HomeMy WebLinkAbout06062012 PACAB Packet Port and Commerce Advisory
Board
Regular Meeting
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June 6, 2012
Council Chambers
noon
SEWARD PORT AND COMMERCE ADVISORY BOARD
Regular Meeting
June 6, 2012 12:00PM COUNCIL CHAMBERS
Deborah Altermatt 1 . CALL TO ORDER
Board Member
Term Expires 07/2013 2. PLEDGE OF ALLEGIANCE
Daryl Schaefermeyer 3. ROLL CALL
Board Member
Term Expires 07/2012 4. SPECIAL ORDERS, PRESENTATIONS AND
Bruce Jaffa REPORTS
Board Member
Term Expires 07/2012 A. AKRR Representative- Louis Bencardino
Daniel Oliver B. Harbormaster Report — Mack Funk
Board Member
Term Expires 07/2013 C. Chamber of Commerce Report- Cindy Clock
Steve Fink
Board Member D. Administration Report- Ron Long
Term Expires 07/2012
Bob Linville 5. Citizens' comments on any subject except those items
Board Member
Term Expires 07/2014 scheduled for public hearing. [Those who have signed in
will be given the first opportunity to speak. Time is limited
Carl Hughes to 2 minutes per speaker and 30 minutes total time for this
Board Member agenda item.]
Term Expires 07/2014
Jim Hunt 6. Approval of agenda and consent agenda [Approval of
City Manager Consent Agenda passes all routine items indicated by
asterisk ( *). Consent Agenda items are not considered
Ron Long separately unless a Board Member so requests. In the
Assistant City Manager event of such a request, the item is returned to the Regular
Mack Funk Agenda.]
Harbor Master
Suzi Towsley
Executive Liaison
City of Seward, Alaska PACAB Agenda
June 6, 2012 Page 1
7. INFOMATIONAL ITEMS, REPORTS AND PRESENTATIONS —
A. Coastal Villages Homeport Update
B. Seward Ships Drydock Lease Extension
C. Board Membership
8. UNFINISHED BUSINESS
9. NEW BUSINESS
A. May 2, 2012 Minutes
10. CORRESPONDENCE, INFORMATIONAL ITEMS AND REPORTS (No action
required) -
11. BOARD COMMENTS
12. CITIZEN COMMENTS [5 minutes per individual - Each individual has one opportunity to
speak.)
13. BOARD AND ADMINSTRATIVE RESPONSE TO CITIZENS'COMMENTS
14. ADJOURNMENT
City of Seward, Alaska PACAB Agenda
June 6, 2012 Page 2
Council Agenda Statement
Meeting Date: June 11, 2012'
From Mack Funk, Harbormaster
Through: Jim Hunt, City Manager
Subject: Seward Ship's Drydock Ground Lease Extension
BACKGROUND & JUSTIFICATION
The City of Seward has long pursued the development of the Seward Marine Industrial Center, and constructed
improvements to the area, including a Syncrolift Shiplift System, Ship Transfer System, and related rails, dock,
and breakwater. The current ground lease for a portion of the area immediately upland of the Shiplift Facility
has been in effect between the City and Seward Ship's Drydock, Inc. (SSDI) since 1995. In 2010, the Lease
was extended through June 30, 2016. The City Council authorized the possibility of future extensions through
June 30, 2040.
Lease extensions are based upon approved capital improvements to the Lease area or the City's Shiplift Facility
operated by SSDI (Lease, Article 2). SSDI and the City went to binding arbitration in 2008. The question
before the arbitrators centered on whether SSDI's proposed replacement of the cathodic protection system
would constitute an "improvement" for purposes of extending the Lease term when the City contended that
SSDI had not maintained or repaired the existing system that over the years deteriorated to a point where it no
longer functioned. The panel of three arbitrators decided on December 23, 2008 that SSDI was, in fact, eligible
for an extension through June 30, 2016 based on the investment made in a new Cathodic Protection system, to
replace the older system, to protect the sheet pile breakwater below the waterline.
