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HomeMy WebLinkAbout08142023 City Council Packet Seward City Council Agenda Packet 0 ail , Photo by Kris Peck Monday, August 14 2023 City Council Chambers Beginning at 7:00 p.m. 1963 1965 2005 The City of Seward,Alaska CITY COUNCIL MEETING AGENDA City Council Chambers, 410 Adams Street Please silence all cell phones and devices during the meeting Mayor Sue McClure Council Member Randy Wells Acting City Manager Norm Regis Vice Mayor John Osenga Council Member Kevin Finch City Clerk Kris Peck Council Member Liz DeMoss Council Member Robert Barnwell City Attorney Brooks Chandler Council Member Mike Calhoon Monday,August 14, 2023 at 7:00 p.m. 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. CITIZEN COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULE FOR PUBLIC HEARING (Those who have signed in will be given the first opportunity to speak. Time is limited to 3 minutes per speaker and 36 minutes total time for this agenda item) 5. APPROVAL OF AGENDA AND CONSENT AGENDA (Approval of ConsentAgenda passes all routine items listed under Item 7. ConsentAgenda items are not considered separately unless a council member requests.In the event of such a request, the item is returned to the Regular Agenda) 6. SPECIAL ORDERS, PRESENTATIONS,AND REPORTS A. Proclamations and Awards 1) Founders Day Proclamation..........................................................Pg. 5 B. City Manager Report.......................................................................Pg. 6 C. City Clerk Report...........................................................................Pg. 110 D. City Attorney Report.......................................................................Pg. 111 E. Other Reports and Announcements 1) Small Business Development Center(SBDC) Quarterly Report............ .....Pg. 113 2) HYPER Financials.....................................................................Pg. 114 3) Seward Electric Utility Ad Hoc Committee Meeting Minutes July 31, 2023 .............................................................................................Pg. 116 4) Providence Audited Financials for FY21 and FY22................................Pg. 123 F. Presentations (Presentations are limited to ten minutes each, excluding Q&A, and are limited to two per meeting unless increased by council.) 1) Presentation By R&M -Public Safety Building Needs Assessment .............Pg. 151 City Council Meeting Agenda 8-14-2023 11 P a g e 7. CONSENT AGENDA(also marked with asterisk*) A. Minutes of Preceding Meeting 1) *Approval of the July 24, 2023 City Council Regular Meeting Minutes......Pg. 164 B. Introduction of Ordinances-None lzj*Iatr-adtietia of O-.a;,,anee-2023 020-Amen'lm'-rrrgCSow.,r City Code Ti Title 12 Clerk's Note: This item was not ready by the packet deadline C. Resolutions on Consent Agenda 1)*Resolution 2023-090: Accepting The Return of $56,310.58 In Funds From Kenai Peninsula Borough That Was Intended For The Japanese Creek Feasibility Study Project,And Appropriating Funds........................Pg. 176 2)* Resolution 2023-091: Approving An Employment Agreement Between The City Of Seward And Kathleen Sorensen For City Manager Services......Pg. 186 3)*Resolution 2023-092: Authorizing The City Manager To Enter Into A Loan Agreement With The Alaska Department Of Environmental Conservation.....................................................................Pg. 196 4)*Resolution 2023-093: Authorizing The City Manager To Enter Into A Management And Operating Agreement With Providence Health & Services Washington d/b/a Providence Health& Services Alaska...................Pg. 211 5)*Resolution 2023-095: Authorizing the City Manager To Enter An Independent Contractor Agreement With Selena Soto for GIS Technical Services and Appropriating Funds............................................................Pg. 233 D. Other Items on Consent Agenda-None 8. PUBLIC HEARINGS -None 9. UNFINISHED BUSINESS -None 10. NEW BUSINESS A. Resolutions 1) Resolution 2023-094: Repealing Resolution 2023-058: Personnel Policy 2023-01: Phone Use and Recording Policy..................................................Pg. 259 B. Action Memoranda City Council Meeting Agenda 8-14-2023 2 1 P a g e 1) Action Memorandum 2023-011: Determining It Is In The Best Interest Of The Seward Community To Sell The Electric Utility And Specifying The Primary Reasons.....................................................................................Pg. 277 2) Action Memorandum 2023-012: Clarifying the Reasons Homer Electric Association is the Preferred Electric Utility to Purchase Seward Electric...........................Pg. 287 C. Other New Business 1) Seward City Tours Request to Purchase Property.................................Pg. 294 11. INFORMATIONAL ITEMS AND REPORTS A. Boards and Commissions Minutes 1) Planning& Zoning Commission a. June 6, 2023 Planning& Zoning Minutes.........................................Pg. 337 12. CITIZEN COMMENTS (There is no sign in for this commentperiod. Time is limited to five (5) minutes per speaker.) 13. COUNCIL AND ADMINISTRATION COMMENTS AND RESPONSES TO CITIZEN COMMENTS 14. ADJOURNMENT City Council Meeting Agenda 8-14-2023 3 1 P a g e PROCLAMATION WHEREAS, ON AUGUST 28, 1 903, 83 MEN, WOMEN, AND CHILDREN, ARRIVED AT RESURRECTION BAY ON THE STEAMER, THE SANTA ANA; AND WHEREAS, ABOARD THIS STEAMER WERE TWO BROTHERS, JOHN AND FRANK BALLAINE, WHO ARRIVED ON THE LOWELL HOMESTEAD; AND WHEREAS, THE BALLAINE BROTHERS ENVISIONED A RAILROAD TO THE INTERIOR OF ALASKA WITH A COASTAL HEADQUARTERS; AND WHEREAS, THE SETTLERS CLEARED THE TOWNSITE, ERECTED BUILDINGS, AND BEGAN THE CONSTRUCTION OF THE ALASKA CENTRAL RAILROAD, LATER TO BECOME THE ALASKA RAILROAD; AND WHEREAS, JOHN BALLAINE BESTOWED UPON THE NEW TOWN THE NAME SEWARD, IN HONOR OF WILLIAM H. SEWARD; PRESIDENT LINCOLN'S SECRETARY OF STATE WHO NEGOTIATED THE PURCHASE OF ALASKA FROM RUSSIA IN 1867, AND WAS LATER PRESIDENT ANDREW JOHNSON'S SECRETARY OF STATE; AND WHEREAS, THE LANDING DATE OF AUGUST 28, 1903 IS REMEMBERED AS SEWARD Ts FOUNDER'S DAY. NOW THEREFORE I, SUE MCCLURE, MAYOR OF THE CITY OF SEWARD, ALASKA, DO HEREBY PROCLAIM SATURDAY, AUGUST 28, 2023 AS: FOUNDER'S DAY DATED THIS 1 4TH DAY OF AUGUST, 2023 THE CITY OF SEWARD, ALASKA SUE MCCLURE, MAYOR 5 City of Seward Acting City Manager's Report August 14, 2023 Mayor McClure and Council Members, Mr. Brumley from the USCG was here August 3rd and 4t" to look at the new coast guard site at SMIC and finalize and signed the Real property exchange agreement, which will come before you at this meeting. The Salmon Derby is here August 12 to the 20t"; they are still looking for volunteers for the derby booth. Met with Elaina Sprague from Senator Sullivan's office along with six marines that are looking for an area to store emergency airport equipment and were interested in some railroad property for this endeavor, and are interested in the states airport project. The city has met with our Federal lobbyist on 8-7 to discuss possible future legislation and funding opportunities. The Central Treasury report to the CMR, the acting finance director will be available for any questions. If you have any questions please feel free to reach out to me, you have my number. Board and Commission Attendance Attached is the Board and Commission attendance record. Purchase Orders As required by the Seward Municipal Code 6.05.010, the following purchase orders between $5,000 and $30,000 have been approved by the City Manager since the last council meeting. Department Vendor Description Amount WATER CORE AND `r9 L N LF SoJe Sou roe for replacement parts for Water Department.Valve 5,016.90 box,key box,mainline paving boxes and stainless steel repair band for S"AC ELECTRIC ADIVIN ALASKA TEXTILES INC FR Raingear CJathing for Linemen Crew %070.00 Vis PROVAL TECHNOLOGIES INC VSAcansultationservices. Ensu re system patch ing an d 11,250.00 monitoring is in place and properly configured. Thank you, Norm Regis Page 3 of 3 6 City of Seward - Human Resources Manager Report Staffing Information # of Department Job Title Positions Filled Administration City Manager 1 1 Assistant City Manager 1 1 Human Resources Manager 1 1 Executive Assistant 1 1 TOTAL: 4 4 Finance Director - unfunded for 2023 1 0 Deputy Finance Director 1 1 Senior Accountant 1 1 Accounting Technician III 1 1 Accounting Technician II 1 1 Accounting Technician - Utilities 2 1 Accounting Tech Payroll 1 1 Accounting Tech Accounts Payable 1 0 TOTAL: 9 6 Public Works Director 1 1 Street Foreman 1 1 Maintenance Mechanic 3 3 Public Works Technician 1 1 Shop Foreman 1 1 Water and Wastewater Foreman 1 1 Water and Wastewater Operator 3 3 Building Maintenance Technician 2 1 TOTAL: 13 12 Community Development Director 1 1 Planner 1 1 GIS Technician 1 1 TOTAL: 3 3 Electric Director 1 0 Operations Supervisor 1 0 Field Engineer 1 1 Executive Assistant 1 1 Lineman 4 4 Plant Operator 2 2 TOTAL: 10 8 Fire Department Chief 1 1 Deputy Chief 1 1 Executive Assistant 1 1 Building Official 1 1 Building Fire Inspector 1 1 Firefighter/EMT 1 1 Seasonal - Summer Laborer 1 1 7 # of Department Job Title Positions Filled TOTAL: 7 7 Harbor Harbor Master 1 1 Deputy Harbor Master 1 1 Office Manager 1 1 Executive Assistant 2 2 Harbor Worker II 6 6 Harbor Worker III 1 1 Seasonal - Summer Laborer Part-Time 1 1 Seasonal - Summer Laborer Full-Time 1 0 TOTAL: 14 13 IT Director 1 1 Senior IT Tech 1 1 IT Technician 1 1 TOTAL: 3 3 Library Director 1 1 Assitant Library Director 1 1 Library Technician 1 1 Curator 1 1 Library Aide 1 1 Seasonal - Aides 2 2 TOTAL: 7 7 Police Chief 1 1 Deputy Chief 1 1 Sergeant 1 1 Patrol Officer 7 4 Patrol Officer not funded 1 0 Executive Assistant 1 1 Corrections Sergeant 1 1 Corrections Officer 4 3 Corrections Officer not funded 1 0 Dispatch Supervisor 1 1 Dispatcher 5 5 Animal Control Officer 1 1 Animal Control Officer Assistant 1 1 DMV Clerk 1 1 TOTAL: 27 21 Parks &Recreation Director 1 1 Deputy Director 1 1 Executive Assistant 1 1 Campground Coordinator 1 1 Program Coordinator 1 1 Recreational Assistant 1 1 Maintenance Technician 1 1 Seasonal - Summer 15 10 Seasonal - Winter 2 0 TOTAL: 24 17 8 # of Department Job Title Positions Filled City Clerk's Office City Clerk 1 1 Deputy City Clerk 1 1 Executive Assistant 1 1 TOTAL: 3 3 Total number of authorized positions: 124 Total number of filled positions: 104 9 C) C) - o%D � Lr) o0000 \ \ \ Q \ _ Q \ \\ 2 \ \ Q \ � � \\ \ \ \ Q \ Q \\ \ zz \ e � \\ \ \ \ / / O \ 3 Ln $ $ o $ $ o $ $ $ $ $ $ » » z » » z » »» » » » Q Q \ \ U $ $ »$ z »o $ »$ $ $ $ $ $ » » »» » » » Q Q \ \ \ \ $ $ $ $ $ $ r Ln$ o $ $ o » » » » » » »z » » z Q Q a � a � a ■ � ■ � ■ $ $ $ $ $ $ re) $ o $ o o aj »z » zz � � C) � C)00 � $ $ o $ $ $ $ 0 0 0 0 » » z » » » >-Zl I IZIZz § o § cr 0 a fA % \ % / EE E An N 2 ( 0u 0 § oLn u ' § _ � _ _ ( f � UU 2 � £ to = � 0 2 - � 0 # # = � = 2 = E be � � � . � E = = � _ so ■ Ea£ BB % E � ■ 2 = � � E ƒ BB caa. Ln caE:V) / / / 2 ƒ \ \ f ± 322 Dear Mr. Regis, Thank you for your interest and participation in the FY24 federal appropriations process. I'm reaching out to you regarding your, City of Seward for Public Water Utility Upgrades, Congressionally Directed Spending request. Unfortunately, although Senator Murkowski submitted your request for committee consideration, it was not included in the Senate bill,which passed out of committee today. I understand how disappointing this is,but please be assured that Senator Murkowski did all that she could to advocate for your project's inclusion. As you may know,many committees received funding allocations that were more limited than prior years. For this bill, funding allocated for CDS requests was substantially lower than last year, and only a few of Senator Murkowski's requests were funded. We appreciate the time and effort you put into this important project. Although it was not included in the bill,we would like to keep in touch and stay updated on how we can assist and support you. If your organization would like a letter of support for competitive grant opportunities, or would like to be updated about our upcoming grants symposium where you can learn about other federal funding opportunities,please reach out to me at dana herndonkmurkowski.senate. og_v. Thank you, Tanya Lautaret Tanya Lautaret Regional Special Assistant I Kenai Peninsula&Kodiak Office of U.S. Senator Lisa Murkowski Phone: 907.262.4220 Mobile: 907.341.9718 44539 Sterling Highway, Suite 203 Soldotna,AK 99669 www.murkowski.senate.gov 11 CRW Technical Memorandum ENGINEERING GROUP,LLC Date: July 27, 2023 To: Doug Schoessler, DPW Director, City of Seward Thru: Don Porter, PE, R&M Consulting, Inc. From: Tracy McKeon, PE—CRW Engineering Group, Inc. Project: City of Seward Community Library and Museum HVAC Assessment Project: (CRW#77101.06) Subject: Final Report EXECUTIVE SUMMARY CRW Engineering Group was contracted to provide a survey of the Heating, Ventilating and Air Conditioning (HVAC) systems for the Seward Community Library and Museum. This report includes a summary of the findings regarding the condition of the existing building HVAC system and recommendations for upgrades. The survey was performed utilizing review of as-built record drawings, site observations, discussions with the City of Seward and Library staff and an engineering analysis of the building. The purpose of the survey is to aid the City of Seward in creating a plan for mechanical upgrades to complete repairs and upgrade the building HVAC systems to deal with ongoing maintenance and operational concerns. The original building code analysis was complete in accordance with the 2006 International Building Code and the HVAC system design was in accordance with ASHRAE 62.1-2010. Since the original construction of the building, there have been ongoing leaks and need repetitive repairs that have led to concerns with the quality of the installation, potential design deficiencies, and the cost of increased operation, maintenance and repairs. Several of the areas in the building have been designed for natural ventilation and have reported significant occupant thermal comfort issues. Consideration for upgrading the HVAC systems to support improved occupant comfort and improved efficiency of the building was also reviewed. The following is the list of upgrades/repairs recommended for the building: 1. Reconfigure terminal unit piping to eliminate flex connections at baseboard and radiant zones. 2. Improve ventilation for Young Adult and Children rooms to provide ventilation in accordance with ASHRAE 62.1-2019. 3. Install drip pans under all piping in Secure Storage and Exhibit Work Rooms. 4. Provide drip pan, route condensate from AHU-4 to indirect drain to a new hub drain in loading dock. 5. Repair leak at heating coil, HC001. 6. Seal air leak at condensate piping penetration near humidifier manifold in duct at AHU-1. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 1 12 r(-,R Technical Memorandum ENGINEERING GROUP,LLC EXISTING HVAC SYSTEMS DESCRIPTION General The building was originally constructed in 2014. The total building area is approximately 24,323 square feet and includes two occupied floors with a basement. The general layout of the building includes the Lobby, Museum/Exhibit, Community Room, Kitchen, Storage, Loading Dock, Secure Storage, Server Room, and Exhibit Workroom on the first floor. The second floor includes the Library Stacks, Reading Area, Young Adult, Children, Meeting Room, Work Area, Research Area, Director Office, and Circulation Desk. Both floors have a men and women restrooms, elevator access, custodian closets and stair access.The basement includes the mechanical room, fan room, and collection storage area. The building heating systems is comprised primarily of two fuel fired boilers and an electric boiler, radiant floors and perimeter hydronic finned tube, and duct reheat coils. While the ventilation system includes both constant volume and variable volume air handlers, a relief air fan, two heat recovery ventilators, and several small cabinet supply ventilation fans, The HVAC systems are from the original construction of the building. It was reported that since shortly after construction they have had ongoing issues with leaks in the hydronic heating system and indoor air quality issues in several areas of the building. The hydronic leaks have been primarily addressed as they have occurred, by the HVAC service contractor Long Building Technologies, but are ongoing. Also, it is noted that some leaks have been reoccurring in the same locations in some cases, most recently ones in the community room closet and the basement. In preparation for the site investigation on May 1. 2023, we spoke with Ryan Skiff at Long Building Technologies regarding recent and past work orders in the building and ongoing concerns with the HVAC system.The initial discussion with the City of Seward had led to some questions of potential water quality concerns, electrolysis, galvanic corrosion, and/or a defective batch of fittings installed. Ryan indicated that they had sampled the water and it was within acceptable ranges and okay. However, he did confirm that they had multiple areas where there were numerous flex lines installed including the secure storage area where he would estimate there were 60 connections that had been replaced. He noted that the original flex connectors installed before they started replacing them were "Home Depot" style flex connectors with garden style hose end threaded connections. These are prone to leaks and have been replace with a welded style. A few other items brought up at the time of concern included: 1. Balance valves are installed on both the supply and return of terminal units . 2. The boilers had been recently re-piped as primary/secondary with the electric boiler as backup. Several bad fuses had recently been replaced. Noted the boilers operate on an outside air reset schedule and have been operating well unless they run out of fuel since. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 2 13 r(-,R Technical Memorandum ENGINEERING GROUP,LLC 3. Four actuators for radiant floor zones had failed and been replaced.This should correct the hot and cold places in the building. We will review space temperatures during our site investigation. 4. They have had a few controllers fail due to brown outs over the years and have installed UPS to prevent further issues. 5. The heat recovery ventilator (HRV) serving Director's office was found not to have a wall controller. One is not available from the manufacturer. 6. The humidifier is maintained twice a year, but due to water quality it should be done four times a year. 7. The contractor has performed spot flushing of the system when making repairs. 8. Contractor confirmed that controls are a Niagra N4 front end with Schneider field devices. Additionally,we reviewed the existing HVAC control drawings made available to gain an understanding of the operation of the build and maintenance. Site Observations: On May 1, 2023,Tracy McKeon performed a visual inspection of the facility. An existing conditions survey was performed on the HVAC systems.This report describes the existing conditions and recommendations of the systems found. Ventilation Upon review of the original building construction documents, it was found the ventilation systems in the building were designed in accordance with ASHRAE standard 62.2010 with a mixture of mechanical ventilation and natural ventilation assuming a normal building occupancy of 140 people. Upon review of the design documents, we found all outside air and ventilation standards appeared to meet the design standard of reference. Additional descriptions and findings based on our site investigations for each of the individual ventilation systems I noted below. AHU-1 is the centralized air handling system for Museum ventilation. The air handler is located in a dedicated fan room in the basement in a dedicated fan room. It serves Exhibit 119, Exhibit Workroom 116, Secure Storage 117, and Office 110. This is a constant volume unit with heating, cooling, and humidification.The supply air utilizes low pressure ductwork and reheat coils through the system to maintain zone temperature setpoints. Return fan for this unit operates to maintain a slightly positive general building pressure. Air returns back to the unit of it can be directed to a relief louver high on the building. No unusual building pressures were noted in the spaces. During the site inspection we documented the following temperatures in the spaces: Exhibit Work Room 680F Secure Storage 630F `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 3 14 r(-,R Technical Memorandum ENGINEERING GROUP,LLC The following concerns were noted: 1. A minor leak was noted at the heating coil, HC001. 2. Air was found to be leaking at condensate piping penetration near humidifier manifold in duct at AHU-1. AHU-2 is a variable volume air handler unit that serves the Community room. This unit is located in Storage Room 104. The unit operates at low speed during times of low demand and has an AHU-2 bypass switch on the wall. Through gravity return air returns back to the unit or to a relief louver high on the wall. No unusual building pressures were noted in the space relative to the rest of the building. Radiant floor and hydronic finned tube are used to provide additional thermal comfort in the Community Room. During the site inspection we documented the following temperatures in the spaces: Community Room 690F Storage 104 680F The following concerns were noted: 1. Outside air intake for AHU-2 was found to be located adjacent to a parking area. No signs were noted to be installed to turn off cars do to outside air intake in the area. While no fumes were noted in the building the building was closed during the site investigation and no cars were present. 2. Signs of past leaks at the heating coil to this unit. This appear to have been repaired and was not actively leaking at the time of the inspection. AHU-3 is a constant volume heat recovery unit that is located in Loading Area 109. It provides general building exhaust, EF-3, for the restroom and supply air, SF-3, for the Lobby 101, Kitchen 103, Loading Dock 109, and Server Room 115. The supply air utilizes low pressure ductwork and reheat coils throughout the system to maintain zone temperature setpoints.Three reheat coils on this system serve the loading zone, lobby and Kitchen, and the server room, respectively. During the site inspection we documented the following temperatures in the spaces: Lobby 101 680F Vestibule 100 630F Women (1st Floor) 670F Loading Dock 109 660F Women (2nd Floor) 680F `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 4 15 r(-,R Technical Memorandum ENGINEERING GROUP,LLC The following concerns were noted: 1. There are four holes in the bottom of the AHU-3 noted. We were advised that Condensate runs out of this unit onto the floor through the holes and regularly floods the floor in Loading Dock 109 that does not have a drain in it. This drips onto the cabinet unit heater located below AHU-3. Upon review of the Operations and Maintenance manual we did not find a drip pan in the unit. 2. We also noted concerns with the installation of the flex connections and supports to the reheat coil in the loading dock.These are further discussed in the heating section. AHU-4 is a constant volume heat recovery ventilator installed above ceiling in Research 212. It serves Research 212 and the Director's Office 211. The supply air utilizes low pressure ductwork and radiant floor is provided in the spaces for additional comfort. During the site inspection we documented the following temperatures in the spaces: Research 212 720F The following concerns were noted: 1. It was notably noise in the 122 square foot room Research 212 room when AHU-4 was operating at 48 dB in space while seated in relation to the Library Stacks which was 28 dB. We found supply diffusers ducted directly off the main without the industry and manufacturer recommend downstream installed duct lengths between the AHU-4 discharge and the first branch take off. 2. The factory controller was noted as missing and the controls were directly wired to the terminal strip at AHU-4. As a result, DDC cannot enable, disable, or otherwise control the unit or damper operation. 3. While not noted during the inspection, it was brought to our attention that in the past a gas/exhaust fume odor has been noticed in the Director's Office when AHU-4 is in operation. Upon investigation we found the unit is ducted such that the outside air intake is downwind of the exhaust. Natural Ventilation Areas During our investigation we found no mechanical ventilation or cooling serving the Library Stacks, Juniors, Reading Areas, Upper Lobby, Circulation Desk, Work Area, Meeting/Study, Young Adults, or Children Rooms. Currently the ventilation requirements are met in these spaces by natural ventilation with additional airflow circulation assistance by a high volume low speed fan (HVLS) mounted in the center of the Library Stacks. The HVLS helps to provided improved indoor air quality by continuously mixing incoming fresh air when windows are open in the space, provides heat destratification in the space, and helps to reduce condensation build up on roof and beams and floor, and keeps space and humidity temperatures more uniform in the space. Radiant floor and perimeter baseboard is provided in spaces for additional comfort. