, reports, and schedules; and conformance with professional standards, the department will distribute them to the appropriate state agencies. Entity (Recipient) - An organization receiving financial assistance from the State of Alaska. "Entity" does not include the University of Alaska or any other state agency, a for -profit entity, or a non United States based entity. Financial Assistance - State grants, contracts, provider agreements, cooperative agreements, all forms of state financial assistance to an entity, and all forms of state financial assistance provided through an entity to e third party. Financial assistance does not include: a Public assistance provided under AS 47. Ei Goods or services purchased for the direct administration or operation of state government. Page 4 48 May 2011 O Moneys advanced to an entity under one or more state loan programs. • Power cost equalization payments made to an electric cooperative on behalf of its customers. • Amounts received under state loan programs. • Scholarships, loans or other tuition aid provided to students, but paid to an educatidhal institution or their behalf. For a third party, "financial assistance" does not include goods purchased from the third party for direct administration or operation of the entity that received financial assistance. Known Questioned Costs — Those questioned costs specifically identified by the auditor in the audit conducted under 2 AAC 45. State Single Audit - Audits required under 2 AAC 45.010. Entities expending state financial assistance in amounts described in 2 AAC 45.010 are required to submit audits to the Department of Administration. Please refer to Section 6 for a complete reprinting of 2 AAC 45. Subrecipient — An entity that receives state financial assistance passed through from the original recipient. The subrecipient is responsible to meet the requirements of the assistance program. Vendor — An entity that receives a procurement contract for goods or services from a recipient. Vendor contracts are usually a result of a competitive bidding process. A vendor's responsibility is to meet the requirements of the procurement contract. FUTURE IMPROVEMENTS We appreciate your assistance in identifying improvements for future updates to the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Please direct your comments to: Colleen M. Campbell, Single Audit Coordinator State of Alaska, Department of Administration Division of Finance PO Box 110204 Juneau, AK 99811 -0204 Phone: (907) 465 -4666 Fax: (907) 465 -2169 E -mail: sinale.auditalaska.cov State Single Audit Website: htto: // fin. admix, .>tate.ak.us /dof!ssa /index.isoo _ Page 5 May 2011 49 SECTION 2 - REQUIREMENTS STATE SINGLE AUDIT AND MAJOR PROGRAM THRESHOLDS State Single Audit Threshold: Unless additional audit requirements are imposed by state or federal law, a recipient of state financial assistance that expends a cumulative total equal to or greater than $500,000 during the entity's fiscal year is required to submit an annual single audit., Please refer to the following section, "Total Adjusted Expenditures Computation" to calculate the cumulative total grant funds. Audit emphasis must focus on the most important areas. Because it is Impractical to audit all programs of every entity and still keep the single audit emphasis on materiality and efficiency, auditors are required to evaluate administration of "major programs." Major Program Thresholds: Major program categories for state financial assistance during an entity's fiscal year are as follows: grogram xpenditure $ 50,000 $ 75,000 $100,000 $300,000 Total Adjusted Expenditures' for All State Financial 'sssistarree Less than $1 million $ 1 to $ 5 million $ 5 to $20 million $20 to $50 million TOTAL ADJUSTED EXPENDITURES COMPUTATION For the purpose of determining whether or not the state single audit and major program thresholds have been met, follow these steps: Step #1: Start with the total expenditures from ALL financial assistance programs. Step #2: Deduct any: direct federal funding, federal pass- through funds, and any financial assistance from state programs identified in 2 AAC 45.010(m). Step #3: Add in any non -cash State financial assistance. Step #4: The remaining amount will be the Total Adjusted Expenditures for the purpose of determining whether the State single audit and major program thresholds have been met. FEDERAL PASS-THROUGH FUNDS Federal money passed to an entity by the Slate of Alaska is NOT considered to be state financial assistance. Page 6 50 May 2011 STATE PROGRAMS IDENTIFIED IN 2 AAC 45.010 (M) Financial assistance in the following form is excluded from the threshold calculation per 2 AAC 45.010(m). However, under 2 AAC 45.010(n), the excluded financial assistance in 2 AAC 45,010(m) is not exempt from compliance testing if the entity meets the threshold requirements under 2 MC 45.010(6). Please refer to Section 6 for a complete reprinting of 2 AAC 45 and the specific statute citations. • Community revenue sharing money provided under AS 29.60.850 - 29.60.879. • Aviation fuel tax money provided under AS 43.40.010. ® Electric and telephone cooperative gross revenue tax refunds provided under AS 10.25,570. ® Alcoholic beverage license fee refunds provided under AS 04.11.610. ® Fisheries tax refunds provided under AS 29.60.450, AS 43.75.130, and AS 43/7.060. • PERS!TRS relief funding under money appropriated to pay employer unfunded liability attributable to the entity under AS 14.25 and AS 39.35. • Money expended for projects that are solely managed, supervised, and controlled by the Alaska Energy Authority under AS 44.83 and turned over to the grantee at the conclusion of the project. NON -CASH STATE FINANCIAL ASSISTANCE State non -cash financial assistance such as free rent, donated property, or donated surplus property shall be valued at fair market value at the time of receipt or the assessed value provided by the state agency. Non-cash financial assistance values must be included in the total adjusted expenditures computation for the fiscal year in which it was received. PROFESSIONAL STANDARDS he current standards contained in and /or issued by: Auditors must comply w • American Institute of Certified Public Accountants (AICPA) Y Government Auditing Standards • Governmental Accounting Standards Board (GASH) ® The Alaska Administrative Code 2 AAC 45 • The 2011 State of Alaska Audit Guide and Compliance Supplement for State Single Audits Page 7 May2011 51 AUDIT REQUIREMENTS State Single Audit Requirements under 2 RAC 45.010: An entity that meets the state single audit threshold is required to have an independent auditor conduct an audit for the entire operations of the entity, The audit must be conducted according to the audit standards effective at the time of review for the audit period. Current audit standards are identified in the previous section, "Professional Standards." The audit package must include the reports listed in Section 3 — Reporting. Page 8 52 May 2011 SECTION 3 ° REPORTING REPORTING PACKAGE An entity that meets the state single audit requirements is required to submit a reporting package that includes the following: a Audited financial statements and notes to the financial statements, ® Schedule of State Financial Assistance. ® Auditor's reports - In an effort to make the reports understandable and to reduce the number of reports issued, the following format of reports is required: o Opinions (or disclaimers of opinions) on the financial statements and the Schedule of State Financial Assistance. o Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. o Report on Compliance with Requirements that could have a Direct and Material Effect on each Major Program and on Internal Control over Compliance in Accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. • Schedule of Findings and Questioned Costs. See example on page 13, Summary Schedule of Prior Audit Findings (as applicable). See example on page 15. • Corrective Action Plan (as applicable). See examp e on page 16. • Copy of any management letter issued by the auditor (as applicable). UNTIL THE DEPARTMENT OF ADMINISTRATION RECEIVES SUFFICIENT COPIES OF ACCEPTABLE AUDIT REPORTS, INCLUDING THE ITEMS NOTED ABOVE (AS APPLICABLE) THE AUDITEE HAS NOT MET THE AUDIT REQUIREMENT. Page 9 May 2011 53 SCHEDULE OF STATE FINANCIAL ASSISTANCE For each financial assistance award, the following information is required: 1. Name of state agency administering the award. 2. Program name and award number. 3. Expenditures for audit period. 4. identification of major state programs. The Schedule of State Financial Assistance should also include total overall expenditures as well as expenditures subtotaled by program and by each awarding agency. Any other information, such as the following, may be included to make the schedule easier to read: • Award Period • Award Amount • Beginning Revenues Receivable (deferred revenue) • Receipts for Audit Period • Ending Revenues Receivable (deferred revenue) Page 10 54 May 2011 AUDITOR'S REPORTS In general, auditor's opinions and reports must include the following: 1, Opinions on financial statements and Schedule of State Financial Assistance m An opinion (or disclaimer of opinion) on whether the financial statements are presented fairly in all material respects in conformity with accounting principles generally accepted in the United States of America. a An opinion on whether the Schedule of State Financial Assistance is fairly stated in all material respects, in relation to the financial statements taken as a whole. 2. Internal Control Related to Financial Statements and internal Control Related to Major Programs Reports must describe the scope of testing of internal control and the results of the tests and, where applicable, must refer to the separate Schedule of Findings and Questioned Costs. It is not expected that the auditor will test internal control structure policies and procedures on which there is no intent to rely for purposes of expressing an opinion on compliance or the financial statements. 3. Compliance with Laws, Regulations, and the Provisions of Contracts or Grant Agreements, Noncompliance that Could Have a Material Effect on the Financial Statements and Each Major Program Reports must include an opinion or disclaimer of opinion, on whether the auditee complied with laws, regulations, and the provisions of applicable contracts or grant agreements; noncompliance with which could have a direct and material effect on the financial statements and each major program. As applicable, the report must refer to the separate Schedule of Findings and Questioned Costs. 4. Schedule of Findings and Questioned Costs — (See example on page 13) A Schedule of Findings and Questioned Costs, which includes the following three components: a. A summary of the auditor's results, which shall include: 1) The type of report the auditor issued on the financial statements of the auditee. 2) A statement indicating if any significant deficiencies in internal control were disclosed by the audit of the financial statements and whether any such conditions were material weaknesses. 3) A statement as to whether the audit disclosed any noncompliance which is material to the financial statements. 4) A statement indicating if any significant deficiencies in internal control over state major program were disclosed by the audit and whether any such conditions were material weaknesses. Page 11 May 2011 55 5) The type of report the auditor issued on compliance for major state programs. 6) The dollar threshold used to distinguish state major programs. b. Findings related to the financial statements which are required to be reported in accordance with generally accepted government auditing standards (GAGAS). c. Findings and questioned costs related to state awards. 1) Audit findings should be presented in sufficient detail for the auditee to prepare a corrective action plan and take corrective action and for State agencies to arrive at a management decision. 2) The following specific information shall be included, as applicable, in audit findings: a. A reference number assigned to each audit finding. b. Identification of the state award(s) and grant number(s) for which noncompliance was found. c. The criteria or specific requirement upon which the audit finding is based, including statutory, regulatory, or other citation. d. The condition found, including facts that support the deficiency identified in the audit finding. e. Identification of questioned costs for state awards that exceed $5,000 in the aggregate for all tested transactions for financial assistance being audited. f Information to provide proper perspective for judging the prevalence and consequences of the audit finding. g. The possible asserted effect to provide sufficient information to the auditee and state agency to permit them to determine the cause and effect to facilitate prompt and proper corrective action. h. Recommendations for corrective action to prevent future accurst-tees of the deficiency. 3) Audit findings which relate to the same issue should be presented as a single audit finding. 4) Audit findings which relate to both the financial statements and state awards should be reported in both sections of the schedule, However, the reporting in one section of the schedule may be in summary form with a reference to a detail report in the other section of the schedule. Fags 12 56 May 2311 Name of Entity EXAMPLE: SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Fiscal Year Ended June 30, 201x SECT ION;1 •- S1iMMARY,OFIAUDJTak'S RESULTS "': Financial Statements Type of auditor's report issued: internal Control over financial reporting: • Material weakness(es) identified? s Significant deficiency (ies) identified? • Noncompliance material to financial statements? State Financial Assistance Type of auditor's report issued on compliance for major programs: Internal control over major programs: • Material weakness(es) identified? • Significant deficiency lies) identified? Dollar threshold used to distinguish a state major program: Unqualified ❑ Yes ❑ Yes ❑ Yes z Unqualified ❑ Yes • Yes $75,000 No none reported No E No ❑ none reported i'SECTIO tI -,; f3CLAL:STA.'TEMEttiT FIND,tNe The (name of entity) did not have any findings that relate to the financial statements. -SECTION I( €: STATE AWARD FINDINGS AND . €QUESTIGSNED COSTS.° Finding 201x -1: Deadline for State Single Audit. State Program Name, Grant lx -xxx. Criteria: 2 AAC 45.010(b) states an entity that expends a cumulative total of 5500,000 or more shaft submit an audit report for the audit period by..." the earlier of 30 days after the entity receives its audit report for the audit period; or nine months after the end of the audit period "' or a later date agreed upon in writing and advance offthe date in this section. Condition: This (name of entity) did not engage a qualified audit firm within the required timeline to complete and submit the audit in a timely manner. Questioned Costs: None. Context: The audit firm was engaged to perform an audit in accordance with the 2 AAC 45 more than nine months after the audit period. Effect: This (name of entity) is not in compliance with 2 AAC 45.10 (b)(1). Cause: This (name of entity) did not have controls in place to identify the requirements of the state single audit threshold. Recommendation: This (name of entity) should implement controls to identify the source of funding awards. When necessary, the grantee should engage a qualified audit firm in order to the audit to be completed and submitted within the required tirneframe. Page 13 May 2011 57 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS AND CORRECTIVE ACTION PLAN The auditee is responsible for follow -up and corrective action on all audit findings, significant deficiencies, material weaknesses and recommendations included in the audit report. Corrective Action Plan - (See example on page 16) The auditee is required to submit a corrective action plan for each of the current year audit findings. Each finding or condition should be concisely addressed; however, the plans should contain adequate information tor state agencies to evaluate and monitor the recipient's intended actions. As a part of the evaluation process, state grantor agencies may require additional information or clarification of intended actions. Corrective action plans should include the following: ® Comments on Findings, Significant Deficiencies, WViaterial Weaknesses, and Auditor's Recommendations. The auditee should provide a statement of concurrence or non - concurrence with the findings, significant deficiencies, material weaknesses, and auditor's recommendations. If the auditee does not agree with a finding, significant deficiency, material weakness, or recommendation, specific information should be provided to explain its position. e Actions Taken or Planned. The auditee should describe actual or planned actions that will correct all deficiencies identified in the report, the name(s) of the contact person(s) responsible for the corrective action and projected dates for completion of the corrective action. If the auditee believes a corrective action is not required, a statement describing the reasons should be included. Summary Schedule of Prior Audit Findings - (See example on page 15) As part of this responsibility, the auditee is required to submit a summary schedule of the prior year's audit findings even if findings have been resolved. The auditee should provide an update on the status of corrective actions taken on prior findings, including dates, when the findings were resolved or the planned completion date for resolving the findings. This summary must also include the status of findings from any previous audits if those findings were reported as unresolved in the prior year audit period. Reference Numbers Required The Summary Schedule of Prior Audit Findings and the Corrective Action Plan must include the reference numbers the auditor assigned to the audit findings in the Schedule of Findings and Questioned Costs. Page 14 May 2011 58 Name of Entity EXAMPLE: SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the Fiscal Year Ended June 30, 201x Finding: 08-1. Segregation of duties. This finding has been resolved. Duties have been separated as much as possible and alternative controls have been implemented to compensate for lack of separation. Finding: 09 -1, Timely submission of progress reports. This finding has been resolved. Progress reports are submitted when due, even if there is no financial activity during the reporting period. Finding: 09 -2. Failure to reconcile bank accounts, This finding is still unresolved. It is repeated as finding 10 -2 for the year ended June 30, 201x. Finding: 09 -3, Grant reimbursement not requested on a timely basis. This finding has been resolved. Grant reimbursements were requested on a timely basis during the year ended June 30, 201x. Page 15 59 May 2011 Name of Entity EXAMPLE: CORRECTIVE ACTION PLAN For the Fiscal Year Ended June 30, 201x FirkaTicjaVi tate ent Findings ;. Finding: 2010 -1 Segregation of Duties Name of Contact Person: Name, Title Corrective Action: The duties will be separated as much as possible and alternative controls will be used to compensate for lack of separation. The accounting staff will become more involved in providing these controls. Proposed Completion Date: November 1, 201x to Award F.pn ln�s':and Questioned Costs Finding: 2010 -2 Late submission of financial reports Name of Contact Person: Name, Title Corrective Action: The program coordinator will be responsible for submitting quarterly and year -end financial reports within 15 working days of the quarter or year end. Proposed Completion Date: The above procedure was implemented August 1, 201x. Page 16 May 2011 60 ILLUSTRATIVE AUDITOR'S REPORTS This section contains examples of reports issued under generally accepted auditing standards and Government Auditing Standards, based on the guidance found in Statement of Auditing Standards No. 117, effective for audits for periods ending on or after June 15, 2010. • Example 1: Unqualified Opinions on Basic Financial Statements Accompanied by Required Supplementary Information and Supplementary Information — State or Local Governmental Entity e Example 2: Unqualified Opinion on Financial Statements - Not- For - Profit Entity • Example 3: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards (No Material Weaknesses Identified, No Significant Deficiencies Identified, No Reportable Instances of Noncompliance or Other Matters Identified) e Example 4: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards (Material Weaknesses and Significant Deficiencies and Reportable Instances of Noncompliance, and Other Matters Identified) O Example 5: Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits (Unqualified Opinion on Compliance; No Material Weaknesses or Significant Deficiencies in Internal Control over Compliance Identified) • Example 6: Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits (Qualified Opinion or Compliance; Material Weaknesses and Significant Deficiencies in Internal Control over Compliance Identified) Page 17 May 2011 61 Example 1: Unqualified Opinions on Basic Financial Statements Accompanied by Required Supplementary information and Supplementary Information — State or Local Government Entityl Independent Auditor's Report [Addressee] We have audited the accompanying financial statements of the govemmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Example, Any State, as of and for the year ended June 30, 20x1, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Example's management. Our responsibility is to express opinions on these financial statements based on our audit, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards2, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. [Optional: An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting, Accordingly, we express no such opinion.l' An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions". In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business - type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Example, Any State, as of June 30, 20x1, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America, In accordance with Government Auditing Standards, we have also issued our report dated [date of report] on our consideration of the City of Example'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 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 infernal control over financial reporting or on compliance.5 That report is an integral part Page 18 62 May 2011 of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The [identify accompanying required supplementary information, such as management's discussion and analysis and budgetary comparison information] on pages XX through XX and XX through XX are not a required part of the basic financiai statements but are supplementary information required by accounting principles generally accepted in the United States of America.6 We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Example's basic financial statements, The accompanying Schedule of State Financial Assistance is presented for purposes of additional analysis and is not a required part of the basic financial statements.8 9 The Schedule of State Financial Assistance is required by the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Such information has been subjected to the auditing procedures applied in the audit of the basic financiai statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.10 [Signature] [Date] Copyright 2011, by the American Inailtate of Certified Public Accountants, inc. All rights reserved. Reprinted with permission. Refer to the AICPA Audit and Accounting Guide State and Local Governments for additional guidance on reportlng on a government's basic financial statements. In particular, appendix A to chapter 14 of that guide describes conditions that may make modifications of the standard report neceesart; and illustrates several of those modifications, such as reference to the work of other auditors. 2 For financial audits performed in accordance with Government Auditing Standards, chapters 1-5 of Government Auditing Standards, duly 2007 revision, apply. The standards applicable to financiai audits are the general, fieldwork, and reporting standards described in chapters 3 - 5 of Government Audiftng Standards. a This optional wording may be added in accordance with Interpretation No. 17, "Clarification in the Audit Report of the Extent of Testing on Internal Control Over Financial Reporting in Accordance With Generally Accepted Auditing Standards," of AU Section 508, Reports on Audited Financial Statements (AICPA, Professional Standards, voL. 1, AU sec, 9508 par .E5 -.88), which provides reporting guidance for audits of nonissuers, interpretation No. 17 also addresses how auditors may expand this report to explain that their consideration of internal control was sufficient to provide the auditor sufficient understanding to plan the audit and determine the nature, timing and extent of tests to be performed, but was not sufficient to express an opinion an the effectiveness of the Internal control. If this optional wording Is added, in an audit of a governmental entity, the remainder of the paragraph should read as follows. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions." `` If the financial statements include organizational units that are not required to have a Government Auditing Standards audit, the auditor should consider modifying this scope paragraph. Page 19 May 2011 63 @ This sentence should be modified if the auditor is providing an opinion on internal control over financial reporting or on compliance in the Government Auditing Standards report. 6 The auditor may identify the body requiring the information, which in this situation is the Governmental Accounting Standards Beard. 7 Generally accepted accounting principles require that the financial statements of state and focal governments be accompanied by a management's discussion and analysis, and may require that they be accompanied by other required supplementary information (RSO. The auditor may be required le or choose to report on that information. This example assumes such reporting. AU section 558,kt, Required Supplementary information (AICPA, Professional- Standards, vol. 1); AU section 559 Att Reporting on Information Accompanying the Basic Financial Statements in Auditor - Submitted Documents (.AICPA, Professional Standards, vol. 1); and the AICPA Audi and Accounting Guide State and Lace! Governments contain guidance on the auditor's responsibilities for and reporting on RSI. t SAS No. 119 was issued in February 2010. This SAS addresses and clarifies the auditor's responsibility when engaged to opine on whether supplementary information is fairly stated, in all materai respects, in relation to the financial statements as a whole. The SAS is effective for audits of financial statements for periods beginning on or after December 15, 2010. Early implementation is permitted. Upon its effective date, SAS No. 119, along with SAS No. 118, will supersede the requirements and guidance in AU section 551A. :SAS No. 120, Required Supplementary information (AICPA, Professional Standards, vol. 1, AU sec. 558), was issued in February 2010. This SAS addresses and clarifies the auditor's responsibility in relation to information supplementary to the basic financial statements when that is required by a designed accounting standard setter to accompany such financial statements. The SAS is effective for audits of financial statements for periods beginning on or after December 15. 2010. Early imp'l'ementation is permitted. Upon its effective date, SAS No. 120 will supersede the requirements and guidance in AU section 558A, Required Supplementer/ Information (RNCPA, Professional Standards, vol. 1). 9 If the financial statements are accompanied by supplementary information other than RSI (known as SI ), the auditor may be required to or choose to report on that information. This example assumes such reporting. AU Section 550A, Other Information in Documents Containing Audited Financial Statements (AICPA. Professional Standards, vol, 1); AU section 551A: and the AICPA .Audit and Accounting Guide State and Local Governments contain guidance on the auditor's responsibilities for and reporting on 5t. In addition, in an audit in accordance with 2 AAG 45, the financial statements should be accompanied by a supplementary schedule of state financial assistance and the auditor should report whether that schedule is presented fairly in all material respects in relation to the financial statements taken as a whole. See footnotes* (below) and t (above) for information related to recently issued SASs that will replace the guidance discussed In this footnote. " SAS No. 118, Other information in Documents Containing Audited Financial Statements ( AICPA, Professional Standards, vol. 1, AU sec. 550), was issued in February 2010. This SAS addresses and clarifies the auditor's responsibility in relation to other information in documents containing audited financial statements and the auditor's report thereon. The SAS is effective for audits of financial statements for periods beginning on or after December 15, 2010. Early implementation is permitted. Upon its effective date, SAS No. 118 will supersede the requirements and guidance in AU Section 550A, Other Information in Documents Containing Audited Financial Statements (AICPA, Professional Standards, vol. 1), and along with SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole (AICPA, Professional Standards, vol. 1, AU sec. 551), the requirements in AU section 551A, Reporting on Information Accompanying the Basic Financial Statements in Auditor-Submitted Documents (AICPA, Professional Standards, vol. 1). `The reference to the Schedule of State Financial Assistance should be deleted if the Schedule of State Financial Assistance is not presented with the basic financial statements (that is, a separate single audit package is issued), In such a circumstance, the required reporting on the schedule may be incorporated in the report issued to meet the requirements of the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. See example 5 (note 46) for additional guidance. i0 When reporting on SI, the auditor should consider the effect of any modifications to the report on the basic financial statements (for example, a qualified opinion, a modification as to consistency because of a change in accounting principle, or a reference to the report of other auditors). Furthermore, if the report on Si is other than unqualified, this paragraph should be modified. AU sec. 551A, paragraphs .09—.11 and .13 - •14 provide guidance for reporting in these circumstances. Page 20 64 May 2011 Example 2: Unqualified Opinion on Financial Statements — Not- for - Profit Entity" independent Auditor's Report [Addressee] We have audited the accompanying statement of financial position of Example NPO as of June 30, 20x1, and the related statements of activities and cash flows12 for the year then ended, These financial statements are the responsibility of Example NPO's management Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,i3 issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. [Optional: An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Example NPO's internal control over financial reporting. Accordingly, we express no such opinion.]14 An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.15 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Example NPO as of June 30, 20x1, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.. In accordance with Government Auditing Standards, we have also issued our report dated [date of report) on our consideration of Example NPO'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 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 internal control over financial reporting or on compliance.16 That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit)' Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of state financial assistance is presented for purposes of additional analysis as required by the State of Alaska Audit Guide and Compliance Supplement for State Single Audits and is not a Fage 21 65 May 2011 required part of the basic financial to the auditing procedures applied our opinion, is fairly stated, in all statements taken as a whole.) [Signature] [Date] statements.18 Such information has been subjected in the audit of the basic financial statements and, in material respects, in relation to the basic financial Copyright 2011, by the American Institute of Certified Public Accountants, Inc. All rights reserved. Reprinted with permission. " Refer to the AICPA Audit and Accounting Guide Not- far -Profit Organizations for additional guidance on reporting on the financial statements of a not- for -profit entity. •In addition to the situations discussed in that guide, auditors may need to modify he report on the iinenciai statements to referto the work of other auditors, using the guidance in AU section 543, Par: of Audit Performed by Other independent Auditors (AICPA, Professional Standards, vol. 1). 