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HomeMy WebLinkAboutRes2004-064 I I I Sponsored by: DunhamN aldatta CITY OF SEWARD, ALASKA RESOLUTION 2004-64 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, SUPPORTING THE MUNICIPAL ADVISORY GROUP RESOLUTION 2004-01 AND CLARIFYING THE CITY OF SEWARD'S POSITION IN REGARDS TO THE STRANDED GAS DEVELOPMENT ACT WHEREAS, the intent ofthe Stranded Gas Development Act is to provide a mechanism for achieving the fiscal certainty that potential project sponsors indicate they need before proceeding with the large investment needed to bring Alaska North Slope natural gas to market; and WHEREAS, the Stranded Gas Development Act allows the state to contract away municipalities' ability to collect property tax under AS43.56, municipal sales and use tax, municipal special assessments, a comparable tax or levy imposed by the state or a municipality, or other state or municipal taxes or categories of taxes identified by the commissioner; and WHEREAS, the Stranded Gas Development Act requires a Muncipal Advisory Group be established to provide advice to the State of Alaska Department of Revenue; and WHEREAS, State of Alaska has received and accepted an application from a qualified sponsor group under the Stranded Gas Development Act, is considering other applications, and is reviewing other proposals for the development of Alaska North Slope Gas, and WHEREAS, the Stranded Gas Development Act offers sponsors of stranded gas projects an opportunity to negotiate fiscal contracts with the State of Alaska, thereby potentially increasing the certainty for calculating taxes and royalties over the life of the project and thus increasing the competitiveness of the project and reducing fiscal risks; and WHEREAS, the Stranded Gas Development Act and the Commissioner of Revenue may negotiate terms for inclusion in a proposed contract with a qualified sponsor providing for periodic payment in lieu of one or more taxes that otherwise would be imposed by the state or a municipality; and WHEREAS, the Stranded Gas Development Act requires a qualified sponsor to provide a detailed description of options to mitigate the increased demand for public services and other negative effects caused by the project; and WHEREAS, the Stranded Gas Development Act requires applicants to provide a description of the methods and terms under which the applicant is prepared to make gas available to meet the reasonably foreseeable demand in the state for gas within the economic proximity of the project during the term ofthe proposed contract; and CITY OF SEWARD, ALASKA RESOLUTION 2004-64 WHEREAS, the State of Alaska has established a Municipal Advisory Group consisting of representatives of revenue-affected municipalities, economically-affected municipalities, and the unorganized borough; and WHEREAS, the purpose of the Municipal Advisory Group is to make recommendations to the State on an acceptable revenue stream and structure to local governments in lieu of taxes and for the commissioner to report periodically on the development of the contract provisions that affect the municipalities; and WHEREAS, the Stranded Gas Development Act implies a payment in lieu of traditional municipal taxes maybe needed to make a gas line project viable; and WHEREAS, another purpose of the Municipal Advisory Group is to assist the State of Alaska in determining the social and economic impacts on municipalities of the construction and post-construction of an Alaska gas line project, and the attendant costs of those impacts to municipalities; and WHEREAS, a fixed-line-wide payment in lieu of taxes may not allow for changing conditions within a municipality or the state, such as those changes created by new voter approved bonds, increased mill rates, and formation of new local governments; and WHEREAS, it is incumbent upon municipal officials to communicate clearly to residents about public revenues; and WHEREAS, the Muncipal Advisory Group desires the Alaska gas line project to maximize training and hiring of workers and contractors from within the state, leading to enhanced workforce and economic development. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. No reduction or deferral in municipal taxes is acceptable without appropriate justification from the State of Alaska and the project sponsor. Section 2. The State of Alaska should weigh the cost benefit of a tax exemption with the difficulty of administering an exemption from specific taxes. Section 3. The State of Alaska should devise a payment in lieu of taxes structure that provides certainty for municipalities at least through the end ofthe stated contract period. I I I CITY OF SEWARD, ALASKA RESOLUTION 2004-64 Section 4, The State of Alaska should ensure the payment in lieu of taxes structure recognizes the loss to present and future forms oflocal government ofthe opportunity to respond to changing conditions through changing tax rates. Section 5. The State of Alaska should provide incentives to the successful applicant under the Stranded Gas Development Act to ensure the training and hiring of Alaskans for the construction, operations and maintenance of the gas line. Section 6. The State of Alaska should require that the successful applicant will include take- off points at strategic locations along the pipeline to make gas available to meet the reasonably foreseeable demand for in-state natural gas use. Section 7, The State of Alaska should ensure there will be a fair tariff to the points of in- state takeoff of gas. Section 8, The State of Alaska should ensure that affected municipalities' combined share of the economic rent ofthe approved project should correlate with the revenue stream of the project by negotiating that the present value ofthe aggregate amount of payment in lieu oftaxes is not less than the amount that would have been collected under AS 43.56, AS 29.45 and AS 29.46. Section 9. This resolution shall take affect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of June, 2004. THE CITY OF SEWARD, ALASKA r~>~tv .J J14LJ I Vanta Shafer, Mayor AYES: NOES: ABSENT: ABSTAIN: Dunham, Valdatta, Amberg, Clark, Anderson, Shafer None Branson None ATTEST: '., . ' . ~," It Ii.:! : 0 ~~ . .. : .. . Agenda Statement Meeting Date: June 14, 2003 From: Willard Dunham and Bob Valdatta, Council Through: Phil Shealy, City Manager Agenda Item: Municipal Advisory Group Stranded Gas Development Act BACKGROUND & JUSTIFICATION: Earlier this year the City Council approved the appointment of council members Robert Valdatta and Willard Dunham to be the City’s representatives on the Stranded Gas Development Municipal Advisory Group. This act allows a project developer to negotiate special fiscal terms on a gasline project or special tax arrangements. After negotiations the governor will submit the proposal to the legislature for approval. The property tax is a big deal in the economics of a gas pipeline and the Municipal Advisory Group’s role is to ensure that the governor and legislature don’t give away the farm in their enthusiasm for construction of a pipeline. In order to clarify their concern, the Municipal Advisory Group has drafted resolution 200- 01 stating their position and have asked member communities to approve this action. CONSISTENCY CHECKLIST: Yes No 1. Comprehensive Plan _____ _____ 2. Strategic Plan _____ _____ 3. Other _____ _____ 4. Not applicable __X__ FISCAL NOTE: NONE ________________________________________________________________________ RECOMMENDATION: Seward City Council approve a motion supporting the Municipal Advisory Group resolution 2004-01 and clarifying the City of Seward’s position in regards to the Stranded Act Development Act.