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 5 16 r(-,R Technical Memorandum ENGINEERING GROUP,LLC The HVLS fan was installed in the Library Stacks and serves this space, as well as the Circulation Desk and Reading Areas, Juniors, Upper Lobby originally it served the Work Area based on the original construction documents. However, the Young Adults, Children, and Meeting are all physically separated from the Library Stacks area and these spaces do not see any of the airflow circulation benefit of the HVLS fan. Additionally, with the Work Area having recently been walled off from the circulation desk this has result in a lack of circulation of air to this space. Leading to some of the discomfort experienced by the occupants. Natural ventilation is most effective in winter due to buoyancy driven air flow. For natural ventilation to be effective in any space windows, need to be open for a minimum of 10-15 minutes every hour and there needs to be a temperature differential. Without this we see higher levels of CO2 in spaces, inadequate transfer of air, and thermal comfort issues. With colder temperatures in the winter, occupants tend not to open windows and summer air temperatures don't create the need differentials to make natural ventilation effective in most instances. Additionally, when the outdoor temperature equals the indoor temperature, as it often does during a typical Seward summer day, there is no natural draft pressure. This means that wind is required to create good air movement or a mechanical means such as the HVLS fan. In addition, high ceilings are required for effective buoyancy driven air flow. It was brought to our attention that the Young Adults, Children, and Meeting/Study Areas can be stuffy and do not seem well ventilated.This was not unexpected based on the separation from the HVLS fan and lower ceilings in the spaces. We found eggcrate exhaust grilles installed in the drop ceiling in the Childrens room, but these just opened to the above ceiling no duct or mechanical system is attached. During the site inspection we documented the following temperatures in the spaces: Library Stacks/Reading Area 670F Children 690F Young Adults 680F Meeting/Study 690F The following concerns were noted: 1. The closing of windows in the staff Work Area prevents circulation of air and increases staff discomfort. 2. Young Adults/Children/Meeting/Study have low ceilings, are physically isolated for HVLS fan, and only served by natural ventilation. In summer with the limited temperature differential resulting in minimal airflow through spaces thermal discomfort is a concern. Windows must be open to provide required outside air in the space and there is no good means to provide an even distribution of airflow and temperatures throughout these spaces. 3. It is recommended that the Young Adults and Children Rooms at a minimum be supplemented with mechanical ventilation. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 6 17 r(-,R Technical Memorandum ENGINEERING GROUP,LLC Heating The heating system for the building consists of one fuel fired Burnham Model V9A Series, oil fired, cast iron boiler with Power Flame burner rated for 4.1 GPH and one Lattner Space Saver electric boiler The boilers are approximately 10 years old and are in good condition. The boilers are located in a boiler room on the basement level, adjacent to the fan room. The boilers are piped primary/secondary and appeared to be sized for 70 to 75% of the building heading loads. Each boiler has a pump on the primary loop. The building heat system is circulated by the two inline variable drive circulating pumps out to control valve at terminal units, coils, and reheat coils. A set of zone pumps circulate heating water to the radiant floor zones off the return from the central heat system.The building is primarily heated with radiant floor and reheat coils with supplemental perimeter hydronic finned tube radiation, unit heaters, and cabinet unit heaters. The building heating system is 75 percent radiant floor with some baseboard perimeter heating and heating coils supplementing the remainder of the system. Concerns of the reoccurring issues and description of leaks were noted at specific fittings, connections with dissimilar metals, and numerous pipe flex connectors. Due to the reoccurring leaks in the facility, we used an ammeter to test for any stray electrical current at the water service and verify the service was grounded. No electrical current was noted. During our inspection we found numerous flex connections installed on the hydronic heating supply and return connections to all terminal units including air handling heating reheat coils, finned tube terminal unit connections, cabinet unit heaters, unit heaters, and radiant zone connections. Flex connectors are typically installed for one of several reasons; to compensate for misalignment in piping and reduce stress, control vibration such that normal equipment vibrations are reduced at the connector, to reduce noise in areas of high pipe vibration, and to compensate for thermal expansion. The original design has hard piped expansion loops included in the design and therefore, flex expansion compensators should only be installed at areas of high pipe vibration or to control vibration from normal equipment operation. We would not anticipate flex connectors to have been installed in new construction of misalignment of piping. The design documents support this finding see the snapshots below of details from the construction documents. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 7 18 r(—,R Technical Memorandum ENGINEERING GROUP,LLC JL wcrxco urtuurc r,nw ccxmo�uux, smuxw.sacral vrrcs µo m cwwErnoxs gw rs wrm ca aocR w,q 0.NBICr WI XaP 7r+6 Yl0.'Ml[p�ii Yee�e(tlm m[i0a'� a Hn'RE nw kwl BR wC[l�IH2 XI\AaM P0Y SbAM. DETAIL - RECESSED CEILING MOUNTED CUH DETAIL - FT-1 (SINGLE SECTION)- m wnxxr n'aw mgsA akw wry es--sr�-- -- e e* e e PJ16� .' r��ASE55m WMFC�Y , _ ________________7- AecAain unoun tlaA tCw�WK ' S1Au(A eW.aax rWAES AW�aaarCA4 ro ruawr Armx mqs� aww waA� of gars AAn mmu i 2 DIAGRAM - RADIANT FLOOR HEATING LOOP W52 s � The original installing contractor provided flex connectors on all hydronic finned tube terminal unit, reheat coil, air handling coils, cabinet unit heaters, unit heaters, and radiant zone supply and return piping connections even though they were not required by the design. Moreover, we found flex connectors of various material types, lengths, including both sweat and threaded ends as well. Connector ends should have been constructed of similar material to pipe connections and sweated not threaded for a more secure leak resistant construction. We would have expected most flex connectors to be 10" in length for the branch connections under 1-1/4" in size and to be installed only at units associated with excessive vibration. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 8 19 r(-,R Technical Memorandum ENGINEERING GROUP,LLC We had been instructed prior to the inspection the balance valves were installed on both the heating supply and return lines to each of the terminal units. Upon investigation we found that the system included cartridge style automatic flow limiting valves with strainers and isolation valve with Specific findings are noted below: Mech Room 001: 1. Unit heater, UH-1, Flex connectors installed were stainless and not well supported. 2. Water service is located in this space. Fan Room 005: 1. Small leak noted at heating coil, HC-001. 2. Flex connectors are installed on the small unit heater in this space. Storage 006: 1. Multiple flex connectors, at heating coil, HC-5, not properly supported and stressing connection. Potential for leaks. Dissimilar metals were noted at connections. 2. Flex connections at all fin tube, heating coil, radiant floor zone, unit heater, and cabinet unit heater branch lines. Only required at heating coil and unit heaters per original design drawings. Storage Room 104: 1. Past leaks were visible at the flex connectors serving the heating coil for this unit, and the high point vent on the heating supply/return lines in the space. 2. Hoffman automatic air reliefs had been noted as leaking in this space and others. Loading Dock 109: 1. Flex connectors to the cabinet unit heater were not properly supported and showing evident signs of sagging. Susceptible to leaks. 2. Noticeable previous leaks had been repaired. Exhibit Room 119/Secured Storage 117: 1. Noticeable previous leaks had been repaired. 2. Flex connections were installed at all fin tube, heating coils, radiant floor zone, and cabinet unit heater branch lines. Only required at heating coils per original design drawings. Library Stacks/Reading Areas/Juniors/Young Adults/Childrens/Meeting Study: `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 9 20 r(-,R Technical Memorandum ENGINEERING GROUP,LLC 1. These areas were served by radiant floor and limited perimeter finned tube heat for comfort. It was noted that finned tube heating was not provided under all operable windows in these spaces. 2. Director noted that heating in the winter was not consistent through the spaces in the Young adults and Children spaces. Research 212: 1. Radiant manifold access panels were in this space as well as AHU-4 located above. It was noted this was to be a quiet space for research and studying. RECOMMENDATIONS The following are recommendations to address issues with the existing HVAC systems: 1. Replacement of AHU-4 Heat Recovery Ventilator and Improvements for Young Adult Room Ventilation/Work Room: After review with Long Building Technologies and the Vendor the cost of providing a new controller for the existing unit would exceed the cost of replacement of the unit.Additionally, we recommend relocation and modifying the location of the exhaust and outside air intake. This unit could be increased in capacity to allow additional outside air to be provided to supplement natural ventilation for Young Adults and the Work Area as well. 1. Providing a new unit with a new factory controller will allow DDC to provide control of the unit and dampers for better comfort control and code required outside air to the various spaces. As originally intended, the design for the space. This will also increase energy efficiency for the building. 2. The unit needs to be insulated, to minimize sound and larger ducts to reduce noise Branch lines and diffusers need to be relocated to reduce noise and vibration in Research 212. However limited space however limited space above ceiling may require this unit to be relocated or ceiling to be dropped additionally to accommodate. 3. Finally, Unit capacity should be increased to include supplemental outside air for Young Adults Room and Work Area Which are adjacent to the unit and existing spaces served. This is not required outside air but to improve comfort control so could be limited to 150 to 200 cfm supply and exhaust in Young Adults and 85 to 100 cfm in Work Area. 2. Improve ventilation for Childrens Room and Meeting Room to provide ventilation in accordance with ASHRAE 62.1-2019: The existing ventilation zones were designed to provide ventilation to via natural ventilation but the low ceiling space and obstructions in the space make it difficult to provide adequate airflow and maintain uniform temperature distribution in the space. Recommend a new heat recovery ventilator or be installed to provide supplemental mechanical ventilation to these spaces to provide better thermal comfort to the occupants. Ceiling may have to be modified to accommodate unit and consideration given to acoustical linings to prevent excess noise in City of Seward —Seward Community Library & Museum Mechanical Survey Report 10 21 r(-,R Technical Memorandum ENGINEERING GROUP,LLC the space. Ensure all branch lines installed are a minimum of 5 duct diameters from the main and a minimum 3 foot straight run of duct is provided on the intake and exhaust from the unit. 3. Repair Leaks at AHU-1: Repair leak at heating coil HC-001 and seal air leak where condensate piping penetrates humidifier manifold at duct. 4. Removing Flex Connections from Hydronic Finned Tube, Cabinet Unit Heater, and Radiant Zone Terminal Connections: The heating system does not require flex connectors on the heating supply and return piping at the finned tube, cabinet unit heaters, and radiant zone terminal units. Flex connectors are not required to compensate to control vibration or for thermal expansion.These connectors were not required by the original heating design and the current design has not changed . They can be deleted and will reduce the potential for leaks to develop at these locations. S. Removing Flex Connections from Unit Heater Terminal Connections: The heating system does not require flex connectors on the heating supply and return piping to the smaller hydronic horizontal unit heaters. Flex connectors are not required to compensate to control vibration or for thermal expansion. For unit heaters that are less than 20 lbs. and 1/60 HP. We would recommend flex connections be removed and hard piped, Units experience minimal vibration. 6. Install drip pans under piping in Secure Storage 117 and Exhibit Workroom119: In addition to removing unnecessary flex connectors, it is recommended that to protect exhibits and valuable artifacts stored in these areas it is recommend that drip pans be installed under all piping in this space and leak detection sensors be installed in the drip pans that are monitored by DDC to alarm when moisture is detected. 7. Install Drip pan AHU-3/ Route Condensate to hub drain in Loading Dock Install a drip pan in AHU-3 and install a condensate drain pipe to slope to drain to indirect drain to a hub drain that can connect to the existing 2-inch waste piping in wall in loading dock area. 8. Mechanical systems re-balance: Following upgrades,the heating and ventilation system should be rebalanced to ensure that the system is adjusted for design operation. Balancing the air and water systems will improve system operating efficiency as systems will be adjusted to operate at design settings. `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 11 22 r(—,R Technical Memorandum ENGINEERING GROUP,LLC SITE PHOTOGRAPHS �M1 ;Y Figure 1: Existing Boilers `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 12 23 CRW Technical Memorandum ENGINEERING GROUP LLC 1 Figure 2: AHU-1 Heating Coil Flex Connection and Leak `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 13 24 CRW Technical Memorandum ENGINEERING GROUP LLC i s I Figure 3: HC-5 Flex Connections HOT 1/4 ar��RE� r .A.RADIANTHEA ♦RADIANTHF.4T11 d Figure 4: Flex Connections Installed at Radiant Zone `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 14 25 r(—,R Technical Memorandum ENGINEERING GROUP,LLC Figure 5: AHU-4 Above Research 212 xn�wa+wW w"m' - . iwo-m�aa�e� •�- 11�w,ti rOra r. f "CAUTION" =.--M� `ATTENTION" Figure 6: Terminal Strip in AHU-4 `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 15 26 CRW Technical Memorandum ENGINEERING GROUP LLC Figure 7: Childrens Room with Return Grilles in Ceiling `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 16 27 CRW Technical Memorandum ENGINEERING GROUP LLC 3 ..4 411 s• Figure 8: Young Adults with Perimeter Finned Tube and Operable Windows `~ City of Seward —Seward Community Library & Museum Mechanical Survey Report 17 28 From: Ahlbera,Brenda To: 'Robert Dumouchel"; "Mark Robl"; "Mark Kirko"; "Jennifer Carroll"; 'Bryan Hawkins";Stephen Sowell; Doug Schoessler; "karlCabstormchasersmarine.com"; "onormanvc(abhotmail.com"; "Francis Norman"; "Mark Ball"; "Crystal Collier"; "Heidi Geagel";'Rachel Friedlander"; "Kachemak City Clerk";Cicciarella.Bob;Schultz,Eric; Marsh,Jon; Mathis,Robert;Clinton Crites; "nanwalek(&yahoo.com";"Gwen Kvasnikoff"; "vivian(aboortaraham.ora";"LowellPt";"micaCalstormchasersmarine.com"; "Anchor Kings"; "Anchor Point Senior Center"; "Anchor Point Chamber"; "Anchor Point Library"; "Chris Crum-Anchor Pt APC"; "Chris Platter-Anchor Pt APC"; Dawson Slaughter;dewhite55Calamail.com;ikmarshCalvmail.com; "Shafer. Broke-Anchor Pt APC"; thedrakesCabhorizonsatellite.com; "mark.robertOcbalaska.aov";Aviva Braun-NOAA Federal Cc: Mayor Peter Micciche Subject: KPB Siren Project Update 07.20.2023 Date: Thursday,July 20,2023 5:07:34 PM Attachments: imaae001.ona External Email:This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Siren Project Update July 20, 2023 The siren installation schedule has been updated (below). The contractor will be conducting a live audio test on each new siren as they are installed. We'll be adding a new siren in Homer off of Kachemak Drive and one in Anchor Point located at the solid waste transfer site (see notes below). Also, we will be rolling out a public outreach campaign through the end of August, reminding folks of the installs in their area. Thanks to our agency partners for helping with coordinated messaging to ensure that the public is aware of the tests per each location. Have a wonderful evening all, B Installation Schedule: July 24-25: Homer Harbormaster July 26-27: Homer Ice Rink July 28-29: Homer Mariner Park July 31-August 1 : Nanwalek August 2-3: Port Graham August 4-5: Seldovia August 7-8: Homer Fish & Game August 8-9: Homer Bishops Beach August 9-10: Homer Northern Enterprises Boat Yard *NEW* August 10-1 1 : Anchor Point *NEW* Mailer sent to all property owners and flyers to be posted throughout the community August 14-15: Seward Nash Rd *temporary road closure* August 16-17: Seward Marine Industrial August 17-18: Seward High School August 18-19: Seward Harbormaster August 21-22: Seward Fire Station August 22-23: Lowell Point Brenda Ahlberg Emergency Manager Community & Fiscal Projects bahlbergCkpb.us 29 907-262-2098 direct 907-231-6505 mobile 907-714-2415 duty officer 24/7 00 8816 3153 0508 sat phone 907-714-2395 fax Kenai Peninsula Borough Emergency Response Center 253 Wilson Lane Soldotna, AK 99669 bahlbera@kpb.us www.kpb.us- Information by department info.kpb.us- Updates from agencies responding to area-wide emergencies (new URL) @KPBAlerts- Facebook Page KENAk PENINSULA BOROUGH 144 Forth Binkley Street �. Soldotna, Alaska 94669 *. C., 30 CHUGACH- POWERING ALASKA'S FUTURE July 20, 2023 Rob Montgomery Electric Utility General Manager City of Seward P.O. Box 167 Seward, Alaska 99664 Subject: Allocation of 2022 Margins—Chugach Electric Association,Inc. Dear Rob: Chugach Electric Association, Inc. (Chugach) has completed its allocation of margins based on calendar-year 2022 operating results. Consistent with prior years,Chugach's margins are allocated to each class under the Revenue Adjusted / Allocated Margins methodology on the basis of revenue, revenue requirements, and ratemaking margin levels as approved by the Regulatory Commission of Alaska (Commission). The allocations are scheduled to be provided to the Chugach Board of Directors for approval at the July 26, 2023 Board meeting. The North and South District allocations reflect the Commission approved revenue requirement and cost of service study for rates effective during calendar year 2022. Table 1 below summarizes the 2022 allocations for all functional classes on the Chugach system: Table 1: Allocation of 2022 Margins South District North District Total Percentage Retail - G&T $2,387,368 $2,875,861 $5,263,229 64.8% Retail - Distribution $2,021,584 $786,235 $2,807,819 34.6% Retail Subtotal $4,408,952 $3,662,096 $8,071,048 99.4% Wholesale- Seward $52,689 --- $52,689 0.6% Total Retail and Wholesale $4,461,641 $3 662,096 $8,123,737 100.0% Seward's total allocation of 2022 margins is $52,689. As of December 31, 2022, Seward's patronage capital totaled $220,148. After approval of the 2022 allocations, Seward's total patronage capital will increase to $272,837. The attached Exhibit 1 provides the supporting calculations for the allocation of 2022 margins. Chugach's 2022 Audited Financial Statements are also attached. Chugach Electric Association, Inc. 530'1 Elechz ri Drive.P,O Box I96300 ArcYirra fie, ,413ska 99519-6300. (907) 563 494 Paz(907) 562-0027. j30017P-749 :vvv..chugachelec,tric com• mfc,rJrhu�a�chelectnc corn 31 Rob Montgomery July 20, 2023 Allocation of 2022 Mar ins Page 2 Please contact me anytime if you have any questions or would like additional information. Sincerely, CHUGACH ELECTRIC ASSOCIATION, INC. */ Arthur W. Miller Chief Executive Officer P.O. Box 19630 Anchorage, Alaska 99519-6300 Telephone: (907) 762-4758 Arthur—Miller@chugachelectric.com Attachments 32 Chugach Electric Association,Inc. Anchorage,Alaska Capital Credit Allocation to G&T and Distribution by District and Class Margins for Calendar Year:2022 (A) (B) (C) (D) (E) Revenue Revenue Requirement Revenue°/u RR Description Jan-Dec Total Jan-Dec South District Retail-G&T $132,262,731 $132,262,731 $134,008,513 98.70% Retail-Distribution --- --- --- 98.70% Wholesale-Seward $2,396,412 $2,396,412 $2,321,209 103.24% Total $134,659,143 $134,659,143 $136,329,722 ---- North District Retail-G&T $97,878,157 $97,878,157 $113,200,938 86.46% Retail-Distribution --- --- --- 86.46% JBER Contract $11,883,036 $11,883,036 $13,755,423 86.39% Total $109,761,193 $109,761,193 $126,956,361 ---- Combined Total $244,420,336 $244,420,336 $263,286,083 (F) (G) (11) m (J) RR Assigned Margins Adjusted Revenue Requirement Margins Utility Margins Description Jan-Dec Jan-Dec(E*G) Post Audit' South District Retail-G&T $5,622,021 $5,548,781 52.26% Retail-Distribution $5,007,059 $4,941,830 46.54% Wholesale-Seward $123,055 $127,042 1.20% Total $10,752,136 $10,617,653 100.00% North District Retail-G&T $6,545,627 $5,659,616 66.44% Retail-Distribution $2,161,151 $1,868,619 21.94% JBER Contract $1,146,595 $990,521 11.63% Total $9,853,373 $8,518,757 100.00% Combined Total $20,605,509 $19,136,410 ---- $7,584,845 (K) (E) (M) (N) (C) (P) Allocation of Utility Margins Allocation of G&T Assignments Description Jan-Dec Total(Jan-Dec) Percent Jan-Dec Weighted Avg. South District Retail-G&T $2,183,807 $2,183,807 52.26% 97.76% 97.76% Retail-Distribution $1,944,932 $1,944,932 46.54% --- --- Wholesale-Seward $49,999 $49,999 1.20% 2.24% 2.24% Total $4,178,739 $4,178,739 100.00% 100.00% 100.00% North District Retail-G&T $2,262,919 $2,262,919 66.44% 85.11% 85.11% Retail-Distribution $747,141 $747,141 21.94% --- --- JBER Contract $396,046 $396,046 11.63% 14.89% 14.89% Total $3,406,106 $3,406,106 100.00% 100.00% 100.00% Combined Total $7,584,845 $7,584,845 ---- ---- ---- 2022-Capital Credit Allocation Exhibit 1 -Allocation Summary 7/20/2023 33 Page I of 2 Chugach Electric Association,Inc. Anchorage,Alaska Capital Credit Allocation to G&T and Distribution by District and Class Margins for Calendar Year:2022 (Q) (R) (S) (T) (U) (V) Margin Adjustments Final Margin Description G&T and Distribution AWWU Microwave Allocation Percent South District Retail-G&T --- $117,496 $86,065 $2,387,368 53.51% Retail-Distribution --- --- $76,651 $2,021,584 45.31% Wholesale-Seward --- $2,690 --- $52,689 1.18% Total $0 $120,186 $162,717 $4,461,641 100.00% North District Retail-G&T --- $121,752 $89,183 $2,473,854 67.55% Retail-Distribution --- --- $29,445 $776,587 21.21% JBER Contract --- --- $15,608 $411,655 11.24% Total $0 $121,752 $134,237 $3,662,096 100.00% Combined Districts Retail-G&T --- $239,248 $175,249 $4,861,222 59.84% Retail-Distribution --- --- $106,097 $2,798,171 34.44% Wholesale-Seward --- --- --- $52,689 0.65% JBER Contract --- $2,690 $15,608 $411,655 5.07% Total $0 $241,938 $296,954 $8,123,737 100.00% 1 The total post-audit utility margin,$7,584,845,reflects Chugach's 2022 margins totaling$8,123,737,reduced by the gains associated with Chugach's microwave business($296,954)and sales to AWWU($241,938). 2022-Capital Credit Allocation Exhibit 1 -Allocation Summary 7/20/2023 34 Page 2 of 2 'ddhe + CHUGACH POWERING ALASKA 5 FUTURE CHUGACH ELECTRIC ASSOCIATION, INC. Financial Statements December 31, 2022 and 2021 (With Report of Independent Registered Accounting Firm Thereon) 35 "�4 KPMG LLP Suite 600 701 West Eighth Avenue Anchorage,AK 99501 Independent Auditors' Report The Board of Directors Chugach Electric Association, Inc.: Opinion We have audited the consolidated financial statements of Chugach Electric Association, Inc. and its subsidiary (the Company), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in equities and margins, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes to the consolidated financial statements. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022 in accordance with U.S. generally accepted accounting principles. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued. Auditors'Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a KPMG LLP,a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee. 36 substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. K'PNi(C, LLP Anchorage, Alaska April 5, 2023 2 37 Chugach Electric Association, Inc. Consolidated Balance Sheets As of December 31, 2022 and 2021 Assets December 31, 2022 December 31, 2021 Utility plant: Electric plant in service $ 2,109,990,748 $ 2,085,567,712 Construction work in progress 52,721,736 34,253,304 Total utility plant 2,162,712,484 2,119,821,016 Less accumulated depreciation (702,820,630) (640,729,478) Net utility plant 1,459,891,854 1,479,091,538 Other property and investments, at cost: Nonutility property 76,889 76,889 Operating lease right-of-use assets 3,831,720 4,109,694 Financing lease right-of-use assets 217,069 17,273 Investments in associated organizations 6,993,487 7,280,936 Special funds 26,275,805 43,016,636 Restricted cash equivalents 30,000 64,310 Long-term prepayments 305,854 291,846 Total other property and investments 37,730,824 54,857,584 Current assets: Cash and cash equivalents 3,178,673 12,489,780 Special deposits 58,300 58,300 Restricted cash equivalents 12,676,066 25,100,943 Fuel cost/other under-recovery 1,579,375 0 BRU capital surcharge under-recovery 18,845,238 0 Accounts receivable, less provision for doubtful accounts of $983,450 in 2022 and $1,269,080 in 2021 50,243,472 47,186,182 Materials and supplies 49,979,660 45,283,376 Fuel stock 18,220,114 14,087,849 Prepayments 6,239,353 4,917,095 Other current assets 379,412 942,497 Total current assets 161,399,663 150,066,022 Other non-current assets: Deferred charges, net 108,557,249 112,348,138 Total other non-current assets 108,557,249 112,348,138 Total assets $ 1,767,579,590 $ 1,796,363,282 (Continued) 3 38 Chugach Electric Association, Inc. Consolidated Balance Sheets (continued) As of December 31, 2022 and 2021 Liabilities, Equities and Margins December 31, 2022 December 31, 2021 Equities and margins: Memberships $ 1,986,171 $ 1,949,262 Patronage capital 194,755,133 188,573,753 Other 15,594,172 15,477,923 Total equities and margins 212,335,476 206,000,938 Long-term obligations, excluding current installments: Bonds payable 1,128,549,996 1,173,366,663 Notes payable 18,924,000 23,028,000 Less unamortized debt issuance costs (5,960,113) (6,072,373) Operating lease liabilities 3,583,801 3,835,282 Financing lease liabilities 203,786 13,667 Total long-term obligations 1,145,301,470 1,194,171,239 Current liabilities: Current installments of long-term obligations 49,178,851 42,473,838 Commercial paper 45,000,000 22,000,000 Accounts payable 26,356,140 14,878,065 Consumer deposits 4,874,798 5,663,067 Fuel cost over-recovery 0 1,281,307 Accrued interest 8,454,148 8,752,021 Salaries, wages, and benefits 12,103,644 13,030,034 Fuel 6,933,243 6,259,917 Undergrounding ordinance liability 11,894,343 9,477,892 Settlement obligation 12,181,556 12,003,853 Other current liabilities 1,705,080 1,431,478 Total current liabilities 178,681,803 137,251,472 Other non-current liabilities: Deferred compensation 1,387,476 2,115,229 Other liabilities, non-current 658,627 741,387 Deferred liabilities 9,639,703 12,724,119 Settlement obligation 0 12,000,000 BRU regulatory liability 96,612,203 107,364,906 Cost of removal obligation/asset retirement obligation 122,962,832 123,993,992 Total other non-current liabilities 231,260,841 258,939,633 Total liabilities, equities, and margins $ 1,767,579,590 $ 1,796,363,282 See accompanying notes to consolidated financial statements. 