12 Each of the statements presented, which may include a statement of functional expenses, should be identified in the introductory paragraph. 12 See footnote 2. • 14 See footnote 3. If thls optional wording is added, in an audit of a nongovernmental entity, the remainder of the paragraph would read as follows: "An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion." 15 See footnote 4. 16 See footnote 5, 17 if the financial statements are accompanied by RSl or Si (for exampie,, a comparison of actual and budgeted expenses), the auditor may be required to or choose to report on that information in one or more paragraphs following this paragraph. AU section 550A; AU section 551A; and AU section 558A contain guidance on the auditor's responsibilities for and reporting an RSI and SI. See also footnote 10. fL See footnotes 5 and 9. 'a See footnote 10. Page 22 66 May 2011 Example 3: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards (No Material Weaknesses Identified, No Significant Deficiencies Identified, No Reportable Instances of Noncompliance or Other Matters- Identified) [Addressee] We have audited the financial staternents2D of Example Entity as of and for the year ended June 30, 20x1, and have issued our report thereon dated August 15, 20x1.21 We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government ,Auditing Standards,' issued by the Comptroller General of the United States 23 Internal Control over Financial Reporting24 25 In planning and performing our audit, we considered Example Entity's internal control over financial reporting 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 Example Entity's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Exempte Entity's internal control over financial reporting. A deficiency in internal control 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. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters26 As part of obtaining reasonable assurance about whether Example Entity's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which .could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. Page 23 67 May 2011 The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of Example Entity in a separate letter dated August 15, 20X1. `' This report is intended solely for the information and use of management, [identify the body or individuals charged with governance], others within the entity, and the State of Alaska and is not intended to be and should not be used by anyone other than these specified parties,2e [Signature] [Date] a Copyright 2011, by the American Institute of Certified Public Accountants, Inc. All rights reserved, Reprinted with permission, 27 As explained in the AICPA Audit and Accounting Guide State and Local Governments, the auditor generally expresses or disclaims an opinion on a governments basic financial statements by providing an opinion or disclaimer of opinion on each opinion unit required to be presented in those financial statements. For audits of governmental entities, the first sentence in this report would be modified to reflect the opinion units that have been reported on. In addition, the first sentence under the heading "Internal Control over Financial Reporting° would be revised to refer to "our opinions" instead of "our opinion." An illustration of the revised wording for the first sentence follows: We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Example Entity as of and for the year ended June 30, 20x1, which collectively comprise example Entity's basic financial statements and have issued our report thereon dated August 15, 20x1." 21 Describe any departure from the standard report (for example, a qualified opinion, a modification as to consistency because of a change in accounting principle, or a reference to the report of other auditors). 22 See footnote 2. 23 If the financial statements Include organizational units that are not required to have a Government A Standards audit, the auditor should consider modifying this scope paragraph. 24 Government Auditing Standards permits, but does not require, auditors to express an opinion on internal control over financial reporting or on compliance If sufficient wok was performed 25 This report sequences the reporting an internal control over financial reporting before the reporting on compliance and other matters. Auditors may present the internal control and compliance sections of the Govemment Auditing Standards report in whichever sequence better meets their needs, u Other matters are certain findings of fraud or abuse. As per industry practice, the reference to "other matters" in both the' heading and the following paragraph typically appears in all repots, even if the report does not present or refer to findings of fraud or abuse or even it the only findings of fraud or abuse are presented in or referred m from the section on internal control over financial reporting. 27 Government Auditing Standards requires the auditor to communicate in writing to officials of the audited entity violations of provisions of contracts or grant agreements or abuse that have an effect on the financial statements that is Tess than material but more than inconsequential. Paragraph 5.09 of Government Auditing Standard's requires the reference illustrated in this paragraph if the auditor has issued a management letter reporting such matters. This reference does not preclude the auditor from including other discussions or recommendations in the management letter. g Page 24 68 May 2011 26 This paragraph conforms to AU section 532, Restricting the Use of an Auditor's Report (AICPA, Professional Standards, vol. 1). See AU section 532 for additional. guidance on restricted -use reports. 'v Because this report relates to the audit of the financial statements, and is based on the generally accepted audlting standards audit procedures performed, it is subject to the provisions of AU section 530, Dating of the independent Auditor's Report (AICPA, Professional Standards, riot 1). Therefore, it should be dated the same date as the auditor's repert on the financial statements, which per paragraph .01 of AU section 530 is "no earlier than the date on which the auditor obtains sufficient appropriate audit evidence" Page 25 May2011 69 Example 4: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards (Material Weaknesses and Significant Deficiencies and Reportable instances of Noncompliance, and Other Matters identified) [Addressee] We have audited the financial statements30 of Example Entity as of and for the year ended June 30, 20x1, and have issued our report thereon dated August 15, 20x1.3 We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,32 issued by the Comptroller General of the United States.33 Internal Control over Financial Reportinga4 3S In pianning and performing our audit, we considered Example Entity's internal control over financial reporting 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 Example Entity's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Example Entity's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or rnaterial weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses [and other deficiencies that we consider to be significant deficienciesj.3o A deficiency in internal control 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. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses. [List the reference numbers of the related findings, for example, 20X1 -1, 20X1 -3, and 20X1 -4]. [A significant deficiency is a deficiency or a combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant Page 26 May 2011 70 deficiencies. (List the reference numbers of the related findings, for example, 20X1 -2 and 20X(1 -5,)f r Compliance and Other Matters38 As part of obtaining reasonable assurance about whether Example Entity's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items [fist the reference numbers of the related findings, for example, 20x7 -2 and 20x1 -5]. [NOTE: The referenced findings should include reportable: a) instances of noncompliance; and b) fraud or abuse that is not the result of a significant deficiency.] We noted certain matters that we reported to management of Example Entity in a separate letter dated August 15, 20x1.39 Example Entity's response to the findings identified in our audit is described in the accornpanying schedule of findings and questioned costs, We did not audit Example Entity's response and, accordingly, we express no opinion on it. This report is intended solely for The information and use of management, [identify the body or individuals charged with governance], others within the entity, and the State of Alaska and is not intended to be and should not be used by anyone other than these specified parties,4o [Signature] [Rate] 41 Copyright 2011, by the American Institute of Certified Public Accountants, Inc. All rights reserved. Reprinted with permission. 30 See footnote 20. 31 See footnote 21. 32 See footnote 2. 33 See footnote 23. 34 See footnote 24. 36 See footnote 25. Page 27 May 2011 71 as If no significant deficiencies are identified, the text within the brackets is omitted fro 37 See footnote 36. 38 See footnote 26. 39 See footnote 27. 40 See footnote 28. 4: See footnote 29. ?age 72 e report. May 2011 Example 5: Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on internal Control over Compliance in Accordance with State of Alaska Audit Guide and Compliance Supplement for State Single Audits (Unqualified Opinion on Compliance; No Material Weaknesses or Significant Deficiencies in internal Control over Compliance identified) Independent Auditor's Report [Addressee} Compiiance42 We have audited Example Entity's compliance with the types of compliance requirements described in the State of Alaska Audit Guide and Compliance .Supplement for State Single Audits that could have a direct and material effect on each of Example Entity's major state programs for the year ended June 30, 20x1. Example Entity's major state programs are identified in the accompanying schedule of state financial assistance. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major state programs is the responsibility of Example Entity's management. Our responsibility is to express an opinion on Example Entity's compliance based on our audit, We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards,`" issued by the Comptroller General of the United States; and State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Those standards and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major state program occurred. An audit includes examining, on a test basis, evidence about Example Entity's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion, Our audit does not provide a legal determination of Example Entity's compliance with those requirements. In our opinion, Example Entity complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major state programs for the year ended June 30, 20x1. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits and which are described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example, 20x1 -3 and 20x1 -6].44 Page 29 73 May 2011 Internal Control over Compliance Management of Example Entity is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to state programs. In planning and performing our audit, we considered Example Entity's internal control over compliance with the requirements that could have a direct and material effect on a major state program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance, Accordingly, we do not express an opinion on the effectiveness of Example Entity's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a state program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above as Example Entity's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit Example Entity's responses and, accordingly, we express no opinion on the responses.46 This report is intended solely for the information and use of the management, others within the entity [identify the body or individuals], and the State of Alaska and is not intended to be and should not be used by anyone other than these specified parties" [Signature] [Date] Copyright 2011, by the American Institute of Certified Public Accountants, inc. All rights reserved. Reprinted with permission. ?age 30 74 May 2011 42 This report sequences the reporting an compliance before the reporting on internal control over compliance. Auditors may present the internal control over compliance and compliance sections of this report in whichever sequence better meets their needs. as The standards applicable to financial audits are the general, fieldwork, and reporting standards described in chapters 3 -5 of Government Auditing Standards. °" When there are no such instances of noncompliance id in the schedule of findings and questioned costs, the last sentence would be omitted, °V There may be instances in which it would be appropriate to report on the schedule of state financial assistance in this report (that is, a separate single audit package is issued). to such a circumstance, a new section would be added immediately following this paragraph. For audits of not-for-profit organizations, the wording of the hew section Is as follows: Schedule of State Financial Assistance We have audited the basic financial statements of Example Entity as of and for the year ended June 30, 20x1, and have issued our report thereon dated August 15, 20x1. Our audit was performed for the purpose of forming an opinion on the basic financial statements Taken as a whole. The accompanying schedule of state financial assistance is presented for purposes of additional analysis as required by State of Alaska Audit Guide and Compliance Supplement for State Single Audits and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, Is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. For audits of governmental entities, the wording of this now section is as follows: Schedule of State Financial Assistance We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Example Entity as of and for the year ended June 3D, net and have ssued our report thereon dated August 15, 20x1. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise Example Entity's basic financial statements. The accompanying schedule of state financia`t assistance is presented for purposes of additional analysis as required by State of Alaska Audit Guide and Compliance Supplement for State Single Audits and is not a required part of the basic financial statements, Such information has been subjected to the auditing procedures applied to the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole, 'JJhen reporting on the supplementary information, the auditor should consider the effect of any modifications to the report on the basic financial statements (for example, a qualified opinion, a modification as to consistency because of a change in accounting principle, ar a reference to the report of other auditors). Furthermore, if this report on supplementary information is other than unqualified, this paragraph should be modified accordingly. Guidance for reporting in these circumstances is described in AU section 551, paragraphs .09 -.11 and .13 -.14, Reporting on Information Accompanying the Basic Financial Statements in Auditor - Submitted Documents (AICPA, Professional Standards, vol: 1). , 4e If there are no findings referred to in this report (or identified in the schedule of findings and questioned costs), this paragraph should be omitted. "r This paragraph conforms to AU Section 532, Restricting the Use of an Auditor's Reparf ( AICPA, Professional Standards, vol. 1). See AU section 532 for additional guidance on restricted -use reports. Page 31 • May 2011 75 Example 6: Report on Compliance with Requirements that Could 1-lave a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits (Qualified Opinion on Compliance; Material Weaknesses and Significant Deficiencies in Internal Control over Compliance identified) Independent Auditor's Report [Addressee] Compliance48 We have audited Example Entity's compliance with the types of compliance requirements described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that could have a direct and material effect on each of Example Entity's major state programs for the year ended June 30, 20x1. Example Entity's major state programs are identified in the accompanying schedule of state financial assistance. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major state programs is the responsibility of Example Entity's management. Our responsibility is to express an opinion on Example Entity's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards,49 issued by the Comptroller General of the United States; and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, Those standards and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major state program occurred. An audit includes examining, on a test basis, evidence about Example Entity's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Example Entity's compliance with those requirements. As described in item(s) [list the reference numbers of the related findings, for example, 20x1 -16 and 20X1 -4] in the accompanying schedule of findings and questioned costs, Example Entity did not comply with requirements regarding [identify the type(s) of compliance requirement] that are applicable to its [identify the major state program]. Compliance with such requirements is necessary, in our opinion, for Example Entity to comply with the requirements applicable to that program. In our opinion; except for the noncompliance described in the preceding paragraph, Example Entity complied, in all material respects, with the compliance requirements Page 32 May 2311 76 referred to above that could have a direct and material effect on each of its major state programs for the year ended June 30, 20x1,50 Internal Control over Compliance Management of Example Entity is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to state programs. In planning and performing our audit, we considered Example Entity's internal control over compliance with requirements that could have a direct and material effect on a major state program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Entity's internal control over compliance, Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses or therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.51 A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over ccmpiiance, such that there is reasonable possibility that material noncompliance with a type of compliance requirement of a state program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example 20X1 -8 and 20X1-9) to be material weaknesses. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example 20X1 -6 and 20X1 -7] to be significant deficiencies.'2 53 Page 35 May 2011 77 Example Entity's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit Example Entity's responses and, accordingly, we express no opinion on the responses. This report is intended solely for the information and use of management, others within the entity [identify the body or individuals], and the State of Alaska and is not intended to be and should not be used by anyone other than these specified parties.' [Signature] [Date] Copyright 2011, by the American Institute of Certified Public Accountants, Inc. All nights reserved. Reprinted with permission. 48 See footnote 42. 49 See footnote 43. 50 When other instances of noncompliance are identified In the schedule of findings and questioned casts as required by the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, the following sentence should be added: "The results of our auditing procedures also disclosed other Instances of noncompliance with those requirements, which are required to be reported In accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits and which are deserted in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example, 20x1 -3 and 20x1-63.' 5' If no significant deficiencies were identified, this sentence would read as follows: "However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses." 52 See footnote 45. a8 If no significant deficiencies were identified, this paragraph would be deleted. 94 See footnote 47. Page 34 g May 2011 SECTION 4 - SUBMITTING SINGLE AUDITS WHERE TO SEND AUDITS Centralized Collection of Audits: The department provides the service of collecting and reviewing audits required from entities, This includes state single audits for state nhanciai assistance and federal single audits for recipients of federal pass- through monies distributed by a state agency, Send Audit Packages to: Single Audit Coordinator State of Alaska, Department of Administrat'so Division of Finance P,O. Box 110204 Juneau, AK 99811 -0204 WHAT TO SUBMIT FOR A COMPLETE REPORTING PACKAGE Be sure to include the audited financial statements and all applicable items of a complete reporting package as described on page nine. See the following page for a list of state agencies that may appear on the Schedule of State Financial Assistance. Number of Copies: tate_ Single 'Audit S 1 copy for Each State of Alaska agency listed on the Schedule of State Financial Assistance PLUS O 1 copy for single audit archives 1 copy for Each State of Alaska agency listed on the Schedule of Expenditures of Federal Awards PLUS 1 copy for single audit archives rederal; and State "Single Audits aound'To,gether 1 copy for Each State of Alaska agency listed on either the Schedule of Expenditures of Federal Awards or Schedule of State Financial Assistance PLUS 1 copy for single audit archives Note: School districts have an additional requirement to send a complete reporting package, including management letter, directly to Department of Education & Early Development. After receipt and review of the comrriete reporting package the single audit coordinator's office will distribute the audit package to the appropriate state agencies. :-``l If you have questions, please contact the Single Audit Coordinator at - (907) 4654666. Page 35 May 2011 79 LsTNG OF STATE OF ALASKA AGENcES The foflDwing is a listing of State af Alaska agencies that may have programs subject to the State Single Audit requirements. Please refer to the compliance supplements in this Guide for more detailed information on individual programs and their audit requirements. • Ataska Court System • Alaska Energy Authority (AEA) « Alaska Housing Finance Corporation (AHFC) • Department 0f Administration (DO/\) • Department of Commerce, Community & Economic Development (DOCED) • Department of Corrections (DOC) • Department of Eduoaton & Early Dev&opment (DEED) • Department of Erivironmental Conservation (DEC) • Department of Fish & Game (DFS) « Department 0f Health & Social Services /DUSS\ • Department of Labor & Workloroe Development (DLWD) • Department of Law (LAW) o Department of Military & Veterans Affairs (DMVA) • Department of Natural Resources (DNR) • Department oi Public Safety (UPS) • Department uf Revenue (OOF() ° Department 0f Transportation & Public Facilities /D[T/PF\ ~ Surplus Propert (Department afAdro\nistrG§on. General Services Division) Page 36 80 May 2011 SECTION 5 m QUESTIONS AND ANSWERS This section is designed to clarify issues or requirements of the state single audit. 1. Will state agencies withhold money from their awards to cover the cost of a single audit, or should the recipient do this? Answer. State agencies are not responsible for withholding money for the cost of a single audit. Recipients of state financial assistance are responsible for the budgeting and payment of audit services. 2, How will recipients know if they should plan for the cost of a single audit before the end of the fiscal year? Answer. It is important to continuously track receipt and expenditure of state financial assistance and federal pass- through funds. The recipient should budget for an audit. Then, if it becomes clear that the audit is not necessary, the money can be used as otherwise allowed in the grant agreements. 3. What money can be used to pay the cost of a state single audit? Answer. Audit costs are legitimate costs of administering state financial assistance, Audit costs can be direct or indirect costs depending on the award agreement or policies established by the state granting agency. It is important that audit costs be fully documented. Costs apportioned to state programs need to be supported with schedules or other documentation showing how the allocation was applied. Generally, auditors will evaluate the reasonableness of that allocaion. 4. How will recipients that have not budgeted for the single audit costs pay for it? Answer. Planning ways to meet audit expenses is an important element in good business management. The recipient of state financial assistance that has not earmarked money for an audit will have to absorb the payment .from other unrestricted funds. Failure to set aside money to pay for audits is not a valid excuse for failing to have an audit performed. 5. W at if an audit is not completed within nine months after fiscal year end? Answer. Contact the single audit coordinator to request an extension. The single audit coordinator will review the request, the past history of the grantee in submitting timely audit packages, and other relevant facts. The single audit coordinator's office will notify the recipient, applicable state agencies and CPA firm, if provided, whether the extension request was granted or denied. 6. What is the penalty for noncompliance or not conducting the single audit? Answer. The state single audit regulation does not establish any penalties aside from the penalties already established in law, regulation, or specifically in an award agreement. State agencies will view noncompliance as potential Page 37 May 2011 81 evidence that the recipient may not be able to properly administer awards, This could affect future awards. 7. Are all certified public accountants qualified to perform an audit under 2 AAC 45.010? Answer. 2 AAC 45 requires an audit to be conducted by an independent auditor according to Government Auditing Standards, which requires auditors to have continuing professional education related to government auditing requirements and auditing organizations to have an external quality control (peer) review. Grantees having an audit under 2 AAC 45 should ensure, prior to contracting with the firm, that the prospective audit firm has a current license and satisfies the peer review requirements. 8. How do I submit a state single audit? Answer. For submission information, see page 35 — Submitting Single Audits. S. How many copies of single audits need to be submitted? Answer. See page 35 - Submitting Single Audits. 10. Must the corrective action plan address findings required to be reported by Government Auditing Standards? Answer. Yes. State single audit regulations require that written comments be provided on any findings, questioned costs, significant deficiencies, material weaknesses, and recommendations contained in the audit report. 11.If an auditee does riot have any noncompliance to be reported, does a Schedule of Findings and Questioned Costs have to be included in the reporting package for a state single audit? Answer. Yes. 12.A state single audit is not required of the current year. The prior year state single audit contained audit findings. Do the prior year findings need to be addressed in the current year audit? Answer. No. The affected state agency(s) will continue to work directly with the grantee on the resolution of the prior year findings. 13. Do school districts reports have any special submission requirements? Answer. Yes. School districts should follow the guidelines on page 35, for submitting single audits; with the additional requirement of sending a copy of the reporting package to the Commissioner of the Department of Education and Early Development. AS 14.14.050 requires the school board of each school district to send a copy of theft audit report and management letter to the Commissioner of Education and Early Development by November 15. Send the Commissioner of Education and Early Development's copy to: Page 38 &2 May 2011 Alaska Department of Education & Early Development Education Support Services Attn: Meridith Borman 801 West 10"1 Street, Suite 200 P.O. Box 110500 Juneau, AK 99811 -0500 e -mail: meridith.bom•an(th alaska.gov 14. How does the state determine if an audit meets audit standards? Answer. The single audit coordinator's office will review audit reports for conformance with professional standards; inclusion of required opinions, reports, and schedules; timely completion, and sufficient number of copies. Audits reports will be forwarded to each state agency that granted financial assistance, for review to ensure all awards were included; findings are clear and understandable; and planned corrective actions appear adequate. 