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HomeMy WebLinkAboutRes2012-018 Sponsored by: Hunt taw CITY OF SEWARD, ALASKA RESOLUTION 2012 -018 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING PRINCIPAL AND INTEREST PAYMENTS TOTALING $724,491.30 FOR THE THIRD AVENUE WATER MAIN LOAN FROM THE STATE OF ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION, AND APPROPRIATING $563,106.30 TO THE 2012 BUDGET WHEREAS, Resolution 2004 -106 was approved by the Seward City Council on November 22, 2004, approving a 35% increase in water tariff rates for the purpose of providing a revenue stream to repay a pending loan related to replacement of the Third Avenue Water Main ( "the Project ") from approximately the Alaska SeaLife Center to Port Avenue; and WHEREAS, in 2006, the Seward City Council approved Resolution 2006 -50 accepting a loan in the amount of up to $3,480,000 from the State of Alaska Department of Environmental Conservation ( "DEC ") for the purpose of replacing the Third Avenue Water Line; and WHEREAS, the project was completed in 2007 at a total cost of $2,652,849 with loan repayment originally slated to begin in 2008. Due to a delay in resolving a disputed claim of $594,346.22 related to clean -up of contaminated soils during the Project; repayment on this loan Ifw,. was delayed and loan payments were not made in 2008, 2009, 2010, or 2011; and WHEREAS, the State of Alaska DEC has provided the City of Seward with an amortization schedule which reflects a required payment of $724,491.30 in 2012, with future annual payments of approximately $155,000 per year over the next 15 years; and WHEREAS, the 2012 approved budget provides for debt service on this loan of $161,385 falling short of the requirements for this single payment by $563,106.30, necessitating a one -time appropriation from the Water Enterprise Fund reserves. - NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The City Manager is hereby authorized to make a one -time debt service payment in the amount of $724,491.30 toward the Third Avenue Water Line Loan prior to April 1, 2012. bur CITY OF SEWARD, ALASKA ' RESOLUTION 2012 -018 Section 2. Funding in the amount of $563,106.30 is hereby appropriated from the Water Enterprise Fund reserves account no. 701 - 0000 -3050 to the debt service principal account no. 701 - 7950 -5810 in the amount of $581,935.42 and budgeted debt service interest account no. 701 - 7950 -5820 is hereby reduced by $18,829.12 back to the reserve account, for a total net appropriation of $563,106.30. Section 3. This Resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska this 27 day of February, 2012. THE CITY OF SEWARD, ALASKA David Seaward, ayor AYES: Bardarson, Valdatta, Keil, Shafer, Casagranda, Terry, Seaward NOES: None ABSENT: None ABSTAIN: None ATTEST: Vai J hanna Kinney, CMC ity Clerk s nit ' (City Seal) 2 9a N by YI R 4) tre i 0 tM1 lP :0 4 y; X44 LIUS OF y A Council Agenda Statement r s ett . Meeting Date: February 27, 2012 u 0 To: James Hunt, City Manager 1CA S p From: Kristin Erchinger, Finance Director it Agenda Item: Appropriation to Third Avenue Water Line Loan Debt Service BACKGROUND & JUSTIFICATION: The City of Seward replaced a significant portion of the community's main water line from approximately the Alaska Sealife Center to Port Avenue, in 2007. This project was accomplished at a total cost of $2,652,849 with a loan from the State of Alaska Department of Environmental Conservation ( "DEC "). The Seward City Council authorized that loan by Resolution 2006 -50. The City was originally expected to begin repaying this loan in 2008. However, the City was in dispute with the State of Alaska Department of Transportation ( "DOT "), over a bill for $594,346.22 related to contaminated soils found on the site during the construction project to upgrade Mile 0 to 8 of the Seward Highway, and install the replacement water line. Because of the dispute, the City was unable to consider the project closed, since it would have needed loan monies to pay the disputed claim, which would have impacted future repayment of the loan. Ultimately, the State DOT agreed not to pursue the City for reimbursement of their costs, and the loan is now being finalized by the State of Alaska DEC. The City increased water rates by 35% effective January 1, 2005, to generate sufficient revenues to repay this loan. Due to the delay in repayment, the Water Enterprise Fund cash reserves increased more than $800,000 since 2008, related to the delay in repayment. The amortization schedule for this loan requires an up -front payment of $724,491.30 in 2012, which is $563,106.30 more than anticipated in the 2012 approved budget, necessitating an appropriation from the Water Fund reserves. INTENT: Authorize an additional appropriation of $563,106.30 in 2012 for the purpose of making the first payment on the Third Avenue Water Line loan totaling $724,491.30, making up for debt service payments not made in 2008, 2009, 2010, and 2011. CONSISTENCY CHECKLIST: Where applicable, this resolution /ordinance is consistent with the Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures. FISCAL NOTE: Funding in the amount of $563,106.30 is available in the Water Enterprise Fund for this debt service payment, based on an increase in rates in 2005. Approved by Finance Department: u�IGI 022 ATTORNEY REVIEW: Yes No X RECOMMENDATION: City Council approve an initial payment of the Third Avenue Water Line loan, and appropriate funds.