4 39 Chugach Electric Association, Inc. Consolidated Statements of Operations Years Ended December 31, 2022, 2021, and 2020 2022 2021 2020 Operating revenues $ 354,418,746 $ 354,458,456 $ 237,428,680 Operating expenses: Fuel 83,474,943 86,561,826 60,122,978 Production 37,961,076 36,640,560 24,556,922 Purchased power 23,268,040 23,129,060 22,380,419 Transmission 9,690,024 9,313,578 7,323,776 Distribution 26,319,170 26,798,579 18,914,383 Consumer accounts 10,298,655 10,554,469 8,199,828 Administrative, general, and other 52,203,530 51,871,897 29,398,871 Depreciation and amortization 64,660,942 60,465,653 36,874,892 Total operating expenses $ 307,876,380 $ 305,335,622 $ 207,772,069 Interest expense: Long-term debt and other 41,607,914 42,625,653 25,546,831 Charged to construction (2,521,899) (2,641,159) (373,098) Interest expense, net $ 39,086,015 $ 39,984,494 $ 25,173,733 Net operating margins $ 7,456,351 $ 9,138,340 $ 4,482,878 Nonoperating margins: Interest income 639,406 294,670 369,386 Allowance for funds used during construction 96,433 112,157 147,223 Capital credits, patronage dividends and other (68,453) 33,312 (2,606) Total nonoperating margins $ 667,386 $ 440,139 $ 514,003 Assignable margins $ 8,123,737 $ 9,578,479 $ 4,996,881 See accompanying notes to consolidated financial statements. 5 40 Chugach Electric Association, Inc. Consolidated Statements of Changes in Equities and Margins Years Ended December 31, 2022, 2021, and 2020 2022 2021 2020 Memberships: Balance at beginning of period $ 1,949,262 $ 1,908,432 $ 1,776,592 Memberships and donations received 36,909 40,830 131,840 Balance at end of period $ 1,986,171 $ 1,949,262 $ 1,908,432 Other equities and margins: Balance at beginning of period 15,477,923 15,376,562 15,309,357 Unclaimed capital credits retired (19,685) (25,706) (42,164) Memberships and donations received 135,934 127,067 109,369 Balance at end of period $ 15,594,172 $ 15,477,923 $ 15,376,562 Patronage capital: Balance at beginning of period 188,573,753 181,564,419 177,380,964 Assignable margins 8,123,737 9,578,479 4,996,881 Retirement/net transfer of capital credits (1,942,357) (2,569,145) (813,426) Balance at end of period $ 194,755,133 $ 188,573,753 $ 181,564,419 Total equities and margins $ 212,335,476 $ 206,000,938 $ 198,849,413 See accompanying notes to consolidated financial statements. 6 41 Chugach Electric Association, Inc. Consolidated Statements of Cash Flows Years Ended December 31, 2022, 2021, and 2020 2022 2021 2020 Cash flows from operating activities: Assignable margins $ 8,123,737 $ 9,578,479 $ 4,996,881 Adjustments to reconcile assignable margins to net cash provided by operating activities: Depreciation and amortization 64,660,942 60,465,653 36,874,892 Amortization and depreciation cleared to operating expenses 12,657,577 13,232,954 7,973,036 Allowance for funds used during construction (96,433) (112,157) (147,223) Write off of inventory,deferred charges and projects 1,599,280 246,258 567,040 Other (48,315) 304,438 651,355 (Increase) decrease in assets: Accounts receivable,net (3,138,384) 6,728,760 (17,048,090) Fuel cost under-recovery (1,579,375) 0 1,445,753 Materials and supplies (5,155,732) 708,802 81,372 Fuel stock (4,132,265) 2,311,843 (3,110,337) Prepayments (1,342,531) (113,048) (713,087) Other assets (28,625) 487,473 (10,018) Deferred charges (6,607,593) (12,455,252) (23,524,240) Increase(decrease) in liabilities: Accounts payable 8,070 (5,332,594) 4,051,713 Consumer deposits (788,269) 413,795 (363,107) Fuel cost over-recovery (1,281,307) 231,685 392,249 Accrued interest (297,873) (396,669) 3,430,931 Salaries,wages and benefits (937,893) (1,393,218) 4,003,779 Fuel 673,326 697,961 (1,203,925) Other current liabilities (115,126) 749,134 (1,600,576) Deferred liabilities (18,333,080) (10,578,181) 846,475 Net cash provided by operating activities 43,840,131 65,776,116 17,594,873 Cash flows from investing activities: Return of capital from investment in associated organizations 288,329 316,274 557,852 Investment in special funds (1,411,673) (22,860,509) (1,080,198) Investment in marketable securities and investments-other 0 0 (6,600) Investment in ML&P acquisition 0 0 (699,527,862) Proceeds from the sale of marketable securities 0 0 205,408 Proceeds from special funds 0 0 1,173,591 Proceeds from capital grants 238,604 2,773,224 0 Proceeds from sale of property and equipment (390,946) 51,885 0 Extension and replacement of plant (56,854,713) (43,929,316) (27,107,529) Net cash used in investing activities (58,130,399) (63,648,442) (725,785,338) Cash flows from financing activities: Payments for debt issue costs 0 (136,354) (3,761,491) Net increase(decrease) in short-term obligations 23,000,000 12,000,000 (14,000,000) Proceeds from long-term obligations 0 0 800,000,000 Repayments of long-term obligations (42,192,667) (41,964,667) (26,837,667) Memberships and donations received 153,158 142,191 199,045 Retirement of patronage capital and estate payments (1,859,857) (2,569,145) (813,426) Proceeds from consumer advances for construction 13,419,340 7,598,916 5,235,447 Net cash(used in) provided by financing activities (7,480,026) (24,929,059) 760,022,908 Net change in cash,cash equivalents,and restricted cash equivalents (21,770,294) (22,801,385) 51,832,443 Cash,cash equivalents,and restricted cash equivalents at beginning of period $ 37,655,033 $ 60,456,418 $ 8,623,975 Cash,cash equivalents,and restricted cash equivalents at end of period $ 15,884,739 $ 37,655,033 $ 60,456,418 Supplemental disclosure of non-cash investing and financing activities: Cost of removal obligation/ARO $ (1,031,160) $ 6,885,808 $ 4,278,545 Extension and replacement of plant included in accounts payable $ 13,545,751 $ 2,172,436 $ 1,132,270 Patronage capital retired/net transferred and included in other current liabilities $ 82,500 $ 0 $ 0 Supplemental disclosure of cash flow information-interest expense paid,net of amounts capitalized $ 38,235,264 $ 39,104,950 $ 20,669,620 See accompanying notes to consolidated financial statements. 7 42 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 (1) Description of Business and Presentation of Financial Information Description o Business Chugach Electric Association, Inc. ("Chugach") is the largest electric utility in Alaska engaged in the generation, transmission, and distribution of electricity in Anchorage and the upper Kenai Peninsula area. Chugach is on an interconnected regional electrical system referred to as the Alaska Railbelt, a 400-mile-long area stretching from the coastline of the southern Kenai Peninsula to the interior of the state, including Alaska's largest cities, Anchorage and Fairbanks. Chugach's retail and wholesale members are the consumers of the electricity sold. Chugach supplies much of the power requirements to the City of Seward ("Seward"), as a wholesale customer. Occasionally, Chugach sells available generation, in excess of its own needs, to Matanuska Electric Association, Inc. ("MEA"), Homer Electric Association, Inc. ("HEA"), Golden Valley Electric Association, Inc. ("GVEA"), and prior to October 30, 2020, Anchorage Municipal Light & Power ("ML&P"). Power pool sales to MEA began in April 2021. Chugach was organized as an Alaska electric cooperative in 1948 and operates on a not-for-profit basis and, accordingly, seeks only to generate revenues sufficient to pay operating and maintenance costs, the cost of purchased power, capital expenditures, depreciation, and principal and interest on all indebtedness and to provide for reserves. Chugach is subject to the authority of the Regulatory Commission of Alaska ("RCA"). On October 30, 2020, Chugach acquired substantially all of the assets of ML&P from the Municipality of Anchorage, Alaska ("MOA"). The consolidated financial statements include the activity of Chugach and the activity of the Beluga River Unit ("BRU"). Chugach accounts for its share of BRU activity using proportional consolidation (see Note 15 — "Beluga River Unit"). Intracompany activity has been eliminated for presentation of the consolidated financial statements. Presentation of Financial Information On October 30, 2020, Chugach recorded the ML&P acquisition in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations," with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. The purchase price was allocated to the assets acquired and the liabilities assumed based on their fair value. The allocation of the purchase price included the fair value of BRU reserves, which was recorded net of a regulatory offset equal to the value of the reserves and was received and recorded in June 2021. (2) Significant Accounting Policies a. Manggement Estimates In preparing the financial statements in conformity with United States generally accepted accounting principles ("GAAP"), the management of Chugach is required to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets 8 43 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 and liabilities as of the date of the balance sheet and revenues and expenses for the reporting period. Estimates include the fair value of assets acquired and liabilities assumed, allowance for doubtful accounts, workers' compensation liability, deferred charges and liabilities, unbilled revenue, estimated useful life of utility plant, cost of removal and asset retirement obligation ("ARO"), and remaining proved BRU reserves. Actual results could differ from those estimates. b. Regulation The accounting records of Chugach conform to the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission ("FERC"). Chugach meets the criteria, and accordingly,follows the accounting and reporting requirements of Financial Accounting Standards Board ("FASB") ASC 980, "Topic 980 - Regulated Operations." FASB ASC 980 provides for the recognition of regulatory assets and liabilities as allowed by regulators for costs or credits that are reflected in current rates or are considered probable of being included in future rates. Our regulated rates are established to recover all our specific costs of providing electric service. In each rate filing, rates are set at levels to recover all our specific allowable costs and those rates are then collected from our retail and wholesale customers. The regulatory assets or liabilities are then reduced as the cost or credit is reflected in earnings and our rates, see Note (2n) "Deferred Charges and Liabilities. " c. Utility Plant and Depreciation Additions to electric plant in service are recorded at original cost of contracted services, direct labor and materials, indirect overhead charges, and capitalized interest less contributions in aid of construction ("CIAC"). As an electric utility, Chugach follows the FERC system of accounts which recommends that CIAC be recorded as a reduction to utility property plant and equipment. FASB ASC 210-10-S99, "Section S99 — SEC Materials," requires the utility plant of a public utility company to present the cost and adjustments thereto as required by the system of accounts prescribed by the applicable regulatory authorities. For property replaced or retired, the book value of the property, removal cost, less salvage, is charged to accumulated depreciation. Renewals and betterments are capitalized, while maintenance and repairs are normally charged to expense as incurred. In accordance with FASB ASC 360, "Topic 360 — Property, Plant, and Equipment," certain asset groups are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable in rates. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset group exceeds the fair value of the asset. 9 44 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Depreciation and amortization rates have been applied on a straight-line basis and at December 31, 2022 are as follows: Annual Depreciation Rate Ranges Legacy Chugach Legacy ML&P Steam production plant 3.03% - 3.26% 2.70% - 11.97% Hydroelectric production plant 0.88% - 2.71% 2.09% - 2.79% Other production plant 2.18% - 3.46% 2.90% - 4.52% Transmission plant 1.01% - 10.50% 1.68% - 2.45% Distribution plant 1.40% - 10.00% 1.61% - 5.09% General plant 1.95% - 33.33% 1.66% - 14.87% Other 2.75% - 2.75% 3.33% 18.54% On March 23, 2017, the RCA approved revised depreciation rates effective July 1, 2017 in Docket U-16-081(2) for the legacy Chugach assets. The legacy ML&P assets are those acquired in the ML&P acquisition and are depreciated at rates effective at acquisition. Chugach's depreciation rates include a provision for cost of removal. Chugach records a separate liability for the estimated obligation related to the cost of removal. Chugach records Depreciation, Depletion and Amortization ("DD&A") expense on the BRU assets based on units of production using the following formula: 67% of the total production from the BRU as provided by the operator divided by 67% of the estimated remaining proved reserves (in thousand cubic feet (Mcf)) in the field multiplied by Chugach's total assets in the BRU. Prior to the ML&P acquisition, Chugach's formula used Chugach's 10%ownership interest in the BRU. Effective October 30, 2020,the formula was adjusted to reflect Chugach's 67%ownership interest. d. Full Cost Method Chugach has elected the Full Cost method to account for exploration and development costs of gas reserves. e. Asset Retirement ObliKation Chugach calculates and records Asset Retirement Obligations ("ARO") associated with the BRU. Prior to October 2022 Chugach used certain financing rates as its credit adjusted risk free rate and the expected cash flow approach to calculate the fair value of the ARO liability. After the completion of the ARO study, the expiration of the ARO changed from 2037 to 2034. The ARO asset is depreciated using the DD&A formula previously discussed. The ARO liability is accreted using the interest method of allocation. The depreciation expense and accretion expense related to the ARO are reclassified from the income statement to the ARO surcharge deferred account,where the costs are recovered on a levelized dollar-per-Mcf basis calculated by using the remaining volumes of BRU production until field abandonment. 10 45 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 f Investments in Associated Organizations The loan agreement with National Rural Utilities Cooperative Finance Corporation ("NRUCFC") requires as a condition of the extension of credit, that an equity ownership position be established by all borrowers. Chugach's equity ownership in this organization is less than one percent. Chugach also has an equity ownership in CoBank, ACB ("CoBank") acquired in connection with prior loan agreements, which have since been repaid. Although we no longer have a patronage earning loan with CoBank, there remains an existing equity investment balance in this organization. These equity investments do not have readily determinable fair values and are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. No impairment or observable price changes were recorded during 2022, 2021, or 2020. Investments in associated organizations was $7.0 million and $7.3 million at December 31, 2022 and 2021, respectively. g. Special Funds Special funds include deposits associated with the deferred compensation plan and investments associated with the BRU. Once the BRU becomes no longer economically feasible to produce hydrocarbons, the BRU owners will cease operations and remove facilities and abandon the field based on estimates prepared by an engineering team. Chugach collects and restricts funds for this liability. The BRU ARO investment fund was established pursuant to an agreement with the State of Alaska. The BRU ARO investment fund is a separately managed investment portfolio specifically for the purpose of dismantling the field. These funds are not expected to be used until approximately 2034 when the BRU owners retire the BRU gas field. Therefore, the portfolio of funds benefit from being in a separate investment portfolio with separate, distinct, and broad investment criteria that is consistent with the timing of when the funds are expected to be utilized.The investment portfolio is managed to maximize capital appreciation with a long-term rate of return. The portfolio has specific investment guidelines approved by the Board of Directors ("Board") to accomplish the purpose of the ARO fund. 11 46 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 The investment allocations are detailed below: Investment Allocations Investment Type Target Min Max At December 31, 2022 Equity 47% 46% U.S. Large-Cap Equity 22% 12% 32% 22% U.S. Mid-Cap Equity 10% 5% 15% 10% U.S. Small-Cap Equity 5% 0% 10% 5% International Developed Equity 6% 0% 12% 6% Emerging Markets Equity 4% 0% 8% 3% Alternatives 21% 22% Real Estate 3% 0% 6% 2% Alternative Beta 10% 0% 15% 12% Infrastructure 5% 0% 10% 5% Commodities 3% 0% 6% 3% Fixed Income 32% 33% U.S. Fixed Income 18% 8% 28% 18% U.S. High Yield Fixed Income 5% 0% 10% 5% TIPS 2% 0% 10% 2% International Fixed Income 5% 0% 10% 4% Cash 2% 0% 10% 4% As part of the ML&P acquisition, we acquired ML&P's BRU ARO funds, in-kind, of approximately $17.3 million. The combined BRU ARO was $20.1 million and $21.4 million as of December 31, 2022 and December 31, 2021, respectively. Additional funds associated with the BRU for which the RCA has specified the use were $4.8 million and $19.5 million at December 31, 2022 and December 31, 2021, respectively. Currently, its use is for fuel price volatility in future periods. On May 16, 2022, Chugach received approval to adopt a forward-funding recovery structure for BRU capital expenditures through a BRU Capital Reserve Surcharge on an interim, non-refundable basis, and received final approval on December 23, 2022. This account is being used to fund current and future years BRU capital requirements. The BRU Capital Reserve Surcharge provides for the exact recovery of BRU capital requirements through a balancing account. 12 47 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 h. Cash, Cash Equivalents, and Restricted Cash Equivalents The following table provides a reconciliation of cash, cash equivalents, and restricted cash equivalents reported within the Consolidated Balance Sheet that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows. December 31, 2022 December 31, 2021 Cash and cash equivalents $ 3,178,673 $ 12,489,780 Restricted cash equivalents 12,676,066 25,100,943 Restricted cash equivalents included in other property and investments 30,000 64,310 Total cash, cash equivalents and restricted cash equivalents shown in the consolidated statements of cash flows $ 15,884,739 $ 37,655,033 Restricted cash equivalents include funds on deposit for future workers' compensation claims and funds from the MOA to be used for a rate reduction refund to the North District members as ordered by the RCA, which was $12.2 million at December 31, 2022. Restricted assets, including cash equivalents, are recognized on Chugach's Consolidated Balance Sheet when they are restricted as to withdrawal or usage. i. Marketable Securities Marketable securities consist of bond mutual funds, corporate bonds, and certificates of deposit with a maturity less than 12 months, classified as trading securities, reported at fair value with interest and dividend income and gains and losses in earnings. There were no realized gains or losses on marketable securities for the twelve months ended December 31, 2022 and 2021. j. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount. The allowance for doubtful accounts is management's best estimate of the amount of probable credit losses in existing accounts receivable. Chugach determines the allowance based on its historical write-off experience and current economic conditions. Chugach reviews its allowance for doubtful accounts monthly. Past due balances over 90 days in a specified amount are reviewed individually for collectability. All other balances are reviewed in aggregate. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Chugach does not have any off—balance-sheet credit exposure related to its customers. k. Materials and Su Rplies Materials and supplies are stated at average cost. 13 48 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 1. Fuel Stock Fuel Stock is the weighted average cost of fuel injected into Cook Inlet Natural Gas Storage Alaska ("CINGSA"). Chugach's fuel balance in storage for the years ended December 31, 2022 and 2021 amounted to $18.2 million and $14.1 million, respectively. m. Fuel and Purchased Power Cost Recovery Expenses associated with electric services include fuel purchased from others and produced from Chugach's interest in the BRU, both of which are used to generate electricity, as well as power purchased from others. Chugach is authorized by the RCA to recover fuel and purchased power costs, excluding costs associated with the Eklutna Purchased Power Agreement ("PPA"), through the fuel and purchased power adjustment process, which is adjusted quarterly to reflect increases and decreases of such costs. We recognize differences between projected recoverable fuel and purchased power costs and amounts recovered through rates. The fuel cost under/over recovery on our balance sheet represents the net accumulation of any under- or over-collection of fuel and purchased power costs. Fuel cost under-recovery will appear as an asset on our balance sheet and will be collected from our members in subsequent periods. Conversely, fuel cost over-recovery will appear as a liability on our balance sheet and will be refunded to our members in subsequent periods. n. Deferred Charges and Liabilities Included in deferred charges and liabilities on Chugach's financial statements are regulatory assets and liabilities recorded in accordance with FASB ASC 980. See Note 8 Deferred Charges and Liabilities. Continued accounting under FASB ASC 980 requires that certain criteria be met. We capitalize all or part of costs that would otherwise be charged to expense if it is probable that future revenue in an amount at least equal to the capitalized cost will result from inclusion of that cost in allowable costs for ratemaking purposes and future revenue will be provided to permit recovery of the previously incurred cost. Management believes Chugach's operations currently satisfy these criteria. Chugach's regulatory asset recoveries are embedded in base rates approved by the RCA. Specific costs incurred and recorded as regulatory assets, including the amortization period for recovery, are approved by the RCA either in standard Simplified Rate Filings ("SRF"), general rate case filings, or specified independent requests or filings. The rates approved related to the regulatory assets are matched to the amortization of actual expenses recognized. The regulatory assets are amortized and collected through rates over differing periods depending upon the period of benefit as established by the RCA. Deferred liabilities include refundable CIAC, which are credited to the associated cost of construction of property units. Refundable CIAC are held in deferred liabilities pending their return or other disposition. If events or circumstances should change so the criteria are not met, the write off of regulatory assets and liabilities could have a material effect on Chugach's financial position, results of operations or cash flows. 