15.If an audit report is found deficient, what procedures will be used to notify the parties involved; and who will resolve the issues? Answer. The single audit coordinator's office will notify the entity (copy to the auditor and applicable granting agencies) of a deficient reporting package within four weeks of receipt of the audit. Within 30 days of this notification, the entity is required to provide the requested information and /or documents. If a revision or further information is required by the auditors, the notification wilt be sent to the auditor with a copy sent to the entity and applicable granting agencies. The auditor will have 30 days to submit revised reports or other requested information. Audits are not in compliance with the timely submission requirement of the single audit regulation until deficiencies are resoived. The entity should maintain contact with the state granting agency(s) and the single audit coordinator's office while deficiencies are being resolved. The single audit coordinator's office will mediate disagreements between the auditor, recipient, and the state granting agency(s). 16.What is an entity's responsibility when awarding a subrecipient(s) an amount equal to or greater than the audit threshold? Answer. The original entity receiving state financial assistance is responsible for ensuring that third parties comply with the state single audit requirements. The entity is required to provide the subrecipient with specific information regarding the award and its requirements. The entity must have an effective system for monitoring the subrecipient. As applicable, the entity must ensure that appropriate corrective action is taken within six months after disclosure of a third party's noncompliance with state statute or regulation, or financial assistance agreement. Page 39 83 May 2011 17.Are auditors required to evaluate the entity's system for monitoring subrecipient compliance with 2 AAC 45.010? Answer. Yes. 18.Are private firms contracted to provide products such as office furnishings considered third party subrecipients that are subject to the single requirements? Answer. No. 19.What is the difference between a subrecipient and a vendor? Answer: A subrecipient is an entity that receives state financial assistance passed through from the original recipient. The subrecipient is responsible to meet the requirements of the assistance program. A vendor is an entity that receives a procurement contract for goods or services from a recipient. Vendor contracts are usually a result of a competitive bidding process. A vendor's responsibility is to meet the requirements of the procurement contract. 20.What is the determining factor in deciding whether a third party is a subrecipient or a. vendor? Answer. The test for a subrecipient relationship is whether the organization receives state financial assistance to carry out a program. 21.Are contracts or agreements negotiated between the state and local governments, such as Transfer of Responsibility Agreements, included under single audit requirements? Answer. Yes, provided the local government has met the audit threshold specified in the single audit regulation. 22.We understand that federal financial assistance includes foans and loan guarantees. Are loans under state programs categorized as state financial assistance and subject to audit? Answer. No, 23.How do entities determine state major programs when their fiscal year has a different yearend than the state? Answer. Major program and audit thresholds are based on the entity's fiscal year. Page 4084 May 2011 24.When an entity changes its yearend, how should it treat the stub period for purposes of the state single audit? Answer. A state single audit of the stub period is required if the stub period is longer than six months, or if it was audited by itself. If the stub period is less than six months and not audited separately, it should be included in the succeeding year's single audit. 25.Are auditors required to do compliance testing for financial assistance programs that are excluded from the state single audit threshold computations? Answer. Yes, if such programs are determined to be major state programs. The exclusion applies only for the audit threshoid computation, not compliance testing. 26.If the Compliance Supplement does not contain requirements for a particular program, does that mean this program does not need to be audited for compliance? Answer. No. The auditor should determine compliance requirements from the award document, and applicable laws and regulations. Auditors can contact the agency representatives indicated on page 50, Single Audit Contacts. 27. What requirements apply to federal pass- through money? Answer Federal pass- through money received from state agencies remains classified as federal financial assistance. Federal compliance and audit requirements apply to this money. The requirements for federal single audits are contained in the Single Audit Act Amendments of 1996 and U.S. OMB Circular A -133. 28. What are the federal audit and major program thresholds? Answer. U.S. OMB Circular A -133, Revised June 27, 2003, clanged the federal audit threshold for fiscal years ending after December 31, 2003 as follows: Audit Threshold - A recipient of federal awards that expends a cumulative total equal to or greater than $500,000 during the entity's fiscal year is required to submit_ a federal single audit. A program audit may be performed if the entity had expenditures under only one federal program and is not subject to any other requirements to have a financial statement audit. (Subject to more detailed requirements — See U.S. OMB Circular A -133). Maior Federal Programs - Major federal programs are determined on a risk -based approach. The risk -based approach includes consideration of current and prior audit experience; oversight by federal agencies and pass- through entities; and inherent risk of the federal program. The determination is subject to a variety of exceptions and limitations described in U.S. OMB Circular A -133. Page 41 May 20111 85 29.On which schedule should federal pass - through money be shown? Answer: Only on the Schedule of Expenditures of Federal Awards. Federal funds passed through the State of Alaska should be clearly identified on the federal schedule by both federal and state agencies. 30.A state single audit was not required, but a federal single audit was required. Should the federal single audit be submitted to the single audit coordinator's office? Answer. Yes, if the recipient expended federal financial assistance passed through the State of Alaska, during the audit period. See page 35, Submitting Single Audits. 31.Does the single audit coordinator's office need a copy of the Data Collection Form SF-SAC? Answer: No. This is a federal form required to be submitted with audit reporting packages sent directly to the U.S. Bureau of the Census. For further information, go to the federal clearinghouse website: http: / /han ester.census.covlsac 32.How can recipients keep the kind of accounting and other records necessary to comply with the requirements under the single audit regulation and financial assistance agreements? Answer: Good business practice requires that documentation be created and retained. These extremely important records can demonstrate to an external reviewer /auditor that claimed expenditures complied with the terms of a financial assistance agreement, This documentation could include - but is not limited to - such things as approved timesheets, vendor invoices, canceled checks, periodic financial and program reports, and an accounting system that adequately identifies costs to programs. Recipients of state financial assistance are responsible for keeping organized records. It is not the responsibility of the auditor to organize the recipient's financial records, Poorly organized financial records increase audit costs. Experience has shown that one of the most frequent problems reported in state single audits is lack of supporting documentation. When supporting documents cannot be produced, auditors usually report "questioned costs." State agencies may take actions to recover questioned costs from recipients. Page 42 May 2091 86 33.What are "questioned costs ?" Answer. Auditors report expenditures that may not be allowable charges to state programs as "questioned costs." State agencies determine whether charges will be allowed. Questioned costs usually fall in one of five categories: • Unallowable - Costs specifically not allowed under the general and specific requirements or conditions of a program. ® Ineligible - Costs which would otherwise be allowable except the amounts involved were paid on behalf of an individual who is not eligible. • Undocumented - Costs for which detailed documentation does not exist. • Unapproved - Costs for which the program requires approval and the auditor cannot find evidence of approval, or costs not provided for in an approved budget. • Unreasonable - Costs incurred that may not reflect the actions of a prudent person, or the assignment of an unreasonably high valuation to in -kind contributions. Page 43 May 2011 87 SECTION 6 - REPRINT OF 2 AAC 45 Alaska Administrative Cade Title 2 Administration Chapter 45. Grant Administration Section Section 10. Audit requirements 80, Exemptions from financial assisfanc 60. (Repealed) 85, Waiver of audit requirements 70. Applicability 90. Definitions 2 AAC 45.010. AUDIT REQUIREII/IENTS. (a) A state agency that enters into a financial assistance agreement to provide financial assistance to an entity shall, in coordination with any other state agencies providing financial assistance to that entity, require that entity to submit to the department an audit of the recipient entity if that entity is subject to an audit under this section. The audit must be conducted and submitted as described in this section. In order to ensure compliance with this subsection, a state agency must include the audit requirements of this section in any financial assistance agreement subject to this subsection. (b) An entity that expends financial assistance with a cumulative total of 9500,000 or more during the entity's fiscal year shall submit an audit report for the audit period to the department, by (1) the earlier of (A) 30 days after the entity receives its audit report for the audit period; or (B) nine months after the end of the audit period; or (2) a later date than the date calculated under (1) of this subsection, if (A) the state agency that provides the financial assistance agrees to the change of date; and (B) the agreement under (A) of this paragraph is made in (i) writing; and (ii) advance of the date calculated under (1) of this subsection. (c) An audit required by this section must be conducted by an independent auditor, according to the following audit standards effective at the time of review for the audit period: (1) Government Auditing Standards, July 2007 Revision., adopted by the comptrolier general of the United States, and adopted by reference; (2) generally accepted auditinc standards, as accepted by the American Institute of Certified Public Accountants in the Codification of Statements on Auditing Standards in effect as of January 1, 2009 for the type of entity being audited, adopted by reference; (3) State of Alaska Audit Guide and Compliance Supplement for State Single Audits, May 2010 revision, prepared by the department, adopted by reference. (d) The audit required under this section must report on the following: (1) the system of internal controls of the entity and the auditor's identification of significant deficiencies and material weaknesses of the entity, using the applicable standards set out in (c) of this section; Page 44 S8 May 2011 (2) the entity's compliance with applicable state statutes and regulations and applicable financial assistance agreements affecting the expenditure of the financial assistance; the report must identity findings and known questioned costs that exceed $5,000 in the aggregate for all transactions of expenditures tested for the financial assistance being audited; (3) the entity's financial statements; (4) the schedule of state financial assistance; (5) the schedule of findings and questioned costs. (e) As part of the audit report required under this section, the entity must provide (1) written comments on any (A) findings; (B) known questioned costs; (C) significant deficiencies, including material weaknesses; and (D) recommendations contained in the audit report; (2) the entity's plan for corrective action, if any findings are identified or any recommendations are made in the audit report; (3) the status of the entity's implementation of any plans for corrective actions related to (A) the audit reports required under this section for the fiscal year before the audit period; and (B) unresolved findings of audit reports required by this section for audit periods before those specified in (A) of this paragraph; and (4) a written explanation of the reasons why corrective action will not be taken if the entity does not intend to take corrective action on the findings and recommendations in any audit report required by this section. (f) An audit report required under this section need not evaluate the effectiveness of a program funded by financial assistance. However, a program evaluation or financial monitoring may be conducted by the state agency or requested of the entity by the state agency that entered into the financial assistance agreement, (g) An audit required by this section must cover the entire operations of the entity. (h) An entity shall provide the department with sufficient copies of each audit report to allow submission of a copy to each state agency providing financial assistance to the entity. The department will determine if auditing standards have been met and will forward a copy of the audit to the appropriate state agencies. The department will coordinate the assignment of the resolution to one state agency, if the exceptions concern more than one state agency. The applicable state agency providing financial assistance to the entity must meet its responsibilities under other taw for ensuring compliance with the audit report. (i) Unless additional audit requirements are Imposed by state or federal taw, a state agency that provides financial assistance to an entity shall accept the audit required by this section in satisfaction of any other audit requirement. If additional audit work is necessary to meet the needs of a state agency, the audit work must be based on the audit required by this section. Nothing in this subsection authorizes a state agency to seek payment from the entity for the additional audit work. Page 45 89 May 2011 (j) A third party that receives financial assistance through an entity, in an amount described in this section, is subject to the applicable requirements of this section. An entity that disburses $500,000 or more in state financial assistance to a third party shall ensure that the third party complies with the requirements of this section. That entity shall also ensure that appropriate corrective action is taken within six months after a third party's noncompliance with an applicable state statute or regulation, or financial assistance agreement, is disclosed. (k) Repealed 07/01/98. (I) For purposes of this section, if an entity has not identified is fiscal year, that entity's fiscal year is July 1 through June 30. (m)Financial assistance in the following form is not included when calculating whether an entity meets the threshold monetary requirement under (b) of this section: (1) community revenue sharing money provided under AS 29.60.850 - 29.60.879; (2) repealed 3/31/2008; (3) aviation fuel tax money provided under AS 43.40.010; (4) electric and telephone cooperative gross revenue tax refunds provided under AS 10.25.570; (5) alcoholic beverage license fee refunds provided under AS 04.11.610; (6) fisheries tax refunds provided under AS 29.60.450, AS 43.75.130, and AS 43,77.060; (7) PERS/TRS relief funding under money appropriated to pay employer unfunded [ability attributable to the entity under AS 14 :25 and AS 39.35. (8) money expended for projects that are solely managed, supervised, and controlled by the Alaska Energy Authority under AS 44.83 and turned over to the grantee at the conclusion of the project. (n) Financial assistance in a form fisted in (m) of this section is not exempt from compliance testing if the entity meets the threshold monetary requirement under (b) of this section. (o) Repealed 7/1/98. (Eff. 8/1/85, Register 95; am 6/29/90, Register 114; am 7(1/98, Register 146; am 3/31/2008, Register 185; am 8/1/2008, Register 187; am 1/1/2011, Register 196) Authority: AS 37.05.020 AS 37.05.190 2 AAC 45.060. EXTERNAL QUALITY REVIEW OF AUDIT ORGANIZATION. Repeaied. (Eff. 7;1/98, Register 146; repealed 3/31/2008, Register 185) 2 AAC 45.070. APPLICABILITY. (a) The amended version of this chapter, effective January 1, 2011, applies to an audit for an audit period that begins or continues after January 1, 2011. (b) An entity may agree to be subject to the provisions of the amended version of this chapter, effective January 1, 2011, for an audit period beginning on or after July 1, 2009 and ending on or before December 31, 2010, by voluntarily submitting (1) an audit that complies with those provisions; or (2) a statement that an audit is not required underthe provisions of 2 AAC 45.010(b). (Eff. 7/1/98, Register 146; am 3/31/2008, Register 185; am 8/1/2009, Register 187; am 1/1/2011, Register 196) Authority: AS 37.05,020 AS 37,05.190 Page 46 90 May 2011 2 AAC 45.080. EXEMPTIONS FROM FINANCIAL ASSISTANCE. (a) For purposes of this chapter, "financial assistance" does not include the following: (1) public assistance provided under AS 47', (2) goods or services purchased for the direct administration or operation of state government; (3) moneys advanced to an entity under one or more state loan programs; (4) power cost equalization payments made to an electric cooperative on behalf of its customers; (5) scholarships, loans, or other tuition aid provided to students, but paid to an education institution on their behalf, (b) In addition to the exemptions set out in (a) of this section, for a third party, "financial assistance' does not include goods purchased from the third party for direct administration or operation of the entity that received financial assistance. (Eff. 7/1198, Register 146) Authority: AS 37,05.020 AS 37.05.190 2 AAC 45.085. WAIVER OF AUDIT REQUIREMENTS. (a) No later than 30 days after the due date of an entity's audit, the entity may submit a written request to the commissioner under this section for a waiver of the requirements for an audit under 2 AAC 45.010 for good cause. (b) A written request submitted under this section must state the reasons for the request for waiver and good cause. Good cause exists under this section if (1) the financial assistance expended by the entity was under close state agency management and supervision; (2) an audit will not likely promote the public interest because (A) the audit will be duplicative of existing audited information; (5) an alternative source of externally verified information from an independent source provides sufficient assurance that the financial assistance was expended properly. (c) For the purposes of this section, an entity's lack of funding to purchase an audit is not good cause for waiver of an audit under this section. (d) No later than 30 days after receiving a written request for a waiver under this section, the commissioner will issue a written decision regarding the request for waiver. The written decision will document the basis for any grant or denial of waiver under this section. The commissioner's decision will be mailed or delivered to the entity and will constitute the final administrative decision on the request. (e) in this section, "commissioner" means the commissioner of administration. (Eff. 1/1/2011, Register 196) Authority: AS 37.05.020 AS 37.05.190 2 AAC 45.090. DEFINITIONS. For purposes of this chapter, unless the context otherwise requires, (1) "audit period" means the entity's fiscal year in which the entity expended financial assistance; (2) "entity" does not include (A) the University of Alaska or any other state agency; (B) a for - profit entity; and (C) a non United States based entity; Page 47 91 May 2011 (3) "financial assistance" means state grants, contracts, provider agreements, cooperative agreements, and all forms of state financial assistance to an entity; "financial assistance" includes all forms of state financial assistance provided through an entity to a third party; (4) "known questioned costs" means those questioned costs specifically identified by the auditor in the audit conducted under this chapter; (5) repealed 3131/2008; (6) "department' means the Department of Administration; (7) "significant deficiencies" has the meaning given in Section 5.11a. of the Government Auditing Standards adopted by reference in 2 AAC 45.010(c). (Eff. 7/1198, Register 146; am 3/31/2008, Register 185) Authority: AS 37.05.020 AS 37.05.190 Page 4892 May 2011 SECTION 7 e COMPLIANCE SUPPLE iIE IT COMPLIANCE SUPPLEMENT OVERVIEW This section describes general and specific compliance requirements, which if not met, could have a material effect on the auditee's combined financial statements and /or state programs. Each requirement is accompanied by suggested audit procedures for testing compliance. These are intended to be suggestions and are not the only or necessarily the best audit procedures, nor are they mandatory. Auditors should apply professional judgment in determining the audit procedures that are necessary to adequately measure an entity's compliance. General Requirements: Some constitutional or statutory requirements are appiicabfe to all or most state assistance programs and should be considered in all financial and compliance audits, Specific Requirements: These requirements are applicable to specific state programs. Specific Requirements are organized in five categories: ® Types of service allowed or unallowed e Eligibility • Matching, level of effort, or earmarking requirements • Reporting requirements • Special tests and provisions Auditors are not relieved of responsibility for compliance testing of programs not included in specific requirements cr compliance supplement sections. Auditors should review the award, grant agreement, regulations, or enabling legislation to determine whether there are special conditions that need to be considered. GRANTING AGENCY CONTACT LIST Questions regarding specific requirements for a program should be directed to the granting agency's contact person, See the following page for a list of the current Single Audit Contacts. °age 49 93 May201' F;SINGLE :AUBiT CONTACTS, • SINGLE AUDIT COORDINATOR':. COLLEEN CAMPBELL - Department of Administration, ,,:Division of Finance, P- O:'Box 110204, Juneau, AK 99811 -0204 Phone: !465 -4666 •cFax 465 -2169 E -mail: s;nnle'.audit6,alake ccv ;i(Mb 0204) Administration Gary Zepp - 465 -5653 / Fax 465 -2194 Division of Administrative Services P.O. Box 110208, Juneau, AK 99811 oarv.zeoolalalaskaaov (MS 0208) Administration.. Surplus Property. Jim Jobkar- 257 -9632J Fax 279 -4976 Dept of Adm'rn, Division of General Services 2400 Viking Drive, Anchorage, AK 99501 -1776 iim.lobkar!Lalaska.aov Labor and Workforce Development Bill Endicott - 465 -59821 Fax 465 -2107 Office of the Commissioner P.O. Box 21149, Juneau, AK 99802 -1149 william.endicott;aJ.alaska.gov (MS 0700) Lew Matt vanSteenwyk -- 465 -36766 / Fax 465-5419 Division cf Administrative Services P.O. Box 110300, Juneau, AK 99811 matt.vansteenwvk(cia;eska,nov (MS 0300) Alaska Court System, Military & Veteran's Affairs Rhonda McLeod - 264 -8215 / Fax 264 -8292 Office of the Administration Director 820 W 4m Ave, Anchorage, AK 99501 -2005 mmc'eodf courts.state.ak.us Stephanie Church -- 465 -4736 / Fax 465 -4605 Division of Administrative Services P.O. Box 110900, Juneau, AK 99811 stephanle.churchiTalaska.nov (MS 0900) Commerce, Community & Economic Development Natural Resources Karmen Bowman -- 465 -5445 / Fax 465 -5863 Division of Administrative Services P.O. Box 110803, Juneau, AK 99811 karmen.bowman(Dalaska.00v (MS 0800) Bill Andrews - 465 -3503 / Fax 465 -2102 Division of Support Services 400 Willoughby Ave., Juneau, AK 99801 -1724 bill.andrewsralalaska.00v (MS 1000) Corrections Public Safety Kevin Worley -4654641 / Fax 465 -3253 Division of Administrative Services P.O. Box 112000, Juneau, AK 99811 kevin.worleviDaiaska.gov (MS 2000) Chyenne Schmidt -- 465.5501 / Fax 463 -5039 Division of Administrative Services P.O. Box 111200, Juneau, AK 99811 chvenneschmidtlr7. alaska.aov (MS 1200) Education and Early Development . Revenue Heidi Reichi -- 465 -6682 / Fax 463 -5279 Division of Education Support Services P.O. Box 110500 Juneau, AK 99811 heidi.reichk aiaska.aov (MS 0500) Environmental Conservation Brook Larson -- 465.3671 / Fax -465 -1685 Division of Administrative Services P.O. Box 110410, Juneau, AK 99811 brookiarsor aIasCa.gOV (MS 0410) Transportation & Public Facilities Joanna McDowell - 465 -5289 / Fax 465 -5097 Division of Administrative Services.. 410 WdloughbyAve.#105 Juneau, AK 99801 -1795 joanna,mcdoweiii88%aiaska.gov (MS 1800) Bob Janes -- 465 -2080 / Fax 586 -8365 Office of the Commissioner / Internal Review . 3132 Channel Drive, Juneau, AK 99801 -7898 bob.ienesealaska.gov (MS 2500) Fish & Game Alaska Energy Authority Barbara Mason - 465 -6069 / Fax 465 -6078 Division of Administrative Services P.O. Sox 22526, Juneau, AK 99811 -5526 harbar.masonraiaska.00v (MS 1100) Health & Social Services Amy Adler - 771 -3013 / Fax 771 -3044 Finance Department. 813 West Northern Lights Blvd, Anchorage, AK 99503 aadierraaldea.crq Alaska Housing Finance Corporation Bob Wright -- 465-3121 / Fax 463 -5149 Finance and Management Services P.O. Box 110602, Juneau, AK 99811 rotlertNdrighOalaska.cov (MS 0650) Christie George - 330 -8270 / Fax 338 -2585 Planning and Program Development Department P.O. Box 101020, Anchorage, AK 99510 -1020 coeorne0lahfc.state- ak.L's Fade 50 94 May 2011 GENERAL COMPLIANCE REQUIREMENTS Public Purpose Compliance Requirement: Article IX, Section 6 of the Alaska Constitution requires all appropriations of public money or transfer of public property to accomplish a public purpose. Suggested Audit Procedures: Evaluate expenditures to determine that they accomplish a public purpose. Civil Rights Compliance Requirement: Alaska Statute 18.80200 and federal civil rights laws prohibit discrimination against a person because of race, religion, color, national origin, sex, age, physical or mental disability, marital status, change in marital status, pregnancy, or parenthood. Suggested Audit Procedures: 1. Obtain representation andlor attorney letters to dete!ruine whether any civil rights suits have been adjudicated or are pending. 2. During the fiscal year for each program, determine the: a) Number of complaints filed with federal, state and/or local agencies responsible for ensuring nondiscrimination. b) Status of unresolved complaints or investigations. c) Actions taken on resolved complaints or completed investigations. Minimum Wages Compliance Requirement: Alaska Statute 23.10.065 requires employers to meet minimum wage requirements. Suggested Audit Procedure: Review payroll records for compliance. Prevailing Wages Compliance Requirement: Alaska Statute 36 5.010 requires certain projects meet the provisions of AS 36 Public Contracts. To the extent that such provisions apply to the project that is the subject of an assistance agreement, the recipient shall pay the current prevailing rates of wage to employees. Suggested Audit Procedures: 1. Identify the programs involving construction activities. 2. Review construction contracts and subcontracts and determine whether they contain provisions requiring the payment of prevailing wages. 3. For the selected construction contracts and subcontracts, determine whether the audited entity immediately notified the Alaska Department of Labor & Workforce Development under AS 36.05.035 of the: a) Amount and effective date of the contract b) Identity of the contractor and all subcontractors c) Site or sites of construction d) Project description Page 51 %/lay2011 95 Workers' Compensation Compliance Requirement: As required by AS 23.30, recipients of state financial assistance and their contractors shall provide and maintain workers' compensation insurance. Suggested Audit Procedures: 1. Examine project records to determine whether workers' compensation insurance was provided as required. 2. Determine whether any Department of Labor & Workforce Development actions regarding insufficiency of workers' compensation are proposed or pending. 3. Examine insurance policy to determine whether it provides Alaska benefits for employees hired in Alaska. Contractors' Bonds Compliance Requirements: Alaska Statute 36.25.010 specifies that except as provided in AS 44.33.300, before a contract exceeds $100,000 for the construction, alteration, or repair of a public building; or public work of the state or political subdivision of the state is awarded; the contractor shall furnish perfomlance and payment bonds. Suggested Audit Procedures: 1. Review the recipient's system designed to ensure that contractors meet bonding requirements. 2. Review project records for evidence that contractors met bonding requirements. Political Activitv Compliance Requirement: Alaska Statute 37,05.321 states grant funds may not be used for influencing legislative action. A grant or earnings from a grant made under AS 37.05.315 - .317 (grants to municipalities, grants to named recipients, and grants to unincorporated communities), may not be used for the purpose of influencing legislative actions; or for travel in connection with influencing legislative action unless pursuant to a specific request from a legislator or legislative committee. Suggested Audit Procedures: 1. Test the expenditures and related records for indications of lobbying activities, publications, or other materials intended for influencing legislation, or similar type costs. 2. Test whether the above costs, if any exist, are charged directly or indirectly to state - assisted programs. 