HomeMy WebLinkAboutOrd2010-009 Sponsored by: Oates
Introduction: January 10, 2011
FAIL Public Hearing: January 24, 2011
FA Postponed to: February 14, 2011
Postponed to: March 14, 2011
Postponed to: April 11, 2011
Postponed to: April 25, 2011
Postponed to: May 23, 2011
Enactment: May 23, 2011
CITY OF SEWARD, ALASKA
ORDINANCE 2010 -009
A ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING SEWARD CITY CODE SECTION 5.35.055 TO
CREATE A REVENUE SOURCE FOR REPAYMENT OF UP TO A
$3.73M GENERAL OBLIGATION BOND FOR CONSTRUCTION OF
THE SEWARD COMMUNITY LIBRARY MUSEUM BY
ESTABLISHING A VARIABLE SEASONAL SALES TAX THAT
INCREASES THE CITY OF SEWARD RATE TO 5% DURING APRIL
THROUGH SEPTEMBER OF EACH YEAR AND REDUCES THE
RATE TO 3% IN OCTOBER THROUGH MARCH OF EACH YEAR
WHEREAS, the City of Seward and the Seward Community Library Museum Building
Committee have been working since 2003 to obtain funding and design a new library museum;
and
WHEREAS, the Seward Community Library Museum Building Committee and the City
of Seward have secured $5.1 Million in State and private foundation funding and $1.1 Million in
grant applications are pending; and
WHEREAS, in October 2009 voters approved a General Obligation bond in an amount
not to exceed $5 Million for construction of the library /museum; and
WHEREAS, the administration and project managers have estimated that up to $3.73
Million will be needed to complete the project as currently projected; and
WHEREAS, the annual debt service cost for up to a 25 -year $3.73 million General
Obligation Bond at an interest rate of 4.5% is approximately $249,000 per year; and
WHEREAS, a revenue source is necessary to establish and pay the debt service on a
General Obligation Bond; and
WHEREAS, sales tax is a revenue source by which city residents, local residents, and
visitors will all contribute to the construction and operating costs of the new library museum; and
CITY OF SEWARD, ALASKA
ORDINANCE 2010 -009
WHEREAS, the current City of Seward sales tax rate is 4% and is combined with a
Kenai Peninsula Borough sales tax rate of 3% for a total rate of 7 %; and
WHEREAS, a variable seasonal sales tax that increases the current City of Seward sales
tax 1% to a rate of 5% from April through September and decreases the current City of Seward
sales tax 1% to a rate of 3% from October through March would generate approximately
$348,000 in additional tax revenue each year for the City; and
WHEREAS, the variable seasonal sales tax would result in a combined Borough and
City sales tax rate of 8% from April through September and 6% from October through March;
and
WHEREAS, the variable seasonal sales tax proposed above would keep year -round taxes
at current levels for full -time residents of Seward when their purchases are spread equally
throughout all months of the year; and
WHEREAS, the combined Kenai Peninsula Borough and City of Seward variable
seasonal sales tax of 8% from April through September and 6% from October through March is
expected to provide sufficient revenue to repay principal and interest on up to a 15 year $3.73
Million General Obligation Bond, allow completion of the new library museum project, and
provide approximately $99,000 annually to assist in paying for the increases in personnel and
operating costs for the new library museum; and
WHEREAS, according to State law, a tax imposed solely for the purpose of repayment
of debt is not subject to voter referendum, however in this case, the seasonal sales tax will
generate more annual revenues than is necessary solely to repay debt, and will therefore this
ordinance may be subject to a voter referendum; and
WHEREAS, the current City Council of the City of Seward recommends to a future City
Council that this sales tax change should sunset when the up to a $3.73 Million General
Obligation Bond is paid in full.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, HEREBY ORDAINS that:
Section 1. Seward City Code Section 5.35.055 is amended as follows (strike out =
deletions; bold italics = additions):
5.35.055. Computation; addition of tax to total retail price; tax schedule.
(a) The amount of the sales tax to be added to the sales price, charge or rental shall be
three (3) percent from October 1 through March 30 and five (5) percent from April
1 through September 30 of the sale price, charge or rental rounded off to the nearest
CITY OF SEWARD, ALASKA
ORDINANCE 2010 -009
cent by eliminating any fraction of one -half cent or less and by increasing any fraction
over one -half cent to the next highest cent. Each seller shall be furnished the schedule
of tax payable on each taxable amount from $0.01 to $100.00. Any one sale of items
separately priced shall be taxed upon the aggregate amount. Beginning April 1, 2003,
(b) The revenue from a coin - operated machine shall be treated in gross on a monthly
basis, without reference to the amount paid or placed on a particular transaction.
Section 2. These changes to the City of Seward sales tax rates are for the purpose of
paying the annual debt service for up to a 15 -year $3.73 Million General Obligation Bond, to
complete the library museum project, and shall sunset December 31, 2027.
Section 3. Section 1 of this ordinance shall become effective April 1, 2012. This
ordinance shall take effect 30 days following passage and posting.
ENACTED by the City Council of the City of Seward, Alaska, this 23 day of May,
2011.
THE CITY OF SEWARD, ALASKA
FAILED
Willard E. Dunham, Mayor
AYES: Smith, Casagranda, Keil
NOES: Bardarson, Valdatta, Shafer, Dunham
ABSENT: None
ABSTAIN: None
ATTEST:
FAILED
Johanna Kinney
City Clerk
(City Seal)