14 49 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 o. Patronage Capital Revenues in excess of current period costs (net operating margins and nonoperating margins) in any year are designated on Chugach's statement of operations as assignable margins. These excess amounts (i.e. assignable margins) are considered capital furnished by the members, and are credited to their accounts and held by Chugach until such future time as they are retired and returned without interest at the discretion of the Board. Retained assignable margins are designated on Chugach's balance sheet as patronage capital. This patronage capital constitutes the principal equity of Chugach. The Board may also approve the return of capital to former members and estates who request early retirements at discounted rates under a discounted capital credits retirement plan was authorized by the Board in September of 2002. p. Consumer Deposits Consumer deposits include amounts certain customers are required to deposit to receive electric service. Consumer deposits at December 31, 2022 and 2021, totaled$2.0 million and $2.3 million, respectively. Consumer deposits also represent customer credit balances from prepaid accounts. Credit balances at December 31, 2022 and 2021, totaled $2.9 million and $3.4 million, respectively. q. Fair Value ofFinancial Instruments FASB ASC 825, "Topic 825 — Financial Instruments," requires disclosure of the fair value of certain on and off-balance sheet financial instruments for which it is practicable to estimate that value. The following methods are used to estimate the fair value of financial instruments: Cash, cash equivalents, and restricted cash equivalents — the carrying amount approximates fair value because of the short maturity of those instruments. Marketable securities—the carrying amount approximates fair value as changes in the market value are recorded monthly and gains or losses are reported in earnings (see Note 2i). Long-term obligations — the fair value estimate is based on the quoted market price for same or similar issues (see Note 11). Consumer deposits — the carrying amount approximates fair value because of the short refunding term. The fair value of accounts receivable and payable, and other short-term monetary assets and liabilities approximate carrying value due to their short-term nature. r. Operating Revenues Revenues are recognized upon delivery of electricity and services. Energy sales revenues are Chugach's primary source of revenue and are recognized upon delivery of electricity. Wheeling revenue is recognized when energy is wheeled across Chugach's transmission lines. Other miscellaneous services are billed monthly as provided. Operating revenues are based on billing rates authorized by the RCA,which are applied to customers' usage of electricity. Chugach's rates 15 50 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 are established, in part, on test period sales levels that reflect actual operating results. Chugach's tariffs include provisions for the recovery of gas costs according to gas supply contracts, as well as certain purchased power costs. For more information, see "Note 17 Revenue From Contracts with Customers." s. Capitalized Interest Allowance for funds used during construction ("AFUDC") and interest charged to construction - credit ("IDC") are the estimated costs of the funds used during the period of construction from both equity and borrowed funds. AFUDC and IDC are applied to specific projects during construction. AFUDC and IDC calculations use the net cost of borrowed funds when used and is recovered through RCA approved rates as utility plant is depreciated. For all projects Chugach capitalized such funds at the weighted average rate of 3.3%, 4.2%, and 4.2% during 2022, 2021, and 2020, respectively. t. Environmental Remediation Costs Chugach accrues for losses and establishes a liability associated with environmental remediation obligations when such losses are probable and can be reasonably estimated. Such accruals are adjusted as further information develops or circumstances change. Estimates of future costs for environmental remediation obligations are not discounted to their present value. However, various remediation costs may be recoverable through rates and accounted for as a regulatory asset. u. Income Taxes Chugach is exempt from federal income taxes under the provisions of Section 501(c)(12) of the Internal Revenue Code and for the years ended December 31, 2022, 2021, and 2020 was in compliance with that provision. In addition, as described in Note 19 "Commitments and Contingencies, " Chugach collects sales tax and is assessed gross revenue and excise taxes which are presented on a net basis in accordance with FASB ASC 606-10-65, "Topic 606 - Revenue from Contracts with Customers." Chugach applies a more-likely-than-not recognition threshold for all tax uncertainties. FASB ASC 740, "Topic 740 — Income Taxes," only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. Chugach's management reviewed Chugach's tax positions and determined there were no outstanding or retroactive tax positions that were not highly certain of being sustained upon examination by the taxing authorities. Management has concluded that there are no significant tax positions requiring recognition in its financial statements for all periods presented. Chugach's evaluation was performed for the tax periods ended December 31, 2020 through December 31, 2022 for United States Federal Income Tax, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2022. 16 51 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 (3) Accounting Pronouncements Issued, and adopted: ASC Update 2018-14 "Compensation Retirement Benefits Defined Benefit Plans General (Subtopic 715-20):Disclosure Framework Changes to the Disclosure Requirements for Defined Benefit Plans" In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." ASU 2018-14 modifies ASC 715-20 to improve disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for fiscal years ending after December 15, 2020, for public companies. Early adoption is permitted. Chugach began application of ASU 2018-14 on January 1, 2021. Adoption did not have a material effect on our results of operations, financial position, and cash flows. ASC Update 2021-05 "Leases (Topic 842) Lessors - Certain Leases with Variable Lease Payments" In July 2021, the FASB issued ASU 2021-05 "Leases (Topic 842) —Lessors — Certain Leases with Variable Lease Payments". ASU 2021-05 requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate (hereafter referred to as "variable payments") as an operating lease on the commencement date of the lease if specified criteria are met. The amendments in ASU 2021-05 should be applied by using either of the following approaches: 1.Retrospective application to leases that commence or are modified on or after the adoption of ASC 842. 2.Prospective application to leases that commence or are modified on or after the date on which a lessor first applies the amendments in ASU 2021-05. Lessors that have adopted ASC 842 as of July 2021, should apply the transition requirements for fiscal years beginning after December 15, 2021. Chugach began application of ASC 842 on January 1, 2019. See "Note 18 —LEASES." Early adoption of ASU 2021-05 is permitted. Chugach began application of ASU 2021-05 on January 1, 2022. Adoption did not have a material effect on our results of operations, financial position, and cash flows. ASC Update 2021-09 "Leases (Topic 842) Discount Rate for Lessees That Are Not Public Business Entities" In November 2021, the FASB issued ASU 2021-09 "Leases (Topic 842)—Discount Rate for Lessees That Are Not Public Business Entities". ASU 2021-09 allows lessee's that are not a public business entity to use a risk-free rate as its discount rate by class of underlying asset rather than an entity-wide level. The amendments in this update also require that when the rate implicit in the lease is readily determinable for any individual lease, the lessee would use that rate (rather than a risk-free rate or an incremental borrowing rate), regardless of whether it has made the risk-free rate election. 17 52 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 The amendments in this update are effective for fiscal years beginning after December 15, 2021. Chugach began application of ASU 2021-09 on January 1, 2022. Adoption did not have a material effect on our results of operations, financial position, and cash flows. ASC Update 2021-10 "Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance" The amendments in this update require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity's financial statements. The amendments in this update are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. Chugach began application of ASU 2021-10 on January 1, 2022. Adoption did not have a material effect on our disclosures. (4) Fair Value of Assets and Liabilities Fair Value Hierarchy In accordance with FASB ASC 820, Chugach groups its financial assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1 —Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect Chugach's estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. 18 53 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 The tables below present the balances of Chugach's investment accounts associated with the BRU ARO and other obligations,which are comprised of bond and equity securities. Chugach had no other assets or liabilities measured at fair value on a recurring basis at December 31, 2022, or December 31, 2021. December 31, 2022 Total Level 1 Level 2 Level 3 BRU ARO Fund $ 20,114,870 $ 18,004,464 $ 2,110,406 $ 0 RRR Fund $ 12,174,066 $ 12,174,066 $ 0 $ 0 Future Natural Gas Purchases Fund $ 4,773,459 $ 4,773,459 $ 0 $ 0 December 31, 2021 Total Level 1 Level 2 Level 3 BRU ARO Fund $ 21,441,165 $ 19,154,277 $ 2,286,888 $ 0 RRR Fund $ 24,000,943 $ 24,000,943 $ 0 $ 0 Future Natural Gas 0 Purchases Fund $ 19,437,450 $ 19,437,450 $ 0 $ Fair Value of Financial Instruments Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions. The fair value of cash, cash equivalents, restricted cash equivalents, accounts receivable and payable, and other short-term monetary assets and liabilities approximate carrying value due to their short-term nature. The estimated fair values of long-term obligations included in the financial statements at December 31, 2022, are as follows (dollars in thousands): Carrying Value Fair Value Level 2 Long-term obligations (including current installments) $ 1,196,395 $ 977,132 (5) Re ug latory Matters Gas Dispatch Agreement In 2016, Chugach and MEA entered into an agreement entitled, "Gas Dispatch Agreement" in which Chugach provides gas scheduling and dispatch services to MEA. On January 24, 2022, MEA provided notice that it was terminating the Gas Dispatch Agreement, effective August 1, 2022. Termination of the agreement reduced annual revenues by approximately $0.2 million. Simplified Rate Filing Prior to the acquisition of the MOA d/b/a ML&P on October 30, 2020, Chugach participated in the SRF process for adjustments to base demand and energy rates for Chugach retail customers and wholesale customer, Seward. SRF is an expedited base rate adjustment process available to electric cooperatives in the State of Alaska, with filings made either on a quarterly or semi-annual basis. Chugach participated on a quarterly filing schedule basis. While there is no limitation on base rate decreases, increases under SRF are limited to 8% in a 12-month period and 20% in a 36- 19 54 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 month period. Chugach is also permitted to cease participation under the SRF process and adjust rates through general rate case filings, which do not have limitations on rate adjustments. As a result of the acquisition, Chugach submitted a request to the RCA to temporarily suspend its participation in the SRF process pending the completion of a general rate case following its acquisition of ML&P, which will be filed no later than August 15, 2023. The RCA granted Chugach's request. Chugach will request RCA approval to re-enter the SRF process after completion of its rate case. Operation and Regulation of the Alaska Railbelt Electric and Transmission System In 2020 the Alaska Legislature enacted Senate Bill ("SB") 123, requiring an electric reliability organization ("ERO") to be formed for the Railbelt electric grid. The ERO's primary tasks are to develop and enforce reliability standards, develop transmission and interconnection standards, and conduct integrated resource planning for the Railbelt. The Railbelt utilities worked with other stakeholders to form the Railbelt Reliability Council ("RRC") with the intent that the RRC would ultimately submit an application to the RCA to become the ERO. On March 25, 2022, the RRC formally submitted its application for certification as the ERO. The RRC is structured as a combination independent and balanced stakeholder board, which means that consumers, providers, and non-consumer/provider interests are all represented on the RRC board.The RCA opened a docket to investigate the RRC's application,received testimony, and held a hearing on the matter. Comments related to the RRC's application were primarily focused on potential measures for reducing costs while still allowing the RRC to complete its mission as the ERO. Following the hearing, the RCA issued an order indicating that certain modifications to the RRC's application were required as a condition of certification. The RRC reviewed and accepted the RCA's required changes and submitted its compliance filing demonstrating as much on September 14, 2022. On September 23, 2022, the RCA issued its order approving the RRC's application to be certificated as the ERO. The RRC has submitted its proposed budget and operating tariff to the RCA for approval. Both matters have been suspended for further investigation. Railbelt Reliability Standards In March 2018, the Alaska Intertie Management Committee completed the development of the Railbelt Reliability Standards and submitted them to the RCA on April 5, 2018. These reliability standards are based on North American Electric Reliability Corporation ("NERC") standards, modified to meet the unique circumstances of the relatively small and islanded Railbelt grid. The standards govern the secure operation of the Railbelt electric grid and will be adopted for the further development, administration, and enforcement of the ERO. In June 2016, in response to RCA Docket I-16-002, Railbelt Utility Information Technology and Operations Technology leadership began meeting to discuss Railbelt cybersecurity. The Railbelt Utilities Managers ("RUM") group designated the Cybersecurity Working Group to review industry standards and provide a statement of work to develop Railbelt cybersecurity standards. On June 21, 2018, Chugach posted a Request for Proposal to hire a consultant to draft the standards. The final draft was presented to the RUM on February 15, 2019. On July 10, 2019,a status update was provided to the RCA by the RUM announcing the completion of Alaska Critical Infrastructure Protection 20 55 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Cybersecurity Standards ("AKCIP") and a collective agreement for adoption effective January 1, 2020. Implementation schedules are contained in the specific standards. ML&P Acquisition The transaction to acquire ML&P closed on October 30, 2020. For more information, see "Note 16 -ML&P Acquisition." Potential Margin Shortfalls Due to Lower Sales On July 1, 2021, Chugach submitted a petition to the RCA requesting approval to modify the Stipulation Resolving All Issues (as approved in Order No. U-18-102(44)/U-19-020(39)/U-19- 021(39)),in response to reductions in sales due,in part,to the COVID-19 pandemic. In the petition, Chugach requested approval to modify the amortization amounts for the Secondary Regulatory Asset and the Eklutna PPA payments, as and if needed, that would allow Chugach to achieve a Margins for Interest ("MFI/I") of 1.20 for 2021, 2022 and 2023. On July 30, 2021, the RCA issued Order No. U-19-020(47)/U-19-021(47) partially denying the petition and opening Docket U-21- 059 for investigation of Chugach's projected margin shortfall. On August 10, 2021, Chugach requested expedited consideration requesting that a decision be issued by the RCA by November 12, 2021. A hearing was held on September 23, 2021, to address Chugach's request to modify the Stipulation. On November 9, 2021, the RCA issued an order authorizing Chugach to modify the amortization of its Secondary Regulatory asset and defer the Eklutna PPA payments, if needed, to achieve a MFI/I of not more than 1.20 for 2021. Additionally, the RCA required Chugach to submit a filing to propose an alternative solution for years 2022 and 2023. Chugach submitted the proposed alternative solution; however, in response to issues raised by its members, withdrew this filing on January 20, 2022. On February 28, 2022, Chugach submitted a petition to the RCA requesting approval to defer up to $8.8 million of the Secondary Regulatory asset and Eklutna PPA payments that were approved for deferral in 2021 by the RCA in Order No. U-19-020(47)/U-19-021(47). Since Chugach did not defer any amounts in 2021, the petition requested RCA approval to defer up to the $8.8 million as previously authorized for 2021 in calendar-years 2022 and 2023, if needed. On October 27, 2022, the RCA issued an order authorizing the deferral of the amortization of the Secondary Regulatory asset if needed to achieve a MFI/I of not more than 1.20 for 2022; however, the petition for deferral in 2023 was denied. Depreciation Study On June 29, 2022, Chugach filed a petition to approve depreciation rates recommended in a depreciation study based on Chugach's 2021 plant balances. The RCA opened a docket to investigate Chugach's filing. The Attorney General, Department of Regulatory Affairs and Public Advocacy ("RAPA") intervened in the proceeding. Chugach and RAPA negotiated a stipulation. The stipulation was filed with the RCA and approved on December 29, 2022, with depreciation rates effective January 1, 2023. The annual impact of the new depreciation rates is a decrease of approximately $2.4 to $3.6 million. 21 56 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Beluga River Unit The BRU is located on the western side of Cook Inlet, approximately 35 miles from Anchorage, and is an established natural gas field that was originally discovered in 1962. Effective October 30, 2020, Chugach acquired ML&P's 57% ownership share of the BRU, increasing Chugach's ownership share of the BRU to 66.7%. Hilcorp owns the remaining 33.3%. Hilcorp drilled two wells in 2021, four wells in 2022, and plans to drill five wells in 2023. Chugach records depreciation, depletion, and amortization on BRU assets based on units of production. During 2022, Chugach lifted 7.9 Bcf resulting in a cumulative lift since purchase of 19.9 Bcf of the approximate 56.4 Bcf in Chugach's proven developed reserved. Chugach and the other owner, Hilcorp, are operating under an existing Joint Operating Agreement. Hilcorp is the operator for BRU. In addition to the operator fees to Hilcorp, other BRU expenses include royalty expense and interest on long-term debt. All expenses other than depreciation, depletion and amortization and interest on long-term debt are included as fuel expense on Chugach's Consolidated Statement of Operations. Chugach has applied and qualified for a small producer tax credit, provided by the State of Alaska, resulting in an estimate of no liability for production taxes for a period of ten years, through 2026. The revenue in excess of expenses less the allowed times interest earned ratio ("TIER") from BRU operations is adjusted through Chugach's fuel and purchased power adjustment process. On May 16, 2022, Chugach received approval to adopt a forward-funding recovery structure for BRU capital expenditures through a BRU Capital Reserve Surcharge on an interim, non- refundable basis. Revenues received from the surcharge are deposited into the BRU Reserve account to meet BRU capital expenditure requirements over the remaining life of the gas field. Under this structure, all future capital expenditures are recovered through the BRU Capital Reserve Surcharge. The BRU Capital Reserve Surcharge is a component of Chugach's BRU gas transfer price. All BRU costs are recovered through Chugach's fuel and purchased power adjustment process as a direct pass-through. Seward On August 23, 2021, Chugach filed a 2022 Wholesale Power Contract ("2022 Agreement") between Chugach and Seward with the RCA. On September 30, 2021, the RCA approved the 2022 Agreement. The 2022 Agreement provides for an initial three-year term, with two subsequent three-year automatic extensions unless terminated by either party with a one-year's advance notice. The 2022 Agreement also provides for the continuation of generation interruptibility if power supplies are not available from the Chugach system in addition to no generation reserve assignment. It also provides significant opportunity for mutual benefit in key areas of operations, including employee training, electric vehicle charging infrastructure, renewable generation, dispatch and engineering services, cyber security, and Advanced Metering Infrastructure ("AMI q). The 2022 Agreement is expected to provide approximately$2.3 million annually in base rate fixed- cost contribution to the Chugach system. In addition to simplifying fuel and purchased power cost recovery, it also provides for the optionality of Seward to purchase natural gas to meet all or portions of the energy requirements and to meet a portion of its power supply needs through economy energy purchases subject to Chugach approval based on operational or economic conditions. 22 57 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 In 2022, the City of Seward announced that it intends to sell the assets of its electric utility to HEA. The sale must be approved by an affirmative vote of Seward residents. That vote is currently scheduled to take place in May 2023. If approved, the 2022 Agreement would likely not be renewed beyond its initial three-year term. Furie Operating Alaska LLC Gas Sales and Purchase A reg ement Chugach entered into a new Gas Sales and Purchase Agreement ("Furie Agreement") with Furie Operating Alaska, LLC (Furie) for firm and non-firm natural gas purchases. The previous agreement was terminated because Furie informed Chugach that they could not produce sufficient gas volumes to meet the firm supply commitment of 5,000 Mcf per day in contract years 7 through 16 (4/l/2023 — 3/31/2033). To replace these firm gas volumes, Chugach exercised an additional purchase option under its firm contract with Hilcorp Alaska, LLC ("Hilcorp Agreement"). The Hilcorp Agreement, including the additional purchase option, provides firm gas supply through March 31, 2028. Under the Furie Agreement, quantities of gas are subject to availability and prices are subject to negotiation. The agreement provides Chugach the option to purchase supplemental gas to meet firm load requirements, if economically advantageous and if operational conditions warrant such purchases. Additionally, this agreement provides Chugach with an additional gas supply option for generation of energy for economy sales, which reduces the underlying cost to provide electric service to members. The RCA approved the Furie Agreement effective November 1, 2021. Power Pooling and Joint Dispatch The RCA approved the Amended and Restated Operations Agreement for Power Pooling and Joint Dispatch (Pooling Agreement) on November 2, 2020. Pursuant to the Pooling Agreement, Chugach and MEA spent the next 18 months working to implement the Pooling Agreement. On December 29, 2021, MEA filed its first quarter 2022 cost of power adjustment wherein it alleged that beginning in January 2022 MEA would no longer be purchasing energy from Chugach at the price proposed by Chugach. On March 3, 2022, the RCA opened a docket to investigate the tight power pool energy exchange and settlement practices of Chugach. A hearing was held on the matter on in May of 2022. The RCA issued its final order on March 3, 2023, requiring Chugach to issue corrected invoices based on a previously agreed upon settlement process required by the Power Pool Agreement and pay any refunds due to MEA. Credit invoices were issued on April 3, 2023 totaling $625,058.49 and a compliance filing will be made to the RCA by April 10, 2023. 23 58 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 (6) Utility Plant Major classes of utility plant, net of contributions in aid of construction, as of December 31 are as follows: Electric plant in service: 2022 2021 Steam production plant $ 294,852,984 $ 308,652,600 Hydroelectric production plant 30,851,393 34,422,805 Other production plant 515,208,052 494,269,738 Transmission plant 349,197,248 346,398,832 Distribution plant 515,386,050 496,019,140 General plant 84,395,785 78,873,995 Unclassified electric plant in service' 128,778,261 128,891,974 Intangible plant' 8,806,840 9,306,358 Beluga River Natural Gas Field (BRU Asset &ARO Asset) 181,030,877 186,903,860 Other' 1,483,258 1,828,410 Total electric plant in service 2,109,990,748 2,085,567,712 Construction work in progress 52,721,736 34,253,304 Total electric plant in service and construction work in progress $ 2,162,712,484 $ 2,119,821,016 ' Unclassified electric plant in service consists of complete unclassified general plant,generation plant,transmission plant and distribution plant. Depreciation of unclassified electric plant in service has been included in functional plant depreciation accounts in accordance with the anticipated eventual classification of the plant investment. Intangible plant represents Chugach's share of a Bradley Lake transmission line financed internally.Other represents Electric Plant Held for Future Use. (7) Investments in Associated Organizations Investments in associated organizations include the following at December 31: 2022 2021 NRUCFC Capital Term Certificates $ 5,902,230 $ 5,902,230 CoBank 1,042,588 1,327,159 Other 48,669 51,547 Total investments in associated organizations $ 6,993,487 $ 7,280,936 24 59 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 (8) Deferred Charges and Liabilities Deferred Charges Regulatory assets and deferred charges, net of amortization, consisted of the following at December 31: 2022 2021 Regulatory assets and deferred charges: Short-term debt issuance and reacquisition costs $ 185,959 $ 310,867 Refurbishment of transmission equipment 49,383 58,642 Feasibility studies 360,376 1,483,976 Cooper Lake relicensing/projects 4,499,389 4,629,492 Fuel supply 1,311,972 1,450,138 Other regulatory deferred charges 3,391,818 717,806 Bond interest -market risk management 2,856,448 3,214,814 Environmental matters 752,066 797,417 Beluga parts and materials 4,300,423 5,529,115 NRECA pension plan prepayment 3,602,295 4,322,754 ML&P acquisition, integration, & consolidation 46,644,515 42,530,884 ML&P regulatory assets acquired 1,604,902 2,676,661 ML&P acquisition price premium 27,434,770 26,727,306 ML&P acquisition secondary regulatory asset 5,277,778 11,611,111 Incremental COVID-19 costs 6,285,155 6,287,155 Total regulatory assets and deferred charges $ 108,557,249 $ 112,348,138 Regulatory assets and deferred charges, not currently being recovered in rates charged to consumers, consisted of the following at December 31: 2022 2021 Regulatory assets and deferred charges Regulatory studies and other $ 3,420,091 $ 1,842,144 ML&P acquisition, integration, and consolidation 46,644,515 42,530,882 ML&P acquisition price premium 27,434,770 26,727,661 Incremental COVID-19 costs 6,285,155 6,287,155 Total regulatory assets and deferred charges $ 83,784,531 $ 77,387,842 We believe all regulatory assets and deferred charges not currently being recovered in rates charged to consumers are probable of recovery in the future based upon prior recovery of similar costs allowed by our regulator or rate orders currently approved by the RCA. The recovery of regulatory assets and deferred charges is approved by the RCA either in standard SRFs, general rate case filings or specified independent requests or filings. In most cases, deferred charges are recovered over the life of the underlying asset. 