3. Test the personnel and payroll records, and identify persons whose responsibilities or activities include political activity. Retention and Inspection of Records Compliance Requirements: A recipient of state financial assistance shall maintain and make available records of expenditure for those funds. As a minimum, the expenditure records shall be maintained until audits required under 2 AAC 45.010 are completed and noncompliance findings are resolved. Suggested Audit Procedure: Determine whether prior audit recommendations were resolved and if not; determine that pertinent records are still available for inspection. Page 52 96 May 2011 Responsibility for Third Parties Compliance Requirement: Per 2 AAC 45.010, a recipient of state financial assistance that disburses financial assistance to a third party(s) in an amount equal to or greater than the audit threshold is required to ensure that the third party(s) complies with audit requirements. The recipient entity must aiso ensure that appropriate corrective action is taken within six months after disclosure of a third party's noncompliance with state statute or regulation, or financial assistance agreement. Suggested Audit Procedures: 1. Determine whether the recipient entity has established a system for notifying third parties of their responsibilities, and that the system is being used. 2. Determine that the recipient entity has established a system to ensure third party compliance. 3. Determine whether the recipient entity has established a system to ensure that appropriate corrective action is taken within six months after a third party's noncompliance is disclosed. Audit Requirements Compliance Requirement: Per 2 AAC 45.010, recipients of state financial assistance that meet the audit threshold are required to submit an audit to the single audit coordinator's office. See section 2 of this Guide, Requirements - State Single Audit and Major Program Thresholds. Suggested Audit Procedure: Refer to information in the "Audit Guide" section of this publication. Page 53 May 2011 97 Suggested by: Council Member Marquis, Council Member Hockey, and Administration CITY OF KENAI ORDINANCE NO. 2603 -2011 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KENAI MUNICIPAL CODE CHAPTER 7,05, "TAXATION OF REAL AND PERSONAL PROPERTY" BY ADDING A NEW SECTION "PROPERTY TAX CREDIT - RESIDENTIAL SPRINKLER SYSTEMS," TO PROVIDE A TAX CREDIT TO OWNERS OF RESIDENTIAL STRUCTURES WHO INSTALL CERTAIN QUALIFYING SPRINKLER DEVICES. WHEREAS, the 2009 international Residential Building Code requires the installation of an NFPA (National Fire Protection Agency) 13D compliant sprinkler system in all newly constructed 1 and 2 family dwellings; and, WHEREAS, the City of Kenai has elected not to impose this require the City's adopted local building codes; and, en t by ending WHEREAS, the City understands the benefits of sprinkler systems and encourages that all new one and two family dwellings constructed in the City limits of Kenai to be sprinidered to a minimum standard that complies with the 2009 International Residential Building Code (or better); and, WHEREAS, in light of those benefits, it is in the best interest of the City to provide a property tax credit to the legal owner(s) of the qualified dwelling that is equal to the actual cost of installation or $2.00 per square foot of the dwelling (excluding attached garages), whichever is less, to be used to satisfy City of Kenai real property taxes for the subject property, NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Form: This is a Code ordinance, Section 2. Amendment of Chanter 7.05 of the Kenai Municipal Code: The Kenai Municipal Code is amended by adding a new section, Property tax credit - residential sprinklers, to he numbered 7.05.075 which shall read as follows: 7.05.075 Property tax credit - residential sprinklers. (a) Credit, The owner(s) of a newly constructed one or two family dwelling who installs, and /or has certified, a compliant sprinkler system by a qualified installer may receive a credit against the City of Kenai property taxes. New Text Underlined [DELETED TEXT BRACKETED] 99 Ordinance No, 2603-2011 Page 2 of 3 (5) Amount of credit. The credit allowed under this section fora residential sprinkler system is the lower of the eligible cost to the owner of the property for the installation of the system or $2.00 per square foot of the dwelling (excluding attached garages). "Eligible cost" means the cost of the sprinkler system including labor and materials required to comply with th,e minimum standard established by code. (c) Carry Over. The amount of credit in any tax year must not exceed the amount of the City of Kenai property tax imposed on the property benefitted by the credit in that tax year, Any amount of a credit not taken in the tax year in which an application is approved may be carried over in subsequent years until the full credit is granted, Any unapplied credit shall remain with the property and may be utilized by subsequent owners, in the event the property is sold, until the full credit has been applied against taxes of the property. (d) Application. (1) A property owner must submit an application for the tax credit to the Finance Department on or before the date that the Finance Department sets which date shall be no later than April 30 of each year. Applications flied after April 30, or applications that are incomplete as of the date set for filing by the Finance Department, will be retained and, once complete, evaluated for a. tax credit for the next succeeding year. (2) An application must: (A) be on the form that the City requires; (3) demonstrate that the taxpayer is entitled to the credit; and, (C) include a certificate of occupancy from the City of Kenai's building official indicating that the system for which the credit is sought meets the requirements of the 2009 International Residential Building Code (of subsequent edition adopted by the City). (e) Appeal. If the tax credit is denied, or if less costs for the installation of the system are allowed than the applicant believes appropriate, the applicant may appeal that decision to the City Manager on a fonui provided by the City. Appeals shall he filed with the City Manager within fifteer! (15) days of the date of any decision under this section. In reviewing an appeal, the City Manager shall consider whether the sprinkler system meets the requirements of this section; the costs were necessarily incurred to install the system in accordance with this section and applicable codes; and the application for the tax credit was timely filed. (i) The credit authorized by this section applies to any tax year beginning January 1, 2012. DELETED TEXT BRACT EDi 100 Ordinance No. 2603 -2011 Page 3 of 3 Section 3. Severability: If any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: Pursuant to KMC 1.13.070(f), this ordinance shall take effect one month after adoption. PASSED 13? THE COUNCIL OF THE CITY OF KENAI, ALAShA, this 21st day of December, 2011. Ai'i'EST: Sandra Modigh, City Clerk. PAT PORTER, MAYOR Introduced: December 7, 2011 Adopted: December 21, 2011 Effective: January 21, 2012 Pew Text Undethnnd; [DELETED TEXT GRACKETEDI 101 ilK aqe with a Past, Gc with a Faturell MEMO: 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 w 4, Telephone: 907 - 283 -7535 / FAX: 907- 283 -3014 11111r TO City Council FROM: Rick Koch DATE: December 1, 2011 SUBJECT: Ordinance 2603 -2011 — Property Tax Credit for Residential Fire Sprinkler Systems The purpose of this correspondence is to recommend Council approval of Ordinance 2603 - 2011. ,a92 The 2009 International Residential Building Code (IRBC) requires installation of fire sprinkler systems in newly constructed one and two family dwellings. The requirement to install fire sprinkler systems in newly constructed one and two family dwellings has been met with strong opposition, primarily as a function of cost, from a variety of individuals and organizations. As a result of this opposition, the majority of municipalities nation -wide have chosen to eliminate the provision requiring fire sprinkler systems. The Administration, Fire Department, and Emergency Services recognize the value of fire sprinkler systems in newly constructed one and two family dwellings. Administration has prepared this ordinance establishing a property tax credit for homeowners that decide to install fire sprinkler systems. Attached is correspondence from the Finance Department estimating the future financial impact of the proposed ordinance. Fire sprinkler systems have been shown to provide protection for building occupants, the structure, and for emergency response personnel. Thank you for your attention in this matter, SUBSTITUTE Suggested by Council Member Marquis, Council Member Hockey, and Administration CITY OF KENAI ORDINANCE NO. 2603-2011 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KENAI MUNICIPAL CODE CHAPTER 7.05, "TAXATION OF REAL AND PERSONAL PROPERTY" BY ADDING A NEW SECTION "PROPERTY TAX CREDIT - RESIDENTIAL SPRINKLER SYSTEMS," TO PROVIDE A TAX CREDIT TO OWNERS OF RESIDENTIAL STRUCTURES WHO YNSTALL CERTAIN QUALIFYING SPRINKLER DEVICES. WHEREAS, the 2009 International Residential Building Code requires the installation of an NFPA (National Fire Protection Agency) 13D compliant sprinkler system in all. newly constructed 1 and 2 family dwellings; and, WHEREAS, the City of Kenai has elected not to impose this requirement by amending the City's adopted local building codes; and, WHEREAS, the City understands the benefits of sprinkler systems and encourages that all new one and two family dwellings constructed in the City limits of Kenai to be sprinkiered to a minimum standard that complies with. the 2009 International Residential Building Code (or better); and, WHEREAS, in light of those benefits, it is in the best interest of the City to provide a property tax credit to the legal owner(s) of the qualified dwelling that is equal to the actual cost of installation or $2.00 per square foot of the dwelling (excluding attached garages), whichever is less, to be used to satisfy City of Kenai real property taxes for the subject property. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Form: This is a Code ordinance. Section 2. Amendment of Chanter 7,05 of the Kenai Municipal Code: The Kenai Municipal Code is amended by adding a new section, Property tax credit - residential sprinklers, to be numbered 7,05.075 which shall read as follows: 7.05.075 Property tax credit - residential sprinklers. New Text Underlined. [DELETED TEXT BRACKETED) 105 Ordinance No. 2603 -2011 SUBSTITUTE Page 2 of 3 (a) Credit. The owner(s) of a newly constructed one or twc family dwelling who installs, and /or has certified, a compliant sprinkler system by a qualified installer may receive a credit against the City of Kenai property taxes. (b) Amount of credit. The credit allowed under this section for a residential sprinkler system is the lower of the eligible cost to the owner of the property for the installation of the system or $2.00 per square foot of the dwelling (excluding attached garages). "Eligible cost" means the cost of the sprinkler system including labor and materials required to comply with the minimum standard established by code, (c) Carry Over. The amount of credit in any tax year must not exceed the_ amount of the City of Kenai property tax imposed on the property benehtted by the credit in that tax year. Any amount of a credit not taken in the tax year in which an application is approved may be carried over in subsequent years until the full credit is granted. (ANY UNAPPLIED CREDIT SHALL REMAIN WITH THE PROPERTY AND MAY BE UTILIZED BY SUBSEQUENT OWNERS, IN THE EVENT THE PROPERTY IS SOLD, UNTIL THE FULL CREDIT HAS BEEN APPLIED AGAINST TAXES OF THE PROPERTY.] (d) Applicatio (1) A property owner must submit an application for the tax credit to the Finance Department on or before the date that the Finance Department sets which date shall be no later than April 30 of each year. Applications filed after April 30, or applications that are incomplete as of the date set for filing by the Finance Department, will he retained. and, once complete, evaluated for a tax credit for the next succeeding year. (2) An application must: (A) be on the form that the City requires; (B) demonstrate that the taxpayer is entitled to the credit; and, (0) include a certificate of occupancy from the City of Kenai's building official indicating that the system for which the credit is sought meets the requirements of the 2009 International Residential Building Code ([OF( or subsequent edition adopted by the City). (e) Appeal, If the tax credit is denied, or if less costs for the installation of the system are allowed than the applicant believes appropriate, the applicant may appeal that decision to the City Manager on a form provided by the City. Appeals shall be filed with the City Manager within fifteen (15) days of the date of any decision under this section. In reviewing an appeal, the City Manager shall consider whether the sprinkler system meets the requirements of this section; the costs were necessarily incun-ed to install the system in accordance with this section and applicable codes; and the application for the tax credit was timely filed. (f) The credit authorized by this section applies to any tax year beginning January 1, 2012. New Text i,lnderhned• [DELETED TEXT BRACKETED] 106 Ordinance No. 2603 -2011 SUBSTITUTE Page 3 of 3 Section 3. Severa.bility: If any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The. City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: Pursuant to KMC 1.15.070(f), this ordinance shall take effect one month after adoption. PASSED BY THE COUNCIL OF THE CITY CP KENAI, ALASKA, this 18th day of January, 2012. ATTEST: Sandra Modigh, City Clerk PAT PORTER, MAYOR Introduced: December 7, 2011 Adopted: January 18, 2012 Effective: February 18, 2012 New Text Underlined' DELETED TEXT BRACKETED] 107 To 'Village with a Past, Ct with a Future' Rick Koch, City Manager Terry Eubank, Finance Director Decetnber 1, 2011 Re: Ordinance No, 2603 -2011 Date: FINANCE DEPARTMENT 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907- 283 -3014 The purpose of this memo is to analyze the financial impact of Ordinance 2603 -2011 on the City's property tax revenue. This analysis will not project potential future use of the proposed credit but will look at the maximum impact the credit could have had if available during calendar years 2007 through 2010. Maximum potential exposure for the City is 82.00 per square foot of new construction excluding garages. The following table shows by year the number of homes constructed, the maximum credit that would have been available, the combined square footage which would have been available for credit had a qualified sprinkler system been installed, the c uTett assessed value of those properties, and the estimated number of years it would take to exhaust the City's credit, Total Total Years to Homes Maximum Eligible Assessed Exhaust Constructed Credit Suuare Footage Value Credit 2007 23 8 88,168 44,084 8 6,120,000 4.13 2008 22 75,316 37,658 5,265,700 4.09 2009 5 15,738 7,869 1,088,500 4,04 2010 7 22.394 11,197 1.596.200 4.13 Total 57 8201,616 100,808 814,070,400 4,11 Assuming it cakes our years to completely utilize the proposed tax credit and 100% participation (maximum. potential impact), the amount of credit to be applied each year cannot exceed the total City tax due for that year, the following is a projected impact on property tax revenue by fiscal year for fiscal years 2008 through 2011. Keep in mind a credit applied for and granted in April of any year will not impact the taxes until the subsequent fiscal year. Tax Credit Year FY2008 FY2009 FY2010 FY2011 2007 $22,042 $22,042 822,042 822,042 2008 18,829 18,829 18,829 2009 - 3,935 3,935 2010 _ -_ - 5.599 Total $22,042 840.871 $44,806 850,405 109 NA' KIM/a/LA LDEF{S {scOC +CrCN November 30, 2011 City of Kenai Rick Koch, City Manager 210 Fidalgo Ave. Kenai, AK 99611 Dear Rick, On behalf of the Board of Directors and members of the Kenai Peninsula Builders Association (KPBA), I'd like to thank the City of Kenai for their time and effort in developing and proposing a property tax credit in regards to residential sprinkler systems in residential dwellings (ORDINANCE NO. 2559 - 2011). As an Association, we continue to be in strong support of any precautions a homeowner may take to better protect themselves from fire danger, which would include sprinkler systems, smoke alarms, and all other appropriate safety measures. The KPBA is a strong advocate of the homeowner's right to choose to install a sprinkler system, and will therefore continue to be in opposition of any proposed mandate. We sincerely thank the City for their efforts in offering this tax credit to our community, and appreciate the opportunity to voice our concerns regarding this important issue. Sincerely, effrey M. Twait 2011/12 KPBA President Cc: KPBA Board ofDirectors P.O. Box 1753 F Kenai, Alaska 99611 phone: (907) 263 -8071 • fax: (907) fn8072 e email: kpbe@ptialaska.hie Terry Bookey / Ryan Marquis To: Mayor Pat Porter Council Members Mike Boyle, Brian Gabriel, Bob Molloy, Tim Navarre Franc: Vice Mayor Ryan Marquis, Council Member Terry Bookey Date. January 11, 2012 Re: Ordinance 2603 -2011 – Property Tax Credit for Residential Sprinkler Systems Over 3,000 people lose their lives each year to fire in the United States. Of those, S out of 10 are in the home. According to the National Fire Protection Association (NFPA), if you have a reported fire in your home, the risk of dying decreases by about 80% when sprinklers are present. As a comparison, the NFPA reports smoke alarms reduce the risk of dying in a home fire by 50 %. Additionally, homes with sprinklers are protected against significant property loss — sprinklers reduce the average property loss by 71% per' fire. Many of the new homes constructed use lightweight, engineered wood systems which bum faster than dimensional lumber. The National Research Council of Canada (NRC) tested the performance of unprotected floor assemblies exposed to fire. The findings of the study assert that these structures are prone to catastrophic collapse as early as six minutes from the onset of fire, Residential fire sprinkler systems respond quickly to reduce the heat, flames, and smoke from a fire; offering residents valuable time to get to safety, and protection to firefighters from major structural failures, like collapsing beams and floorboards, By passing Ordinance 2603 - 2011, the City of Kenai recognizes these and the many other benefits of residential sprinkler systems, and offers incentives -- rather than mandates -- for citizens to use in constructing the most fire -safe homes possible. The City of Kenai has the opportunity to serve as a leader to other communities snuggling to reconcile the proven benefits of residential sprinkler systems and the pressures against mandating such systems. The Council has heard differing points -of -view on sprinkler systems; the sponsors believe this ordinance represents the best interests of each of those points -of -view. We encourage your support of Ordinance 2603 -2011. 113 Suggested by: Administration CITY OE KENAI ORDINANCE NO. 2605.2012 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA INCREASING ESTIMATED REVENUES AND APPROPRIATIONS BY $6,046.52 IN THE GENERAL FUND FOR POLICE TRAINING REIMBURSEMENTS FROM INTERNET CRIMES AGAINST CHILDREN (ICAO). WHEREAS, the Kenai Police Department is an active member in good standing with the Federal Internet Crimes Against Children (ICAO) task force; and WHEREAS, in December of 2011 a Kenai Police Department officer traveled to Houston, TX to attend forensic computer training; and, WHEREAS the 1CAC regional director approved reimbursing the Kenai Police Department for training costs ($6,046.52) upon completion of the training; and, WHEREAS, the high cost of this training was not included in the FY12 Police - Transportation budget, and officers need to attend, additional training for the remaining half of the FY12 budget year; and WHEREAS, the Police Department is requesting appropriation of $6,046.52 to the General Fund, Police Transportation account to cover the costs of the training. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that estimated revenues and appropriations be increased as follows: General Fund increase Estimated Revenues: Police - Federal Grants Increase Appropriations: Police - Transportation S6,046.52 6,046.52 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day of January 2012. Al I E ST: Sandra Modigh, City Clerk Approved by Finance: 7''° PAT PORTER, MAYOR Introduced: January 4, 2012 Adopted: January 18, 2012 Effective: January 18, 2012 New Text Underlined; [DELETED TEXT BRACKETED] 115 w city o{ ICE ASKA 'Village with a past, Git with a Future" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 -283 -7535 / FAX: 907 - 283 -3014 o: TO: Rick Koch — City Manager FROM: Gus Sandahl — Police Chief DATE: 12/27111 SUBJECT: Request ordinance appropriating reimbursement funds from Internet Crimes Against Children (ICAC) For several years the Kenai Police Department has been a member of the Internet Crimes Against Children (ICAC). ICAC is a network of law enforcement agencies who investigate internet crimes against children. Participating agencies also provide awareness and prevention education in the community. For several years, the ICAC regional coordinator has received federal funding to disperse to participating law enforcement agencies for ICAC training programs. The ICAC regional coordinator in Anchorage has agreed to reimburse the Kenai Police Department for forensic computer training that an officer attended in Houston, TX in December of 2011. The tuition and travel costs of this unbudgeted training totaled $6,046.52. The City has already received a reimbursement check of $4,637.70, and we anticipate receiving an additional check of $1,408,82. The costs of this training resulted in a significant depletion of the training budget, and officers still need to attend additional training for the remaining half of FY12. I am requesting an ordinance appropriating $6,046.52 into the General Fund - Police Transportation account. 117 Cdenrinstly ' 1111 1997 ITEM A: Mayor Por A -1. Isle KEN AI CITY COUNCIL REGULAR MEETING January 4, 2012 7:00 P.M. KENAI CITY COUNCIL CHAMBERS MAYOR PAT PORTER, PRESIDING MINUTES CALL TO ORDER called the meeting to order at approximately 7:00 p.m, e of Allegiance Mayor Porter led those assembled in the Pledge of Allegianc A -2. Roll Call There were present: Mayor Pat Porter, Vice Mayor Ryan Marquis, Terry Bookey, Robert Molloy, Tim Navarre, and Brian Gabriel comprising a quorum of the Council. Also present was Student Representative Austin Daly, City Manager Rick Koch, City Attorney Krista Steams, and City Clerk Sandra Ivtodigh, A -3. Agenda Approval. Mayor Porter read the following revisions to the agenda: ADD TO: ITEM D -2: ITEM K -2 REMOVE: ITEM D -3 MOTION: Resolution No. 2012-02 Supporting memorandum from Police Chief Sandahl Council Member Comments Email correspondence from Cre Preschools, LTD ive Play & Resolution No. 2012 -02 Requested by City Manager for revisions Council Member Bookey MOVED to approve the agenda as amended and Council Member Marquis SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 119 IK-ENAI CITY COUNCIL MEETING January 4, 2012 Page 2 of 7 A -4. Consent Agenda MOTION: Council . Member Bookey MOVED to approve the consent agenda as amended, by removing the December 21, 2011 meeting minutes for minor revisions. Council Member Marquis SECONDED the motion. There were no public comments. VOTE: MOTION PASSED UNANIMOUSLY. *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, ITEM B: SCHEDULED PUBLIC COMMENTS - None. ITEM C: UNSCHEDULED PUBLIC COMMENTS Jim Zhu!, Kahtnu Ventures - spoke in favor of the proposed outpatient ambulatory surgery center to be located within the City of Kenai. The "Certificate of Need" public hearing is scheduled on January 19, 2012. Henry K.rull, Kahtnu Ventures - spoke in favor of the proposed outpatient ambulatory surgery center to be located within the City of Kenai. Diana Zirnl, 220 Spur View Drive, Kenai - spoke in favor of the proposed outpatient ambulatory surgery center to be located within the City of Kenai. Rick Davis, Chief Executive Officer of Central Peninsula Hospital - advised the Central Peninsula Hospital does not support the proposed outpatient ambulatory surgery center to be located within the City of Kenai. ITEM D: PUBLIC HEARINGS D -1. Ordinance No. 2604 -2011 - Amending the Official Kenai Zoning Map by Rezoning, Lot 1 -Al, R.M. Thompson Subdivision from Light industrial (IL) to General Commercial (CG). 120 I:ENAI CITY COUNCIL MEETING January 4, 2012 Page 3 of 7 MOTION: Council Member Navarre MOVED to approve Ordinance No. 2604 -2011 and Council. Member Gabriel SECONDED the motion. There were no public comments or council comments. VOTE: MOTION PASSED UNANIMOUSLY. D -2. Resolution No. 2012 -01 - Approving the Purchase of One Police Vehicle Through State of Alaska Equipment Fleet Contract Pricing at a Total Cost of $27,556. MOTION: Council Member Gabriel MOVED to approve Resolution No. 2012 -01 and Council Member Molloy SECONDED the motion. There were no public comments. Student Representative Daly inquired whether local venders were considered for the purchase of the police vehicle. City Manager Koch and Vice -Mayor Marquis advised of an equal opportunity bidding process for all vendors. VOTE: MOTION PASSED UNANIMOUSLY. D -3. Resolution No. 2012 -02 - Accepting a Grant Award from the State of Alaska, Department of Environmental Conservation - Division of Water in the Amount of $1,557,000 and Requiring a. Local Match of $667,2136 for the installation of a Water Main from Lawton Drive to Angler Drive along Beaver Loop Road. REMOVED BY APPROVAL OF THE AGENDA. ITEM E: MINUTES E-1. *Notes from December 19, 2011 Work Session APPROVED BY CONSENT AGENDA. E-2. Regular Meeting of December 21, 2011 121 KENAI CITY COUNCIL. MELTING January 4, 2012 Page 4 of 7 MOTION: Council Member Bookey MOVED to amend, the December 21, 2011 by in "Terry Bookey" within the roll call as present. Council Member Marquis SECONDED the motion. VOTE: MOTION PASSED UNANI&IGUSLY. ITEM p': UNFINISHED BUSINESS -None. ITEM 0: NEW BUSINESS 0-1. Buis to be Ratified. MOTION: Council Member Molloy MOVED to ratify the bills and requested UNANIMOUS CONSENT. Council Member Marquis SECONDED the motion. VOTE: MOTION PASSED UNANIMOUSLY. 0-2. Approval of Purchase Orders Exceeding $15,000 MOTION: Council Member Marquis MOVED to approve purchase orders exceeding $15,000 and requested UNANIMOUS CONSENT. Council Mernber Bookey SECONDED the motion. VOTE: IV OTION PASSED UNANIMOUSLY. G -3. Ordinance No. 2605 -2012 - Increasing Estimated Revenues and Appropriations by $6,046.52 in the General Fund for Police Training Reimbursements from Internet Crimes Against Children (ICAO), APPROVED BY CONSENT AGENDA. g G -4. Action /Approval - Commission/ Committee Reappointments. Mayor Porter nominated Victoria Askin and Tommy Thompson for reappointment to the Harbor Commission and Rebecca Lambour-n to the Parks Recreation Committee. Council Member Bookey MOVED to confirm the Mayor's nomira;ions for reappointment and requested UNANIMOUS CONSENT. Council Member Marquis SECONDED the motion. 122 KENA1 CITY COUNCIL MEETING January 4 2012 Page 50 ;7 VOTE: MOTION PASSED UNANIMOUSLY, Mayor Porter nominated Edward Castillo for the Parks && Recreation Committee vacancy. Council Member Bookey MOVED to confirm the Mayor's nomination of Edward Castillo for appointment to the Parks & Recreation Committee and requested UNANIMOUS CONSENT. Council Member Marquis SECONDED the motion. VOTE: MOTION PASSED UNANEMOUSLY. Mayor Porter nominated Kurt Rodgers for the Council on Aging vacancy. Council Member Gabriel MOVED to confirm the Mayor's nomination of I {urt Rodgers for appointment to Council on Aging and requested UNANIMOUS CONSENT. Council Member Marquis SECONDED the motion. VOTE: MOTION PASSED UNAMMOUSLY. Mayor Porter nominated Kenneth Peterson for appointment to Planning &, Zoning Commission vacancy. (Pursuant to Ordinance No. 2587-2011; council may reuiew the Mayor's Planning & Zoning Commission nomination for confirmation. at the January 18, 2012 meeting.) ITEM El: COMMISSION /COMMITTEE REPORTS II -1. Council on Aging - next meeting Thursday, January 12, 2012. R -2. Airport Commission - next meeting Thursday, January 12, 2012. H.3. Harbor Commission - January meeting cancelled; next meeting scheduled on February 6, 2012. 1I -4, Library Commission - Bob Peters re- elected as Chair; FY13- proposed budgetary items discussed. EI -5. Parks and Recreation Commission - has not met; next meeting to be announced. R -6. Planning and Zoning Commission - no report. 1I -7. Beautification Committee - next meeting scheduled on January 11, 2012. 123 KENAI CITY COUNCIL MEETING January 4. 