To request an extension of the Lease term "... S SDI must submit to the City plans for an improvement ... [that]
must include an estimate of costs and a schedule for installing the improvements." On the other hand, "The
provision in the ground Lease that the improvement proposal is subject to approval by the City does not vest the
Council with additional power over Ground Lease terms." (Arbitration decision)
SSDI made numerous requests to extend the lease (several written attempts are documented over the past four
years, but none are complete in accordance with the Lease). SSDI submitted the costs of three projects that may
qualify for lease extensions: Shiplift Control System Upgrade ($346,001.25), Hoist Pawl Solenoid Upgrade
(409,164.32) and Coating of Cells & Dock Piling ($609,738.37). The total submitted costs of the three projects,
if valid, would qualify SSDI for extensions through 2040. However, each request raises significant questions.
For both the Shiplift Control System Upgrade and the Hoist Pawl Actuator Upgrade, SSDI first requested city
approval on July 29, 2009 (letter enclosed), but the request did not include a schedule. Apparently the City did
not approve the request because it was not complete and did not meet the requirements in Article 2 of the Lease
to ask for an extension of the term. The labor rate charged for this work is $44.10 per hour.
The Coating of Cells & Dock Piling did not achieve the agreed upon goal of reaching 2 feet MLLW. "A
professional acknowledged the paint was about as low as it could get. It was difficult to go to that level. In
looking at the coating, he felt it was acceptable, even though it did not meet the council's guidance from March
[2011]." (Excerpt from the City Council minutes September 26, 2011). The previous city manager
recommended that the work be deemed complete. Several months later, the City Council accepted that
recommendation, in March 2012, as part of the approval of the 5 -year extension of the Maintenance and
Operating Agreement. However, the original estimated cost was $400,000 (compared to $609,738.37).
Furthermore, 72% of the total cost of the project is labor and the labor rate associated with this work is claimed
to be $63 per hour.
S SDI is technically in default of the Lease as a result of four unresolved Notices of Default issued by the Alaska
Department of Environmental Conservation. The City, as the owner of the land, may be held jointly and
severally liable for contamination caused by SSDI at the site. The administration recommends allowing the
Lease to continue, without waiving any rights of the City, with the understanding and expectation that
environmental compliance matters will be dealt with and resolved between SSDI and DEC.
The arbitration panel stated, "The City may not unreasonably withhold its consent to an improvement that SSDI
proposes in connection with exercising the option to extend the Ground Lease." The panel also emphasized
SSDI's responsibility to submit complete requests, including cost and a schedule for completion of acquiring,
installing and constructing the improvement. No requests were sent to the City that comply with Article 2 of
the Lease, and therefore no response was appropriate from the City. SSDI now asks for extensions to the Lease
term to extend the term to June 30, 2040 without the need for compliance with Article 2. The administration
has no objection, and recommends approval of an extension of the Lease term to June 30, 2040.
According to the previous city manager, the ship lift facility is currently maintained in the best condition in the
history of the Seward Marine Industrial Center (Agenda Statement September 26, 2011).
CONSISTENCY CHECKLIST: Yes No N/A
1. Comprehensive Plan (document source here): Seward Zoning X
Strategic Plan (document source here): Seward Marine Industrial Center X
2 ' Development Plan
3. Other (list):
FISCAL NOTE
The current rent collected from Seward Ship's Drydock, Inc. is $64,000 per year (plus tax).
Finance Department: G 4/
ATTORNEY REVIEW Yes X - Limited
RECOMMENDATION
Council approve Resolution 2012- authorizing the City Manager to enter into the Extension of the
Ground Lease with Seward Ship's Drydock, Inc. through June 30, 2040 in substantially the form presented at
this meeting.