25 60 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Deferred Liabilities Deferred liabilities, at December 31 consisted of the following: 2022 2021 Refundable consumer advances for construction $ 1,070,739 $ 359,497 Post-retirement benefit obligation 414,037 448,372 Regulatory liability—gas sales 22,833 22,791 Future gas purchases 7,715,186 7,809,040 ARO surcharge deferred liability 416,908 4,093,502 Eklutna clearing 0 (9,083) Total deferred liabilities $ 9,639,703 $ 12,724,119 Future gas purchases represent funds that ML&P received for BRU underlift for which the RCA has specified the use. (9) Patronage Capital Chugach has a Board approved capital credit retirement policy. It establishes, in general, a plan to return the capital credits of wholesale and retail customers based on the members' proportionate contribution to Chugach's assignable margins. At December 31, 2022, Chugach had$194,755,133 of patronage capital (net of capital credits retired), which included $186,631,396 of patronage capital that had been assigned and $8,123,737 of patronage capital to be assigned to its members. At December 31, 2021, Chugach had $188,573,753 of patronage capital (net of capital credits retired in 2021), which included $178,995,274 of patronage capital that had been assigned and $9,578,479 of patronage capital to be assigned to its members. Approval of actual capital credit retirements is at the discretion of the Board. Chugach records a liability when the retirements are approved by the Board. The Second Amended and Restated Indenture of Trust ("Indenture") and the CoBank Second Amended and Restated Master Loan Agreement, as amended, prohibit Chugach from making any distribution of patronage capital to Chugach's customers if an event of default under the Indenture or debt agreements exists. Otherwise, Chugach may make distributions to Chugach's members in each year equal to the lesser of 5% of Chugach's patronage capital or 50% of assignable margins for the prior fiscal year. This restriction does not apply if, after the distribution, Chugach's aggregate equities and margins as of the end of the immediately preceding fiscal quarter are equal to at least 30% of Chugach's total long-term debt and equities and margins. In November 2022, the Board authorized payments to MEA and Seward of approximately $1.5 million and $90.0 thousand, respectively. In November 2021, the Board authorized payments to MEA and Seward of approximately $2.1 million and $110.2 thousand, respectively. 26 61 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 (10) Other Equities A summary of other equities at December 31 follows: 2022 2021 Nonoperating margins, prior to 1967 $ 23,625 $ 23,625 Donated capital 3,152,636 3,016,702 Unclaimed capital credit retirement' 12,417,911 12,437,596 Total other equities $ 15,594,172 $ 15,477,923 'Represents unclaimed capital credits that have met all requirements of Alaska Statute section 34.45.200 regarding Alaska's unclaimed property law and have therefore reverted to Chugach. (11) Debt Long-term obligations at December 31 are as follows: 2022 2021 2011 Series A Bond of 4.20%, maturing in 2031, with interest payable semi-annually March 15 and September 15 and principal due annually beginning in 2012 40,500,000 45,000,000 2011 Series A Bond of 4.75%, maturing in 2041, with interest payable semi-annually March 15 and September 15 and principal due annually beginning in 2012 117,166,663 123,333,330 2012 Series A Bond of 4.01%, maturing in 2032, with interest payable semi-annually March 15 and September 15 and principal due annually beginning in 2013 37,500,000 41,250,000 2012 Series A Bond of 4.41%, maturing in 2042, with interest payable semi-annually March 15 and September 15 and principal due annually between 2013 and 2020 and between 2032 and 2042 67,000,000 67,000,000 2012 Series A Bond of 4.78%, maturing in 2042, with interest payable semi-annually March 15 and September 15 and principal due annually beginning in 2023 50,000,000 50,000,000 2017 Series A Bond of 3.43%, maturing in 2037, with interest payable semi-annually March 15 and September 15 and principal due annually beginning in 2018 30,000,000 32,000,000 2019 Series A Bond of 3.86%, maturing in 2049, with interest payable semi-annually May 15 and November 15 and principal due annually beginning in 2021 67,200,000 71,100,000 2020 Series A Bond of 2.38%, maturing in 2039, with interest payable semi-annually April 30 and October 30 and principal payments beginning in 2025 275,000,000 275,000,000 2020 Series A Bond of 2.91%, maturing in 2050, with interest payable semi-annually April 30 and October 30 and principal payments beginning in 2021 489,000,000 507,000,000 2016 CoBank Note, 2.58% fixed rate note maturing in 2031, with interest and principal due quarterly beginning in 2016 23,028,000 26,904,000 Total long-term obligations $ 1,196,394,663 $ 1,238,587,330 Less current installments 48,920,667 42,192,667 Less unamortized debt issuance costs 5,960,113 6,072,373 Long-term debt, excluding current installments $ 1,141,513,883 $ 1,190,322,290 27 62 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Covenants Chugach is required to comply with all covenants set forth in the Second Amended and Restated Indenture of trust that secures the 2011, 2012, 2017, 2019 and 2020 Series A Bonds, and the 2016 CoBank Note. The CoBank Note is governed by the Second Amended and Restated Master Loan Agreement, as amended, which is secured by the Indenture dated January 20, 2011. Chugach is also required to comply with the 2016 Credit Agreement, as amended between Chugach and NRUCFC, KeyBank National Association, Bank of America, N.A., Wells Fargo Bank N.A., and CoBank, ACB dated July 30, 2019, governing loans and extensions of credit associated with Chugach's commercial paper program, in an aggregate principal amount not exceeding $300.0 million at any one time outstanding. Chugach is also required to comply with other covenants set forth in the Revolving Line of Credit Agreement with NRUCFC. Securi The Indenture, which became effective on January 20, 2011, imposes a lien on substantially all of Chugach's assets to secure Chugach's long-term debt obligations. On October 30, 2020, a lien was granted on certain ML&P acquired assets to secure the debt associated with the acquisition. Assets that are generally not subject to the lien of the Indenture include cash (other than cash deposited with the indenture trustee); instruments and securities; patents, trademarks, licenses and other intellectual property; vehicles and other movable equipment; inventory and consumable materials and supplies; office furniture, equipment and supplies; computer equipment and software; office leases; other leasehold interests for an original term of less than five years; contracts (other than power sales agreements with members having an original term exceeding three years,certain contracts specifically identified in the indenture, and other contracts relating to the ownership, operation or maintenance of generation,transmission or distribution facilities);non-assignable permits,licenses and other contract rights; timber and minerals separated from land; electricity, gas, steam, water and other products generated, produced or purchased; other property in which a security interest cannot legally be perfected by the filing of a Uniform Commercial Code financing statement, and certain parcels of real property specifically excepted from the lien of the Indenture. The lien of the Indenture may be subject to various permitted encumbrances that include matters existing on the date of the Indenture or the date on which property is later acquired; reservations in United States patents; non-delinquent or contested taxes, assessments and contractors' liens; and various leases, rights-of-way, easements, covenants, conditions, restrictions, reservations, licenses and permits that do not materially impair Chugach's use of the mortgaged property in the conduct of Chugach's business. Rates The Indenture also requires Chugach, subject to any necessary regulatory approval, to establish and collect rates reasonably expected to yield margins for interest equal to at least 1.10 times total interest expense. If any material change occurs in the circumstances contemplated at the time rates were most recently reviewed, the Indenture requires Chugach to seek appropriate adjustment to those rates so that they would generate revenues reasonably expected to yield margins for interest equal to at least 1.10 times interest charges, provided, however, upon review of rates based on a 28 63 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 material change in circumstances, rates are required to be revised in order to comply and there are less than six calendar months remaining in the current fiscal year, Chugach can revise its rates so as to reasonably expect to meet the covenant for the next succeeding 12-month period after the date of any such revision. The Second Amended and Restated Master Loan Agreement with CoBank, which became effective on June 30, 2016, as amended November 26, 2019, also requires Chugach to establish and collect rates reasonably expected to yield margins for interest equal to at least 1.10 times interest expense. The 2016 Credit Agreement governing the unsecured facility providing liquidity for Chugach's commercial paper program requires Chugach to maintain minimum margins for interest of at least 1.10 times interest charges for each fiscal year.Margins for interest generally consist of Chugach's assignable margins plus total interest expense, excluding amounts capitalized. Additionally, Chugach must maintain a minimum Consolidated Margins and Equities balance of$150.0 million, excluding any unrealized gain or loss on any Hedging Agreement, for each fiscal quarter and fiscal year-end. Distributions to Members Under the Indenture and debt agreements, Chugach is prohibited from making any distribution of patronage capital to Chugach's customers if an event of default under the Indenture or debt agreements exists. Otherwise, Chugach may make distributions to Chugach's members in each year equal to the lesser of 5% of Chugach's patronage capital or 50% of assignable margins for the prior fiscal year. This restriction does not apply if, after the distribution, Chugach's aggregate equities and margins as of the end of the immediately preceding fiscal quarter are equal to at least 30% of Chugach's total long-term debt and equities and margins. Maturities ofLoy&term Obligations Long-term obligations at December 31, 2022, mature as follows (dollars in thousands): Year 2011 Series 2012 Series 2016 2017 Series 2019 Series 2020 Series ending A Bonds A Bonds CoBank A Bonds A Bonds A Bonds Total 2023 10,667 6,250 4,104 2,000 3,900 22,000 48,921 2024 10,667 6,250 4,104 2,000 3,900 22,000 48,921 2025 10,667 6,250 3,876 2,000 3,900 22,000 48,693 2026 10,667 6,250 3,192 2,000 3,900 28,000 54,009 2027 10,667 6,250 2,508 2,000 3,900 28,000 53,325 Thereafter 104,332 123,250 5,244 20,000 47,700 642,000 942,526 $ 157,667 $ 154,500 $ 23,028 $ 30,000 $ 67,200 $ 764,000 $ 1,196,395 Lines ofcredit Chugach maintains a$50.0 million line of credit with NRUCFC. There was no outstanding balance on this line of credit at December 31, 2022. On March 16, 2020, Chugach drew $41.0 million on this line of credit to pay the balance of commercial paper. The balance on this line of credit was 29 64 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 subsequently paid using the senior unsecured credit facility backstopping our commercial paper program; therefore, there was no outstanding balance on this line of credit at December 31, 2020. The borrowing rate is calculated using the total rate per annum and may be fixed by NRUCFC. The borrowing rate was 6.25% and 2.45% at December 31, 2022 and 2021, respectively. The NRUCFC Revolving Line of Credit Agreement requires that Chugach, for each 12-month period, for a period of at least five consecutive days, pay down the entire outstanding principal balance. The NRUCFC line of credit was renewed December 15, 2021 and expires December 21, 2026. This line of credit is immediately available for unconditional borrowing. Commercial Paper Chugach maintains a $300.0 million senior unsecured credit facility, as amended June 2019, ("Credit Agreement"), which is used to back Chugach's commercial paper program. The pricing includes an all-in drawn spread of one-month LIBOR plus 90.0 basis points, along with a 10.0 basis points facility fee (based on an A/A2/A unsecured debt rating), as well as provisions for calculating the interest on loans in ways other than the LIBOR. Therefore, any transition away from using LIBOR is not expected to have a material impact on Chugach. The Credit Agreement expires on July 30, 2024. The participating banks include NRUCFC, Bank of America, N.A., KeyBank National Association, Wells Fargo Bank N.A., and CoBank, ACB. Our commercial paper can be repriced between one day and 397 days. Chugach is expected to continue to issue commercial paper in 2023, as needed. On March 16, 2020, Chugach attempted to reprice its outstanding commercial paper. Due to volatility in the markets caused by the pandemic, the demand for cash pushed treasuries into the negative,seizing up the commercial paper market.The lack of overall liquidity resulted in Chugach having to utilize other pre-existing credit facilities. The balance of commercial paper was initially paid using the NRUCFC line of credit,which was subsequently rolled over to the senior unsecured credit facility used to back the commercial paper program. The balance outstanding on our senior unsecured credit facility was $41.0 million bearing interest at 1.85% when it was paid using commercial paper on April 27, 2020. Chugach had $45.0 million and $22.0 million of commercial paper outstanding at December 31, 2022 and 2021, respectively. 30 65 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 The following table provides information regarding 2022 monthly average commercial paper balances outstanding (dollars in millions), as well as corresponding weighted average interest rates: Average Weighted Average Average Weighted Average Month Balance Interest Rate Month Balance Interest Rate January $ 18.5 0.25% July $ 23.1 2.08% February $ 9.4 0.26% August $ 26.0 2.66% March $ 15.4 0.80% September $ 30.5 2.96% April $ 11.1 0.84% October $ 36.9 3.62% May $ 20.0 1.11% November $ 46.1 4.22% June $ 20.0 1.57% December $ 45.0 4.53% Financing In January 2011, Chugach issued $275.0 million of First Mortgage Bonds, 2011 Series A, in two tranches,Tranche A and Tranche B,for the purpose of refinancing the 2001 and 2002 Series A Bonds in 2011 and 2012, and for general corporate purposes. Interest is paid semi-annually on March 15 and September 15 commencing on September 15, 2011. Principal on the 2011 Series A Bonds is paid in equal annual installments beginning March 15, 2012. In January 2012, Chugach issued $250.0 million of First Mortgage Bonds, 2012 Series A, in three tranches, Tranche A, Tranche B and Tranche C, for the purpose of repaying outstanding commercial paper used to finance Southcentral Power Project ("SPP") construction and for general corporate purposes. Interest is paid semi-annually March 15 and September 15 commencing on September 15, 2012. The 2012 Series A Bonds, Tranche A and Tranche C, pay principal in equal installments on an annual basis beginning March 15, 2013, and 2023,respectively.The 2012 Series A Bonds, Tranche B, pay principal beginning March 15, 2013, through 2020, and on March 15, 2032, through 2042. In June 2016, Chugach entered into a term loan facility with CoBank, evidenced by the 2016 CoBank Note,issued in the amount of$45.6 million,which is governed by the Second Amended and Restated Master Loan Agreement dated June 30, 2016, amended November 26, 2019, and secured by the Indenture. In March 2017, Chugach issued $40.0 million of First Mortgage Bonds, 2017 Series A for general corporate purposes. Interest is paid semi-annually on March 15 and September 15, commencing on September 15, 2017. The 2017 Series A Bonds pay principal in equal installments on an annual basis beginning March 15, 2018. In May 2019, Chugach issued $75.0 million of First Mortgage Bonds, 2019 Series A, for the purpose of repaying outstanding commercial paper used to finance Chugach's capital improvement program and for general corporate purposes. Interest is paid semi-annually on May 15 and November 15, commencing on November 15, 2019. The 2019 Series A Bonds pay principal in equal installments on an annual basis beginning on May 15, 2021. 31 66 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 On October 26, 2020, Chugach issued $800.0 million of First Mortgage Bonds, 2020 Series A, in two tranches,Tranche A and Tranche B, for the purpose of funding the acquisition of certain assets of ML&P and related transaction costs. Interest is paid semi-annually April 30 and October 30 commencing April 30, 2021. The 2020 Series A Bonds, Tranche A, pay principal semi-annually beginning April 30, 2025. The 2020 Series A Bonds, Tranche B pay principal beginning April 30, 2021. The bonds and all other long-term debt obligations are secured by a lien on substantially all of Chugach's assets, pursuant to the Indenture, which became effective on January 20, 2011, as previously amended and supplemented. On October 30, 2020, a lien was granted on certain ML&P acquired assets to secure the debt associated with the acquisition. The following table provides additional information regarding the bonds and the CoBank note at December 31, 2022 (dollars in thousands): Average Interest Issue Carrying Maturing Life (Years) Rate Amount Value 2011 Series A, Tranche A 2031 4.2 4.20 % $ 90,000 $ 40,500 2011 Series A, Tranche B 2041 9.2 4.75 % 185,000 117,167 2012 Series A, Tranche A 2032 4.7 4.01 % 75,000 37,500 2012 Series A, Tranche B 2042 14.3 4.41 % 125,000 67,000 2012 Series A, Tranche C 2042 9.7 4.78 % 50,000 50,000 2017 Series A, Tranche A 2037 7.2 3.43 % 40,000 30,000 2019 Series A, Tranche A 2049 9.5 3.86 % 75,000 67,200 2020 Series A, Tranche A 2039 8.5 2.38 % 275,000 275,000 2020 Series A, Tranche B 2050 18.0 2.91 % 525,000 489,000 2016 CoBank Note 2031 3.1 2.58 % 45,600 23,028 Total $ 1,485,600 $ 1,196,395 (12) Employee Benefit Plans Pension Playas Pension benefits for substantially all of Chugach's union employees are provided through the Alaska Electrical Pension Trust Fund and the UNITE HERE National Retirement Fund, multiemployer plans. Chugach pays an hourly amount per eligible union employee pursuant to the collective bargaining unit agreements. In these master, multiemployer plans, the accumulated benefits, and plan assets are not determined or allocated separately to the individual employer. Pension benefits for non-union employees are provided by the National Rural Electric Cooperative Association ("NRECA") Retirement and Security Plan ("RS Plan"). The RS Plan is a defined benefit pension plan qualified under Section 401 and tax-exempt under Section 501(a) of the Internal Revenue Code. Under ASC 960, "Topic 960-Plan Accounting-Defined Benefit Pension Plans," the RS Plan is a multiemployer plan, in which the accumulated benefits and plan assets are not determined or allocated separately to individual employers. Chugach makes annual contributions to the RS Plan equal to the amounts accrued for pension expense. 32 67 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Chugach made contributions to all significant pension plans for the years ended December 31, 2022, 2021, and 2020 of $11.0 million, $11.8 million, and $8.0 million, respectively. As part of the ML&P acquisition, we acquired 201 employees, however, the rates in all significant pension plans did not materially change for the years ended December 31, 2022, 2021, or 2020. In December 2012, a committee of the NRECA Board of Directors approved an option to allow participating cooperatives in the RS Plan to make a prepayment and reduce future required contributions. The prepayment amount is a cooperative's share, as of January 1, 2013, of future contributions required to fund the RS Plan's unfunded value of benefits earned to date using Plan actuarial valuation assumptions. The prepayment amount will typically equal approximately 2.5 times a cooperative's annual RS Plan required contribution as of January 1, 2013. After making the prepayment, for most cooperatives the billing rate is reduced by approximately 25%, retroactive to January 1 of the year in which the amount is paid to the RS Plan.The 25%differential in billing rates is expected to continue for approximately 15 years from January 1, 2013. However unexpected changes in interest rates, asset returns and other plan experience, plan assumption changes, and other factors may have an impact on the differential in billing rates and the 15-year period. On December 29, 2016, Chugach made a prepayment of $7.9 million to the NRECA RS Plan, which is included in deferred charges. Chugach recorded the long-term repayment in deferred charges and is amortizing the deferred charge to administrative, general, and other expense, over 11 years, which represents the difference between the normal retirement age of 62 and the average age of Chugach's employees in the RS Plan. The balance of the prepayment in deferred charges at December 31, 2022 and 2021 was $3.6 million and $4.3 million, respectively. The following table provides information regarding pension plans which Chugach considers individually significant: Alaska Electrical Pension NRECA Retirement Plana Security Plana Employer Identification Number 92-6005171 53-0116145 Plan Number 001 333 Year-end Date December 31 December 31 Expiration Date of CBA's June 30, 2025 N/AZ Subject to Funding Improvement Plan No N04 Surcharge Paid N/A N/A4 2022 2021 2020 2022 2021 2020 Zone Status Green Green Green N/A1 N/A1 N/A1 Required minimum contributions None None None N/A N/A N/A Contributions (in millions) $6.9 $7.1 $4.4 $4.1 $4.7 $3.6 Contributions > 5% of total plan contributions Yes Yes Yes No No No 1 A"zone status"determination is not required,and therefore not determined under the Pension Protection Act(PPA) of 2006. 2 The CEO is the only participant in the NRECA RS Plan who is subject to employment agreements.The CEO's employment agreement is effective through May 1,2026. 3 The Alaska Electrical Pension Plan financial statements are publicly available.The NRECA RS Plan financial statements are available on Chugach's website at www.chugachelectric.com. 4 The provisions of the PPA do not apply to the RS Plan,therefore,funding improvement plans and surcharges are not applicable.Future contribution requirements are determined each year as part of the actuarial valuation of the RS Plan and may change as a result of plan experience. 33 68 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Health and Welfare Plans Health and welfare benefits for union employees are provided through the Alaska Electrical Health and Welfare Trust and the Alaska Hotel, Restaurant and Camp Employees Health and Welfare and Pension Trust Fund. Chugach participates in multiemployer plans that provide substantially all union workers with health care and other welfare benefits during their employment with Chugach. Chugach pays a defined amount per union employee pursuant to collective bargaining unit agreements. Amounts charged to benefit costs and contributed to the health and welfare plans for these benefits for the years ending December 31, 2022, 2021, and 2020 were $9.0 million, $9.3 million, and $6.4 million, respectively. Chugach participates in a multi-employer plan through the Group Benefits Program of NRECA for non-union employees. Amounts charged to benefit cost and contributed to this plan for those benefits for the years ended December 31, 2022, 2021, and 2020 totaled $3.5 million, $3.7 million, and $2.9 million, respectively. Money Purchase Pension Plan Chugach participates in a multiemployer defined contribution money purchase pension plan covering some employees who are covered by a collective bargaining agreement. Contributions to this plan are made based on a percentage of each employee's compensation. Contributions to the money purchase pension plan for the years ending December 31, 2022, 2021, and 2020 were $269.9 thousand, $295.9 thousand, and $196.5 thousand, respectively. 