2012 Page 6 of 7 ITEM I: REPORT OP THE MAYOR Mayor Porter reported on the following: • Received the correspondence from Creative Piay &, Preschool LTD regarding the Katmai Hotel and advised it's a non -issue at this point in time. ITEM 3: ADMINISTRATION REPORTS 3 -1. City Manager - City Manager Koch reported on the following: • Alaska Energy Efficiency Revolving Loan Fund Program update J -2. City Attorney - City Attorney Stearns reported on the following • Finalized City portion of the CINGSA briefing • Judge affirmed the decision of the Board of Adjustments on the Oral Argument of Disque Appeal 3 -3. City Clerk - no report. ITEM K: ADDITIONAL PUBLIC COMMENT K -1. Citivens Comments There were no public comments. K -2. Council Comments Council Member Molloy disagreed with the Mayor's comments regarding Katmai Hotel being converted into The Citadel Center and spoke in opposition for that type of facility being located in the proposed location. Received correspondence from the former clerk expressing gratitude for the City's retirement gift. Attended City's oral argument and commended city attorney for her role in the favorable judgment. Council Member Marquis wished all a happy new year Student Representative Daly advised that students are re -acc school and are looking forward to more daylight. Council Member Bookey - no comment ating to Council Member Gabriel - thanked all presenters for the comments and participation; welcomed the new city clerk. Council Member Navarre happy new year and is looking forward to a good year. 124 KENM CITY COUNCIL MEETING January 4, 2012 Page 7 of 7 Mayor Porter was happy to see Alaska wild salmon for sale and in restaurants in Washing D.C. while visiting family for the holidays. ITEM L: EXECUTIVE SESSION - None Scheduled. ITEM M: PENDING LEGISLATION (This item lists legislation which will be addressed at a later date as noted.) L-1. Ordinance No. 2597-2011 - Amending Kenai Municipal Code 14.22.010, Land Use Table, to Make Comprehensive Changes to the Uses Allowed in the Suburban Residential (RS), Suburban Residential 1 (RS1), Suburban Residential 2 (RS2), Rural Residential (RR), Rural Residential RR -1, and the Urban Residential (RU) Zoning Districts. (Clerk's Now: At its November 16, 2011 m_ee ing, the Council postponed Ordinance No. 2597 -2011 to the August 1, 2012 meeting and the ordinance was referred back to the Planning and Zoning Commission so the Commission could continue to consider the changes proposed in this work product during the Comorehe .sine Plan process.) ITEM N: ADJOURNMENT There being no further business before the Council, the meeting was adjourned at approximately 7:46 p.m. Minutes prepared and submitted by: Sandra Modigh, CMC City Clerk 125 KM ALASKA Suggested by: Administration CITY OF KENAI ORDINANCE NO. 2606-2012 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, INCREASING ESTIMATED REVENUES AND APPROPRIATIONS BY $3,2 14.81 EN THE GENERAL FUND FOR STATE TRAFFIC GRANT OVERTIME EXPENDITURES. WHEREAS, the Kenai Police Department joins with other law enforcement agencies statewide to support Alaska Highway Safety Office (AHSO) traffic safety programs to reduce fatalities and injuries on roadways; and, WHEREAS, AHSO traffic- related overtime funds require no local match and allow the department to provide specific traffic safety patrols; and, WHEREAS, actual AI-ISO overtime expenditures for traffic safety patrols totaled $3,214.81 from July 1 to December 31 of 2011; and, WHEREAS, the Police Department is requesting the appropriation of $3,214.81 to the General Fund, Police Overtime account to cover actual costs of traffic safety program participation. NOW THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that estimated revenues and appropriations be increased as follows: General Fund Increase Estimated. Revenues: State Grant $3,214.81 Increase Appropriations: Police — Overtime $3,214.81 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this first day of February, 2012. A', TEST: Sandra Modigh, City Clerk Approved by Finance: 127 PAT PORTER, MAYOR Introduced: January 18, 2012 Adopted: February 1, 2012 Effective: February 1, 2012 "tlilfage with a Past, CL with a Frstisre" litl1 1991 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 -283 -7535 / FAX: 907- 283 -3014 MEMO: TO: Rick Koch — City Manager FROM: Gus Sandahl — Police Chief DATE: 1/11/12 SUBJECT: Ordinance 2606 -2012 requesting appropriation - Police Overtime The Kenai Police Department continues to participate in seatbelt and DUI overtime patrols, reimbursed to the City of Kenai through a grant by the Alaska Highway Safety Office (AHSO). These overtime patrols were not budgeted in the FY12 budget. Actual overtime costs for Click It or Ticket and DUI overtime patrols from July to December of 2011 are $3,214.81. AHSO- overtime reimbursements are deposited into the general fund. The police overtime account has a significant depletion, and I am requesting an appropriation of $3,214.81 into the general fund, police overtime account for actual AHSO- related overtime costs. The actual overtime costs for the AHSO- related programs for the first 6 months of this budget year are as follows: DUI $2,397.82 Seatbelt $816.99 Total Requested Appropriafion $3,214.81 C# of !EPUGMAMA Suggested by: Administration CITY OF KENAI ORDINANCE NO. 2607 -2012 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, INCREASING ESTIMATED REVENUES AND APPROPRIATIONS BY $10,990.27 IN THE GENERAL FUND FOR STATE BUREAU OF HIGHWAY PATROL OVERTIME EXPENDITURES. WHEREAS, since July 1, 2009, a Kenai Police Department officer has worked on the Alaska State Troopers, Bureau of Highway Patrol (BHP) traffic team; and, WHEREAS, through Alaska Highway Safety Office funding, the State of Alaska has reimbursed the City of Kenai for the officer's salary and overtime; and, WHEREAS, actual overtime expenditures for the Kenai officer on the BHP traffic team have totaled $14,292.27 for the time period of July 1, 2011 to December 31, 2011, and those funds are paid out of the Police - Overtime account; and, WHEREAS, the total Kenai Police budgeted BHP overtime for FY12 was $3,302; arid, WHEREAS, the Police Department is requesting the appropriation of $10,990.27 ($14,292.27 actual, minus $3,302.00 budgeted) to the General Fund, Police Overtime account to cover unbudgeted overtime costs of Bureau of Highway Patrol participation. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that estimated revenues and appropriations be increased as follows: General Fund Increase Estimated Revenues: State Grant - Police Increase Appropriations: Police - Overtime $10,990.27 $ 10,990.27 PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this first day of February, 2012. ATTEST: Sandra Modigh, City Clerk Approved by Finance: 131 PAT PORTER, MAYOR Introduced: January 18, 2012 Adopted: February 1, 2012 Effective: February 1, 2012 the city' art KRAALALASKA "Tillage with a Past, Ci y with a Fixture" Ktpory 9(iijr 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 -283 -7535 / FAX: 907 -283 -3014 o• • TO: Rick Koch — City Manager FROM; Gus Sandahl — Police Chief DATE: 1/11/12 SUBJECT: Ordinance 2607 -2012 requesting appropriation — Police Overtime Since July 1, 2009, a Kenai police officer has worked on the Alaska State Trooper, Bureau of Highway Patrol (BHP) traffic team. The State of Alaska, through Alaska Highway Safety Office grant funding, reimburses the City of Kenai for the officer's salary and overtime. The officer's overtime is paid out of the City of Kenai police - overtime account, which is now significantly depleted. BHP overtime reimbursements, from the State of Alaska, are deposited into the City of Kenai — General Fund. Actual BHP overtime costs for the Kenai BHP officer for the first six months of this budget year (July 1 to December 31, 2011) are $14,292.27. The FY12 Police — Overtime account was budgeted $3,302 for the BHP officer. Actual expended BHP overtime (July to December, 2011): Total budgeted BHP overtime for FY12: Amount requested in appropriation: $14,292.27 $3.302.00 (subtract) $10,990.27 I am requesting an ordinance appropriating $10,990.27 to the general fund, police overtime account to cover the unbudgeted BHP overtime costs from July to December of 2011. MEMO: e with a Past, C. with a Future" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 bribl Telephone: 907- 283 -7535 / FAX: 907 - 283 -3014 11=111 1392 TO: City Council FROM: Rick Koch DATE: January 5, 2012 SUBJECT: Resolution 2011 -74, Amendment of Attachment The purpose of this correspondence is to request that the Council approve a motion to amend the attachment to the above referenced resolution. The City's number one capital improvement priority was for `paving Improvements to City Streets." The attachment should have identified required funding in the amount of $3,000,000 rather than $1,000,000, Thank you for your attention in thls matter. If you have any questions, please contact me at your convenience. Suggested by Administration CITY OF KENAI RESOLUTION NO. 2011 -74 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, ADOPTING THE CITY OF KENAI CAPITAL IMPROVEMENTS PLAN PRIORITY LISTS FOR STATE AND FEDERAL FUNDING REQUESTS FOR THE FISCAL YEAR 2013. WHEREAS, the Capital improvements Plan (CIP) is a guide for capital expenditures; and, WHEREAS, the City of Kenai CIP process has involved consideration of existing p programmatic needs and public input; and, WHEREAS, the CIP compliments the legislative priorities, Gity Budget and Comprehensive Plan; and, WHEREAS, the Kenai City Council held a public hearing on the Capital Improvements Program adoption on November 2, 2011; and, WHEREAS, if unforeseen circumstances occur, the City Council authorizes the City Manager to modify as necessary the City of Kenai's Capital Improvements Plan Priority Lists for State and Federal Funding Requests for the Fiscal Year 2013, and that any modification will be brought before Council for approval at the next regularly scheduled Council meeting. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, adepts the attached City of Kenai capital Improvements Plan Priority List for State and Federal Funding Requests for the Fiscal Year 2013. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2nd day of November, 2011. A i PEST. Carene Hall, Deputy City Clerk PAT PORTER, MAYOR 137 CITY OF KENAI CAPITAL IMPROVEMENTS PROGRAM (CIP) PRI ©RITES FOR STATE FUNDING REQUESTS FOR SFY 2013 PRIORITY NUM BER PROJECT TITLE DESCRIPTION REQUIRED FUNDING NOTES /COMMENTS Pavlrttg & t nprovernents to City Streets The. City of Kenai maintains approximately 20 mites of gravel surfaced roadways within Ws municipal boundaries. The cost of maintenance of gravel roadways is high, dust from gravel roadways is a health issue for the eldedy & young. $ 3,000,000.00 Administration recommends that a ptoject of this type be perpetually included in capital project requests to the State of Alaska. 2 New Water Transmission Mains (Phase IV) Construct approximately 6,000 lineal feet of 16" Water Transmission main along Beaver Loop from Togiak Street to Angler Drive. Private wells in the area to be served by the new water transmission main have been found to prioduce water with arsenic levels up to 200 ppb, or 20 times the EPA water quality limits. $ 1,878,800.00 A grant application for this project has been submiflrd under the State of Alaska, DePartrcent of Environmental Conservation (ADEC) Municipal Matching Grant Program (1V1MC). We have recxeived the scaring and this project and may havescored well enough to he ire-bided in the Governors SFY 2013 capital Budget. The City Council passed Resell tion No. 2011 -65 identifying this project as the number one ADEC MMG priority. 4 Construct New City Light/Heavy Equipment Maintenance Shop This project would construct a 20,000 sf maintenance shop to replace the existing shop. The exciting shop is a collection of buildings and conex's that lacks the room to perform maintenance on the City's equipment fleet, and also lacks engineered ventilation systems as well as other improvements found in designed faculties. $3,500.000 ($1,750,000 City General Fund & 81,750,000 State Appropriation Request) Shop facilities to support operation, and maintenance activities are always difficult projects to metre forward The present facility was never designed to far notate the support manitenan e activities which are being aecompliehed. There may be an opportunity for Federal participation, specifically FAA funding in an amount comensurate with Airport use of the facility. 4 Kenai Central High School Football /Soccer Field Synthetic Turf City commits $250,000 funding to project Replace synthetic the existing nautral turf footha/I/Sealer field with a turf surface. $1,900,000 The GovemorfLegislatrre has provided em for the Conte afire efone (1) synthetic turf foot8lksaccer FWD year. The majority of the footbnt?s ^car fields in Anchorage and the met-Su Valley have already been constructed- This pmjec-t is supported by individuals that have been active in getting the Anchorage /Mat -Su ftekls improved.. This project would ailew Kenai to host the small and aaedium High School Football Chnmpionsl lips as welt as Soccer Championships. 5 Kenai industrial Park Construction Phase II This project would construct waterlsewertetectinr ttotecoinmunications /natural gas utilities to the second phase of the Kenai Industdat Park (up to 20 lots, +1- 25 acres) $ 500,000.00 This fully develops 01e Kenai tndt. + at Park The legislature may be seeking economic, development projects this year. Page 1 of 4 Prepared by R. Koch CITY OF KENAI CAPITAL IMPROVEMENTS PROGRAM (CIP) PRIORITES FOR STATE FUNDING REQUESTS FOR SFY 2013 PRIORITY NUMBER PROJECT TITLE DESCRIPTION REQUIRED FUNDING NOTES /COMMENTS 6 Capital Impro vements to Support S Personal Use Fishery This project would coostwct three Fish Clean ng!Waste Transfer & Enforcement/Data Collection Stations. The three stations would be located at the North Beach, South Beach, and. City Boat Launch. $ 300,000 00 i0 a rerun c rnrirfates on Gown or P tmetl stated that his administration is willing n., invest state resources to mitigate the Intact of the personal use fishery on the City of Kenai and the Kenai Peninsula. $ 1,800 000.00 This is the first phase of a three pha project to rnnstruct improvements to the : `r iTr' and id e t f -din the WWTP Master Plan prepared by CH244HIl1 .003. 7 City of Kenai Wastewater Treatment Plant Upgrades & Renovations This project would construct improvements to the City of Ke0a1's MVP which would increase volume, decrease operating expenses and increase the quality of the effluent. 0 Page 2 of 4 Prepared by: R. Koch CITY OF KENAI CAPITAL. IMPROVEMENTS PROGRAM (CIP) PRIORITES FOR STATE FUNDING REQUESTS FOR SFY 2013 PRIORITY NUMBER PROJECT TITI, ESCRIPTION REQUIRED FUNDING NOTESfCOl14MENT OTHER PROJECTS WHICH WERE CONSIDERED ommsen Subdivision, First Street Re- This project would reconstruct First Street from Cniitomia onstruetion Avenue io Florida Avenue, This roadway exhibits differential movement of the curb & gutter and asphalt. Further the asphalt has and is failing. antral Heights Roadways, Street hting System RenonstruetionJReplacement & onstructton of a Stone water System ily of Kenai Indoor Turf Field Facility 1. Replace the existing asphalt surface new base material as needed 2. Install co piped storm water collection system 3. Construct sidewalk 00 This new fire engine wordd replace an existing 26 year old fire engine. Our 1982 fire engine is the oldest ore figment presently in use at the Fire Department, and was one of the last years in which "open jump sear fire engines were allowed by code. The old engine has reached the end of Ws useful lite and should be replaced. This project would construct a 100'x200` indoor turf field, possibly as an addition to the existing Kenai MuIli- Purpose Facility. The facility would be used by area schools, pre- schools, soccer and other organizations. Page of $ 500,000.0 Ad from a St above. ton be!ieve� te/Federal0 cost esfirnate for specific components of tills project is included ijn the attached teformetion. The most craCti at project is probably to replace the !Inting and asphalt (est. cost $332,000). A storm water system is chalinngine es The rbdivIsion was not originally designed taking into account surface /piped drainage. Curb &gutter is very expensive and it's installation would mandate the constn.,ctton of a storrn water drainange system. $ 3,500,000.00 This project has teen discussed by t!te parks & Resrentlon Commission and it is my understanding they wish to .ontirare dtsrussicn on the subject This project is certainly scussiien but significant work needs to be accomplished to determine its feasibility. Prepared by: R. Koch CITY OF KENAI CAPITAL IMPROVEMENTS PROGRAM (CIP) PRIORITES FOR STATE FUNDING REQUESTS FOR SFY 2013 PRIORITY NUMBER PROJECT TITLE DESCRIPTION REQUIRED FUNDING NOTESICOMtMiCNTS bower Kenai River Drift Boat Pull -Out Project would provide lower river access point for puII -out of drift boats onl y. Unknown ADNR is accomplishing a "Needs Assess-7iecl Study" scheduled to be finished in 2011. It's doubts l any funding would he available for this project in advance of the cnmplotion of the study, and that Stitelfoderal funding reould be appropriated to a State Agency that would be responsible for the construction and operation of the facility. Kenai Spur Highway- Upgrade Five This!orojeet is proposed to provide safety improvements to $ 3,000,000.00 This project has ranked high on the 2010 -2013 STIP and intersections Beaver Loop, Thompson Park, Strawberry Road, Silver funding ispropose-d in SFY 2011 for conceptual design, and Salmon. and TBD to Include turn lanes and lighting. Traffic accidents at these intersections usually involve at least one vehicle traveling at a high rate of speed. and are of significant severity. ROW acquisition. Kenai Spur Highway - Upgrade to Five Conflicting traffic patterns (through traffic vs $ 30,000,000,00 This project bas not ranked high on the 2010 -2013 STIP. Lane configuration Between Soldotna business /residential traffic) and increased traffic counts have A predecessor project, the improvement of f �•e and Kenai increased the number and severity of accidents between Kenai & Soldotna. Planned commercial developments will significantly increase traffic in the near future intersection, of this roadway has rarb a w g nn the STIP and funding For conceptual shrriy 8 ROW r acirisitinn is proposed to begin in SFY 2011. The {Olive-lane project will not be considered for funding until the intersection project is through design, or possibly during construction, New Soccer Fields Irrigation Project would design and install i ngahon systorn for four soccef fields $ 250,000.00 Bridge Access Road, Pedestrian This:project wotdd constrict a pedestrian pathway from the $ 2,000,000.0 I am not aware of any sources of fariding that are availahI Pathway Kenai Spur I Iighway to Kaliitom sky Bsagh Road along Bridge Access Road. This area is heavily traveled by pedestrians., sight seer's, bicyclists, etc_ This project is approximately 2 miles long and would complete the 24 mile Unity Trail that connects Kenai and Soldotna, along both the Spur Highway and Kalifornsky Beach Road. for this project, and several regulatory as ^ncies (EPA, USDF&W) have expressed significant opposition to the project Vehicle Storage Facility for Kenai Senior Center Vehicles This project would construct a six -bay vehicle storage facility at the City maintenance yard_ At present the vehicles are stared outside the center. During the winter this results in vehicles running to maintain heat for trips for the senior clients, and also results in increased mechanical difficulties. $ 400,000.00 ___.. .. ....._.._— ......�.._ - ___.— _ —__... _.....,. ......_. Page 4 of 4 Prepared by: R. Koch Tillage with a Past, City with a Fstgre" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: (907) 283 -75351 FAX: (907) 283 -3014 www.ci.kenai.ak.us MEMO NDUM TO: Mayor and Council Members FROM: Corene Hall, Deputy City Clerk �J DATE: January 6, 2012 RE: COMMISSION /COMMITTEE TERM RENEWALS Following are the members of city commissions, committees, and boards, who have terms ending in January, 2012 that have expressed a desire to be reappointed. Susan Lovett Beautification Committee Does Council wish to renew appointments of the above persons to the Commissions/Committees? 143 'Village with a Past City with a Fost&cre" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: (907) 283 -7535 / FAX: (907) 283 -3014 www.ci.kenai.ak.us MEMO. TO: City Council FROM: Rick Koch, City Manager DATE: January 4, 2012 SUBJECT: Purchase and Sale Agreement between the City of Kenai and Ma & Pa Alaskan Treasures, Inc. for Lot 2, Block 1, Gusty Subdivision The purpose of this memo is to recommend approval of the attached Purchase and Sale Agreement between the City of Kenai and Ma & Pa Alaskan Treasures, Inc. The Council may recall approving the interest rate included in this Agreement at its December 7, 2011 Council Meeting via Resolution No. 2011 -78. Since that time, the Airport Commission reviewed a draft Agreement and recommended approval of the Agreement with additional language clarifying the height restriction for any future buildings on the lot at its December 8, 2011 Commission meeting. The additional language was incorporated into the Agreement by the City Attorney in a new subparagraph 3(c) and an edited subparagraph 3(b). Administration recommends proceeding with City financing, which requires accepting a note secured by a deed of trust subordinate to an existing security interest. This is allowed under KMC 21.115.200(a)(1). The purchase price for the property ($200,000.00) is within the difference between the fair market value of the land with improvements, and the sum of all prior security interests: Appraisal of Land and Improvements, dated June 23, 2011 $600,000.00 First Deed of Trust Balance, as of December 2, 2011 $302.104.61 Difference: $297,895.39 145 Page 2 of 2 January 4, 2011 Purchase and Sale Agreement between the City of Kenai and Ma & Pa Alaskan Treasures, Inc. for Lot 2, Block 1, Gusty Subdivision In general, Administration would recommend against the City holding a second deed of trust, However, in this case the beneficiary of the existing security interest is not willing to relinquish first position, Administration has reviewed a preliminary commitment for title insurance as well as the grantee index, and is assured that there are no delinquent liens or unpaid judgments, Additionally, the Buyer provided escrow statements for the purpose of evaluating performance under the first deed of trust and these were found to be satisfactory. Additionally, Ma and Pa Alaskan Treasures, Inc. have consistently made principal payments in excess of payments due. If you have any questions, please contact me at your convenience, Attachment 146 PURCHASE AND SALE AGREEMENT THIS AGREEMENT is made by and between the City of Kenai, an Alaska home rule municipality (Seller) and Ma & Pa Alaskan Treasures, Inc., an Alaska corporation (Buyer). RECITALS WHEREAS, Seller is the owner of real property located at 11472 Kenai Spur Highway in Kenai, Alaska, and described as Lot 2, Block 1,, Gusty Subdivision, Kenai Recording District, Third Judicial District, State of Alaska "(the Property); and, WHEREAS, the Property is leased to Buyer under a 55 -year lease of the Property dated August 20, 1970 (as amended and assigned to thi yer)(the Lease), and Buyer has applied to purchase the Property; and, WHEREAS, under the terms of that Lease, Buyer as Lessee already owns and has a right to the structural improv$Ments on the Property (subject to some conditions that do not apply); and, WHEREAS, by City of Kenai Ordinance No. 2553 -2011, the Kenai City Council authorized the sale.ofthe Property to Buyer; and NOW, THEREFORE, for good and valuable consideration, the receipt of which is acknowledged, the parties agree as follows: alc;. Seller hereby agrees to sell the Property to Buyer and Buyer hereby agt ces to purchase the Property from Seller, subject to the terms and conditions set forth herein. Purchase Price. (a) Buyer agrees to purchase the Property for the sutratifTWO HUNDRED THOUSAND DOLLARS AND NO CENTS (S200,000 US) (the "Purchase Pricz "j'. The Purchase Price may be paid either through third -party financing or through owner financing under the terms set out in subsections 2(b) and (c), respectively. (b) If third -party financing is utilized by Buyer, the portion of the purchase price not paid in cash through application of any funds produced by Buyer at Closing shall be paid in full through third -party financing at Closing. Buyer represents that PURCHASE AND SALE AGREEMENT Page 1 of 9 L:\a.irport\agts \mapa. agt.purch.122711 147 Buyer has consulted with lending professionals and reasonably believes such financing is available to Buyer. (c) If owner financing is utilized by Buyer, Buyer shall pay a down payment of 530,000, which down payment shall due in cash (or its equivalent) at Closing. The balance due (remainder of the purchase price and any closing or other costs due from Buyer) shall be paid in monthly installments over a term of 20 years with interest accruing at a fixed rate of 7.5% per annum. These terms shall he set forth in aprom.issory note signed by Buyer and guaranteed individually by Debora R. Loveall and Robert B. Loveall, jointly and severally, and further shall he secured by a firstdr second deed of trust on the Property and on any and all improvements thereon. Buyer, and Debora Loveall and Robert Loveall shall further execute any such other documents as may he necessary to establish this financing under these terms. 3, Title. Title shall he conveyed by quitclaim deed. The instrument conveying title to the Property shall further include the following restrictions, promises, and/or covenants: (a) that the City of Kenai reserves unto that the grantee expressly agree for',tself and its heirs, executors, administrators; successors; transferees, and assigns, for the use and benefit of the public a right of flight fdr the passage of aircraft in the airspace above the surface of the Prop erty, together with the right to cause u said airspace such noise as may be inherent in the operation of aircraft, now known or hereafter used, for navigation of or flight in the said airspace, and for use of said airspace for landing on or at and for taking off from or operating on Kenai Municipal Airport; and, grantee expressly agrees for itself and its heirs, executors, administra 'tors, successors, transferees and assigns to restrict the height of objects of naturalrowth and other obstructions on the Property to a height of not more than 242 above mean sea level and subject to a further limitation on the high of all structures and improvements of any kind in subsection (c), below; and (c) that the grantee expressly agrees for itself and its heirs, executors, administrators, successors, transferees, and assigns to restrict the height of all structures and improvements of any kind to a height of not more than 110 based on NAVD -88 Datum; (d) that the grantee expressly agree for itself and its heirs, executors, administrators, successors, transferees, and assigns to prevent any use of the Property which would interfere with landing or taking off of aircraft at the Kenai Municipal Airport, PURCHASE AND SALE AGREEMENT Page 2 of 9 L:1ai portlagtslmapa,agt.purch.1227I I. 148 or otherwise constitute an airport hazard; and, (e) that all covenants heretofore stated shall run with the land and shall inure to the benefit of, and be binding upon the heirs, executors, administrators, successors, transferees, and assigns of the parties to the contract for sale and conveyance; and, (f) that the City shall have a first right of the City to repurchase the Propetry at fair market value at the time of repurchase should Buyer or any of its executors, administrators, successors, transferees, or assigns propose to sell or otherwise transfer the Property to another person or entity; and, (g) that the conveyance is subject to all liens, encumbrances, restrictions, and covenants of record and are specifically, without being limited thereto, subject to any urueleased restrictions contained in the deed or deeds by which" the City received title to the land. 4. Closing. At the time of Closing, Seller shall deliver to Buyer a quitclaim deed for the Property properly executed and acknowledged in proper form for recording and such other instruments and documents as may be reasonably required and customarily given by a Seller to consummate the trausacti'on contemplated, and as may be reasonably required by the title company. Closing and Other Costs.' All escrow fees and closing connection with this stile,shall bepaid by Buyer unless otherwise stated in this agreement. if Buyex desires. to obtain a preliminary commitment for title insurance or title insurance to the Property, it shall be the responsibility of Buyer to obtain such commitment or insurance and to pay all costs associated with the commitment or insurariee. Seller acknowledges that Buyer has previously paid a $4,500 deposit which payment was utilized to pay for the cost of an appraisal of the Property, which cost is the responsibility of Buyer and is satisfied. Any and all prepaid expenses or income of any kind and all taxes and assessments shall be prorated to the date of Closing, Each party shall bear its own costs and attorney's fees, except as otherwise expressly provided. PURCHASE AND SALE AGREEMENT Page 3 of 9 L:lairport\agts\nmpa.agt.pu rch.122711 149 6. Assessments. If at the time of Closing the Property or any part thereof shall be or shall have been affected by an assessment or assessments which are or may become payable in annual installments, whether or not the first installment is then a charge of lien or has been paid, then for the purposes of this agreement all the unpaid installments of any such assessment, including those which are to become due and payable after Closing, shall under no circumstances be deemed to be due and payable by Seller at Closing or otherwise. Any said liens or assessments shall be paid and discharged by Buyer, at or before the Closing or Buyer may elect to take the Property subject to said liens or assessments. 7. Casualty to Property. If all or part of any of the Property or any structure thereon is destroyed or damaged by fire or other casualty, Buyer shall have the option to either: (a) complete the closing; but in such event, the net proceeds of any insurance proceeds prior to Closing shall be resolved according to the terms of the August 20, 1970 Lease; or, (b) refuse to accept title tb the Property, in which case any portion of the Purchase Price paid shall immediately be refunded to Buyer. 8. Onertit'ftn t f the Property -- Buyer. During the period between the date of this agreement and the Closing, Buyer shall comply with the material terms, conditions, and provisions ;of the Lease. 9 Property Condition —RSIS: No Warranties, Buyer acknowledges that the conveyance of the Property shall be made by Sailer to Buyer on an AS IS, WHERE IS" basis, and with all defects and faults; latent or otherwise, including without iimitatibit fire and water /flood damage and the environmental condition of the Property, Buyer acknowledges that Buyer is purchasing the Property in its present condition and that Buyer is relyih .solely on Buyer's own prior possession of the Property and structures thereon and oris$uyer's -own examination and inspections of the Property. Buyer is not relying on any statements or representations made. by Seller or any agents or representatives of Seller. Buyer acknowledges that Seller makes no warranty or representation, express or irnplied or arising by operation of law, including that Seller makes no warranty of condition. habitability, merchantability, or fitness for a particular purpose of the Property or any structure thereon, or with respect to the economical, functional, environmental, physical condition, or any other aspect of the Property or any structure PURCHASE AND SALE AGREEMENT Page 4 of 9 1.. :.airport\agts\mapa.agt.purch..1 2271 1 150 thereon, Seller specifically disclaims any warranty, guaranty, or representation, oral or written, past, present or future, as to or concerning: (i) the nature and condition of the Property or any part thereof, including, but not limited to, its water, soil, or geology, or the suitability thereof for any and all activities and uses that Buyer may elect to conduct on the Property or within any structure on the Property, or any improvements Buyer may elect to construct on the Property, or any income to be derived therefrom, or any expenses to be incurred with respect thereto, or any obligations or any other matter or thing relating to or affecting the same; (ii) the absence of asbestos or any environmentally hazardous substances on, in, or under the Property or on, in or under any property adjacent to or abutting the Property or on, in or under any structure on the Property; (iii) the manner of construction or condition or state of repair or lack of repair of any improvements on the Property; (iv) the nature or extent of any easement, restrictive covenant, right -of -way, lease, possession, lien, encumbrance, license, reservation, zoning, condition or other similar matter pertaining to the Property, or portion thereof; a'nd (v) the compliance of the Property or the operation of the Property or portion thereof iith any laws, rules, ordinances or regulations of any government or other body. The provisions of this paragtaph,sha11 survive the execution and delivery of the deed by Seller and the closing of the transaction contemplated by this agreement. 