Sponsored by: Hunt
CITY OF SEWARD, ALASKA
RESOLUTION 2012 -
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO AN
AGREEMENT TO THE GROUND LEASE WITH SEWARD SHIP'S
DRYDOCK, INC. FOR THE REAL PROPERTY DESCRIBED AS LOTS 1 -A
AND 3, BLOCK 7, FOURTH OF JULY CREEK SUBDIVISION SEWARD
MARINE INDUSTRIAL CENTER, SEWARD SHIP'S DRYDOCK REPLAT,
ACCORDING TO PLAT 2002 -22, SEWARD RECORDING DISTRICT,
THIRD JUDICIAL DISTRICT, STATE OF ALASKA
WHEREAS, the City (Lessor) and Seward Ship's Drydock, Inc. (Lessee) originally entered
into a ground lease in 1995; and
WHEREAS, the Ground Lease was extended in 2010 to reflect the investment by the Lessee
in leasehold improvements; and
WHEREAS, the Lessee has made several other upgrades to the ship lift facility; and
WHEREAS, the Lessee has completed the shiplift controls upgrade, the hoist pawl upgrade.
the coating of the breakwater cells, and the cathodic protection system, and
WHEREAS, the parties desire to extend the lease.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City agrees to accept the improvements.
Section 2. The Ground Lease is hereby extended until June 30, 2040.
Section 3. This resolution shall take effect 30 days after adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 11th day of
June, 2012.
CITY OF SEWARD, ALASKA
RESOLUTION 2012 -
THE CITY OF SEWARD, ALASKA
David Seaward, Mayor
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Johanna Kinney, CMC
City Clerk
(City Seal)
AGREEMENT TO EXTEND GROUND LEASE
This Agreement is between the City of Seward, Alaska, an Alaska municipal corporation
( "City "), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock,
Inc., an Alaska corporation ( "Lessee "), whose address is P.O. Box 944 Seward, Alaska 99664,
who are lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of
certain real property located within the Seward Marine Industrial Center, Seward, Alaska (the
"Lease ").
The City of Seward and the Lessee certify that certain improvements have been
completed that are necessary to extend the Lease Terra in accordance with Ground Lease
Amendment No. 4 dated January 14, 2010. Lessee installed certain capital improvement projects
at the City Ship Lift Facility: Hoist Pawl Solenoid Upgrade, SMIC Cell and Dock Pile Coating,
Control System Upgrade, and Cathodic Protection System. In full consideration of the
aforementioned improvements by the Lessee. the City and Lessee agree that the subject lease
will be extended commencing July 1, 2016 and expiring June 30, 2040.
Dated this day of , 2012
City: Lessee:
CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC.
James Hunt Jam s T. Pruitt
City Manager President
ATTEST: C
l f
Johanna Kinney
pi
City Clerk tS,\
State of Alaska )
)ss.
Third Judicial District
The foregoing instrument was acknowledged before me this day of , 2012 by James Hunt,
City Manager of the City of Seward an Alaska corporation, on behalf of the corporation.
Notary in and for Alaska
My commission expires:
State of Alaska )
)ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this J( t'day of /140 , , 2012 by James T.
Pruitt, President of Seward Ship's Drydock, Inc. an Alaska corporation, on behalf of the corporation.
II a l ( :) �-
Notary in and for Alaska
'' My commission expires: f. /6 /3
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SEWARD SHIP'S DRYDOCK INC.
P.O. Box 944 Tel: (907) 224 -3198
Mile 7 Nash Road Tel: (907) 224-5640
• Seward, Alaska 99664 -0944 Fax: (907) 224 -5376
RECEIVED
City of Seward JUL 2 9 2009
PO Box 167
OFFICE OF THE 29 July,2009
Seward, AK 99664 CITY CLERK
Attention: Phillip Oates; City Manager
Subject: Ground Lease Extension Beyond 2029
Dear Phillip,
As you are aware, Seward Ship's has received tentative award of a MARAD grant. The
major portion of that grant, approximately $700,000, is designated for Syncrolift control
system improvements. As replacement of the cathodic protection system extends the
lease to 2016 and completion of the cell and piling coatings, estimated capital
improvement value approximately $400,000 will provide for the remaining 13 years of
lease extension available under the current lease, we find it necessary to make some
important business decisions concerning future capital improvements of the shiplift
facility.