401(k)Plan Chugach has a defined contribution 401(k) retirement plan which covers substantially all employees who, effective January 1, 2008, can participate immediately. Employees who elect to participate may contribute up to the Internal Revenue Service's maximum of $20,500 in 2022, $19,500 in 2021, $19,500 in 2020, and allowed catch-up contributions for those over 50 years of age of$6,500 in 2022, 2021, and 2020. Chugach does not make contributions to the plan. Deferred Compensation Effective January 1, 2011, Chugach participates in Vanguard's unfunded Deferred Compensation Program to allow highly compensated employees who elect to participate in the Program to defer a portion of their current compensation and avoid paying tax on the deferrals until received. The program is a non-qualified plan under Internal Revenue Code 457(b). Deferred compensation accounts are established for the individual employees; however, they are considered to be owned by Chugach until a distribution is made. The amounts credited to the deferred compensation account, including gains or losses, are retained by Chugach until the entire amount credited to the account has been distributed to the participant or to the participant's beneficiary. The balance of the Program at December 31, 2022, and 2021 was $1.4 million and $2.1 million, respectively. 34 69 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Potential Termination Payments Pursuant to a Chugach Operating Policy, non-represented employees, including the executive officers except the Chief Executive Officer, who is terminated by Chugach for reasons unrelated to employee performance are entitled to severance pay for each year or partial year of service as follows: two weeks for each year of service to a maximum of 26 weeks for 13 years or more of service. If the CEO is terminated by Chugach without cause, they will receive a lump sum payment equal to 100% of their annual base salary payable and the full cost of health and welfare coverage for a period not in excess of twelve months. (13) Bradley Lake Hydroelectric Project Chugach is a participant in the Bradley Lake Hydroelectric Project ("Bradley Lake"). Bradley Lake was built and financed by the Alaska Energy Authority ("AEA") through State of Alaska grants and $166.0 million of revenue bonds. Chugach and other participating utilities have entered into take-or-pay power sales agreements under which shares of the project capacity have been purchased and the participants have agreed to pay a like percentage of annual costs of the project (including ownership, operation and maintenance costs, debt service costs and amounts required to maintain established reserves). Under these take-or-pay power sales agreements,the participants have agreed to pay all project costs from the date of commercial operation even if no energy is produced. Chugach had a 30.4%share, or 27.4 megawatts (MW). Effective October 30, 2020,with the ML&P acquisition our share increased to 56.3%, or an additional 23.3 MW, as currently operated, of the project's capacity. The original revenue bonds were paid in full July 1, 2021. The Battle Creek Diversion Project("Project")was a project to increase water available for generation by constructing a diversion on the West Fork of Upper Battle Creek to divert flows to Bradley Lake, increasing annual energy output by an estimated 37,000 MWh. The project was financed in 2017 and completed in 2020. All Bradley Lake participants are now participating in the project. The share of Battle Creek indebtedness for which we are responsible is 30.4%, or approximately $12.1 million as of June 30, 2022, the most recent information available. In December 2020, AEA purchased the Sterling to Quartz section (SSQ) of the I I5kV transmission line from HEA. The transmission line connects the Bradley Lake Project to the customers that are located north of the Kenai Peninsula. The section is approximately 39 miles long. AEA closed on the purchase by issuing bonds in the amount of$17.0 million. After an accelerated payment on this debt in June of 2022, the share of the SSQ line indebtedness for which we are responsible is now approximately $3.4 million as of June 30, 2022, the most recent information available. On November 30, 2022, AEA closed on a$166.0 million bond financing to pay for transmission line upgrades and battery energy storage systems. Each of the Railbelt utilities share the responsibility for the repayment of the debt. Chugach is responsible for 56.3% of this debt, equal to our share of the Bradley Lake project. 35 70 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 The following represents information with respect to Bradley Lake at June 30, 2022 (the most recent date for which information is available): (In thousands) Total Proportionate Share Plant in service $ 188,297 $ 106,011 Long-term debt 45,924 16,455 Interest expense 1,568 883 Chugach's share of expenses was $8.8 million in 2022, $8.7 million in 2021, and $6.9 million in 2020, and is included in purchased power in the accompanying financial statements. Chugach's share of a Bradley Lake transmission line financed internally is included in Intangible Electric Plant. (14) Eklutna Hydroelectric Project Along with two other utilities, Chugach purchased the Eklutna Hydroelectric Project from the Federal Government in 1997. Ownership was transferred from the United States Department of Energy's Alaska Power Administration jointly to Chugach (30%), MEA (17%), and MOA (53%). As of October 30, 2020, the Eklutna PPA became effective. The Eklutna PPA provides for the purchase of a portion of MOA's share of generation from the Eklutna Project. Plant in service at December 31, 2022, included $5.6 million, net of accumulated depreciation of $4.1 million,which represents Chugach's share of the Eklutna Hydroelectric Project. At December 31, 2021, plant in service included $6.3 million, net of accumulated depreciation of$3.6 million. Each participant contributes their proportionate share for operation, maintenance, and capital improvement costs to the plant, as well as to the transmission line between Anchorage and the plant. Chugach's share of expenses was $4.0 million, $3.4 million, and $0.8 million in 2022, 2021, and 2020, respectively, and is included in purchased power, power production and depreciation expense in the accompanying financial statements. Chugach performs the major maintenance, daily operation, and maintenance of the power plant, providing personnel who perform daily plant inspections, meter reading, monthly report preparation, and other activities as required. (15) Beluga River Unit In April 2016, Chugach and ML&P acquired ConocoPhillips, Inc.'s ("CPAI") working interest in the BRU. Chugach acquired 30% and ML&P acquired 70%. Chugach invested in the BRU to reduce the cost of electric service to its retail and wholesale members by securing an additional long-term supply of natural gas to meet on-going generation requirements. The acquisition complemented existing gas supplies and provided greater fuel diversity. The ownership shares include the attendant rights and privileges of all gas and oil resources,including 15,500 lease acres (8,200 in Unit/ Participating Area and 7,300 held by Unit), Sterling and Beluga producing zones, and CPAI's 67%working interest in deep oil resources. The BRU is located on the western side of Cook Inlet, approximately 35 miles from Anchorage, and is an established natural gas field that was originally discovered in 1962. BRU was jointly owned (one-third) by CPAI, Hilcorp, and ML&P.Following the acquisition,ML&P's ownership of the BRU 36 71 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 increased to approximately 56.7%, Hilcorp's ownership remained unchanged at 33.3%, and Chugach's ownership was 10.0%. Chugach obtained RCA approval to record BRU acquisition costs as deferred charges on our balance sheet and to amortize these costs based on units of BRU production and recognize as depreciation and amortization on Chugach's statement of operations. Chugach was also permitted to recover the deferred costs in the gas transfer price. Effective October 30, 2020, Chugach acquired ML&P's 56.7% ownership share of the BRU, increasing Chugach's ownership share of the BRU to 66.7%. Each of the BRU participants has a right to take their interest of the gas produced. Parties that take less than their interest of the field's output may either accept a cash settlement for their underlift or take their underlifted gas in future years. Chugach was in an underlift position of 39 Mcf at December 31, 2022 and an underlift position of 22 Mcf at December 31, 2021. Chugach has opted to take any cumulative underlift in gas in the future and will record the gas as fuel expense on the statement of operations when received. Chugach records depreciation, depletion, and amortization on BRU assets based on units of production. During 2022, Chugach lifted 7.8 Bcf resulting in a cumulative lift since purchase of 19.8 Bcf. Chugach's 2022 BRU Gas Reserve Study results estimated that there are 69.0 Bcf in proven developed and undeveloped reserves, net of 2022 gas production, there is approximately 61.2 Bcf remaining gas reserves to be produced. Chugach, and the other owner, Hilcorp, are operating under an existing Joint Operating Agreement. Hilcorp is the operator for BRU. In addition to the operator fees to Hilcorp, other BRU expenses include royalty expense and interest on long-term debt. All expenses other than depreciation, depletion and amortization, and interest on long-term debt are included as fuel expense on Chugach's statement of operations. Chugach has applied and qualified for a small producer tax credit,provided by the State of Alaska, resulting in an estimate of no liability for production taxes for a period of ten years, through 2026. The revenue in excess of expenses less the allowed TIER from BRU operations is adjusted through Chugach's fuel and purchased power adjustment process. (16) ML&P Acquisition On October 30, 2020, Chugach acquired substantially all of the assets of ML&P from the MOA. Chugach accounted for the ML&P acquisition in accordance with ASC 805, "Business Combinations," with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. The purchase price was allocated to the assets acquired and the liabilities assumed based on their fair value. The approval of ML&P's rates and Chugach's rates by the RCA, our regulator, which is intended to allow us to collect from customers total revenues equal to the costs of providing service, including a reasonable return on invested capital, is considered a fundamental input in measuring the fair value of ML&P's assets and liabilities, and as such, Chugach concluded that the historical net book values of all assets and liabilities recoverable through rates are representative of their fair values. The allocation of the purchase price includes the fair value of BRU reserves. Due to the application of regulatory accounting, the asset associated with the fair value of BRU reserves is offset by a BRU regulatory liability. 37 72 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 The acquisition premium (goodwill) has been approved for recovery by the RCA and is recorded as part of our regulatory assets.The acquisition premium is split between two regulatory assets.Per RCA order, Chugach recorded a $19.0 million Secondary Regulatory Asset, which was approved for recovery and amortizes over a three-year period and is recognized in administrative, general, and other expense on Chugach's Consolidated Statement of Operations. The balance of the acquisition premium was also approved for recovery and will be included in Chugach's general rate case to be filed with the RCA, which will determine the period recovery. Acquisition and integration costs are recorded as deferred charges on Chugach's Consolidated Balance Sheet, which Chugach believes is probable of being recovered in electric rates. These deferred charges, exclusive of the acquisition premium, totaled $46.6 million at December 31, 2022 and $42.5 million at December 31, 2021. (17) Revenue From Contracts With Customers a. Nature of goods and services The following is a description of the contracts and customer classes from which Chugach generates revenue. i. Energy Sales Energy sales revenues are Chugach's primary source of revenue, representing approximately 97.9%, 98.5% and 98.0% of total operating revenue during the years ended December 31, 2022, 2021, and 2020, respectively. Energy sales revenues are recognized upon delivery of electricity, based on billing rates authorized by the RCA, which are applied to customers' usage of electricity. Chugach's rates are established, in part, on test period sales levels that reflect actual operating results. Chugach's tariffs include provisions for the recovery of gas costs according to gas supply contracts and costs associated with the BRU operations, as well as purchased power costs. Expenses associated with electric services include fuel purchased from others and produced from Chugach's interest in the BRU, both of which are used to generate electricity, as well as power purchased from others. Chugach is authorized by the RCA to recover fuel and purchased power costs through the fuel and purchased power adjustment process, which is adjusted quarterly to reflect increases and decreases of such certain costs. The amount of fuel and purchased power revenue recognized is equal to actual fuel and purchased power costs. We recognize differences between projected recoverable fuel and purchased power costs and amounts recovered through rates. The fuel cost under/over recovery on our balance sheet represents the net accumulation of any under- or over-collection of fuel and purchased power costs. Fuel cost under-recovery will appear as an asset on our balance sheet and will be collected from our members in subsequent periods. Conversely, fuel cost over-recovery will appear as a liability on our balance sheet and will be refunded to our members in subsequent periods. Payment on energy sales invoices to all customer classes below are due within 15 to 30 days. 38 73 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Nature, timing of satisfaction of performance obligations, and significant payment Customer Class terms Retail Retail energy customers can have up to four components of monthly billing included in revenue — energy, fuel and purchased power, demand, and customer charge. The energy rate and fuel and purchased power surcharge are applied by kilowatt hour (kWh) usage. The demand charge is applied by kilowatt (kW). The customer charge is a monthly amount applied by meter. Wholesale Classified as firm energy sales. Four components of monthly billing are included in revenue — energy, fuel and purchased power, demand, and customer charge. The energy rate and fuel and purchased power surcharge are applied by kWh usage. The demand charge is applied by kW. The customer charge is a monthly amount applied by meter. Economy Classified as non-firm energy sales.Three components of monthly billing are included in revenue — fuel, operations and maintenance, and margin. The actual fuel costs are billed per thousand cubic feet(Mcf) used.The operations and maintenance and margin rates are applied by megawatt hour (MWh) usage. Power Pool Power pool transactions are generally firm energy sales that are subject to changes in generation unit availability. The two components of monthly billings included in revenue are fuel and operations and maintenance. Power pool transactions are settled using a split-the-savings principle. Chugach calculates unbilled revenue, for residential and commercial customers, at the end of each month to ensure the recognition of a full month of revenue. Chugach accrued $13.5 million and $13.1 million of unbilled retail revenue at December 31, 2022, and2021, respectively, which is included in accounts receivable on the balance sheet. Revenue derived from wholesale and economy customers is recorded from metered locations on a calendar month basis,so no estimation is required. Power Pool sales began in April of 2021. Power pool revenues are recognized upon delivery of electricity and the transaction is then settled using a split-the-savings principle. The collectability of our energy sales is very high with typically 0.1% written off as bad debt expense, adjusted annually. ii. Wheeling Wheeling represented 1.1%, 0.5%, and 1.3% of our revenue during the years ended December 31, 2022, 2021, and 2020, respectively. Wheeling was recorded through the wheeling of energy across Chugach's transmission lines at rates set by utility tariff and approved by the RCA. The rates are applied to MWh of energy wheeled. The collectability of wheeling is very high,with no adjustment required. iii. Other Miscellaneous Services Other miscellaneous services consist of various agreements including dispatch service and gas transfer agreements, pole rentals, and microwave bandwidth. Revenue from these agreements is billed monthly and represented 1.0%, 1.0%, and 0.7% of our total operating revenue during the years ended December 31, 2022, 2021, and 2020,respectively. The revenue recognized from these 39 74 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 agreements is recorded as the service is provided over a period of time. The collectability of these agreements is very high, with no adjustment required. b. Disaggregation ofRevenue The table below details the revenue recognized by customer class and disaggregates base revenue from fuel and purchased power revenue recognized in the Consolidated Statement of Operations for the year ended December 31, 2022 and 2021 (in millions). Base Rate Sales Fuel and Purchased Power Total Revenue 2022 2021 %Variance 2022 2021 %Variance 2022 2021 %Variance Retail $ 242.0 $ 242.5 (0.2916) $ 80.1 $ 95.5 (16.1%) $ 322.1 $ 338.0 (4.7%) Wholesale 2.4 2.4 0.0% 2.7 2.8 (3.6%) 5.1 5.2 (1.9%) Economy 1.9 0.6 216.7% 15.6 4.5 246.7% 17.5 5.1 243.1% Power Pool 1.1 0.5 120.0% 1.2 0.3 300.0% 2.3 0.8 187.5% Total Energy Sales $ 247.4 $ 246.0 0.6% $ 99.6 $ 103.1 (3.4%) $ 347.0 $ 349.1 (0.6%) Wheeling 0.0 0.0 0.0% 3.5 1.8 94.4% 3.5 1.8 94.4% Other 2.8 3.2 (12.5%) 1.1 0.4 175.0% 3.9 3.6 8.3% Total Miscellaneous $ 2.8 $ 3.2 (12.5%) $ 4.6 $ 2.2 109.1% $ 7.4 $ 5.4 37.0% Total Revenue $ 250.2 $ 249.2 0.4% $ 104.2 $ 105.3 (1.0%) $ 354.4 $ 354.5 (0.0%) The table below details the revenue recognized by customer class and disaggregates base revenue from fuel and purchased power revenue recognized in the Consolidated Statement of Operations for the year ended December 31, 2021 and 2020 (in millions). Base Rate Sales Fuel and Purchased Power Total Revenue 2021 2020 %Variance 2021 2020 %Variance 2021 2020 %Variance Retail $ 242.5 $ 152.4 59.1% $ 95.5 $ 74.1 28.9% $ 338.0 $ 226.5 49.2% Wholesale 2.4 2.3 4.3% 2.8 3.3 (15.2%) 5.2 5.6 (7.1%) Economy 0.6 0.1 500.0% 4.5 0.4 1025.0% 5.1 0.5 920% Power Pool 0.5 0.0 100.0% 0.3 0.0 100.0% 0.8 0.0 100.0% Total Energy Sales $ 246.0 $ 154.8 58.9% $ 103.1 $ 77.8 32.5% $ 349.1 $ 232.6 50.1% Wheeling 0.0 0.0 0.0% 1.8 3.1 (41.9%) 1.8 3.1 (41.9%) Other 3.2 1.7 88.2% 0.4 0.1 300.0% 3.6 1.8 100.0% Total Miscellaneous $ 3.2 $ 1.7 88.2% $ 2.2 $ 3.2 (31.3%) $ 5.4 $ 4.9 10.2% Total Revenue $ 249.2 $ 156.5 59.2% $ 105.3 $ 81.0 30.0% $ 354.5 $ 237.5 49.3% c. Contract Balances The table below provides information about contract receivables, contract assets and contract liabilities. December 31, 2022 December 31, 2021 Contract receivables, included in accounts receivable $ 45,827,873 $ 43,490,663 Contract liabilities 2,836,240 4,662,550 Contract receivables represent amounts receivable from retail,wholesale, economy, and wheeling. Contract liabilities consist of credit balances. Credit balances are reported as consumer deposits and represent the prepaid accounts of retail customers and are recognized in revenue as the customer uses electric service. 40 75 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Significant changes in the contract liabilities balances are as follows: December 31, 2022 December 31, 2021 Contract liabilities at beginning of period $ 4,622,550 $ 3,656,662 Cash received, excluding amounts recognized as revenue during the period 2,658,131 4,509,902 Revenue recognized and transferred from contract liabilities at the beginning of the period (4,444,441) (3,544,014) Contract liabilities at end of period $ 2,836,240 $ 4,622,550 d. Transaction Price Allocated to Remaining Performance Obligations The table below includes estimated revenue to be recognized in 2023 related to performance obligations that are unsatisfied (or partially unsatisfied) at December 31, 2022. 2022 Credit balances $ 2,836,240 Credit balances are primarily associated with Chugach's LevelPay program. The program calculates the monthly amount to be collected from customers annually. It is anticipated the balance will be recognized in revenue within the following year as customers consume electricity. (18) Leases Chugach had three financing leases and several operating leases, most of which were various land easements. Chugach's eight operating leases, recognized as right-of-use assets, consisted of a building, heavy equipment, office trailer, and five land leases, with remaining lease terms of less than one to 50 years and a weighted average lease term of 42 years. Four of the land leases were acquired with the ML&P acquisition. Chugach's operating and financing lease assets are presented as operating or financing right-of-use assets on our Consolidated Balance Sheet. The current portion of lease liabilities is included in current installments of long-term obligations and the long- term portion is presented as operating or financing lease liabilities on our Consolidated Balance Sheet. A weighted discount rate of 3.29%was used in calculating the right-to-use assets and lease liabilities. Chugach's discount rate was calculated using our incremental borrowing rate based on the average borrowing rate of our long-term debt. Recognition of the right-of-use asset and operating lease liability represents a non-cash investing and financing activity. Chugach entered into a Power Purchase Agreement with Fire Island Wind, LLC, ("FIW") on June 21, 2011. The Fire Island Wind contract contains a lease because the agreement identifies an asset and Chugach controls the use of the asset. The wind farm is explicitly specified in the agreement and FIW does not have substantive substitution rights. Additionally, Chugach takes 100% of the output and, to the extent there is wind, can control how and when the wind farm produces power directly through its supervisory control and data acquisition ("SCADA") system. However, due to the exclusively variable nature of the payments related to Fire Island Wind, no new assets or liabilities have been added to the Consolidated Balance Sheet, no changes were made to the Consolidated Statements of Cash Flow, and the variable payments 41 76 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 are still classified as purchased power expense on the Consolidated Statements of Operations. These variable payments, included in purchased power, are reflected in the following table. Supplemental statement of operations information associated with leases for the twelve months ended December 31: 2022 2021 Finance lease cost Amortization of right-of-use assets $ 4,292 $ 3,183 Interest on lease liabilities 621 553 Operating lease cost 377,773 419,175 Variable lease cost 5,232,117 4,439,509 Total lease cost $ 5,614,803 $ 4,862,420 Supplemental cash flow information associated with leases for the twelve months ended December 31: 2022 2021 Cash paid for amounts included in the measurement of liabilities: Operating cash flows from operating leases $ 377,773 $ 418,732 Right-of-use assets obtained in exchange for lease obligations: Operating leases 0 4,109,694 Financing leases 214,486 17,273 Supplemental balance sheet information associated with leases at December 31 were: 2022 2021 Operating lease right-of-use assets $ 3,831,720 $ 4,109,694 Financing lease right-of-use assets 217,069 17,273 Total right-of-use assets $ 4,048,789 $ 4,126,967 Operating lease liabilities 3,583,801 3,835,282 Financing lease liabilities 203,786 13,667 Current installments of lease liabilities 258,184 281,171 Total operating lease liabilities $ 4,045,771 $ 4,130,120 Maturities associated with lease liabilities at December 31, 2022: 2023 $ 385,345 2024 169,345 2025 167,523 2026 166,313 2027 164,504 Thereafter 6,392,755 Total lease payments 7,445,785 Less imputed interest 3,400,013 Present value of lease liabilities $ 4,045,771 42 77 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 (19) Commitments and Contingencies Contingencies Chugach is a participant in various legal actions, rate disputes, personnel matters and claims both for and against Chugach's interests. Management believes the outcome of any such matters will not materially impact Chugach's financial condition, results of operations or liquidity. Chugach establishes reserves when a particular contingency is probable and calculable. Chugach has not accrued for any contingency at December 31, 2022, as it does not consider any contingency to be probable nor calculable. Chugach faces contingencies that are reasonably possible to occur; however, they cannot currently be estimated. Concentrations Approximately 73% of our employees are members of the International Brotherhood of Electrical Workers ("IBEW"). Chugach has three Collective Bargaining Unit Agreements ("CBA") with the IBEW. On October 30, 2020, with the closing of the ML&P acquisition, all three IBEW CBAs were extended through June 30, 2025. We also have a CBA with the Hotel Employees and Restaurant Employees ("HERE"), which is effective through June 30, 2025. Fuel Supply Contracts Chugach entered into a gas contract with Hilcorp effective January 1, 2015, to provide gas through March 31, 2018. The first amendment to this agreement extended the term through March 31, 2019. The second amendment to this agreement revised payment procedures