1.0. Indemnification: Waiver. (a) Buyer agrees to indemnify and defend Seller from and against any and all losses and liabilities, claims, costs (including costs of settlement, attorneys fees, consultant and expert fees), judgments, penalties, fines, and/or damages from personal injury, death, or property damage of any nature, resulting or arising from the sale of the Property or resulting or arising from or attributable to the operations or activities of Buyer under the Lease and Buyer's activities on or about the Property prior to'Closrng. Buyer waives any right, claim, or cause of action that Buyer may have against Seller with respect to the environmental conditions existing at the Property on the date of Closing. (h) Further, if contamination of the Property or other property by a Hazardous Material(s) occurs or has occurred due to or arising in any way from. Buyer's operations on the Property as an occupant and/or lessee of the Property prior to Closing (or thereafter as owner) Buyer shall indemnify and defend Seller from any and all losses and liabilities, claims, costs (including costs of settlement, attomey's fees, consultant and expert fees), judgments, penalties, fines, and/or damages (and including costs of settlement, attorney's fees, consultant and expert fees), which arise during or after Closing and as a result of such contamination. This indemnification of Seller by Buyer includes, but PURCHASE AND SALE AGREEMENT Page 5 of 9 L:\airpon \ags\mapa.agt. purch. 1 22711 . 151 is not limited to, costs incuned in connection with any investigation of site conditions and/or any cleanup, remediation, removal, or restorative work required by any federal, state, or local governmental agency because of a Idaiardous Material(s) being present in the soil or groundwater or under the Property or other properties affected by the contamination. (c) "Hazardous Materials" shall mean (i) all substances, the clean up and disposal of which is regulated by the Comprehensive Environmental Response Compensation. and Liability Act of 1980 (CERCLA) and the Resource Conservation Recovery Act (RCRA), both as amended and all implementing regulations; (ii) hazardous materials and hazardous substances as those terms are used in the applicable provisions of Title 46 of the Alaska Statutes and all implementing regulations, (and as amended from time to time); and, (iii) all substances containing petroleum• or other hydrocarbons, asbestos, or other materials, substances, or waste that are or become regulated as hazardous or toxic under federal, state, or local law. (d) The provisions ofthis paragraph shall survive the execution and delivery of the deed by Seller and the closing,.of the transaction contemplated by this agreement. 11. Miscellaneous Disclosures, ` The structure on the Property is not conveyed as part of this sa e of land. :Notwithstanding, Seller provides notice to Buyer that radon gas is a naturally occurring radioactive gas, that, when it has accumulated in a building in sufficient quantities, May present a health risk to persons who are exposed to it over time. Buyer, in Buyer's, sole discretion, may contact the State of Alaska, Department of Environmental Conservation. or other departments for additional information regarding radon and radonrtesting. 12. Delivery of Possession. Seller shall immediately after Closing, and without Farther notice or demand, deliver unto Buyer full possession of the Property. No Broker. Seller and Buyer each represent and warrant to the other that it has not dealt wrath any broker regarding the Property and this transaction Each party shall be responsible to defend, indemnify, and hold harmless the other as to any claim made by any person or entity for a commission claimed as being due as a consequence of the indemnifying party's acts or conduct. 2012, at parties. 14. Closing Date. Closing shall occur no later than e company or bank in the Kenai, Alaska area unless otherwise agreed by the PURCHASE AND SALE AGREEMENT L: \airport\ages \mapa.agt.purch,1222711 152 Page 6 of 9 15. Time. Time is of the essence in the performance of all obligations hereunder. 16. Notices. All notices, demands, and requests that may or are required to be given by either party to the other under this agreement shall be in writing and given by first -class mail, postage prepaid, to Seller at City of Kenai, Attn: City Manager, 210 Fidalgo Avenue, Kenai, AK 99611, and to Buyer at 11472 Kenai Spur Highway, Suite 1, Kenai, AK 99611. 17. Relationship of the Parties. This agreement does not constitute an agreement of partnership or joint venture and does not authorize Seller to act as an agent for Buyer for any purpose nor does it authorize Buyer to act as an agent for Seller for any purpose. 18. Governing Law and Venue. This agreement shall be governed by and construed under the laws of the State of Alaska. Venue of any dispute shall be the Superior Court for the State of Alaska at Kenai. 19. Integration and Modification. This agreement contains the entire agreement of the parties. All negotiations, statefnents, representations, warranties, and assurances, whether oral or ;■>rjtten, which are in. any way related to the subject matter of this agreement or the performance of either party, are merged and integrated into the terms of this agreement. This agreement may not be modified or amended except by a writing signed by both parties. -20I :Binding; Effect. This agreement shall he binding upon and inure to the benefit of the parties,, their heirs, executors, administrators, successors, transferees, and assigni and may be modified or cancelled only by a written instrument signed by both parties, Survival. All warranties and representation survive the execution and delivery of the deed by Seller and the clo contemplated by this-agreement. gre • g of the transaction 22. Cannons, All captions contained in this agreement are for convenience of reference only and shall not be considered in any way in connection with the interpretation or enforcement of any provision. PURCHASE AND SALE AGREEMENT L: \airport \aa s\r apa.agt.purch.1.22711 153 Page 7 of 9 23. Authority, Each person signing this agreement on behalf of a party has been authorized to do so by a duly- enacted resolution of that parties' Board of Directors or Council (as may he required by law). 24. Multiple Counterparts, This agreement may be executed in multiple counterparts, each of which will signify each party's agreement to the terms, and together will constitute the Agreement. 25. Effective Date. This agreement will bec.oine effective when all the parties have signed it, The date of this agreement is signed by the last party to sign it (as indicated by the date associated with the party's signature) will be deemed the date of this agreement. SELLER: CITY4C F KENA Rick R. Koch Cit }, Manager BUYER: MA S.. PA ALASKAN TREASURES, INC. STATE OF ALA THIRD JUDICIAL DISTRICT Debra R. Loveall Its: President )ss The foregoing instrument was acknowledged before me this day of , 2011, by Rick Koch, City Manager of the City of Kenai, an Alaska municipal corporation, on behalf of the City. PURCHASE AND SALE AGREEMENT U:\veneraRmapa.agt.purch.111611 154 Page 8 of 9 Notary Publicfor Alaska My Commission Expires: PURCHASE AND SALE AGREEMENT Page 9 of 9 \ general mapa.a et.purch. I 11611 155 STATE OF ALASKA )ss THIRD JUDICIAL DISTRICT The foregoing instrument was acknowledged before me this day of 2011, by Debra R. Loveall, President of Ma & Pa Alaskan Treasures; Inc., an Alaska Corporation, on behalf of the corporation. Notary Public of Alaska My Commission Expires: Approved as to form: Krista S. Stearns City Attorney PURCHASE AND SALE AGREEMENT Page 10 of 9 U: =general'\,mapa.agt.p arch.1 1 161 1 156 PAYMENTS OVER 515,80&00WHCH NEED CVUN II_ RATIFICATION COUNCIL MEETINIG OF: JANUARY 18, 2012 __ _ _ ____ _ _ -_,.---'----- VENDOR DESCRIPTION DEPARTMENT ACCOUNT -_-^ -- -,`--�-_� _�'-__-- --�_ AETNA HEALTH INSURANCE VARIOUS HEALTH INSURANCE 110,194 63 |Ca&457PLAN ICMx*57PLAN VARIOUS LIABILITY 26.719 11 PEOS DECEMBER PERS VARIOUS LIABILI TY 177,711.90 ALASKA OIL SALES DECEMBER FUEL VARIOUS OPERATING SUPPLIES 19,360 08 INVESTMENTS VENDOR DESCPTPTION m«rumnni DATE AMOUNT c,xmt_!nt- PURCHASE ORDERS OVER $15,000.50 WHICH NEED COUNCIL APPROVAL COUNCIL MEETING OF: JANUARY 18, 2012 iDOR pESCRIFTION DEPT. ACCOUNT AMOUNT ALASKA PUMP AND SUPPLY SUBMERSIBLE PUMP SEWER MACHINERY & EQUIPMENT 16,957.00 M U7INCREASE OF EXISTING PURCHASE ORDER VENDOR IIESCRIPTIO P.O. rr - DEPT. 98093 - PERSONAL. USE CORNERSTONE EQUIPMENT C/O #1 FISHERY REASON AMOUNT TOTAL PO AMT REMOVAL OF DEBRIS 3,96000 72,460.00 ����pit RENAL ALA " ���� v/ a Past, ����� ����������� � 218Fida|go Avenue, Kenai, Alaska 99811'7794 Telephone: (907) 283-7535, Ext. 236 / FAX: (907) 283-3014 IWIlf �� l��� ������������� Finance Department ��V FROM: Sean 0Vedanleyor, Public UVorksDirector ~�*�v DATE: January 11, 2012 SUBJECT: Kenai North Shore rnprovement Pedestrian Bridge Please increase P[}SBA93(accL#12U^4S8'8Q98) to Cornerstone Equipment Rentals, LLD by33.90O.00 for Change Order No. 1 for Kenai North Shore Improvements Pedestrian Bridgecontratdated January 9r2012. Change Order No. 1 is for the removal cJ GD cubic meters of soil and debris and to open the /londp|sin(o allow for befter water tlow as requssted by ADE G. 1992 For Council Approval: January 18, 2012 January 19, 2012 "Village with a Past, C# with a Fistptre" 210 Fidaigo Avenue, Kenai, Alaska 99611 -7794 Telephone: (907) 2837535 / FAX: (907) 283-3014 www.ci.kenai.ak.us Ms. Christine Lambert Records & Licensing Supervisor Alcoholic Beverage Control Board 5848 East Tudor Road Anchorage, AK. 99507 -1286 Re: NON- OBJECTION OF LICENSE RENEWAL At its regular meeting of January 18, 2012, the Kenai City Council approved the renewal of the liquor license for Country Liquor; license number 1308. The City has raised no objections based on unpaid taxes, delinquent taxes or obligations of the premises to the City. If you have any questions, please contact me at 283 -7535, extension 231. Sincerely, Sandra Modigh, CMC City Clerk cc: Johni Blankenship, Kenai Borough Clerk Applicant Borough Finance Department 161 December 29, 2011. KENAI PENINSULA BOROUGH 144 North Blnkley Street • Scltictna, Alaska 99669 -7520 PHONE: (907) 714.2160 • FAX: (907) 714.2388 Toll -tree within the Borough: 1.800- 476.4441 Eat. 2160 Email: assemblyclerk ©borough.kenai,ak,us Ms, Christine Lambert Records & Licensing Supervisor Alcoholic Beverage Control Board 5848 E. Tudor Road Anchorage, Alaska 99507 -1286 RE: Non - Objection of License Renewal Business Name License Type License Location License No. Dear Ms, Lambert, Country Liquor Package Store City of Kenai 1308 This serves to advise that the Finance Department has revi application and has no objection to the renewal of this license. Should you have any questions, or need additional informat know. Sincerely, 3lankensfiip, MMC Borough Clerk JB /kir JOHN ELANB9EN8HIP BOROUGH CLERK ed the abov referenced , please don't hesitate to let us cc: Applicant City of Kenai KPB Finance Department File 162 KENAI LIBRARY COMMISSION KENAI COUNCIL CHAMBERS JANUARY 3, 2012 7:00 P.M. CHAIR ROBERT PETERS, PRESIDING MEETING SUMMARY ITEM 1: CALL TO ORDER & ROLL CALL Chair Peters called the meeting to order at approximately 7:02 p.m, Roll was confirmed as follows: Commissioners present: Commissioners absent: Staff /Council Liaison present: Chair R. Peters, K. East, C. Brenckle, H. Curti E. Bryson (excused), K. Evans Library Director M. Joiner, Council Member R. Molloy A quorum was present. ITEM 2: AGENDA APPROVAL MOTION: Commissioner Brenckle MOVED to approve the agenda as presented and Commissioner East SECONDED the motion. There were no objections. SO ORDERED. ITEM 3: ELECTION OF CHAIR AND VICE CHAIR MOTION: Commissioner Brenckle MOVED to nominate Robert Peters as chair. Commissioner Curtis SECONDED the motion. There were no objections. SO ORDERED. MOTION: Commissioner Brenckle MOVED to nominate Kathy East as vice chair. Commissioner Curtis SECONDED the motion. There were no objections. SO ORDERED. ITEM 4: APPROVAL OF MEETING SUMMARY -- November 1, 2011 Commissioner Brenckle requested the following correction: in 5 -a, Motion to Amend, change who seconded from Bryson to Bret-icicle. MOTION: Commissioner Brenckle MOVED to approve the meeting summary of November 1, 2011 as amended. and Commissioner East SECONDED the motion. There were no objections. SO ORDERED. 163 ITEM 5: PERSONS SCHEDULED TO BE HEARD - None. ITEM 6: OLD BUSINESS - None. ITEM 7: NEW BUSINESS 7 -a. Discussion -- Budget FY2013 Library Director Joiner reviewed the FY2013 budget, noting increases in operating expenses, small tools, computer software and repair and maintenance. General discussion occurred. MOTION: Commissioner Brenckle MOVED to support the Director's request for an additional part time employee and Commissioner Curtis SECONDED the motion. Joiner outlined the benefits for this position. VOTE: MOTION PASSED UNANIMOUSLY. ITEM 8: REPORTS 8 -a. Director -- Joiner reported on new activiti room policy. d programs, meeting 8 -b. City Council Liaison -- Council Molloy reported he was attending for Council Member Boyle and summarized actions taken at the last council meeting. ITEM 9: NEXT MEETING ATTENDANCE NOTIFICATION 9-a. February 7, 2012 No commissioners requested an excused absence for the February 7, 2012 meeting. ITEM 10: COMMISSION COMMENTS /QUESTIONS East thanked the director for her work on the budget and spoke in support. Curtis thanked the commission for the opportunity to serve. Brenckie noted how much the library had changed. Peters welcomed Commissioner Curtis. ITEM 11: PERSONS NOT SCHEDULED TO BE HEARD -- None. LIBRARY COMMISSION MEETING SEPTEMBER 6, 2011 PAGE 2 164 ITEM 12: INFORMATION 12 -a. Friends of the Library Board Meeting Minutes -- November 8, 2011. 12 -b. Internet Safety Policy 12 -c. FY2012 CIPA Requirements for Schools 12 -d. Publishers vs. Libraries: An E -book Tug of War ITEM 13: MOTION: ADJOURNMENT Commissioner Brenckle MOVED to adjourn and Commissioner Curtis SECONDED the motion. There were no objections, SO ORDERED. There being no further business before the Commission, the meeting was adjourned at approximately 8 :17 p.m. Meeting summary prepared and submitted by: Corene Hall, CMC, Deputy City Clerk 165 LIBRARY COMMISSION MEETING SEPTEMBER 6, 2011 PAGE 3 CITY OF RENAI PLANNING 136 ZONING COMMISSION JANUARY 11, 2012 7 :00 P.M. CITY COUNCIL CHAMBERS CHAIR JEFF MALT, PRESIDING MINUTES 1: CALL TO ORDER Chair Twait called the meeting to order at approximately 7:00 p.m. 1 -a. Roll Call Roll was confirmed as follows: Commissioners present Commissioners absent: Staff /Council Liaison present: A quorum was present. 1 -b. Chair J. Twait, C. Smith, H. Knackstedt, P, Bryson, K. Koester J. Rowell (excused) Planning Assistant N. Carver, Council Member T, Navarre Pledge of Allegiance Chair Twait led those assembled in the Pledge of Allegiance. 1 -c. MOTION: Election of Chair and Vice Chair Commissioner Knackstedt MOVED to nominate Jeff Twait as Chair and Commissioner Bryson SECONDED the motion. VOTE: Bryson YES i Rowell j EXCUSED ackstedt ` YES Koester I YES Smith YES Twait YES MOTION PASSED UNANIMOUSLY. MOTION: Commi Commi VOTE: Toner Bryson MOVED to nominate Henry Knackstedt as Vice Chair and ioner Koester SECONDED the motion. 167 MOTION PASSED UNANIMOUSLY. 1 -d. Agenda Approval MOTION: Commissioner Knackstedt MOVED to approve the agenda as presented and Commissioner Smith SECONDED the motion. There were no objections. SO ORDERED. 1 -d. Consent Agenda MOTION: Commissioner Knackstedt MOVED to approve the consent agenda and. Commissioner Bryson SECONDED the motion, There were no objections. SO ORDERED. *Excused Absences James Rowell Approved by consent agenda, *All items listed with an asterisk ( *) are considered to be routine and non- controversial by the Commission and will be approved by one motion. There will be no separate discussion of these items unless a Commission 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. 2: *APPROVAL OF MINUTES 2 -a. December 14, 2011 Approved by consent agenda. 3. SCHEDULED PUBLIC COMMENT -- None. 4. CONSIDERATION OF PLATS -- None. 5. PUBLIC HEARINGS -- None. 6. UNFINISHED BUSINESS -- None. PLANNING AND ZONING COMMISSION MEETING JANUARY 11, 2012 PAGE 2 168 7. NEW BUSINESS 7 -a. Discussion /Approval -- Request for Approval to Improve Existing Boat Launch Lease of Tidelands - Snug Harbor Seafoods, Inc. (Tract B, Kenai Tidelands Survey No, 2). City Planner Kebschull reviewed the memo included in the packet and noted the following: • Building Official will require a building permit. • Plans must be engineered and stamped. • Applicant will be required to hire a certified engineer for All inspections. • Harbor Commission not required to review lease request. • Intent was for commercial use. • Location of proposed dock was upstream from City dock, Twait read the rules for public hearing and opened the meeting to public comment. There being no one wishing to speak, the public hearing was closed. MOTION: Commissioner Knackstedt MOVED for approval for lease request and Commissione Bryson SECONDED the motion. VOTE: Bryson 1 YES } Rowell Koester 1 YES ;Smith EXCUSED YES Knackstedt 1 YES Twait 1 YES MOTION PASSED UNANIMOUSLY. 7 -b. Discussion -= Angler Drive Zoning Status. City Planner Kebschull reviewed the memo included in the packet that provided a brief history on Conditional Use Permits operating off Angler Acres. Kebschull infoi,ned the Commission the Recreation Zone Intent (FMC 14.20.145) was not consistent with the rest of the code, and recommended the Commission schedule a work session to review the Recreation Zone. Commissioner Comments regarding the proposed rezone of' the Angler Acres Property included: • Recommending a work session. • Notifying property owners to see if there will be any opposition. PLANNING AND ZONING COMMISSION MEETING JANUARY 11, 2012 PAGE 3 169 • Schedule a work session with property owners to a uss zoning change. • Prefer residents request rezone instead of the Commission. Kebschull noted she will send a preliminary notice to the property owners prior to a work session for rezoning the properties, and schedule a work session at the next meeting to review the Recreation Zone. Twait read the rules for public hearing and opened the meeting to public comment. There being no one wishing to speak, the public hearing was closed. 8. PENDING ITEMS 8 -a. Ordinance No. 2597 -2011 - Amending Kenai Municipal Code 14.22.010, Land Use Table, to Make Comprehensive Changes to the Uses Allowed in the Suburban Residential (RS), Suburban Residential 1 (RS1), Suburban Residential. 2 (RS2), Rural Residential (RR), Rural Residential 1 (RR -1) and the Urban Residential (RU) Zoning Districts. (Clerks Note: At its November 16, 2011 meeting, the council postponed Ordinance 11To. 2597-2011 to the August 1, 2012 meeting and the ordinance was referred back to the Plan.ning and Zoning Commission, so the Commission could continue to consider the changes proposed in this worlc product during the Comprehensive Plan Process.) 9. REPORTS 9 -a. City Council -- Council Member Navarre reviewed the December 21, 2011 and January 4, 2012, City Council Action Agenda included in the packet. 9 -b. Borough Planning -- Commissioner Bryson reviewed the January 9, 2012, Borough Planning Agenda included in the packet. Administration -- Kebschull provided an update on the Comprehensive Plan and reviewed the informational items included in the packet, 10. PERSONS PRESENT NOT SCHEDULED -- None. 11. INFORMATION ITEMS 11 -a. 11 -b. City of Kenai - Current Leases 2012 Planning & Zoning Meeting Schedule 12. NEXT MEETING ATTENDANCE NOTIFICATION -- January 25, 2012 No commissioners requested an excused absence for the January 25, 2012 meeting. PLANNING AND ZONING COMMISSION MEETING JANUARY 11, 2012 PAGE 4 170 13. COMMISSION COMMENTS 8s QUESTIONS -- None. 14. ADJOURNMENT There being no further business before the Commission, the meeting was adjourned at approximately 7:33 p.m. Minutes prepared and submitted by: ancy Carver, Planning &, Zoning Assistant PLANNING AND ZONING COMMISSION MEETING JANUARY 11, 2012 PAGE 5 171 DATE: /2-201 NAME: L yA/ °' 4 . ,D of Resident of the City of Kenai??p Residence Address /egg lime. CITY OF , : NAI "Village with a. past — City with a future. BACKGROUND AND PERSONAL DATA - CANDIDATES FOR APPOINTMENT COMMITTEES AND COMMISSIONS RETURN TO: KENAI CITY CLERK 210 FIDALGO AVENUE ECENAI, AK 99611 PHONE: 283-7535, Err. 231 FAX: 2S 3.5066 How long? 25" 5itzes Mailing Address `�/kM'C Home Telephone No. 283- frZ9 Home Fax No. Business Telephone No Business Fax No. Email Addre ' May we include your contact information on our web page? BALL Tf not a11, what, information may we include? PLOYER 7? NAME OF SPOUSE: tt-'/ Job Title Current membership in organizations' S'RQ, fttASo.lte Coals in joy, memberships: 4_,e C COMMITTEES OR ONS IN W}I%CE YOU ARE YNTEREST WY DO YOU WANT'OBEINVO J TIIiS COMMISSION OR CO ffir E? rdx i WHAT BACKGROUND, EXPERIENCE, OR CREDENTIALS DO YOU POSSESS TO BRING TO THE BOARD, COMMISSION OR COMMITTEE MEMBERSHIP? PUBLIC WORKS DIRECTOR CAPITAL PROJECTS MANAGER January 2012 REPORT TO: Rick Koch, City Manager FROM: Sean Wedemeyer Public Works Director /Capital Projects Manager DATE: January 11, 2012 SUBJECT: Mid - Month Report; Public Works / Capital Projects Public Works: • Streets department clearing snow and sanding roads. The usual complaints regarding berms in driveways and snow removal /placement issues are being fielded. • AKOSH voluntary site inspections have been completed on January 10th &11th and will continue on February 215 & 22nd. Status of Projects: • RFP for new Maintenance shop 35% Design — Pre - proposal meeting Tuesday Jan 1 Th. RFP submission deadline Thursday Feb 2 at 5PM. • Vintage Point Siding — To be bid this winter. • Dock Pile Repair and Cathodic Protection — Permits received. Pre -bid Jan 26"'. Bid opening February 7°. • Pedestrian Bridge — Awarded to Cornerstone. Contract and NTP signed. Anticipated start date Monday Jan 1 e`". • Courtney Dr. Sewer — closeout in progress. • Sanitary Survey — Survey completed. Report from Tauriainen expected this week. • Siemens Energy Audit — Investment grade audit (IGA) & energy services proposal (ESP) scheduled to be completed by Siemens in February 2012. • Leif Hansen Flower Beds — Pre- bid Jan 12, Bid opening January 24th. • James Street Paving — Design in progress. • Fire Protection — Bid for inspections and monitoring bid cpening January 17th. • KFD dispatch floorino — Bid opening Jan 18t. • Rec Center Painting — Bid opening Jan 18th. • Kenai Industrial Park — Design in progress. 175 .4 /re cr o. KENAIP ALASKA FINANCE DEPARTMENT QUARTERLY INVESTMENT REPORT December 2011 TO: Rick Koch, City Manager FROM: Terry Eubank, Finance Director DATE: January 12, 2012 SUBJECT: Quarter ending December 31, 2011 Investment Report City of Kenai investment Portfolio At December 31, 2011 the City had investments with a market value of $18,448,645 that is down from $19,044,868 at September 30, 2011. Ongoing payments for some of the City's larger capital projects are causing the decline in the portfolios size. The City's portfolio Is yielding 0.34% that is down from 0.42% at September 30, 2011. Market interest rates continue to fluctuate with rates falling in this quarter. City's Investment Portfolio US Agency Securities $ 9,001,120 AML investment Pool 469,347 Wells Fargo Money Market 7,383,448 Bank Balance 1.594,730 Total $ 11448.645 Permanent Fund Investments The fourth quarter 2011 saw volatility in the market and some recovery from third quarter losses with the quarter ending performance yielding 652 %. Since inception the portfolio has returned 9.52% and in the last year the portfolio has retumed (0.14) %. As of June 30, 2011 the portfolio value was $23,348,815, comprised of $20,920,217 (89.60 %) Airport Land Sale Permanent Fund and $2,428,598 (10.40 %) General Land Sale Permanent Fund monies. With the Airport Land Sale Permanent Fund's year ending balance of $20,920,217 the allowable transfer to airport operations for FY2012 will be $1,011,485. The FY2012 budgeted amount was $1,037,483 meaning the actual will be $25,998 less than projected. The General Land Sale Permanent Fund's year ending balance of $2,428,598 is a decrease of $98,105 from the December 31, 2010 balance. Because the allowable transfer to the General Fund for operations is limited to the lesser of 5% of the funds year ending balance or the years actual earning, there will be no transfer to the General Fund for operations in FY2012. The FY2012 budgeted amount for this transfer was $125,000. 177 CITY OF KENAI INVESTMENT PORTFOLIO SUMMARY December 31, 2011 December 31, 2011 Fair Market Value Cash & Cash Equivalents Fargo Checking $ 1,594,730 0.00% Wells Fargo Secured Money Market 7,383,448 0.01% FDIC Insured Certificates of Deposit 0.00% Alaska Municipal League Investment Pool 469347 0,01% Total Cash & Cash Equivalents 9,447,525 0.01% Current Yield Government Securities hies Less than 1 Year Average Yield 0,00 %, s 1 to 2 Years 5,999,390 0.61% Maturities Greater than 2 Years 3,001,730 0.82% Total Government Securities 9001,120 0.68% Total Portfolio $ 18,448,645 0 Investment Portfolio - Purchase Price $18,457,083 investment Portfolio - Fair Value 06/30/11 18,457,960 Fair. Value Adjustment - .06/30/17 877. Fair Value Adjustment - 12/31/11 (9,314) Cummulative Change in Fair Value S (10.1911 512.000.000 ,. Portfolio Liquidity $4.000,000 II Wquiaity20 %M opal; CV ad urity over 2 years (Ph MaMmam ®actual 178 01?Y CF HENAI INVESTMENTS 12131/2011 SECURITY FELD 0,00 0/27/13 ENLMC 0.86 2/8/13 91-SMC .55 7121/14 FHLMC 0,65 7/18/13 FHLMC 1.75 707/16 Stop 7/27113 to 2.5 FHLMC 0.45 7/25/13 Step 7112 to 1.0 CITY OF KENAI Investments 12 -31 -11 0017 Current year cost or 06/30/11 12/31/11 Unrealised Gain Accrued EFFECT, DATE DATE Market eaten ar LOSS interest RATE PORCH. DUE. 1.000,010,00 1,170,00 - 0.600 6/27/2011 0/27/2013 1.000,46000 (2,170.00) 126233 0,860 3+4/2011 2/6(2013 1,000,01000 510.00 - 0.650 7/2112011 712172014 2,000,260.00 260.00 - 0.650 7110/2011 7/1812013 2,001,72000 (7,72444) - 0.902 6(17 /2011 7/27/2016 1,998,640.00 (1,360.00) 0.450 7/2012011 7/1812013 CUSSP original cost Market Value 3133747150 1000,000 998,34000 313401227 1,000.614 1002.650,00 3134G2PX4 099.500 900.50000 313402072 2,000,000 2,000.000.00 313402882 2,000,444 2.00944444 313402103 2,000,000 2.000,000.00 TOTAL 9,009,556.33 9,010,434 9,001,120.00 (9.314.44) 1,251 0.6884 179 Fixed Income Cash & Cash Equivalents Walls Fargo Secured Money Market Total Cash & Cash Equivalents CITY OF KENAI PERMANENT FUND INVESTMENT PORTFOGO SUMMARY December 31, 2011 Current or Current Fair Market Value Average Portfolio Target Portfolio 30.1un-11 30.58941 31- ©ec -11 Yield Weight Weight Maximum 108,993 148,626 231.563 451,284 0.116 19316 108,993 148,836 231463 451,264 Government & Corporate Securities Government Securities 6,582,048 5,034,168 5,082,747 5.317,558 0.69% 2277% Corporate Securities 3,544812 4,805,222 4,287,694 4.080,014 2.79% 17.48% Total Government & Corporate Securities 9,127,580 9,630,390 9,370 441 9,398,172 1,6854 Total Fixed Mamie 9,236,853 9,768,228 9,602.004 9,849.456 1.63% 42.18% 45.00% 65.00% Equities Domestic Equities Standard & Poor's 500 Index Standard & Poor's 500 SmalkCao Index Standard & Poor's 400 MId.Cap Index Total Domestic Equities International Equities Vanguard Europe Pacific ETF Vanguard Emerging Market ETF Total International Equities Real Estate Vanguard REIT ETF Tote! Real Estate Total Equities 5.396,310 6,033,324 5.356,974 5,710,752 1,015.275 1,011,963 807.969 11.066,533 2.213,374 2,190.727 1.748,770 2.079.073 6,625,459 9.236,014 7,913,713 8,846,358 2,234,347 2,564,155 2,222.600 2,259,483 1 532,135. 1,7420 1,283.789 1,369 064 3,765.482 4,306,210 3,506,389 3,628,547 1.032,756 1.061.646 898,517 1,024,454 1,032,756 1.061,546 898,517 1,024,454 13,424,697 14.603,770 12,318 619 13,499,359 24,485 20.00% 25.00% 4,52% 500% 10.00% 8.90 14 10.0094 15.0054 37,90% 35.00% 50,003/. 9.68% 10.00% 15.005 5,86% 5,06%4 10.00 9' 15.5414 15.00 °b% 25,00% 4,38% 5A.41di 304,4%, 4.3814 5.0016 10,0014 Total Portfolio 22,661.550 24,391,995 21,920,623 23346,815 A 14 Ye 100.004f 100.00% 150.00% Portfolio Composition MandeN54'00Y mereAm and x P,dl 'ed Smarr ne'n ar,,eat n>r5th WeiWx 5Repmum Porifeev warn Portfolio Performance 180 S l.J S ' T B L E I I N V E S T M E N T January 11, 2012 Mr. Terry Eubank Finance Director City of Kenai 210 Fidalgo Avenue Kenai, AK. 99611 Dear Terry; PERMANE APCM CAPNS'AL MANAE+F.R9e6➢r sent via email Enclosed is our December 2011 report for the Airport Permanent Fund, which includes a portfolio appraisal and transactions. As this report coincides with the end of a calendar quarter, performance data is included. On both absolute and relative terms our performance was poor for 2011. In macro terms the account return was essentially flat in 2011. At month -end, the market value of the portfolio was $23,348,815, Based upon the composition of the portfolio at month -end, the annual cash flow would be $310,955, excluding dividends on the equity positions. ee you Wednesday the 18th, for the meeting. Sincerely, Bert Wagnon Senior VIce.- President 181 v! Brandy Niciai, CFA Senior Investment Analyst CITY OF KENAI - AIRPORT PERMANENT FUND Account Statement - Quarter Ending December 31, 2011 ACCOUNT ACTIVITY Portfolio Value on 09-30-11 Contributions Withdrawals Change in Market Value Interest Dividends Portfolio Value on 12- 31-11 pgal INVESTMENT PERFORMANCE Current Account Benchmark: Equity Blend MANAGEMENT TEAM 21,920,623 Director of Client Relations: 0 -888 Your Portfolio Manager: 1,180,127 80,082 1618 71_ Contact Phone Number: 23,348,815 ,j! cup Current Teat to aeear .j, Date 1 , Month 0, 34 t' .37 pare j Year L Date 039 526 -1.45 _ -_ -014 0.0 0.6E 6.]b 1.45 , IA i IU 99 PeK ^znnnce rat Pe, ndq Ono Yea? and Greater are One entizeE PORTFOLIO COMPOSITION ALASKA PERMAtigiiiT APC CAPITAL MArfAraM6tiT Laura Bruce, CFP, ChFC Laura @apern.net Bert Wagnon Jason Roth 907/272 -7575 Alaska Permanent Capital Management Co. PORTFOLIO APPRAISAL CITY OF RENAI - AIRPORT PERMANENT FUND December 3.1, 2011 Yield Average Total A2arket P€t. Annual Accrued to Q y Average Pelee Value Assets Income Interest Matud Quantity __ .......