Prior to accepting the grant funds, Seward Ship's requests to have commitment from the
city administration and council that the Syncrolift control system improvement project
will be considered a capital improvement and that Seward Ship's will be granted a lease
extension beyond the year 2029, based on the same criteria outlined in article 9 of the
December 29, 2008 arbitration award.
Please do not hesitate to contact me if you require any further information or have any
questions.
ely
cer,
rely
James T Pruitt
President, SSDDI
•
City of Seward, Alaska Port and Commerce Advisory Board Minutes
May 2, 2012 V o lu me Page
CALL TO ORDER
The May 2 regular meeting of the Port and Commerce Advisory Board was called to order at
12:01 p.m. by Deborah Altermatt, Chair.
OPENING CEREMONY
Chair Long led the pledge of allegiance to the flag.
ROLL CALL
There were present:
Deborah Altermatt
Dan Oliver- joined the meeting at 12:04
Darryl Schaefermeyer
Steve Fink
Carl Hughes
Bob Linville
Bruce Jaffa
Comprising a full board quorum;
SPECIAL ORDERS, PRESENTATIONS AND REPORTS
1. Rail Road report, Louis Bencardino-
• The RR dock was seeing increased activity and positive signs of spring.
• The proposed federal cuts to railroad funding were discussed and Louis requested as
much local feedback requesting reinstatement of the funding as possible.
2. Harbor Master Report -r
• The Coast Guard has chosen to build new instead of moving their building as they
had previously planned.
• Water was being turned back on at the Harbor.
• Meetings with CVRF had taken place.
3. Administration Repo rt-
...
• Senator Murkowski would be in town on May 5 at the Chamber luncheon.
• Construction on the new library museum had begun.
• Road closures at Trail River were discussed.
• CVRF home porting was still being planned for WITH $10 Million in the voter bond
package.
• April Seattle economic development trip report was given.
CITIZENS' COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED
FOR PUBLIC HEARING
There were none.
City of Seward, Alaska Port and Commerce Advisory Board Minutes
May 2, 2012 Volume , Page
APPROVAL OF AGENDA AND CONSENT AGENDA including minutes from PACAB April
4, 2012 meeting.
Motion (Schaefermeyer/Linville) Approval of Agenda and consent agenda
Motion to adopt the agenda and consent
agenda via unanimous consent with the
addition of New Business items; C. Small
Boat Harbor Dredging, D. Letter
supporting reinstating federal funding for
the Alaska Railroad and E. Set May work
session topic
Motion Passed Unanimously
Motion (Jaffa/Hughes) Motion to approve the reimbursement of
$590.42 to. Chair Altermatt for travel
related expenses on April Seattle trip.
Motion Passed Unanimously
Motion (Schaefermeyer/Hughes) Motion to supporting the proposed plan
and request for harbor dredging as
presented by the harbormaster.
The harbor dredging plan was discussed by the board, including funding possibilities and permitting
process.
Motion Passed Unanimously
Motion (Oliver /Linville) Motion in support of writing a letter
requesting that federal funding for the
Alaska Railroad be fully reinstated
Motion Passed
vote count;
Yeses: Jaffa, Schaefermeyer, Oliver, Hughes, Linville, Altermatt
Noes: Fink.
PACAB chose via unanimous consent to cancel their May 2012 work session.
BOARD COMMENTS
Jaffa would like to see the safety issues on the highway discussed.
Hughes asked to be excused from the June meeting as he would be working, and expressed that he is
very strongly in support of dredging the harbor.
City of Seward, Alaska Port and Commerce Advisory Board Minutes
May 2, 2012 Volume, Page
Linville also strongly supports the harbor dredging.
Altermatt reminded everyone that Harbor opening weekend would take place May 19 with lots of
fun activities, opening of the Mariner's Memorial and the blessing of the fleet.
CITIZENS' COMMENTS
BOARD AND ADMINISTRATIVE RESPONSE TO CITIZENS' COMMENTS
ADJOURNMENT
The meeting was adjourned at 1:29 p.m.
Suzi Towsley Deborah Altermatt
Executive Liaison Chair
(City Seal)
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