and updated notice provisions. The third amendment extended the term of this agreement, thus filling up to 100% of Chugach's needs through March 31, 2023. On December 31, 2019, Chugach entered into a fourth amendment to this agreement thus extending the term through March 31, 2028. The total amount of gas supplied under this contract is estimated to be 79.4 Bcf. All of the gas production is expected to come from Cook Inlet, Alaska. The terms of the Hilcorp Agreement require Chugach to manage the natural gas transportation over the connecting pipeline systems. Chugach has gas transportation agreements with ENSTAR Natural Gas Company ("ENSTAR") and Harvest Alaska. The three minor Chugach gas supply agreements; also has a new agreement with Furie which provides Chugach the option to purchase supplemental gas to meet firm load requirements, if economically advantageous and if operational conditions warrant such purchases. Additionally, the agreement provides Chugach with an additional gas supply option for generation of energy for economy sales, which reduces the underlying cost to provide electric service to members. Chugach has two active gas storage contracts with CINGSA that conclude on March 31, 2032. The firm storage agreement provides for up to 2.1 Bcf of capacity. The interruptible storage agreement provides for up to 1.0 Bcf of capacity. In 2022, 85.3% of our electric energy was generated from gas, which includes energy purchased from others. Of this, 55.2% of the gas-based power was generated at SPP and 42.3% at Sullivan power plants, and the remaining 2.5% being generated at the Beluga, Nikkels, and Eklutna power plants. In 2021, 82.6% of our power was generated from gas, with 56.4% at SPP, 41.6% at 43 78 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 Sullivan, and the remaining 2.0% being generated at the Beluga, Nikkels, and Eklutna power plants. The following represents the cost of fuel purchased, stored, and or transported from various vendors as a percentage of total fuel costs for the years ended December 31,: 2022 2021 2020 Hilcorp 74.8% 78.9% 85.8% Furie 8.1% 5.1% 0.5% CINGSA (Storage) 6.3% 6.1% 6.0% ENSTAR Pipeline 8.0% 7.3% 4.7% Harvest (Hilcorp) Pipeline 2.8% 2.6% 3.0% Miscellaneous 0.0% 0.0% 0.0% BRU Operations At this time, Chugach and Hilcorp, the other owner, have chosen to continue operating under an existing Joint Operating Agreement. Hilcorp is the operator for BRU. Regulatory Cost Charge In 1992, the State of Alaska Legislature passed legislation authorizing the Department of Revenue to collect a Regulatory Cost Charge from utilities to fund the governing regulatory commission, which is currently the RCA. The tax is assessed on all retail consumers and is based on kilowatt- hour (kWh) consumption. The tax is collected monthly and remitted to the State of Alaska quarterly. Sales Tax Chugach collect sales tax on retail electricity sold to consumers in Whittier, seasonally (April through September), and in the Kenai Peninsula Borough, monthly. This tax is remitted to the City of Whittier monthly and to the Kenai Peninsula Borough quarterly. These taxes are a direct pass- through to consumer bills and therefore do not impact our margins. Gross Revenue Tax Chugach pays to the State of Alaska a gross revenue tax in lieu of state and local ad valorem, income and excise taxes on electricity sold in the retail market. The tax is collected monthly and remitted annually. Underground Compliance Charge In 2005, the Anchorage Municipal Assembly adopted an ordinance to require utilities to convert overhead distribution lines to underground. To comply with the ordinance, Chugach must expend two percent of a three-year average of gross retail revenue within the Municipality of Anchorage annually in moving existing distribution overhead lines underground. Consistent with Alaska Statutes regarding undergrounding programs, Chugach is permitted to amend its rates by adding a two percent charge to its retail members' bills to recover the actual costs of the program. The rate 44 79 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 amendments are not subject to RCA review or approval. Chugach's liability was $11.9 million and $9.5 million for this charge at December 31, 2022 and 2021, respectively, and is included in other current liabilities. These funds are used to offset the costs of the undergrounding program. Environmental Matters Chugach includes costs associated with environmental compliance in both our operating and capital budgets. We accrue for costs associated with environmental remediation obligations when those costs are probable and reasonably estimated. Chugach is subject to numerous environmental statutes including the Clean Air Act,the Clean Water Act,the Emergency Planning and Community Right-to-Know Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Endangered Species Act, and the Comprehensive Environmental Response, Compensation and Liability Act and to the regulations implementing these statutes. Chugach does not believe that compliance with these statutes and regulations to date has had a material impact on its financial condition, results of operation or cash flows. However, the implementation of any additional new law or regulation, or the limitations thereof, or changes in or new interpretations of laws or regulations could result in significant additional capital or operating expenses. Chugach monitors proposed new regulations and existing regulation changes through industry associations and professional organizations. The Clean Air Act and Environmental Protection Agency ("EPA") regulations under the Clean Air Act establish ambient air quality standards and limit the emission of many air pollutants. In 2022, The Alaska Department of Environmental Conservation ("ADEC") increased all fees associated with Title I and Title V air emissions. These increased fees affect Beluga, Southcentral, Sullivan, and Nikkels power plants on a yearly basis. Chugach has obtained or applied for all Clean Air Act permits currently required for the operation of generating facilities. Chugach replaced two Underground Storage Tanks ("USTs") in 2022. These tanks were approximately thirty years old. Upon excavation, contamination was discovered under the location of the original fuel dispensing units. Chugach is working diligently with ADEC to determine the best path forward for remediation of the contaminated site. Dependent on the outcome of site investigation, Chugach may be required to complete annual site sampling, but this would not have any material impact on operating expenses. The utility owners of the Eklutna Hydro Project (Chugach, MOA, and MEA) are obligated by a 1991 Fish & Wildlife Agreement (Agreement) to develop and implement measures to protect, mitigate, and enhance (PME) the fish and wildlife impacted by the project (PME program). The program is to be approved by the Governor of Alaska by October 2024 with completion of the approved program no later than October of 2032, 35 years after the Eklutna Hydro Project purchase. The utility owners initiated a required consultation process with key government agencies and interested parties in March 2019, study planning development in 2020, field data collection in 2021 and 2022, and study reporting and program development in 2023 and 2024. The Agreement requires equal consideration of; 1) efficient and economical power production, 2) energy conservation, 3) protection, mitigation of damage to, and enhancement of fish and wildlife, 4) protection of recreation opportunities, 5) municipal water supplies, 6) preservation of other aspects of environmental quality, 7) other beneficial public uses, and 8) requirements of state law when determining the PME alternatives to be included in the program. The Eklutna Hydro Project and 45 80 Chugach Electric Association, Inc. Notes to Consolidated Financial Statements December 31, 2022 and 2021 municipal water system currently utilize 100% of the Eklutna reservoir water inflows. This project is a multi-year study with final completion expected in late 2024. The program will have additional capital costs not included in the Program development and approval. While Chugach cannot predict the implementation of any additional new law or regulation, or the limitations thereof, it is possible that new laws or regulations could increase capital and operating costs. Chugach does not anticipate that environmental related expenditures will have a material effect on our results of operations or financial condition. We cannot, however, predict the nature, extent or cost of new laws or regulations relating to environmental matters. 46 81 Assistant City Manager Stephen Sowell ➢ Public Works Shop Project: Work continues on the 65% design. Based upon the direction from City Council at the July 24th meeting, we will await placing the GO bond on the ballot until the design process is completed. In the meantime, we will work towards 100% design completion and include this on the 2024 Legislative Priorities. External funding opportunities will be explored. ➢ Kenai Peninsula Borough Emergency Manager Brenda Ahlberg provided the City of Seward an update on the KPB Siren Project on July 20. A copy of that update is attached. ➢ Public Safety Needs Assessment: Work continues on this project in collaboration with the design team and the goal is to provide City Council and the public a project update presentation at tonight's meeting. The project is on track to be completed by December 2023. ➢ The Board and Commission Attendance Tracker is included in this report. ➢ Heat Loop Project: The final submission to DOE was completed on August 1st. The Project is in the running for a Phase 1 grant from the Department of Energy. The Heat Loop Project team has completed the follow up meetings with the Department of Energy and is awaiting a grant award announcement. If funded, Phase 1 of the project will continue the engineering/design and stakeholder engagement elements. 82 ClV U Finance Department Sully Jusino Deputy Finance Director Mission Statement: Valuable Objectives: To provide the highest level of services responsive to our We built trust with all stakeholders through responsible community's expectations and to enhance the quality of stewardship of public resources with integrity, life and economic vitality. accountability,and respect. Utility Department: The finance department and the Carmen Jackson team continue to work on utility billing issues and resolve old problems identified through internal audits of the City. Working with Utility Assist. on implementing and mapping the City process of billing, the plan is to go live with Util-Assist for the next billing cycle (August). The outsourcing process is moving smoothly. Utility Assist will work with Cornerstone on the collection program to collect old outstanding balances. Utility Assist. is working on the Net Meter billing implementation. The finance department is assisting with information and analysis of the ongoing water/sewer rate study and the electric rate study. Annual Audit: The Finance department and Altman, Rogers & Co are revising the first draft of the financial report to complete the process as quickly as possible with the goal of receiving the GFOA Certificate of Achievement again for the December 31, 2022 ACFR. Staffing: The finance department continues to struggle with retaining staff but does expect some relief with the outsourcing of the utility billing position. 83 CMR Finance Department Sully Jusino Deputy Finance Director City Code and Fiscal Manual updates: A Fiscal Manual has been created for the City using best practices, the current municipal code, the city charter, and state regulations. The City Manager, Finance Director, and CJCPA are currently reviewing the draft. Of the drafted ten (10) sections, seven (7)have been reviewed and approved by the city currently working with Title 14 with other departments' heads for review and analysis. Carmen Jackson Update: The Carmen Jackson team continues to work closely with the finance department to assist with the Util-Assist transition as well as directly assisting with the billing process until the outsourcing is complete. Additionally, CJCPA continues to provide ongoing accounting services on a daily basis and continues to assist with high level finance department operations. The Carmen Jackson team along with the finance department and administration continues to review the fiscal manual and portions of the City code with financial implications as part of the overall updates to policies and procedures. Central Treasury Report: The attached Central Treasury Report provides the unrestricted cash available by funds as of July 31, 2023. These amounts fluctuate on a daily basis and are reconciled every month. The amounts reports on the agenda statement items for the council represent the available fund balance/net assets for the impacted funds. This is a longer term perspective that takes into account the assets and liabilities of the fund, which results in different numbers than the Central Treasury Report. Any funds with negative cash on the Central Treasury Report are either waiting for funding for expenses already paid or are in the process of being closed out, negative cash for a fund does not represent a problem with operations. Attached with the Central Treasury Report is financial information for the funds that would be utilized for the upcoming resolutions. We have seen an increase in cash due to the FEMA reimbursement paid to the City in July 2023. 84 � r City of Seward,Alaska. ' Central Treasury Report 7.31.23 - The attached Central Treasury Report provides the unrestricted cash available by fund as of July 31, 2023. The intent of this report is to provide transparent financial information to the public. These amounts fluctuate on a daily basis and are reconciled every month; however, these numbers are not audited. The amounts reports on the agenda statement items for the council represent the available fund balance/net assets for the impacted funds. This is a longer-term perspective that takes into account the assets and liabilities of the fund, which results in different numbers than the Central Treasury Report. Any funds with negative cash on the Central Treasury Report are either waiting for funding for expenses already paid or are in the process of being closed out, where the City is required to expend the funds prior to requesting reimbursement for expenditures; negative cash for a fund does not represent a problem with operations. For example, when the City conducts repairs following a major disaster declaration, it can take multiple years before the City receives reimbursement from FEMA for its costs. Funds in Negative balance: • Fund 11113 Harbor CPVKPB —Res.2023-066 Funding for Seward City Tours Services. The City will receive funds from CPV KPB • Fund 11422 NE Harbor Launch Project City Funding—Res.2022-072 City spends $1,573,162.80. • Fund 11433 NE Harbor Launch Proj ect State Funding—Funds received per agreement $2,899,553.25 Fund is closed. • Fund 11431 G, K& L Floats State Funding—Res.2021-113. The City will be reimbursed from the State Grant. For these funds, we see an increase in cash. • Fund 70061 FEMA 2022 Lowell PT Rd Land Slide (Cat A)—FEMA disaster declaration, the City received funds of$ 1,013,819.97 on 7.28.23. • Fund 70062 FEMA 2022 Lowell PT Rd Land Slide (Cat B)—FEMA disaster declaration, the City received funds of$ 126,904.27 on 7.03.23. Attached with this report is the fund balance report for funds that would be utilized for upcoming resolutions. If you have questions or require additional information, please feel free to contact acting finance director Sully Jusino at(907)224-4059, or by e-mail at sjusino@cityofseward.net. 85 Central Treasury Report,July 31,2023 Cash and Investments 2022 2023 Wells Fargo Checking 9,893,165.98 7,835,237.63 Clearing Account 0.00 0.00 Undeposited Funds(Cash in Transit) 97,672.58 104,481.11 Investments 43,012,432.28 43,485,835.00 53,003,270.84 51,425,553.74 By Fund: Fund Name Fund Number General Fund 01000 7,580,600.24 8,748,167.62 Teen Council Agency Fund 02000 6,093.64 6,112.65 Motor Pool Internal Service Fund 03000 2,408,252.16 2,113,081.71 Compensated Absences Fund 03100 465,144.79 500,180.86 Harbor Enterprise Fund 11000 1,534,610.14 690,126.62 Harbor MRRF Fund 11001 740,682.56 839,907.56 Harbor Passenger Fee Fund 11002 795,860.65 544,809.65 Harbor CPV State 11103 1,604,354.49 1,745,002.84 Harbor CPV KPB 11113 216,741.98 (902,239.02) NE Harbor Launch Ramp Renovation Project-City 11422 624,690.33 (2,083.33) NE Harbor Launch Ramp Renovation Project-State 11423 (1,382,004.38) 0.00 G,K&L Floats City 11430 (1,159,073.15) 701,223.90 G,K&L Floats State 11431 73,783.99 (38,681.12) Cathodic Protection Project 11440 13,679.80 13,679.80 SMIC Enterprise Fund 12000 277,756.95 431,686.47 Parking Enterprise Fund 13000 465,024.77 601,492.87 Electric Enterprise Fund 15000 7,856,332.11 4,269,358.57 Electric MRRF Fund 15001 957,301.76 957,301.76 Transmission Line-City Funding 15310 0.00 0.00 Electric Critical Infrastructure Fund 15340 2,849,356.90 331,643.55 Electric Nash Road Infrastructure Project 15351 4,797,093.46 3,156,599.97 Water Enterprise Fund 17000 1,810,826.01 2,437,714.58 Water MRRF Fund 17001 852,572.15 852,572.15 Water ARPA Fund 17100 577,195.00 479,345.32 Lowell Canyon Water Storage Tank 17330 222,914.29 222,914.29 Wastewater Enterprise Fund 18000 2,367,474.63 2,762,796.08 Wastewater MRRF Fund 18001 742,025.05 742,025.05 Wastewater ARPA Fund 18100 577,195.00 537,422.18 Hospital Enterprise Fund 19100 316,328.49 1,042,288.36 Healthcare Facilities 19102 927,284.17 927,284.17 Seward Mountain Haven Enterprise Fund 19200 9,472,307.57 11,327,471.16 Seward Historical Tour 30016 349.00 349.00 SCHC-City Funding 30040 0.81 0.81 Bus Transportation-CPV Funds 30051 85,507.50 931,524.18 Erosion Fund 30070 2,150.00 2,150.00 FEMA 2022 Lowell PT Rd Land Slide(Cat A) 70061 0.00 0.00 FEMA 2022 Lowell PT Rd Land Slide(Cat B) 70062 0.00 0.00 Capital Acquisition Fund-City Funding 80010 645,673.44 566,423.44 Animal Shelter 80015 641,106.99 68,252.10 Streets&Sidewalks-City Funding 80020 74,554.09 74,554.09 Energy Efficiency-CityFunding 80040 101,211.69 93,784.69 Developer Reimbursement Program 80071 1,013,895.50 1,842,678.54 ARPA-LGLRR 80084 1,806,416.27 1,748,320.04 1LH-City Funding 80090 40,000.00 0.00 Japanese Creek Flod Mitigation-City Funding 80117 0.00 58,310.58 Total Pooled Cash and Investments by Fund 53,003,270.84 51,425,553.74 Note: *The above is the pooled cash balance of each fund,which simply represents the amount of available cash held by each fund.This differs from the fund balance in that the fund balance also considers the fund's current assets and liabilities. Preparinance 80010 -Capital Acquisition Fund -City J u ly 31, 2023 7/31/2023 Resolutions Amounts Res.2022-089 GF to CAF 746,000.00 Assets Res.2022-089 Sidewalks Project (350,000.00) Cash to date 7/31/23 566,423.44 Res.2022-116 Hilltop DRP (1,425,000.00) Total Assets 566,423.44 Res.2019-048 Lowell Point Stabiltation (63,750.00) Res.2023-084 Scheffler Creek (15,424.00) Liabilities Encumbrance to date 7/31/23 350,000.00 Res.2023-084 Scheffler Creek 15,424.00 Total Encumbered 365,424.00 Fund Balance/Net Assets Unassigned Fund Balance to date 7/31/23 1,309,173.44 Transfers-In 746,000.00 Transfers-Out (1,425,000.00) Total Fund Balance/Net Assets 630,173.44 Expenditures/Expenses Expenses to date 7/31/23 63,750.00 Total Expenses 63,750.00 Estimated Total Fund Balance/Net Position* 200,999.44 * Unaudited The month of July has not been closed. Prepare&7Finance 17000 -Water Enterprise Fund J u ly 31, 2023 7/31/2023 Assets Cash to date 7/31/23 2,338,010.56 Assets and Receivables to date 7/31/23 8,305,818.32 Total Assets 10,643,828.88 Liabilities Liabilities to date 7/31/23 1,373,866.67 Total Liabilities 1,373,866.67 Fund Balance/Net Assets Unassigned Fund Balance to date 7/31/23 9,444,015.46 Transfers-In 0.00 Transfers-Out (203,577.99) Total Fund Balance/Net Assets 9,240,437.47 Revenues Revenue to date 7/31/23 1,001,329.26 Total Revenues 1,001,329.26 Expenditures/Expenses Expenses to date 7/31/23 971,804.52 Total Expenses 971,804.52 Estimated Total Fund Balance/Net Position* 9,269,962.21 * Unaudited The month of July has not been closed. Prepare8gFinance 4K11, 19100 -Hospital Enterprise Fund July 31, 2023 7/31/2023 Assets Cash to date 7/31/23 1,129,986.89 Assets to date 7/31/23 3,989,806.84 Total Assets 5,119,793.73 Liabilities Liabilities to date 7/31/23 401,396.92 Total Liabilities 401,396.92 Fund Balance/Net Assets Unassigned Fund Balance to date 7/31/23 2,552,949.11 Transfers-In 2,033,368.08 Transfers-Out 0.00 Total Fund Balance/Net Assets 4,586,317.19 Revenues Revenue to date 7/31/23 169,350.10 Total Revenues 169,350.10 Expenditures/Expenses Expenses to date 7/31/23 37,270.48 Total Expenses 37,270.48 Estimated Total Fund Balance/Net Position* 4,718,396.81 * Unaudited The month of July has not been closed. PrepareNjc Finance Electric System Director Rob Montgomery • Ad Hoc Committee — Participated in the July 315t and August 7t" meetings of the electric utility ad hoc committee to provide background on the utility and its operations and answer questions from committee members. Created a notebook of information for the committee and spent time gathering additional information/materials upon their request. Will continue to attend future ad hoc committee meetings to serve as a resource. • Infrastructure Projects (Ongoing) — Infrastructure construction contractor, Sturgeon Electric, has completed the build out of Nash Road Phase I and Fort Raymond sections of the transmission infrastructure project. Additional work completed outside of bid contract included: 1) removing non-vital distribution powerlines and poles paralleling the Fort Raymond Substation access road and, 2) replacing a triple dead-end arm—a crossarm that allows crews to temporarily spread conductors/lines--and a related guy wire with a more permanent solution. Sturgeon Electric performed final clean-up work and remediation the week of July 31. Crews will return in the spring to begin work on Nash Road Phase II. Also, work on the Fort Raymond Substation is ongoing as electric department personnel continue to work with construction contractor Electric Power Constructors. The first substation transformer was delivered on August 8. The arrival of the second transformer has been delayed until early September due to minor damage that occurred early in the shipping process. The transformer was sent back to the factory for repairs and testing. This delay is not expected to have a significant impact on the overall project schedule. Department Overtime —Total overtime hours for the 4-man line crew, 2 plant operators and field engineer: Infrastructure 176.5 hours; Other 69.5. 2023 Rate Study (Ongoing) —The rate study being conducted by The Financial Engineering Company continues. The rate study remains on track for a presentation to City Council in September. Any increase in rates will go into effect in the fall. • Customer Job Orders—Between July 16 and August 1, the department completed 11 job orders with another six in processing. Six additional jobs are in the queue ready for the crew with six more waiting for customers to complete work on their side of the meter. Crews also completed 36 underground locates while the field engineer assisted the billing department by completing meter reading on July 15. The utility GM and staff also worked to resolve three customer complaints related to billing. 