__. Socnrit Cost Aver _.. eCost U.S. TREASURY 600,000 VS TREASURY NOTES 0625% Due 12 -31 -12 400,000 US TREASURY NOTES 1250% Due 10.31 -15 1,075,000 US TREASURY NOTES 2,625% Due 11 -15 -20 Ac^.nxd InWemst AGENCIES 500,000 500,000 500,000 CO 250,000 450,000 PNC FUNDING CORP - FDIC GUARANTEED 2300%Uue 06 -22 -12 91251A 2.875% Duc 12 -11 -13 FRLI3 5.375 %Due 05.18-16 F1451A 0.750% Due 11 -29 -16 EHLMC 4_885% Due 0613 -18 Acc,,,ed lnte st FNMA & HUM C 211,834 FHLMC 4.00% POOL 014203 4000% Doc 04.01 -26 Are edlnlvmet CORPORATE BONUS 200,000 JOHN DEERE GAYLTAL CORP 4.950%008 12 -17 -12 200,000 BERKSHIRE HATAAWAYINC. 2,125%126°024143 200,000 OLAROSM1l47KLINE CAP INC 4.850% Due 05 -15 -13 200,000 TOYOTA MOTOR CREDIT 1.375% Dm, 08 -12 -13 200,000 BARBICK GOLD FINANCE CO- 6.125 %Due 09-15 -13 200,000 IBM CORP 6.50036 Due 10 -15 -13 100.52 603,141 100.47 602,812 2.58 3,750 10 0.16 98.15 392,586 102.56 410,252 316 5,000 852 0.57 101.12 1,087,030 107.66 1,157,302 4.96 28.219 3,644 1.69 4,506 0-02 ,506 2.082,756 2,174,872 431 4,506 100.82 504,100 101,00 504,982 2.16 11,500 287 0.20 102.07 510,339 104.80 523,977 2.24 14,3375 799 0.40 110.35 551,726 118.60 592,996 254 26275 3,210 1.02 100.00 250,009 99.98 249,947 1.07 1 275 167 0.75 110.66 497,970 120.49 542,214 2.32 21,937 1,097 153 5,560 0.02 35 5 2,314,135 2,419,677 10.36 10.36 SS60 60 104.56 221,499 304.98 222,888 0.95 8,473 706 206 706 0.00 221,499 223,094 0.96 706 93.99 187,988 104.1.8 208,351 0.89 9,900 385 18.58 100.10 200,312 101.69 203,390 0.87 4,250 3.653 0.54 93.74 187,474 105.83 211,666 091 9,700 1,239 0.57 101.02 202,052 100.93 201,860 0.86 2,750 1,062 0.79 11145 222,898 108.07 216,138 0.93 12250 3,607 132 103.71 207,422 110.28 220,560 0.94 13,000 2,744 0.70 Alaska Permanent Capital Management Co. PORTFOLIO APPRAISAL CI TT OF KENAI - AIRPORT PERMANENT FUND December 31. 2011 Yield Average Total R karket Pet. Annual Accrued to Quantity Security Cost Average Cost Price Valne Assets 200,0%) MERRILL LYNCH & CO 98.47 196,946 99.16 198,314 0.85 10,900 5,026 5.80 5 450'9, Duo 07-15-14 210,000 )P MORGAN CHASE & CO 4.750% DPP 03 -01 -I5 200,1,00 MORGAN STANLEY 6.0008, DUC 04 -28 -15 200,000 H513C FINANCE 0)61' 5.5009.S Unc 041946 250,000 96181511 COLUMBIA P909 OF 2.1008, Due 05 -18 -16 200,000 CONOCOPHIH.IPS CPA MG =DG 00 5.625% Due 10.1546 200,000 STATOR, ASA 3.125% Tne 08 -11 -17 200,0110 WACHOVIA (7069 GLOBAL MEDIUM 5.75094, Duc 02 -01 -I S N4+ 200,0110 MCDONALI)S CORP 131/17N 00 5.350'!, Due 03 -01 -18 200,000 GENERAL ELECTRIC CAP CORP. 5.625% DIN 05 -01 -18 5110,000 GOLDMAN SACHS GROUP INC_ 116.53 582,570 110.44 952,205 2.37 37 ,500 14,167 5.69 2500)91105 02-1549 Acc ncd Int (rn11 8681 177,764 10636 212,714 0.91 9,500 3.167 264 84.00 168,000 100 -17 200,348 0.36 12,000 2,100 5.93 96.28 192,568 102.33 204,656 0.88 11,000 4.950 4.86 99.98 249,952 104.05 260,120 1.11 5,250 627 1.15 89.87 17,9,74€ 116.75 333,506 1.00 11,250 2,375 1.94 101.11 202,212 10 547 210,940 0.90 6,250 2,326 2.09 85.50 171,000 11.3.60 227,204 0.97 11,500 4,792 3.26 104.35 308,698 119.49 238,980 1.02 10,700 3,567 1,98 84.71 169,416 112.00 224,000 0.96 11,250 1,875 3.49 ESTIC LARGE CAP EQUITY FUNDSIETF 45,504 8906 S&P 500 Eft 'TRUST DOMESTIC MID CAP EQUITY FUNDS/FETE 23,731 131141285 5 841' MIDCAP 100 DOMESTIC SMALL CAP EQI L13' FUNDS/ELF 15,469 GRAPES 57917 SM.ALLCAP 60018001 INTERNATIONAL FUNDS /ETC 73,767 VANGUARD 1dSCl EASLET EMERGING MARKET FUNDS /ET1 35,830 VANGUARD EMERGING MARKET EDI REAL ES ATE 17,663 VANGUARD 11181 1 E13' 662 024 3,707,020 4.080,614 17.43 5 98.88 4,499,556 325.50 5,710,752 24.46 NA 54.42 1,291 545 87.61 2,079,073 8.90 HA 47.91 741,084 68.30 3,056,533 4,52 NA 29.15 2,149,994 30.63 2,259,483 9.633 NA 28.67 f ,027,402 338.21 1,369,064 536 NA 31.37 554,025 58.00 1,024,454 439 NA Alaska Permanent Capital Management Co. PORTFOLIO APPRAISAL CITY OF kENAI' - AIRPORT PERMANENT FIJNIJ December 31, 2011 Yield Average Total Market Pet Annual Accrued to Quantity Security Cost Average Cost Price Value Assets Income Interest iVlatnrily TREASURY BILLS 500,000 US TREASURY BILLS 99.83 499,165 99.91 499,915 2.14 NA 0 - 0.94 9.000% Due 05 -31 -12 CASH ANI7 EQUIVALENTS (SASH RECEIVABLE Divi4cvd Accrual Wells Fargo Scoured 4, "nncpr.I.ark PORTFOLIO 1 00 cn 4 1,875 1,875 901 NA 36.461 36,461 0.16 412,948 412,948 I.77 451,284 451,284 1.93 9,539,465 23,348,515 100 310,955 66,433 Trade Alaska Permanent. Capital Management Co. TRANSACTION SUMMARY CITY OF KENAI - AIRPORT PERMANENT FUND From 12 -01 -11 7o 12 -31 -11 Settle Date Security- PURCHASES DOMESTIC MID CAP EQUITY FLINDS /L3TIF 12-27-11 12 -30 -11 !SHARES S &P MIDCAP 400 DOMESTIC SMALL CAI' EQUITY FUNDS/LIE 12-27-11 12 -30-11 ISIIARES S &L' SMALLCAP 600 INDEX U.S. TREASURY 12-28-11 12 -29- US TREASURY NOTES 2.625% Thee 11 -15 -20 DIVIDEND DOMESTIC' LARGE CAP EQUITY .FLINDS /,ETF 12-16-11 01 -31 -12 SI'DR S &P 500 LIE TRUST DOMESTIC MID CAP EQUITY FI TNDS /ETF 12 -22 -11 12 -29 -11 'SHARES S &P MIDCAP 400 DOMESTIC SMALL CAP EQUITY FUNDS/111T 12-22-11 12 -29 -11 ISIIARES S &P SMALLCAP 600 INDEX EMERGING MARKETPUNDS /EIF 12-21-11 12 -28 -11 VANGUARD EMERGING MARKET EIF INTERNA'IIONAL FUNDS/FIE 12 -21 -11 12 -28 -11 VANGUARD MSCI EAFE ETF Trade Amount 1,308.0000 115,990.17 LT667,0000 116,002.36 300,000 322,18339 554,176..12 36,461.03 8,087.28 3,360.97 32461,98 77.160.28 Alaska Permanent Capital Management Co. TRANSACTION SUMMARY C"I ' OE RENAI - AIRPORT PERMANENT FUND From 12 -01 -11 To 12 -31 -11 Trade Settle ,Date Date Security RE.A.I'. ESTATE 12 -23 -11 12 -30 -11 VANGUARD REITETE INTEREST AGENCIES 12 -I1 11 12 -11.11 12 -13 -11 12 -22 -11 FNMA 2.875% Due 12- I1 -1.3 12 -13 -11 EtILMC 4.875% Due 06 -13 -18 12 -22 -11 PNC FUNDING CORP - FDIC GUARANTEED 2.300% Due 0C -22 -12 CASH AND EQUIVALENTS 12 -01 -11 12 -01 -11 Wells Fargo Secured MoueyMatket Account CORPORATE BONDS 12 -17-11 12 -17 -11 JOHN DEERE CAPITAL CORP 4,950% Due 12 -17 -12 12 -28 -11 12 -28 -11 AT&T WIRELESS SVCS INC 8.125% Due 05 -01 -12 FNN 12. C 2-15-11 FHLMC 4.00% P001. 014203 4.000% Due 04 -01 -26 6 Quantity, Trade Amount 11,339.65 168,871;.19 7,187,50 10,968.75 5,750.00 23,906.25 22.33 4,950.00 2,573.00 7,523.00 73553 Alaska Petmauenl Capital Management Co. TRANSACTION SUMMARY CITY OF KENAI - AIRPORT PERMANENT FUND From 12- 01 -11l'0 12 -31 -11 Trade Settle Date Date Trade Security Quantity _..... Amount tLS. TREASURY 12 -31 -11 01 -03 -12 115 TREASURY NOTES 0.625% Due 12 -31 -12 PRINCIPAL PAYDOWNS MA & Ft1LMC 12 -15 -11 12 -15 -11 F'IILMC 4.00% POOL C14203 4.000% Due 04 -01 -26 b-" PURCHASED ACCRUED INTEREST U.S. TREASURY 12-28-11 I2-29 -II US TREASURY NOTES 2,625% Due 11 -15 -20 SALES, MATURITIES, AND CALLS CORPORATE BONDS 12 -28 -11 12-28-11 AT &T WIRELESS SVCS INC 8.12534 Due 05- 111 -12 1,875.00 34,062.11 8,824.10 8,824.10 4.10 951.92 951.91 200,000 205,205 -08 DOMESTIC LARGE CAP EQUITY FUNDS /ETF 12-27-11 12 -30 -11 SPDR S &P 500 ETT TRUST 1,840.0000 232,907.33 US. TREASURY 12 -23 -11 12 -27 -11 US TREASURY NOTES 300,000 301,417.97 0.625% Due 12-31-12 ... 7394590,38 Alaska Permanent Capital Management Co. TRANSACTION SUMMARY CITY OF !t ENAI - AIRPORT PERMANENT FUND From 12 -01 -11 To 12 -31 -11 'Dade Settle Trade Date pate Security Quantity Amount SOLD ACCRUED INTEREST U.S. TREASURY 12- 23' -11 12-27-11 135 TREASURY- NOTES 0.625% Due 12-31-12 917.12 917.12 WEEHDRAW CASH AND EQUIVALENTS 12 -20 -11 12 -20 -11 ells Fargo Secured 319.28 MuneyMarket Aceonta . <.. 319.28 Alaska Permanent Capital Management Co. REALIZED GAINS AND LOSSES CITY OF KENAI - AIRPORT PERMANENT FUND From 12-01-11 Through 12 -31 -11 Date Quantity 12 -15 -11 12 -23 -11 12 -27 -11 12 -28 -11 Security 8,824.10 ENLMC 4.00% POOL G14203 4.000% Due 04 -01 -26 300,000 US TREASURY NOTES 0.625% Due 12 -31 -12 1,840.0000 S1'DR S &P 500 ETF TRUST 200,000 AT &T WIRELESS SVCS INC 8- 125% Doc 05- 01 -12. TOTAL GAINS TOTAL LOSSES r 0 Avg. Cost Basis Proceeds Gain Or Loss 9,226.70 8,824.10 - 402.60 301,570.31 181,944.09 228,392.00 301,417.97 232,907.33 205,265.08 721,133.10 748,414.4 - 152.34 50,963.24 - 23,126.92 50,963.24 - 23,681.86 27,281.38 1 a 1 Trade Date Dividend Ace 12 -01 -11 12- 16 -1.1 01- 12-31-1.1 Alaska Peunaneul Capital Management Co. CASH LEDGER CITY OF KEN4I - AIRPORT PERMANENT FUND From 12 -01 -11 11, 12 -31 -11 Tani Code Activity- CASH RECEIVABLE 12 -01 -11 12 -31 -11 01 -03 -12 dp Beginning Balance Dividend Ending Balance 3eginning Balanc merest Wells Fargo Secured Alo 12- 111 -11 12 -01 -11 12 -01 -11 4 12 -1 12 -1 -11 4 3 -11 12 -20 -11 12 -20 -11 12 -21 -11 12 -28 -11 12 -21 -11 12 -28 -11 dp dp dp 4 wd 4 4 iugBalange Account legianing Balance Interest Interest Interest Pavdown Interest Withdrawal Dividend Dividend Security SPDR S &P 500 Eli TRUST 135 TREASURY NOTES 0.625% Due 12 -31 -12 Wells Fargo Secured MoncyMarkct Account FNMA 2.875% Due 12 -11 -13 PI ILMC 4.875% Due 06 -13 -18 FHLMC 4.00% POOL 014203 &000% Duo 04 -01 -26 PFILMC 4.00% POOL G14203 4.000% Due 04 -01 -26 JOHN DEERE CAPITAL CORP 4.950% Duc 12 -17 -12 from Port folio VANGUARD EMERGING MARKET Bif VANGUARD MSCI FAPE ET!: to Amount 0.00 36,461.03 36.46 1.03 0.00 1,875.00 1,815.011 54,466 -03 2233 7,18730 1.0,968.75 735.53 8,824.10 4,950.00 - 319.28 32,46198 77,160.28 1 0 Alaska Pemtanent Capital Management Co. CASH LEDGER CITY OF KENA! - AIRPORT PERMANENT FUND From 12 -01 -11 To 12 -31 -11 Trade Settle Tian Date Date Code Aciivlty 12 -22 -11 12 -22 -1I dp Interest 12 -22 -I1 12 -29 -11 dp Dividend 12 -22 -11 12 -29 -11 dp Dividend 12 -23 -11 12 -27 -11 dp Sale 12 -23 -11 12 -27 -11 dp Accrued Interest 12 -23 -11 12 -30 -11 dp Dividend 12 -27 -11 12 -30 -11 wd Purchase 12 -27 -11 12 -30 -11 wd Purchase 12 -27 -11 12 -30 -11 dp Sale 12 -28-11 12 -29 -11 wd Purchase 12 -28 -11 12 -29 -11 wd Accrued Internal 12 -28 -11 12 -28 -11 dp Interest 12 -28 -11 12 -28 -11 dp Sale Ending Balance Security PNC FUND NU CORP - FDIC GUARANTEED 2.300% Due 06 -22 -12 ISHARES S &P SMAU CAP 600 INDEX 'SHARES S&P MIDCAP 400 US TREEASURY NOTES 0.625% Due 12 -31 -12 US TREASURY NOTES 0.625% Due 1231 -12 VANGUARD REIT Elf ISHARES S &P MIDCAP 400 [SHARES S &P SMALLCAP LLCAP 600 INDEX SPDR S &P 500 Elf TRUST U5 TREASURY NOTES 2.625% Due I I- 1.5 -20 US 1REASIIRY NOTES 2.625% Due 11 -15 -20 AT &T WIRELESS SVCS INC 8.125% Dtie 05 -01 -12 AT &T WIRELESS SVCS INC 8.125% Due 05 -01 -12 Amount 5,750.00 3,360.97 8,087.28 301,417.97 91712 11,339.65 -115,990.17 - 116,00216 232,907.33 -322,183.59 -951.92 2,573.00 205,265.08 412.947.38 Airport Improvement Program: January 2012 Airport Manager's Report Apron Rehabilitation: The Airport and Finance Department are finalizing the close out documents, Master Plan — Existing facility inventories and inspections are being conducted in addition to collecting and updating aviation related activities existing and forecasted for the airport. Phase One tasks are about 60% complete. The Phase One document will be available for review in March 2012, Obstruction Clearing EA - The draft Environmental Assessment has been prepared and is available for review. The second Public Information Hearing is scheduled for the Airport Commission meeting on January 12, 2012. Letters have been mailed to property owners and followed by telephone calls from the Airport Manager. Float Plane Basin EA & Design: The project will be bid ready when grant funds become available, Winter Operations: The Airport crew continues to battle the many winter storms. There has been a lot of icing conditions and rain but all air carrier operations have continued as scheduled. The airport continues to receive compliments on the snow and ice removal efforts. Terminal Space: The airport will be advertising this month for a travel agency to replace the vacancy left by Alaska's Best Travel. This was a valuable service offered in the terminal and has been missed. FY13 Budget: Airport staff is concentrating on the budget and -will -have a draft document prepared by January 20. 2012 -01 193 KE II ALASKA KENAI COMMUNITY LIBRARY MID -MONTH REPORT JANUARY 2012 December Circulation Figures Adult Fiction 1,654 Htternet Access 1,I31 Adult Non-Fiction 1,530 Young Adult Fiction 231 Video 5 Periodicals 126 Room Booking 34 Juvenile Fiction 461 Music 161 Juvenile Non- Fiction 327 DVDs 2,359 Easy Fiction 1,206 Audio books 164 Easy Non- Fiction 526 Miscellaneous 191 Interlibrary Loan 19 Computer Programs 12 Total Print 6,080 Total Non -Print 4,057 Total Circulation 10,137 In -House circulation 226 Library Door Count Downloadable Audio 338 Download able EBooks 188 Oar year -to -date circulation for FY12 is running at a 1094 increase over the same period in FYI1. The chart below shows our comparative total circulation over the last seven years. You can see that our circulation in 2009 was slightly higer than the circulation in 2010 or 2011, keeping in mind that we were under construction in both those years with periodic closings of twoand three weeks at a time. Income Fines Xerox Lost/Damaged Test Proctoring Fee Printing Other 1 00O0 110000 100000 &1000 DECEMBER $ 1,266.56 61.50 86.99 20.00 233.25 25.00 Total income $ 1,693.30 195 Library Curds Issued December Homer Kasilof Kenai Nilciski Soldotna Sterling Organization 3'c Other 1 5 50 12 29 2 Total 99 coy of, RAN \ ALASKA FOLIC E !JEE ARTMENT MID-MONTH REPORT TO: Rick Koch - City Manager FROM: Gus Sandahl - Police Chief ,17S- DATE: 1/10/12 SUBJECT: Police & Communications Department Activity - Month of December 2011 Police handled 632 calls for service (up from 553 in December 2010). The Communications Center received 290 emergency 9 -1 -1 calls (180 from cell phones). Communications personnel handled 3,383 administrative phone calls. Officers made 35 arrests. Traffic enforcement resulted in 113 warnings, 25 speeding tickets, 4 seatbelt tickets, 21 citations for equipment violations, and 35 citations for "other " traffic violations. There was only 1 DUI arrest. Police investigated 21 vehicle crashes. Six of the crashes involved moose. None of the crashes were DUI- related. On Friday, December 9t seven officers participated in a Police Athletic League dcage ball event at the Boys and Girls Club. On December 2, Officer Harris attended two days of forensic computer training at the Anchorage Police Department, On December 4, he traveled to Houston Texas for 5 days of forensic computer training. The City of Kenai was reimbursed for the Houston travel costs by Internet Crimes Against Children (ICAO). On December 7, Chief Sandahi and Lt. Ross attended a 3 -day Executive Development Conference in Anchorage. On December 12th and 13"' all officers participated in two nights of control tactics tr aining in the Kenai diddle School wrestling mat room. One of KPD's officers is a trained contro tactics instructor, and he did an excellent job administering the training. n the Schools, SRO Prins handled the 3 criminal investigations. During the two week Christmas break, Officer Prins was assigned to investigative and patrol work, Officers stayed busy during December, handling a variety of investigations and crashes. 197 hee;.yaf DI It SW STRAY ANIMAL CONTROL M D- MONTH REPORT December 2011 2011 2020 67 73 ADOPTED 2011 2010 66 68 Dogs 34 40 Dogs 33 32 Cats 32 34 Cats 32 35 Other Species 1 0 Other Species 1 1 RELEASED BY OWNER 64 58 CLAIMED Dogs 29 22 Dogs Cats 34 34 Cats Other Species 1. 2 Other Species D.Q.A. Dogs Cats Other Species EUTHANIZED Dogs Cats Other Species TOTAL ANIMALS 134 140 Other Disposi 13 9 11 7 2 2 0 54 19 23 32 30 Borough Animals 35 60 Field Investigations 71 85 Total_ Dogs 64 67 Volunteer hours 96 79 Total Cats 68 71 Total phone 527 433 Total Other Species 2 2 Kennel Permits 0 (1 Community Involvement Projects' Our Dog walling teams braved the December storms and cold to wal& our Baas 25 hours in December. 199 the cr' y a f KENAI, ALASKA To: Rick Koch, City Manager From: Rachael S. Craig, Senior Center Director Date: January 9, 2012 Total Decem.Eser Meal Count 2011 Served: Total Congregate Meals Served: 1,027 Total Home Meals Served: 1,837 Total December Count 2010 Served: Total Congregate Meals Served: 1,088 Total Home Meals Served: 1,557 KENAI SENIOR CENTER JANUARY REPORT During the month of December the senior center was rented five times. n December we had 132 volunteer hours. December was a busy month of Christmas activities and events. The Line Dancers and, Bell Ringers performed at Heritage Place, Forget -Me -Not, Nikiski, and our Senior Center. The Bell Ringers performed for the United Methodist Church and for the Senior Center Christmas Party. We served 125 children during Breakfast with Santa. The children enjoyed pancakes, visits with Santa and pictures were taken. Seniors volunteered serving breakfast to the children and their parents. Patsy Clifford sponsored the Christmas Tea and cookie exchange. 23 senior women participated. Patsy did a. wonderful job of decorating and shared her special china and tea pot collection for the event. She donated door prizes. The women brought cookies to share at the tea and to exchange. A Senior Christmas Dinner and gift exchange was held. We had 63 seniors were in attendance for the dinner and gift exchange, the Bell Ringers and Line Dancers performed. "Forget Me Not" Band provided entertainment for the New Year's Eve Luncheon. 74 seniors participated, We had a great time dancing and the food was wonderful! This past quarter, the Wellness, Exercise and Activity Program continues to grow, 13 seniors participated in 155 hours of aerobic exercises and 20 seniors participated in 348 hours in the "Growing Stronger" wei.ght resistance classes. A volunteer is facilitating the Tai -Chi Class and this past quarter we had 5 seniors participated in 41 hours. Besides the exercise classes on site, the line dancers met at the rec. center 3 days a week, 10 senior women participated 37 hours this past quarter. A volunteer R:J, presented an 8 -week course for improving your memory; "How Do We Improve What We Have ". This class was attended regularly with 12 seniors in attendance. Tne National Family Caregivers Support Group had two meetings at the senior center this quarter with 15 caregivers present. 201 MEMO: e with a Past, a with a Muve" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907- 283 - 7535/ FAX: 907- 283 -3014 TO: Rick Koch, City Manager FROM: Marilyn Kebschull, Planning Administration DATE: January 11, 2012 SUBJECT: Comprehensive Plan Update Status Cionxq 1992 When I last updated you on the progress of the Comprehensive Plan, we were distributing drafts of the background report to department heads for review and comments, Comments are being received and forwarded to the consultant for review and inclusion in the draft report. We had tentatively hoped to have the draft prepared for the Planning & Zoning Commission to begin their review on January 25' ". However, that review has been rescheduled for work sessions beginning at the February Bth meeting. The consultants and I have also been working on the Implementation Plan which includes goals and objectives for the Plan. That document will be drafted and sent to the Commission after they complete review of the background report. We anticipate additional changes to the background repori and the Implementation Plan as additional comments are received during the ongoing public process (Internet survey, public opinion survey, and meetings with schools). The survey Is in the final stages of preparation and we have set a target date for publication on Survey Monkey for February 161 The survey will also be available on the City's web site, at City Hall and the Library. Citizens who have participated in the public process and provided their contact information will be sent a copy of the survey through a list serve email. The first newsletter has been drafted and will be ready for distribution in February to coincide with the publication of the survey. The Commission finalized the draft Land Use Map. A copy of the draft is available on the Clty's web site. 203 FINANCE DEPARTMENT MID -MONTH REPORT To: Rick Koch, City Manager From: Terry Eubank, Finance Director Date: January 12, 2012 Re: Monthly Report January 2012 The past month has been a busy one with much of the department's focus on the preparation of the FY2013 Budget. The Council will receive its first draft of the FY2013 budget with its April 4th packet. There is much work to be done by all City departments over the next couple of months. Corey has returned to her normal workday including working in the Finance Department in the mornings. Ms. Oldham did an outstanding job for the department while Corey was the acting City Clerk. The department is giad to have Corey back and once again be fully staffed. The data center construction is progressing well and in the next month or so many of the City's data servers will be relocated into the new facility. *. the coy o f KENAI, ALASKA KENAI PARKS & RECREATION MID -MONTH REPORT JANUARY 2012 The ConocoPhillips /City of Kenai Multi -Use Facility had a total of 90 hours reserved for the month of December. This compares to 71 hours last year during this time. January's hours look to be solid as well, despite losing a few hours due to cold temperatures. The annual Peninsula Winter Games Youth Hockey Tournament takes place January 25 -29th. To date, a total of 21 hours are booked for this event. A total of 40.5 hours were spent maintaining sidewalks located at City Hall, Kenai Library, and the Kenai Cultural & Visitors Center. Thirteen (13) hours were spent maintaining the Daubenspeck Park pond. The department also constructed two wooden benches and placed a couple burn pits along lake's edge. A few skaters have been taking advantage of the opportunity which I'm sure will increase as weather warms a bit. The department has been facilitating the construction of a couple park benches which will be provided by KCHS student. Project is tied to meeting his civic service requirements. Benches will be placed at the --disc golf courses this summer. The Director contacted Larry Lewis (ADF &G) on possible Bear Awareness signs for parks and trail areas. Mr. Lewis will be offering suggested language and graphics for possible use. Department will gear up to remove holiday decorations the week of January 16` ", weather and staffing permitting. The recent wind storms caused us some extra work attending to several affected pole decorations, particularly those along the Spur Hwy, New seasonal banners were purchased and installed at the Kenai Visitors & Convention Center. A mirror located in the Rec. Center weight room was accidently broken by a patron. Mirror has been removed and Rec. staff ordered a replacement. Nancy Casey wrapped up her bid ready design documentation proposal for Municipal Park and is being reviewed by administration. Bid proposals for painting of the Recreation Center are due January 18"'. Pre -bid conference for the Leif Hansen Memorial Park landscape improvements will occur Thursday, January 12`h. Bid opening will be Tuesday, January 241h. 207 he uZy of KENAI, ALASKA FIRE DEPARTMENT MID -MONTH REPORT January/ 2012 At the Fire depamnent, 201 t went out with a bang and 2012 has started off strong also. We ended the year up 8% over last year's nm volume and 2012 hasn't let down. We are presently on a pace, in the first 2 weeks of January, to put us up 20% by years end. The weather seems to be the driving factor these days for workload. The bitter cold of a few weeks ago had crews out working with the water department dealing with hydrant maintenance and the recent tremendous amount of snow fall has kept crews busy out on the streets clearing hydrants. The Training Officer has been outlining a training regiment for one of our firefighters to acquire his State of Alaska FFII certification. We are teaching this in house for the first time and are excited about the project, ,Ve recently attended and "after action" meeting dealing with the wind storms in November. Participants included all emergency agencies that were affected by the stonn, dispatch centers. HEA and the Office of Emergency Management. The meeting centered around a synopsis of the complexity around communications and information sharing between agencies, The department is still staying involved with the Kenai Peninsula Cclleee and their paramedic ride along program and Safe Kids with their car seat program. 209 KENN, ALASKA / e ���illa9e witA a Past, (c with a Future" MEMO: 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907- 283 -7535 / FAX: 907- 283 -3014 TO: Rick Koch, City Manager FROM: Larry Floyd, Building Official THROUGH: Sean Wedemeyer, Public Works Director /Capital Projects Manager DATE: January 4, 2011 SUBJECT: Summary of 2011 Building Department Activity The following table shows building permit activity for 201 1: Type of Building Permit Residential — New Housing Construction Residential — Additions & Alterations Commercial — New Construction No. of Building Permits { Valuation Plan Review Fees Collected Permit Fees Collected 28 $4,613,555 1 $4,255.30 36 685,230 367.75 4 F 5,777,900 21,002.79 511,664.36 2,500.54 33.203.95 Commercial — Additions & Alterations Mobile Home Permits Multi- family- New TOTAL 20 1,357,081 6 0.00 10,540.51 0.00 0.00 i 6,166.35 0 0.00 104 $12,433, 766 4,521.03_'i 600.00 0.00 Sign Permits 4 Building Inspections Performed: 443 211 Building Summary Memo2011 Page 2 ianuary 5, 2012 The following tables compare building permits issued in 2010 and 2011. The table shows the number of permits issued each quarter and their value. 2010 ■ Residential - New Housing 2nd 3r0 4`n TOTAL 0 10 ; 7 2 19 Residential - 1 Additions & Alterations 15 12 5 33 Commercial - New Construction 0 2 1 4 Commercial - , Additions & Alterations Multi- family- New TOTAL 5 11 8 9 33 0 6 39 $502,500 I $66,550,000 1 0 0 1 28 17 90 53,110,800 ! 5688.600 I $10,852,800 1 2011 1 f 2 3rn 4`" TOTAL Residential - New Housing 0 6 21 1 28 Residential - Additions & Alterations , 6 12 14 4 36 Commercial - New Construction 0 9 1 4 14 Commercial - Additions & Alterations 3 7 a 6 20 Multi - family - 1 New 0 0 0 0 0 Misc. Permits 0 1 1 4 6 1TOTAL 9 35 41 19 1 104 1 $828,000 $6,963,831 $3,980,435 $661,500 512,433,766 I 212 2011 Building Permits Commercial /Residential Values 213 BUILDING PERT S VALUE SU ARY 2011 Note: Other includes additions, alterations, repairs, and renovations. R= Residential C= Commerclal SFO= Single Family Dwelling MFD= Multi - Family Dwelling Permit #: Date Owner Address Description Plan Fee Permit Fee Valuation RJC 184779 —1I 1134780 1139781 i>D 1/7/2011 Chad Sorenson 106 N. Tinkvr La, Apt al Other -RES 1/1412 01 1 Holy Assmnptio 1105 Mission Ave. Russian Orthodox 1/19/2011 Robert Robinson 1206 Fourth Ave_ 1134782 i 2/7/2011 Thomas Pellearom 113 lacerood Ct 1134784 18478" 184786 ;84787 - 2/7/2011 David Fisdicr 2/2512011 Chris Lombard 2/28/2011 3i- ilia, Adams 3/22/2011 Kenai Combined 13 12321-Ilnc I 306 N Hitt St. 1129 Alder Ave. lily 115 Main Street Loop 514 O'crinnd Ave. Bldg_ 3/23/2011 Cheriisn'Cherrier. (Bay Anne Demo Pennii) C 1134758 - -�f 3/23/2011 84789 ! 4/4/2011 Michael chilli 134790 --_, 4/4/2011 1134791 4118,/2011 Susan Lovett Deady Si a t tin (City of Kenai) Tuesday, Januay 03, 2012 10832 Kenai Spur Hscv 507 Hemlock Spur Hsi 601 Laurel Dr. Other - Commercial OHter -RFS Other -RES Other -RES Met Oihcr -RES Other - Cenmcr(aid Demo Permit (lihei Comm ercial Other -RES New - Ccmrncrria( Other -RIrS 50 -00 5139.25 50,00 50 00 50 SAD 50 00 547 00 52,124 73 50.00 $8.40 50.00 5245.00 50.00 547.00 525,000 R 590.51 52,500 t' $26.88 5500 R 5294.00 5130,000 R 5:175 00 5131,000 R 544.80 52.000 R 524,000 R S3,27650 5509.000 C 50.00 50 t7 516.80 54,000 O $47.00 50 R $643.75 585,000 t' 567.76 56,500 R Page 1 of 7 Permit #: Date Owner 184792 4/25/201:1 City of Kenai Restrnomv 11B4793 _ 4/27/2011 CINGSA 184 794 j 4/27/2011 Cheerier & CL 1134795 4,282011 Barrier. Moravec 34796 j 4/25/2011 City of Kenai - !._._._.__..__� Marathon Park 484797 [I134798 14799 I 1^a ca In4800 84301 4.34802 B4803 _1 134804_._ 8480.5 934806 ......._... . 1134807 _..j 5/3/2011 Thomas Phillips 5/52011 Dennis Barnard. 519/2011 Russian Odhodox Church Address Shore 912 Kenai Ave. 1377 Beaver Loop Rd. a LLC. 514 Overland 1102 Second St 400 Marnthon Rd. 311 Linwood Ln 335 Dolchok Lane 1104 Mission Ave. 5/9/2011 Three Bears 5/9/2011 City of Kenai - Marathon Park Shelte 5/11/2011 Ryan Tunsetl ',... 5/1912011 City of Kenai -Kenai Water Treat. Fac.. 5/17/2011 CINGSA Officelshop Building 5/17/2011 CINGSA Auxiliary Building 5/17/2011 Farris Family 'frost 5/18/2011 Fred Perez Tuesday, January 03, 2012 Description New - Commercial New - Commercial Otter- Commercial (Alec-RES New - Commercial Other -RCS Other -RES Other- Conunercial 10575 Kenai Spur Huy. Other- Commercial 400 Marathon Rd_ 2815 Bryson Ave. 420 Shotgun Dr. 1377 Bridge Access Rd 13'77 Bridge Access Rd- 1303 Colonial Dr. 204 Birch St. Other-Cormnerclal New -SFD New- Carnmereial New- Commercial_ New - Commercial Otter -RES New -SFD Plan Fee Permit Fee Valuation PJC $483.70 $3,528.36 5(1.00 50.00 5483.70 $33.60 $0.00 581.4! $39.06 5117.81 $351.33 $8,390.69 $ 1,603.26 $1955.97 $0.00 598.56 5895.75 $43,000 C 55,428.25 $962,000 $2,393.75 $350,000 C $47.00 52,000 R 5895.75 543,000 (' $67.20 $6,000 R 547.00 $2.500 R $125.25 $2,367 C $60.10 51,714 C $181.25 $10,000 C $702.66 5305,000 R $12,908.75 53,000.000 (. $2,466.55 $363,000 C 53,009.90 5459,90(1 C 547.00 .$5,000 R 5197.12 570,400 R Page 2 uf7 Permit #: Date Owner Address on Plan Fee Permit Fee Valuation R/C 1134809 C 1134811 5/27/2011 Todd Harsbu 411 Evergreen 5)27/2011 Twin City Raceway 490 Shotgun Dr. 5/31/2011 Stanley Ford New -SFD Other - Commercial 10288 Kenai Spur 1lwy. Other - Commercial 84812 6/1/2011 O'Reilly's Auto Para 10511 Kenai Spur Hwy. New - Commercial 34814 6/1/2011 Teresa Werner 508 Japonski Dr. 6/2(2011 Pal Reilly 206 Candlelight Dr 134815 6/8/2011 David & Sue Salter 134816 184817 134818 84819 1529 Town Wa 6/8/2011 CINGSA Electrical 1430 Bridge Access Rd Equipment Enclosure 6/8/2011 KPBSD - KCAA 9383 Kenai Spur Hwy. Arts/Sports 131dg.'. 6/13/2011 Jody Svec 203 Portlock St. 671.412011 Jerry Sprague 805 Cook Avenue [134820 ' 6/15(2011 Stanley & Michelle 614 Ponderosa St Surer 134821 1 6/17/2011 Mark Schrag 312 Princess St. 1134823._J..- 1E34824 6/22/2011 John & Connie Auram 2555 Seine Ct. 6/30/2011 John Boyce 1619 Tanaga Ave 6/3012011 Highland Trailer Park- 5125 Silver Salmon Dr. Lashbrook #35 Tuesday, January 03;2012 Other -RES New -SFD New -SFD New - Commercial Other - Commercial Other -RES New -SFD Other -RES Olhcr -RES Other-RES Other -RES MH htspeetion 5210.00 $0.00 $227.01 52,101.94 $0.00 $176.40 $343.28 5495.79 $154.11 $0.00 $118.72 559.22 50.00 $67.20 $23.50 $420.00 5135,000 R $251.25 $15,000 C $$49.25 522,000 3 233.75 $500,000 C $94.00 $15,000 C $352.80 $126,000 II 5686.56 $175,000 R 5762.75 567,000 C 5237.25 514,500 C $47.00 $950 5237.44 580,500 R 5118.44 540.000 R 547.00 56,000 R 5134.40 548,000 R $47.00 $1,500 $100.00 $0 R Page 3 of 7 Permit if:. Date Own Address 134825 t 7x2011 Jackie McOahap 2819 Bryson rysan Ave. x4826 7/11/2011 Dustin Vasicek 2520 VIP Dr. 1134827 7/12/2011 Dan Stcrchi 305 Evergreen St. 84828 ] 7/14/2011 Jason Followell 1131 Redoubt Ave. 64829 1 7212011 Elisa Harmon 7/22/2011 134831 7 /22/2011 Carol Frees 609 Maple Dr. 7/262011 Larry Rosko 1502 Tundra Rose Ln 7/28/2011 Sherman Smith 535 Ames Rd. 8/3/2011 KI'13SD- 5wires Elem. 315 Swires Rd 8/10./2011 Rory Espy 903 Magic Ave. Habitat for Humanity (City of Kenai) 11823 Kenai Spur Hwy. 453 1123 2nd St. 1134832 Ir J IT34833 134834 1134835 4 1 8:10/2011 Erik Yarnes 310 Cindy Circle 1134837 8/10/2011 Sarah 13ollier 800 Hollier St 84838 .. 8/15/2011 Douglas McCauley 1603 Bumblebee Ave_ 134$39 8/172011 Lawrence Hoy. 1605 Bumblebee Ave. 134840 1 8/18/2011 Arctic Barnabas 135 N Willow St Ministries nrmary 03, 2012 Des ption New - Garage /Carport Other -RES New -SFD Other -RES MH Inspection New -SFD Other -RES Other -RES New-Gal-ay./Carport Other-Comm at Other -RES Other -RES Other -RES Other -RES Other -RES Otuer- Commercial Plan Fee $230.50 50.00 $134.40 $0.00 $0.00 $168.00 50.00 50.00 5208.32 50.00 50.00 80.00 522.40 $0.00 538.06 $0.00 Permit Fee Valuation R/C $461.00 8150,000 I'` 547.00 $3,000 ll 5268.80 $85,000 R 547.00 52,000 R $100.00 $0 R 5336.00 578,000 R 847.00 $9,280 R 547.00 $4,500 R 5416.64 5655 R $100.00 $48,000 C 547.00 $2,500 R 847.00 $2,500 R $44.80 56,000 R $47.00 53,000 R 876.16 57,000 R 547.00 $1,000 C Page 4 o17 N 03 Permit it: IB (841 1E14842..,...�.�__. ;34843 (34844 04845 1348.46 1134347 1[348449 `14850 04851 34852 84353 134854 Date Owner Address 8/18/2011 Casey Her1rbergcr 1215 Chinook Dr, 8/19/2011 Douglas Owinn 1611 Bumblebee Ave. 8/25/2011 Hall Quality Builders 880 N. Strawberry Rd. 8/30/201I Safeway Inc_ Carts 10576 Kenai Spur Hwy 1303 Channel Way Cecil & Pablola Peek 1305 Channel Way 8/31/2011 Leilani Moffett 8131/20/1 8/31/2011 Kelsey Skolnick & Thomas Galloway 8 /31 /2011 Marti Anderson 8/31 /2011 Matthew & `fauna Meade 8/31/2011 Michael Talent 8 /31/2011 Janette Pickens 8/3//2011 Kelsie Remsen 8/31/2011 Dil Ian Haugslad & Liana Perzechino W1/2011 Ehrhardt 9/2/2011 Buccaneer Alaska Operations 9/2/2011 Bnceaneer Alaska Operation Kathy Nikolas & Peter Tuesday, January 03, 2012 1307 Channel y 1510 Meander Lane 1309 Channel Way 1311 Channel Way 1402 1-ledley Dr. 1404 Bed Icy Dr. 1520 Meander Lane 212 Baker SL 110 Main 5t. Loop Rd. 700 Marathon Rd. Descrip New-SFD Other -RES New -SFD Other -Co r New -SFD New -SFD NewSFD NcwSED Now-SFD New -SF13 New -SFD New SFD New -SFD New -SFD Other- Comrnerciz New- Commmeroiai n erciz Plan Fee 1423.50 $0.011 1267.54 $1,268.38 10.00 $0,00 80.00 80.00 10.00 $444.99 $0.00 Permit Fee Valuation RIC $847.00 $47.00 8535.08 8298,000 81,95135 8271,000 $457.80 $210,000 R $457.30 8210,000 R $457.80 8210,000 R 8457.80 $210,000 R 1457.80 5210,000 8432.18 1205,000 8324,000 R $0 R R e R R $132.18 $205,000 R $0.00 1432.18 1205,000 R 50.00 8457.80 1210,000 R 867.20 $134.40 $45.000 FL 89051 1139.25 $7,000 C S577,69 8888.75 $85,000 C Page 5 of 7 N itta 184865 --' Permit #: 1134857 n4xsx 1134859 1534860 -- j 1134861 034862 1234863_...._.__., 1534866 184867 1134868 34869 _... I 134870 174871 84872_ _.._...� Date Owner 9/7/2011 Peter Klauder 9/8/2011 Debbie Brown 9/14/2011 Mathew Copple. 9!262011 Hall Qualify Builders 9/26/2011 Hall Quality Builders 9/26/2011 Robert Tepp 9/27 /2011 Byler Contracting 9/27/2011 Brian Gabriel 928/2011 Edward Fames 10/3/2011 Sandra & Michael Lashbrook 10/4/2011 Bill Ireland 10/4/2011 Seventh Day Advents Church 10/4/2011 CINGSA 10/4/2011 C1NGSA 10/6/2011 GC 10/6/2011 Kenaitzc Indian Tribe Tuesday, January 03, 2012 Address ........... ..........._... 606 Petersen Way 718 Sycamore St. 1515 Stellar Dr. 600 Ames Rd. 1508 Second Ave. 2715 Watergate Way 3275 Togiak St. 2305 Watergate Way 2345 VIP Dr. e P 11 Other -RES Other -RES Other -RES New -SFD New -SFD New - Garage /Carport New -SFD Other -RES New - Garage/Carport 5125 Silver Salmon 429 MIl Inspection 2707 Wildwood Dr. 429 M42 Inspection 701 Swires Rd. 1377 Bridge Access Rd 1377 Bridge Access Rd 10419 Kenai Spur Hwy. trA 1002 Mission Ave. Otter- Commercial New- Commercial New - Commercial Other- Conweroia1 Other-Commercial Plan Fee Permit Fee Valuation R/C 50.00 50.00 $0.00 5184.24 $109.20 $29.12 5293.16 $29.75 $60.48 30.00 $0330 50.00 5600.44 5418.44 $190.61 $74.75 575.60 594.00 594.00 5368.48 5218.40 558.24 5586.32 $59.50 $120.96 5100.00 $100.00 50.00 5923.75 5643.75 5293.25 5115.00 520,000 R $10,000 R 515,000 R 5200,000 R $135,000 R $24,000 R 5253,000 57,000 $6,000 R R R $0 It se R 50 590,000 550,000 C C C $18,000 55,000 C Page 6 of 7 Permit#: Date Owner - Address Plan Fee Permit Fee Valuation R/C 84873 10%10/2011 Thomasine prince 11823 Kenai Spur Huy_ kll 184874 10/14/2011 Joshua Dey 1 220 Richfield M11 Inspection Other -RES IB4875 ___. 10/14/2011 Bill Ireland 2707 Wild wood Dr. 428 MH inspection [B4876 _ _l 10;17/2011 Woodridge Apartments 903 Cook Avee. Apt A9 1134877 10/19/2011 Andrew East 106 Candlelight Dr_ 1134878 � 10/20/2011 Michael Phillips 110 Richfield Dr. 184879 0(27/2011 Kenai ,Peninsula Racing 490 Slwtgnn Dr. Lions - MX 1134880 ._,. [ 10/31/2011 Mike Schilling 220 Trading Bay Rd. i N O �B4SSt 10/31/2011 Byler Coulractine 415 Phillips Dr. rL 82 1 1/3/2011 Atncrican Legion Post 902 Cook Ave. R..... _---I i 20 �B4883 11/15/2011 Derrick Stanton 10832 Kenai Spur Hay. 84885 12/20/2011 Tony Doyle 7984 Kenai Spur Hwy. Otlicr- Commercial Other -RES Other -RES New- Commercial Other- Commercial New -SFD New - Commercial Other-Commercial Other -RES $11.00 $100.00 50 R $47.00 $0.00 5100.00 $0 R $0.00 $47.00 50 C $0.00 594.00 $119,000 R $0.00 $47.011 $3.000 R 5117.81 $181.25 $10,000 C $0.00 $818.75 575,0110 C 5336.36 5673.12 5245,000 R 10.00 $32L25 520,000 C 50.00 547.00 51,000 C 547.1)0 $94,00 $25,000 R $500 R Grand Total 530,146.87 558,509.36 $12,433,766 Note: Fees include amounts not collected on city projects and non -profit donations. Tuesday, January 03, 2012 Page 7 of 7 PURCHASE ORDERS BETVVEEN $2,50890 AND $15,000,00 FOR COUNCIL REVIEW COUNCIL MEETING OF: JANUARY 18, 2012 VENDOR DESCRIPTION DEPT. ACCQLINT AMOUNT MCKINLEY SERVICES WONDERWARE UPGRADE WELLHOUSE #4 CONSTRUCTION 2,990.00 ALASKA OIL SALES TERMINAL GENERATOR FUEL AIRPORT OPERATING SUPPLIES 6,500.00 MCKINLEY SERVICES NETWORKING EQUIPMENT VARIOUS CONSTRUCTION 9,285.59 WATER TESTING G WATER TONI'KA EQUIPMENT COMPANY TREATMENT FACILITY WATER TREATMENT FACILITY CONSTRUCTION 8,000,00 2012 Alaska Gaming Permit Application Organization Information DEPARTMENT 050 ONLY Validation 4 Date Stang 26 Federal EIN 09-2012254 Organaation Name Our Lady of Angels I Mailing Address 225 South Spruce Street 1 Entity Type (check one) a Corporation !] Partnership 8 ❑Association no„ enter gaming pe 781 Phone Number 907 283 -4555 1 Website Address 1 NIA I City Kenai (907 283 -2009 AK Zip • 4 99611 Organization Type (check one) for definitions see AS 05.15.690 and 15 AAC 160.995. ❑ Charitable ❑ Fraternal ❑ Police or fire department ❑ Civic or service ❑ Labor ❑Political ❑ Dog mashers' eseeclation 0 Mduntcipa ity 0 Religious ❑ Educational ❑ Nonprotittrade association 0 Veterans ❑ Fishing derby association 0 Outboard motarassoctation 0 IRA/Native Village 0 Yes O No Does the organization have 25 or more members who are Alaska residents as defined in your articles of incorporation or bylaws? Members in Charge of Games Members in charge must be natural persons and active members of the organization or employees of the municipality and designated by the organization. Members in charge may not be licensed as an operator, be a registered pull -tab vendor or an empioyee of a vendor for this organization. tf more than one alternate, attach a separate sheet. 1Pnmary Member First Name 1 Blaine %1.I. 0 Primary Member Last Name j Gilman i Alternate Member First Name Jane M.I. E Al mate Member Lest Name Fuerstenau 1 Social Security Number 574 -52 -8355 Email iY bdpi!man(aLptialaska.net ! Social Semidry Number 370 -82 -5410 Email janef(Walaska. net 1 Daytime Phone Number (9071 283-2600 Mobile Number (9071398 -0840 Daytime Phone Number (9071262 -0365 Mobile Number (9071252 -8140 1 Home Mailing Address 1 218 Susieana Home Mailing Address PMB 357 35555 Kenai Spur Highway !City Kenai State AK. Zip m4 99611 City Soldotna Has the alternate member passed the test? G Yes j State I AK ❑ No ?Zip -4 199669 Permit N under which test was taken12054 Has the primary member passed the test? 9 Yes ❑ No Permit 0 ureter which test was taken; 781 Legal Questions These questions must be answered, If you answer Yes to either question, see instructions. Yes 2 No Does any member of management or any person who is responsible for gaming activities have a prohibited conflict of interest as defined by ISAAC 160.954? • ❑Yes El No Has any member of management or any person who is responsible for peening activities ever been mnv cted of a felony, extortion, or a violation df a law or ordinance of this state, or another jurisdiction, that is a crime involving theft or dishonesty, or a violation of gambling laws? 1We declare, under penalty of unewom felsifrcabon, that I have examined thisapplicatton, including any attachments, end that to the best of our knowledge end belie[ at is true and complete.- Weunderstand that any false statement made on the application or any attachments is punishable by taw - By our signatures below we, 4he iodmary member, the aitemate member, and it applicable, the manage 00 games, agree to allow the Department of Revenue la review any criminal history we may Iinave, In accordance with 15 AAC 150,934. instiucfions) Printed Name Mail to: ALASKA DEPARTMENT OF REVENUE TAX DIVISION - GAMING GROUP P0 SOX 110420 JUNEAU AK 99611-04120 Phone 907 -465 -2320 • Fax 907 - 466 -3098 826 One copy of he completed application must be sent to the neares municipality or borough. See instructions for mandatory attachments. Pay online with OTIS at wwwtax.alaska.gov or make check payable to State of Alaska. New applicants must pay by check, Retain a dopy tor your records Permit Fee The permit tee is based on the 2011 estimated gross receipts. Check the appropnale bey. O New applicant O SG-$20,000 20,001 - 8100,000 100,001 or more 5201 $501 $1001 0405 -626 Rev 06111 • Page 1 2012 Alaska Gaming Permit Application Gaming Pemnt if l Orpanimllon Name 751 j Our Lady at Angels Facility -Based Games (self - directed) If more than two tacitities, attach a separate sheet, FedIir Name (Physical Address City Our Ladyof Angels j 225 South Spruce Street Kenai Facktylyper{-C^�heck one) Game Type (check all that apply) Ovmed L_1Leasad D Donated L_ Bingo D✓ Refpe D Pull-tabs DANmal classic lcjieken)' EAcimal classic (ratracer ❑Special 826 Stare l2ip,4 AK I gas 11 D Caicdila Zip +4 Facility Name )Physical Addre City Facility Type (orient one) Type (,check at thatap gOwned Di eased D Donated !Deingo DRaflie DPvll -tab Area -Based Games if more than two areas, attach a separate sheet. ❑Animal classic (rat ram}` 0 Special crew raffle*' 0 Calcutta poor* ' restricted game type "'see instructions for mandatory attachments Area 'Game type (check all that apply) D Raffle' Contest of skill [Jrtstt derby 'bog masher comast D Gesso)spec1y) ea Game type (check all that apply) ❑ Raffle ❑ Contestot skill ❑Else derby Q Dag rusher contest ❑Classic (specify) Manager of Games Required only for self-directed pull-tabs and bingo. l Manager First Name lMl )Manager Last Name 1 ' Social Security Number 'Daytime Phone Number Home Mailing Address Email (Mobile Phone 1 City Stale Zip +4 Has the manager ct games passed the test? ❑ Yes D No Permit'q under which test taken Vendor Information Attach 2012 vendor registralion forrn(s) and fee(s) for each vendoriis Bar or Liquor Store Name IPhysical.Address elow. ity hate 'Zip *4 AK Bator Liquor Store Name cal Address ity ;State 12 AK Bar or Llquot Store Name tPhysical Address Bar or Liquor Store Name ;Physical Address lCtty ity State (Zip +4 AK (State Zip -4 AK [Bar or Liquor Store Narne (Physical Address IClty (State l Zlp +4 AK Operator information Designate operator who will conduct activities on the organization's behalf, Attach signed operating art c are than a sap Operator License 4 Operator Facility Name GameType(s) Physical Address City State ;Zip +4 Multiple- Beneficiary Permittee information (MBP) Designate the MEP with which the organizatiori has signed a partnership or oint venture agreement. NIP Permit 4 MBP Name Facility Name Game Type(sj Physical Address City State ZIp +4 Dedication of Net Proceeds Desaibe in detail how the organization will use the net proceeds from gaming activities 826 ITo help fund a mission in bush Alaska I 224 Retain a copy for your records 0405 -826 Rev 06(1; • Page 2 IN V ES MENT REVIEW City of Kenai Airport Endowment Fund for period ending December 31, 2011 ALASKA PERMANENT APCM CAPITAL MANAGEMENT Agenda ➢ Portfolio Review & Performance ➢ Appendix — Economy & Financial Markets — Expenses Matter — Portfolio Appraisal ALASKA PERMANENT APCM CAPITAL MANAGEMENT 1 Portfolio Review ➢ The account was established in September of 2008 with a deposit of $17.4 million in securities and cash. June 2009: $289,136 June 2010: $891,268 June 2011: $999,976 April 2011: $2,526,702 ➢ Market value of the fund as of December 31, 2011: $23,348,815 ➢ Average annual return since inception: +9.52% ➢ 2011 was a very volatile year. Equities had large price movements as political events, natural disasters, international turmoil, and the European situation all unsettled the markets. ➢ The fixed income markets were impacted by the above, with a "flight to safety" move in U.S. Treasury securities driving very low PERMANENT rates even lower. The 10 year Treasury now yields less than 2 %. APCM CAPITAL MANAGEMENT 2 Portfolio Review Asset Allocation for City of Kenai Airport Endowment Fund as of December 31, 2011 WI U.S Bonds 15 Mid Cap Equity xP Internati onal Equity Real Estate Equity ALASKA PERMANENT APCM CAPITAL MANAGEMENT 'A Large Cap Equity Small Cap Equity P2 Emerging Markets Equity Total fixed Income U.S. Bonds Equities Large Cap Equity Kid Cap Equity Snell Cap Equity International Equity Emerging IVIarkets Equity Real Estate Equity 42.2% 57.8% 24.5% 8.9% 4.5% 9.7% 5.9% 4.4% 45% 40-65 55% 20/0 15-25 10% 5-15 5% 0-10 10% 5-15 5% 0-10 5% 0-10 $9,849,456 $13,499,359 $5,710,752 $2,079,073 $1,056,533 $2,259,483 $1,369,064 $1,024,454 $23,348,815 3 Portfolio Review Total Return ALASKA PERMANENT APCM CAPITAL MANAGEMENT 15% -5% 45% -25% 1.45 -0.14 5.80 4.49 Account Performance Previous Year as of December 31, 2011 -2.08 -1.73 0.54 1.02 VIIMAIRk -18.85 18.42 8.57 8.48 Total Account Fixed Income Large Cap Equity Mid Cap Equity Small Cap Equity Intl Equity Emerging Markets MSCI Emerging Barclays Int G/C S &P 500 Performance is gross of fees. S &P 400 S &P 600 MSCI EAFE Kenai Airport Benchmark Real Estate S &P U.S. REIT 4 Portfolio Review Total Return ALASKA PERMANENT APCM CAPITAL MANAGEMENT 15% 10% 5% 0% -5% 1.45 -0.14 1 Year Account Performance as of December 31, 2011 9.29 9.85 3 Year Kenai Airport Benchmark Performance is gross of fees and annualized for periods greater than one year. Inception performance begins September 30, 2008. 9.52 10.04 Since Inception 5 Portfolio Review ➢ Despite the high volatility, the overall portfolio ended the year approximately unchanged on a return basis. ➢ On a relative basis, we did not perform well in 2011. In hindsight, our biggest shortfall was being worried about rising interest rates and watching them fall even further. ➢ The fixed income portfolio was positioned below benchmark duration and underweight U.S. Government securities which hurt relative performance. ➢ Equity allocations were overall a detractor (overweight to emerging markets). ➢ For 2012, we believe equities will outperform fixed income. With the U.S. Treasury 10 -year note below 2% and the 2 -year at 1/4 of 1 %, the pricing appears very expensive. Corporate securities have ALASKA relative value, offering higher yields and good supporting financials. PERMANENT APCM CAPITAL MANAGEMENT 6 AL ASKA PI-RMANEY 1 CAPITAL MA \ACIMk\ 1 COMPANY IS RELATIONSHIP DRIVEN AND VIEWS 11 SELF AS A LONG- I ERM PARTNER WITH ITS CLIENTS YOUR BUSINE,SS IS IMPOR I AN 1 10 US! VISIT US AT OUR WEBSITE: APCM.NET ALASKA PERMANENT APCM CAPITAL MANAGEMENT ALASKA PERMANENT APCM CAPITAL MANAGEMENT ALASKA PERMANENT APCM CAPITAL MANAGEMENT Economy & Financial Markets 9% 6% ". 3% 0% -3% -6 °% -9% Gross Domestic Product Q3 2008 01 03 2009 Q1 Q3 2010 01 Q3 2011 Bloomberg 600 400 200 0 -200 -400 -600 Job Growth and Unemployment Rate Sep 10 Dec 10 Mar 11 Change in Payrolls (000's) usimaiuoUnemployment Rate Bureau of labor Statistics 11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% Jun 11 Sep 11 Dec 11 Oil Price - West Texas Intermediate $160 8% Dec 31st $98.83 $120 $80 $40 so 1997 1999 2001 2003 2005 2007 Bloomberg 2009 2011 6% 4% 2% 0% -2% -4% Consumer Price Index (YoY) Through Nov 30th 2001 2003 2005 2007 2009 2011 All Items Less Food and Energy Bureau of Labor Statistics 9 Economy & Financial Markets Doinestc Equities Large Cap S&P 500............ Mid Cap 5 &P 400 Small Cap 5 &P 600 International Equities _ _ Developed M5[IEAEE Emerging MSc Emerg'u,g Market Total Bond Market 6 Nays Agyrey-[e 1 -3 yr U.S. Treasury /Agency Barclays Int'I Treasury Borrloys Global Tsy ex -0' lie......s a r e ..,, 3.3 -12.1 7.7 -4.7 4.4 -18.4 20.1 2.4 15.3 8.5 21.5 -1.6 0.4 -13.3 6.4 -2.1 1.1 7.8 6.8 6.5 0.2 1.6 1.8 3.8 0.1 4.3 5.3 7.2 al :zedfor periods greater than one year S &P 500 Earnings Yield vs. Baa Bond Yield 10% 9% 7 6% Mood y5; 555155 5 4%.. 3% '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 Sources: Standard & Poor's, Moody's, 7.P. Morgan Asset Management ALASKA Data as of 12/31/2011. PERMANENT APCM CAPITAL MANAGEMENT S &P 500 Index Dec 31st 1,257.60 1600 1400 200 000 800 600 1996 1998 2000 2002 2004 2006 2008 2010 2012 Bloomberg 20'year Annualized Returns by Asset Class (1991 — 2010) Source: J.P. Morgan Asset Management Average asset allocation investor return is based on an analysis by Dalbar Inc. All returns are annualized (and total return where applicable) and represent the 20 -year period ending 12/31/10 to match Dalbar's most recent analysis. 10 ALASKA PERMANENT APCM CAPITAL MANAGEMENT Economy & Financial Markets 5% 4% 3% 2% 1% 0% 0 5 10 15 20 Bond Maturity (Years) 2/31/2010 12/31/2011 Yield Curve Comparison Bloomberg Barclays 2011 Bond Total Return as of December 31, 2011 13.56% 4.86% 6.23% 10.14% 25 8.15% 30 6.02% Treasuries TIPS Agencies MBS Munis Corporates CMBS 7% 6% 5% 4% 3% 2% 1% 2000 Bloomberg 5% 4% 3% !, 2% 1% 0% 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Bloomberg 10 Year Treasury Note Yield Dec 31st 1.88% 2002 2004 2006 2008 2010 Corporate A Spread /10 Year Treasury 2012 Dec 31st 252 bps 11 ALASKA PERMANENT APCM GAVItAE MANAGEMENT Current Outlook Economic Outlook The U.S. economy is expanding modestly, but still faces major headwinds from the ongoing deleveraging of consumer and financial balance sheets. The unemployment rate dropped to 8.5% last month. Job gains jumped to +200,000 in December. Both the residential and commercial property markets remain sluggish. GDP growth was +1.8% in Q3, up from +1.3% in Q2. Q4 growth may be in the +3-4% range. The consensus outlook calls for about +2-3% growth and a moderation of inflation in 2012. Fears of a double dip recession in the U.S. have receded. Worldwide GDP declined -0.7% in 2009 and was +5.1% in 2010. The IMF forecasts (September 2011) world growth of +4.0° %for 2011. This growth will likely be led by the emerging markets — many of which have had economies that continued to grow throughout the financial crisis. The OECD (November 2011) said that growing doubts about the survival of Europe's monetary union has caused global growth to stall and represents the main risk to the world economy. It expects the 34 OECD nations to grow +1.9% in 2011 and +1.6% in 2012, down from its +2.3% and +2.8% prediction in May. Europe may experience a mild recession in 2012. Inflation Outlook Inflation is up +3.4% year-over-year and the "core" rate is +2.1 %. Still, inflationary pressures are likely to be muted given substantial unused capacity in the labor and product markets. However, volatile oil and commodity prices are a threat to the inflation outlook. WTI crude increased $7 last year and finished 2011 near $100 per barrel. Commodity prices have been range bound for the past few months, but the Dow Jones UBS Commodity Index lost -13.3% in 2011. Policy Actions The Federal Reserve is worried about slow economic growth and is maintaining a ZIRP (zero interest rate policy), committing to a federal funds rate close to zero until 2013. The Fed ended its $600 billion QE2 bond buying program in June. They initiated "Operation Twist" in September to keep long rates low and announced that maturing MBS would be reinvested back into the mortgage market. The debt ceiling was raised this summer, but not before a downgrade by S &P of U.S. debt to AA +. The congressional "super committee" failed to achieve a consensus on reducing the deficit, so $1.2 trillion of "automatic" cuts will begin in 2013. Congress and the President extended last year's "temporary` payroll tax cuts and more unemployment benefits through February. This election is going to be a doozy fought over the economy and debt. Overseas, Europe continues to grapple with a banking system that was more levered than the U.S. The ECB (extending 3 year loans at 1%) and the IMF have taken significant steps to shore up confidence and provide liquidity to EU governments struggling with deficit /debt problems. Greece, Ireland, and now Portugal have accepted bailouts. Italy is now in the crosshairs as bond yields have shot up. Many countries have undertaken "austerity" measures to close their budget gaps, but the market remains skeptical. Europe remains the major "wildcard" in the outlook! Bond Outlook Interest rates have traded in a narrow range for several months as signs of better economic growth offset a safe haven bid for high quality bonds. For the year, Treasuries were the best performers posting a +9.8% return, while the gains of spread product were in the +6-7% range. We remain short our benchmarks and overweight spread product. Treasuries are unattractive. Equity Outlook The equity markets recovered in the fourth quarter. For 2011, the S &P500 gained +2.1% while developed international stocks (EAFE) lost -12.1%. Volatility remains high. We generally like domestic large company stocks over smaller names. Globally we favor emerging markets over developed international (EAFE). REITs have performed well, but they are overvalued in our judgment. Very low interest rates and reasonable valuations (the S &P 500 trades at 12x forward earnings) offset uncertainties in the Middle East, Europe, and budget pressures in the U.S. January 2012 12 Expenses Matter ➢ APCM costs the City of Kenai 30 basis points on the first $10 million ➢ And 25 basis points on any amount over $10 million ➢ On a $20 million dollar portfolio: 30 bp x $10 million 25 bp x $10 million Paid monthly in arrears ALASKA PERMANENT APCM CAPITAL MANAGEMENT $30,000 $25,000 $55,000 per year 13 Portfolio Appraisal CITY OF KENAI - AIRPORT PERMANENT FUND December 31, 2011 Quantity U.S. TREASURY 600,000 400,000 1,075,000 U5 TREASURY NOTES 0.625% Due 12 -31 -12 US TREASURY NOTES 1.250% Due 10 -31 -15 US TREASURY NOTES 2.625% Due 11 -15 -20 Accrued Interest Security AGENCIES 500,000 PNC FUNDING CORP - FDIC GUARANTEED 2.300% Due 06 -22 -12 500,000 FNMA 2.875% Due 12-11-13 500,000 FH LB 5.375% Due 05 -18 -16 250,000 FNMA 0.750% Due 11 -29 -16 450,000 FHLMC 4.875% Due 06 -13 -18 Accrued Interest FNMA & FHLMC 211,834 FHLMC 4.00% POOL G14203 4.000% Due 04 -01 -26 Accrued Interest CORPORATE BONDS 200,000 JOHN DEERE CAPITAL CORP 4.950% Due 12 -17 -12 200,000 BERKSHIRE HATHAWAY INC 2.125% Due 02 -11 -13 200,000 GLAXOSMITHKLME CAP INC 4.850% Due 05 -15 -13 200,000 TOYOTA MOTOR CREDIT 1.375% Due 08 -12 -13 200,000 BARRICK GOLD FINANCE CO. 6.125% Due 09 -15 -13 Average Cost Total Average Cost Price 100.52 98.15 101.12 100.82 102.07 1.10.35 100.00 110.66 104.56 93.99 100.16 93.74 101.03 111.45 603,141 392,586 1,087,030 2,082,756 504,100 510,339 551,726 250,000 497,970 2,314,135 100.47 102.56 107.66 101.00 104.80 118.60 99.98 120.49 221,499 104.98 221,499 187,988 200,312 187,474 202,052 222,898 104.18 101.69 105.83 100.93 108.07 Market Value Pct. Annual Assets Income 602,812 2.58 3,750 410,252 1.76 5,000 1,157,302 4.96 28,219 4,506 0.02 2,174,872 9.31 504,982 523,977 592,996 249,947 542,214 2.16 11,500 2.24 14,375 2.54 26,875 1.07 1,875 2.32 21,937 5,560 0.02 2,419,677 10.36 222,388 0.95 8,473 706 0.00 223,094 0.96 208,351 203,390 211,666 201,860 216,138 0.89 9,900 0.87 4,250 0.91 9,700 0.86 2,750 0.93 12,250 ALASKA PERMANENT APCM CAPITAL MANAGEMENT. Accrued Interest 10 852 3,644 4,506 287 799 3,210 167 1,097 5,560 706 706 385 1,653 1,239 1,062 3,607 Yield to Maturity 0.16 0.57 1.69 0.20 0.40 1.02 0.75 1.53 2.06 0.58 0.59 0.57 0.79 1.32 Portfolio Appraisal CITY OF KENAI - AIRPORT PERMANENT FUND December 31, 2011 ALASKA PERMANENT' APCM CAPITAL MANAGEMENT Yield Average Total Market Pct. Annual Accrued to Quantity Security Cost Average Cost Price Value Assets Income Interest Maturity 200,000 IBM CORP 103.71 207,422 1.10.28 220,560 0.94 13,000 2,744. 0.70 6.500% Due 10 -15 -13 200,000 MERRILL LYNCH & CO 98.47 196,946 99.16 198,314 0.85 10,900 5,026 5.80 5.450% Due 07 -15 -14 200,000 JP MORGAN CHASE & CO 88.88 177,764 106.36 212,714 0.91 9,500 3,167 2.64 4.750% Due 03 -01 -15 200,000 MORGAN STANLEY 84.00 168,000 100.17 200,348 0.86 12,000 2,100 5.93 6.000% Due 04 -28 -15 200,000 HSBC FINANCE CORP 96.28 192,568 102.33 204,656 0.88 11,000 4,950 4.86 5.500% Due 01 -19 -16 250,000 BRITISH COLUMBIA PROV OF 99.98 249,952 104.05 260,120 1.11 5,250 627 1.15 2.100% Due 05 -18 -16 200,000 CONOCOPHILLIPS CDA FOG FDG CO 89.87 179,748 116.75 .233,506 1.00 11,250 2,375 1.94 5.625% Due 10 -15 -16 200,000 STATOIL ASA 101.11 202,212 105.47 210,940 0.90 6,250 2,326 2.09 3.125% Due 08 -17 -17 200,000 WACHOVIA CORP GLOBAL MEDIUM 85.50 171,000 113.60 227,204 0.97 11,500 4,792 3.26 5.750% Due 02 -01 -18 200,000 MCDONALDS CORP M /T /N 104.35 208,698 119.49 238,980 1..02 10,700 3,567 1.98 5.350% Due 03 -01 -18 200,000 GENERAL ELECTRIC CAP CORP. 84.71 169,416 112.00 224,000 0.96 11,250 1,875 3.49 5.625% Due 05 -01 -18 500,000 GOLDMAN SACHS GROUP INC. 116.51 582,570 110.44 552,205 2.37 37,500 14,167 5.69 7.500% Due 02 -15 -19 Accrued Interest DOMESTIC LARGE CAP EQUITY FUNDS /ETF 45,504 SPDR S &P 500 ETF TRUST DOMESTIC MID CAP EQUITY FUNDS /ETF 23,731 ISHARES S &P MIDCAP 400 DOMESTIC SMALL CAP EQUITY FUNDS /ETF 15,469 !SHARES 5 &P SMALLCAP 600 INDEX INTERNATIONAL FUNDS /ETF 73,767 VANGUARD MSCI EAFE ETF EMERGING MARKET FUNDS /ETF 35,830 VANGUARD EMERGING MARKET ETF 55,662 0.24 3,707,020 4,080,614 17,48 55,662 98.88 4,499,556 125.50 5,710,752 24.46 NA 54.42 1,291,545 87.61 2,079,073 8.90 NA 47.91 741,084 68.30 1,056,533 4.52 NA 29.15 2,149,994 30.63 2,259,483 9.68 NA 28.67 1,027,402 38.21 1.,369,064 5.86 NA Portfolio Appraisal CITY OF KENAI - AIRPORT PERMANENT FUND December 31, 2011 ALASKA PERMANENT APCM CAPITAL MANAGEMENT'S Yield Average Total Market Pct. Annual Accrued to Quantity Security Cost Average Cost Price Value Assets Income Interest Maturity REAL ESTATE 17,663 VANGUARD REIT ETF TREASURY BILLS 500,000 US TREASURY BILLS 0.000% Due 05 -31 -12 CASH AND EQUIVALENTS CASH RECEIVABLE Dividend Accrual Wells Fargo Secured MoneyMarket Account TOTAL PORTFOLIO 31.37 554,025 58.00 1,024,454 4.39 NA 99.83 499,165 99.98 499,915 2.14 NA 0 0.04 1,875 1,875 0.01 NA 36,461 36,461 0.16 412,948 412,948 1.77 451,284 451,284 1.93 19,539,465 23,348,815 100 310,955 66,433 PUBLISHER'S AFF DAVIT UNITED STATES OF AMERICA, 1 STATE OF ALASKA J ss: Denise Reece being first duly sworn, on oath deposes and says: That I am and was at all times here in this affidavit mentions, Supervisor of Legals of the Peninsula Clarion, a news- paper of general circulation and published at Kenai, Alaska, that the Council Agenda PO #96546 a printed copy of which is hereto annexed was published in said paper one each and every day for one successive and consecutive day in the issues on the following dates: January 16, 2012 X SUBSCRIBED AND SWORN to me before this 16th day of January 2012 NOTARY PUBLIC in favor for the State of Alaska. My Commission expires 26- Aug -12 A UN CiL - REGULA armor 18 2012 7:00PMN, IAl CtTY COUNCIL CHAfl htto.11www a.kenai ak u ITEM 0: PUBLIC HEARINGS 1 Resolution No. 2012-02-Accepting a Grant Award from the State' Alaska, Department of Environmental Conservation Division of Water': in the Amount of $1,557000 and Requiring a Local Match of $667,286 or the Installation of a Water Main from Lawton Drive to Angler Drive along Beaver Loop Road Resolution No 2012 -03- Pertaining to the Authorized Invest the investment Allocations of and Establishing Appropriate Be' to Measure Performance of the City's Permanent Funds, Ordinance No. 2603-2011-Amending Kenai Municipal Code Chapter Taxation of Real and Personal Property' by Adding a New Section operty Tax Credit - Residential Sprinkler Systems; to Provide a Tax ;redit to Owners of Residential Structures who Install Certain Qualifying Sprinkler Devices Ordinance No 2605. 2012 - Increasing Estimated Revenues and Appropriations by $0046.52 in the General Fund for Police Training Reimbursements from Internet Crimes Against Children (ICAC) ITEM G: NEW BUSINESS 1 *Ordinance 2606 - 2012- Increasing Estimated Revenues and by $3,214.81 in the General Fund for State Traffic Grant Overtime Expenditures. 2. *Ordinance 2607. 2012- increasing Estimated Revenues and Appropriations by $10;990.27 in the General Fund for State Bureau of. Highway Patrol Overtime Expenditures. 3 Amend Resolution No 2011 -74 - Adopting The City Of Kenai Capital! Improvements Plan Priority Lasts For State And Federal Funding. Requests For The Fiscal Year 2013 Action/Approval- Commission /Committee R Action /Approval - Purchase and Sale Ag Kenai and Ma & Pa Alaskan Treasures, I� Subdivision. 6. Action /Approval - Is to be Ratified 7. Action /Approttal - Purchase Orders Exceeding $1. 8. *Liquor License Renewal - Country Liquor, Lioens ITEM L: EXECUTIVE SESSION _.. Regarding Matters the immediate Knowledge of Which Could Have a Adverse Impact on the Finances of the City and to Give Direction to Administration' Cook Inlet Natural Gas Storage Alaska (CINGSA) Rights, Easements and Pore Space. [AS 44,62.310(c) 1 )j ITEM M: ADJOURNMENT The public is invited to attend and participate Additional info available through the City Clerk's office at 210 Fidalgo Avenue, website at http://www.ci.kenai.ak us eappomtments meet between the for Lot 2. Block t,:. Sandra Modigh,