90 Fire & Building Department Fire Chief Clinton Crites 2023 TYD Statistical Information: Fire & Life Safety Inspections: 236 with 161 violations noted. We NEED volunteers, if you or Emergency Calls: 254 someone you know is interested in serving your community, please New Building Permits Issued 2023: 39 give us acall at 224-3445 or stop with a total construction valuation of$24,616,552.00. by at one of our trainings on Wednesday evenings at 6:OOpm. • Great on-going training! Come by and see what we are all about! • Continual maintenance on the station and apparatus. • Emergency calls have been steady and several days 2-3 within the same hour, this is taxing on volunteers, but they are stepping up as best as possible. • We visited with the Obihiro exchange students LM 7 _ KL ._ 4 W_- la d / 1 4 v - Y 1� The popularity of electric bikes and electric scooters(e-bikes and e-scooters)has taken off over the past few years,Lithium-ion batteries are usually the source of power for both,and if not used correctly,or if damaged,those batteries can catch on fire or explode.Whether you use a-bikes or e-scooters as your main way of getting around,or just for fun,there are important safety tips to keep in mind when charging or storing these devices. The Problem * Store e-bikes,e-scooters,and batteries Damaged or defective batteries can over- away from exit doors and anything that can heat,catch fire, ❑r explode. get hot or catch fire. Lithium-ion battery fires give off toxic Only have device repairs performed by a gases and they burn extremely hot. qunlifled professional. • Do not put lithium-ion batteries in the trash. Safety Tips Recycling is always the best option.Take * Only purchase and use devices, batteries, the batteries to a battery recycling location and charging equipment that are listed by or contact your local waste department for a nationally recognized testing lab and disposal instructions. labeled accordingly. Signs of a Problem • Always fol low the instructions from the = manufacturer. ` Stop using the e-bike or e-scooter if you notice Only use the battery and the charger that any of these problems with the battery: unusual were designed for,and came with,the device. odor,change in color,too much heat,change in Do not keep charging the device or device shape, leaking,smoking,or not keeping a charge. battery after it is fully charged. Only charge one device or device battery at € LEARN a time to prevent overloading the circuit. If you see a fire ... MORE Keep batteries at room temperature when possible. Do not charge at tom- Leave building Visit nfpa.arglebikes pe rat ures below 32T(0T)or above 1D5°F immediately. (40T), (I Don't try to f ight 510 0 Do not stare batteries in direct sunlight or the fire. inside hat vehicles,and keep them away from children and liquids. Call 911. AD, NATIONAL FIRE PROTECTION ASSOCIATION NFPA The leading information and%nawk-A%resource on fire.electncal and related hazards 92 IRE Become a Volunteer Firefighter or EI T a F . Stop by the Seward Fire Department for more information i 4h e awl- Y / I A � a VETERAN TO VOLUNTEER Veterans make great volunteer firefighters Harbor Harbormaster Norm Regis ➢ We have been working on cleanup on both sides of the bay. ➢ The 50-ton and 330-ton Travelift are starting to pick up for winter storage; the SMIC yard is starting to fill up. ➢ We are continuing to train several new harborworkers on the maintaining and operating the Travelifts. ➢ We are working on the SMIC yard drainage to keep water flowing into the ditches. We have finally received our DEC permit for the water system on G, K and L-float, the project is complete and under budget for both construction and engineering. ➢ Some people like that we are still working with some COVID protocol in mind while continuing to do boat lifts and public contact in the Seward Harbor office. ➢ W we will continue the cleanup at the old Raibow dump area, just a few more items to deal with and we can lease the property out again. ➢ The harbor office is open seven days a week starting May 7. ➢ The harbor is fully staffed. ➢ We are continuing to work with the Director from the Pacific Northwest &Alaska Maritime Administration U.S.DOT on finding a suitable grant for the washdown pad project. ➢ We are waiting on funding for the 5-ton crane on I-Dock, Corp Permit has been approved ➢ We have received the Coast Guard Purchase and sale agreement it will be presented to you at this meeting. ➢ Mr. Brumley from the USCG who is in charge of the purchase and sale agreement for the coast guard building/land was in Seward on August 3rd and 4t" to look at the site and finish last minute details. ➢ The harbor is full moving vessels around trying to adjust to the always-changing dynamics of the harbor. We have painted several fire lanes, people are starting to park in them for long periods of time. 94 Seward Community Library & Museum Bailey Sayler MUSEUM WINDOW DISPLAY Early Alaska Railroad The summer Windows of History display features a history of the early Alaska Railroad. Learn about the railroads beginning as the Alaska Central Railroad in 1903, through its ups and downs until it was purchased by the federal government in 1915, and its official start as the Alaska Railroad Company in 1923 when President Harding came to Alaska to drive the golden spike at Nenana. On view are an assortment of early railroad photos from the Resurrection Bay Historical Society. Thank you Museum Volunteers We would like to thank our amazing museum volunteers, from the Resurrection Bay Historical Society and the Seward Community Library Association, for all the hours they put into caring for the museum and its collection. In 2022, both organizations combined contributed over 660 hours to volunteering, with RBHS having 624 of those hours. We would also like to thank local Boy Scout Troop 568 for volunteering 56 additional hours with RBHS to complete other large museum tasks. Play n Chat Every Tuesday and Thursday, Bloom brings arts n crafts, story time, and play time for our younger crowd. Upcoming Events *August is National Dog Month. The library will have all programs focusing on mans best friend. ,After school tutoring Tuesday— Friday. Math, Spanish, and Language Arts help. ,August 17—Stuffed Animal Campout at the library. Bring your favorite animal to campout at the library while you take home a smores. You can pick up your stuffed animal Saturday during business hours. ,Every Friday starting August 14th we will have a Movie Matinee starting at 3. ,September 23-Annual Nerf War- library closes early at 3 pm and Nerf War starts at 6 pm. 95 OSeptember 30th- 15t Solar Program will have solar eclipse fun and crafts. More details to come! 4 October 7th—2n6 Solar program at the library with crafts. More details to come. You can pick up your Free Solar Glasses for October 14th partial Solar Eclipse. OOctober 14th-Solar Eclipse Day! Sign up for our final Eclipse event happening at Avtec from 10 am —12 pm. We will have a Dome inside the Avtec Gym where we can view the solar system! Registration Required. Movie @ 2 "Waves Over Seward," a movie about the 1964 Earthquake, will be hosted Tuesday-Saturday and some Sundays at 2 p.m. in the downstairs community room of the library. Admission for this event is priced at $5 per person, while children aged 12 and under can enjoy free entry. Summer Reading Challenge has ended. Our finale was held at the Coast Guard building where we enjoyed hotdogs, a jN watermelon, and a water balloon fight to end the Summer Reading Challenge. This year we had over 100 patrons sign up to complete the challenge. Our grand finale happened Friday with the Coast Guard where everyone enjoyed a tour of the boat, hot dogs, watermelon, and of course a water balloon fight! We had - over 50 people turn out to enjoy the morning with the Coast Guard! Saturday Storytime: Join us for Story-time and an activity every Saturday at 11:00 a.m. Library hours Tuesday— Friday 9 a.m. —6 p.m. Saturdays 9 a.m. —5 p.m. Museum Summer Hours Tuesday—Saturday 11-5 p.m. Month of July Stats WIFI Users— 1428 Patrons Served — 10701 Passports We are currently taking passport appointments for new passports but not renewals. Please call 907-224-4082 for appointments. 96 i 15. i 4 Flo nr _ Exploring Our Community Heroes! This Summer _ Reading Program has taken our readers on an incredible journey, connecting with Alaska Waste, i Library, Fire Dept, Sea Life Center, Police Department, Public Works, and our grand finale with the United States Coast Guard! Each local hero has graciously T ., dedicated a morning to enlighten and inspire, sharing .' their invaluable knowledge and unwavering t" g commitment to serving our community. Together, we discovered ways they make our town shine! it F - I k MOVIE @ 2 WAVES OVER SEWARD - 1964 EARTHQUAKE&TSUNAMI TV $5.00 Admission Klds under 12 ge,in frae ti v "a Shows once a day at 2 PM _ Tuesday-Saturday P - 25 minutes - Community Room • �;. Saward Community Library&Museum + 239 Ave 907-22224-4082 w—cityof saward.us.11 bmus \� Sgw NRO 97 Park Maintenance Hoben Park Fountain is up and running. Continual upkeep and cleaning of debris Woodlawn Cemetery Improvements Replacing damaged boards on the Boardwalk Sand filled in at Horseshoe pits near Branson Pavilion Working on enhancing Park areas Waterfront Bathroom maintenance, swapping out old hardware, replacing damaged materials. A Q 98 DA k 22 s• ems' k '• t ,�p4;;ar e Campgrounds Updates to the Campspot website for Campground reservations. To limit the high volume of phone calls with FAQ's and improving consumer usability. Reconfiguration of camp sites Replacing missing camp site numbers and relocating picnic tables Working on electrical issues changing out old parts in breaker boxes and replacing water spickets in hookup sites Sports & Recreation The Sports and Rec crew is back in the AVTEC Gym! We've sure enjoyed the outdoors and the sun recently. We've been hard-at-it with youth soccer, youth adventure camp and pop-up events. The 4th of July was a bubble mania for Parks and Rec with basketball hoops, ladder ball, cornhole and fun prizes to go along with all the bubbles a bubble machine could possibly make at the kids corner. Youth Soccer has 84 participants and over 10 volunteer coaches. It has been a successful year of fun and great weather for the young footballers. We are heading into the last week of youth soccer camp with t-shirts to be handed out soon. Our sponsors this year were Seward Coastal Charters, Adventure 60 North and Seward Properties. Pickleball continued on Wednesdays outdoor at Forest Acres with a decent crew. 99 The Youth adventure camp comprised of 13, 10-14 year old's heading out into the outdoors all five Saturdays in July. We hiked Harding Ice Field, Lost Lake and Grayling Lake, while also fishing, kayaking, gold panning and making desserts over an open campfire. Participants received backpacks with our sponsor Metco's logo on it, hats with a JAG sponsored patch, fishing poles and foraging bags. It was a hit and sure to be a repeat next summer with new adventures. The Camp Stove Cookoff was a success with 11 participants on six teams. Ed McElroy and Mark Swanson provided amazing music while each team had an hour to cook a meal comprised of surprise ingredients in a backpacking backpack for a chance to win a $300 REI gift card. Gillian Braver and Peter Frank narrowly edged out Andrew Smith and Cara Wallschlaeger with an amazing chana masala. Our judges were Chad from Firebrand, Faith from the Porthole and Erik from the Brewery, each of which were sponsors along with The Cookery. Another event that we may see in the winter with the popularity. We were able to raise $140 for the Food Pantry along with some food donations from the event. Finally as we look forward to August we have some usual hits at AVTEC and some new events. Skate Nights are back every other Saturday, while rock climbing, pickleball, volleyball and basketball are weekly occurrences. The ever popular Kids Night is back and will take place on Saturday August 19th. Leagues will be starting up in October so look for that. New to the docket is Teen Hoops Tuesdays and Dungeons and Dragons, which will be held back to back from 4- 6pm and 6-8pm on Tuesdays. Finally to end the month we will have another pickleball tournament on August 30th. If it lives up to the last one it's sure to be awe-inspiring! So much more in September, so keep an eye out and spread the word about Sports and Rec and follow us on social media or subscribe to our newsletter by emailing sportsandrecgcityofseward.net. rr c- sr. 100 it _ t Daily Activities: (August) Tuesday: Open Gym: 10-6pm *Senior Walking Hour: 11-12pm Teen Hoops Tuesdays: 4-6pm (starts August 15th) Dungeons and Dragons: 6-8pm (Starts August 22nd) Wednesday: *Senior Walking Hour: 11-12pm Open Pickle Ball: 6-8pm 101 Cribbage meetup: 6-8 pm (multi-purpose room) Thursday: *Senior walking hour: 11-12pm Youth Gym: 12-lpm Open Basketball: 6-8pm Friday: Senior Walking hour: 12-lpm Youth Gym: 1-3pm Open Volleyball: 6-8pm Saturday: Open Pickleball: 12-2pm Open Rockwall: 2-4pm Adult Only Rockwall: 4-5pm Skate Night: 6-8pm (every other Saturday) Other events: Tuesday & Thursday August 2-10: Youth Soccer 5:30-8pm, Elementary Field Fridays August: Open Soccer 6-8pm, Elementary Field August 12th: Back to School Skate Night, 6-8pm, AVTEC Gym August 19th: Kids Night, 6-8pm, AVTEC Gym August 26th: Autumn Skate Night, 6-8pm, AVTEC Gym August 30th: Doubles Pickleball Tournament, 6-9pm, AVTEC Gym 102 Public Works Department Doug Schoessler - Director _ x T E Orr �. aR ➢ Public Works Director • US Army Corp of Engineers -Tunnel: -Had an on-site meet and greet visit with COL Jeffrey Palazzini,USACE Alaska District Commander (Incoming District Commander) and team. There will be more visits as the project moves forward. • Utility extensions: -The Ballaine Blvd water and sewer proj ect's successful bidder was Metco Alaska. Construction this fall will complete the water and sewer mains for residential services at the current 6th Ave Public Works site. Page 1 of 3 103 ➢ Streets Department -Street crews have completed adding material to many of the alleys in town. The efforts and continuing work on the alley ways is helping to smooth the surface and lessen the puddling during rain events. -Painting crosswalks and street lines continue. We have been notified by the State DOT that they will only do minimal painting of center lines this year because of the 0-8 Project being done. -Sweeping has begun and will continue. -Street crews will continue to grade gravel roads and patch potholes. ➢ City Shop -Regular and preventative maintenance work continues We are shorthanded this month in the shop. -Some major work is being done on some of our loaders and road graders. Some fixes will be costly enough to need council approval for the repair funds. More information will be provided as we receive quotes. ➢ Water & Wastewater Department -Some construction is already starting this season. The locate requests are coming in daily. -Water systems and alarms are all showing normal and being monitored daily to ensure water quality is above standards. -Monthly testing of water and wastewater systems is being done and submitted to DEC as required by the permits. -------------------------------------------------------------------------------------------------------------------- ➢ Wastewater Lagoon: • -The City was successful through Senator Murkowski and others in recently getting approved for $2,000,000 of funding for sludge removal on the City's sewer lagoons. This project is tentatively scheduled for 2025 depending on sludge buildup in the lagoons. There is also a 20%match on those funds that will have to be paid. • -We are currently working on other grant or loan funding to replace the liner at that same time.The liner replacement will also require the use of a helicopter to lift out the 40 biodomes and reinstall them on the new liner. • -This will also be the time to make any upgrades to the air systems and blower components since all "in-lagoon" systems will have to be removed to install a new liner. Because the lagoon will have to be drained (one side at a time). We can capitalize on construction costs and efforts by installing new system upgrades at the same time. • The new DEC permits also added a disinfection requirement to be completed in the next 5 years. • -We are working on the funding and coordination of the many components and the planning efforts in the next few years will help make a successful project. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Page 2 of 3 104 -A repeating reminder to all residents not to flush wipes,feminine products, etc. down the toilet. Also, never put grease down the drain. Sewer clogs due to these items cost the sewer utility thousands of$$ each year to fix the problems that could have been easily prevented. These losses of capital are to be reflected in monthly sewer service rates. Page 3 of 3 105 Community Development Department Jason Bickling ➢ P&Z met on August 1st and took care of some business items at a regular meeting and then followed with a work session on the Cemetery Master Plan. ➢ The Cemetery Columbaria have been installed: 1 in the Odd Fellows portion of the City Cemetery and 2 in the American Legion Cemetery. ➢ The annual Municipal Lands Inventory and Use Plan review will be coming before the commission in the next month for a work session or possibly two. It will then be approved at a regular meeting and brought before council. ➢ We are continuing to work on platting pieces for the new Public Works Facility. ➢ We are continuing to work with the Utility Department regarding some easements, right of ways, and pole placements - considering possible future land use. ➢ We will be reviewing CUPs starting at the beginning of August. After we go through our CUP review process P&Z will be reviewing applicable code. Our code currently doesn't have a lot of teeth for following up and helping with non- compliance to the CUP. ➢ We are continuing to work through the compliance process with the attorney on the illegal STIR that we filed suit with. I believe that we are getting close to resolution with compliance and fines/fees. ➢ We are still (patiently) waiting for the ADEC decision on the Jesse Lee Home Property review. I will let Council know immediately when we hear back from them on whether more mitigation will need to be done. ➢ Our long-term Temp is continuing to work on scanning and archiving for the Com Dev, Fire, Public Works, and Electric Departments. ➢ We are continuing with our normal business of processing of records requests, short term rental permits, replats, rezones, CUPs, and consulting regularly with community members that have questions about the development and use of their land and helping with applications. 106 GIS Report: - Selena is continuing to work with Public Works data. She has created an updated Water and Sewer Map so that the changes that are made in the field by Public Works will reflect on the map. - The web map for Conditional Use Permits has now been added to our Mapping/GIS webpage under the Planning & Zoning section. The CUPs and associated resolutions have been attached to the features themselves to make it easier to read the conditions. - Selena has finished updating the Muni Land Plan's mapping imagery for this year's future review. - Selena is working on a Future Land Use Map audit to coincide with Courtney's work on the zoning history map. Once this research is finished, mapping applications/layers will be added to the online zoning map as well as updating the printed versions. 107 From: Rob Montaomery To: Kris Peck Cc: Stephen Sowell Subject: FW: Please Review Date: Tuesday,August 8,2023 2:45:13 PM Kris, Here is the bullet we would like to add to the City Manager's Report. Let me know if you have questions.Thanks for your assistance. Rob Chugach Electric Maintenance and Assistance — Seward's electric utility will operate its Fort Raymond Power Plant to assist Chugach Electric Association with planned maintenance on its facilities in the Dave's Creek Substation near Cooper Landing. Operating Fort Raymond will allow CEA customers around Moose Pass and Cooper Landing, as well as City of Seward electric customers, to maintain power service as CEA isolates equipment at Dave's Creek and later when the equipment is placed back in service. CEA's maintenance activities will begin on August 22 and wrap up on August 25. CEA will provide Seward with a work order number so that CEA can be invoiced for fuel usage at Fort Raymond during the plant's operations. 108 ED 240 W.68th Ave. Anchorage,Alaska 99518 August 7,2023 DOT&PF Central Region 4111 Aviation Avenue PO Box 196900 Anchorage,AK 99519-6900 RE: 2023 Updated Rock Blasting Schedule Seward Hwy MP17-22.5 Rehabilitation Project No.0311032/Z536100000 Highway Closures: Change beginning August 21st, 2023, Mondays through Thursdays between 8:30PM and 10:OOPM Who: QAP, Southeast Roadbuilders (SERB), and Alaska Department of Transportation Event: Rock Excavation with Explosive Agents This notification is to alert the traveling public and other agencies to the change in schedule of rock excavation by use of explosives beginning August 21"2023.Due to already decreasing light conditions the blasting schedule is being adjusted to be performed slightly earlier. Blasting activities will continue to require a FULL CLOSURE of the Seward Highway between MP19 and MP22 depending on the blast location.Closures for blasting activities will still be performed on Mondays,Tuesdays,Wednesdays,and Thursdays however the time will be adjusted for the full closure beginning between 8:30PM and 10:00PM. QAP and SERB do not anticipate needing the full duration of the closures and will work diligently to reopen to a minimum of one lane with a pilot car as soon as safe to do so.However due to unforeseen circumstances it may result in utilizing the full closure duration to safely reopen the highway to traffic.Below table outlines the anticipated blasting schedule moving forward. Date Range Blasting Closure Times Road Crew Shift Today through Aug.20 9:30 PM to 11:00 PM(Monday—Thursday) 8:30 PM to 9:30 AM(Sunday—Thursday) August 21 through Sept.15 8:30 PM to 10:00 PM(Monday—Thursday) 7:30 PM to 8:30 AM(Sunday—Thursday) Sept.15 through End of Season 9:00 AM to 10:00 AM(Monday—Thursday) 8:00 AM to 8:00 PM(Sunday—Thursday) If there are any questions,please feel free to use the contacts below for further information: Matt Schram,QAP Project Superintendent mschramAcolaska.com 907-250-9452 Daryl Belanger,QAP Project Engineer d elan er ,col k com 907-350-8467 Sincerely, Daryl Belanger Project Engineer 109 Clerk's Report August 14, 2023 Kris Peck Along with our usual work, the Clerk's Office has been busy with the 4 high school exchange students from Obihiro, Japan. Our Executive Assistant Karen picked them up from the airport and thus began an action-packed week of boat tours, kayaking, educational tours and walks, shopping, volleyball, biking, hiking and more! A big thank you to their host families the Barnwells and the Crites! And thank you to the Chamber of Commerce, Deputy City Clerk Jodi Kurtz and all the locals that helped out with activities and joined them on their adventures. We lucked out with perfect weather and they did NOT want to leave! We waved goodbye at the train station as they headed to Anchorage to catch their flight back to Japan. Next year, we are optimistic that Seward High School students will apply for the program! 110 CHANDLER, FALCONER, MUNSON & CACCIOLA, LLP ATTORNEYS AT LAW SUITE 302 911 WEST EIGHTH AVENUE ANCHORAGE, ALA SKA 99501 TELEPHONE:(907)272-8401 FACSIMILE:(907) 274-3698 bcf@bcfaklaw.com August 2, 2023 Seward City Council City of Seward PO Box 167 Seward, AK 99664 Re: Status Report Dear City Council: This is our status report covering activity on legal matters worked on during July 2023. General Matters: We reviewed a ballot proposition for a charter amendment. We completed review of the Title 14 recodification ordinance. We reviewed and commented on revisions to Title 6. We advised on revocation of the phone use policy. We commented on a preliminary certification related to the ACOE project. We reviewed a bond proposition for the public works building project. Electric Utility: We began work on amendments to the purchase agreement with Homer Electric Association. Parks: We advised on parks facility rental forms. Planning: We advised on a contract for GIS services. Port and Harbor We continued work on revising a land exchange with the USCG. This includes a sale of city property, USCG conveying a building to the City and shortening an existing USCG lease agreement. We prepared a license agreement with NOAA for a tidal gage installation. We filed suit to remove an abandoned vessel per council direction. We have worked with the harbormaster 111 Status Report to Seward City Council August 2, 2023 Page 2 of 2 on code enforcement and resolving issues with nuisance vessels. We advised on a new assignment of the Breeze Inn lease. We began work on a property sale agreement with 4JBC . You can expect to receive our next status report by September 6th. Very truly yours, CHANDLER, FALCONER, MUNSON& CACCIOLA, LLP Brooks Chandler 112 DocuSign Envelope ID:6699DO48-C35D-4197-94DF-F7E9EOFE2EOE Alaska Small Business A Development Center ALAS[A SBDC LAr BUsfNESs ENTERPRISE INSUTUTE July 18, 2023 City of Seward 410 Adams St Seward, AK 99664 Dear Mayor McClure, City Council, and City Staff, This letter serves as our quarterly report for the period April 1 to June 30, 2023. The Seward Business Advisor, KellyAnn Cavaretta, continued her strong performance with a 100% satisfaction rating on client surveys for the sixth consecutive quarter, a testament to the quality of advising she provides entrepreneurs in Seward. As the COVID-19 pandemic faded, demand for in-person advising in Seward continued to increase. In 2020 and 2021, the SBDC did not provide a single in-person advising session to a Seward client. The past year, with KellyAnn established in Seward, that figure jumped to 73% in-person. Here is a summary of deliverables to the Seward community during the quarter (year): Client Hours: 190.5 (347.3) Jobs Supported: 165 (353) Total Clients: 42 (59) Capital Infusion: $1,728,584 ($2,074,584) New Businesses Started or Bought: 5 (6) Client Surveys: 100%positive (100%positive) This report provides lists of the top advising topics and top industries obtaining technical assistance from the Alaska SBDC in Seward. Assistance to entrepreneurs looking to purchase established businesses jumped up to the number one topic this quarter, followed closely by assistance to start-ups. Accommodation remained atop the industry list, followed by rentals and entertainment, with all of these industries preparing for what was anticipated to be the highest grossing tourist season on record. Topics Industries 1. Buy/Sell Business: 48.0 hrs (25%) 1. Accommodation: 56.3 hrs (30%) 2. Start-up Assistance: 47.3 hrs (25%) 2. Rentals: 34.5 hrs (18%) 3. Financing/Capital: 38.0 hrs (20%) 3. Entertainment: 31.6 hrs (17%) 4. Business Planning: 6.8 hrs (4%) 4. Retailers: 30.1 hrs (16%) 5. Tax Planning: 5.8 hrs (3%) 5. Food Services: 14.8 hrs (8%) We would like to thank the City of Seward for their support of the Seward Business Advisor position. KellyAnn continues to exceed expectations and we appreciate the knowledge and experience she brings to our team and the Seward community. Please do not hesitate to contact us if you have any questions. Sincerely, DocuSigg�nneed by: 98AFA012679B4D U, 18 2023 Jon Bittner JJ Y ' Executive Director Alaska SBDC .00000OW MM7 :E •F i :D 190199508 Anchorage - Fairbanks - Juneau - Kenai Peninsula - Ketchikan - Mat-Su Valley Seward Prevention Coalition Statement of Financial Position As of June 30, 2023 HYPER DAY CARE CITY DONATION TOTAL HYPER TOTAL ASSETS Current Assets Bank Accounts Edward Jones Investments 399,058.19 399,058.19 $399,058.19 FNBA Checking -513.97 -14,230.69 -14,744.66 $-14,744.66 Total Bank Accounts $-513.97 $384,827.50 $384,313.53 $384,313.53 Other Current Assets Workers Comp Prepayment 0.00 0.00 $0.00 Total Other Current Assets $0.00 $0.00 $0.00 $0.00 Total Current Assets $-513.97 $384,827.50 $384,313.53 $384,313.53 TOTAL ASSETS $-513.97 $384,827.50 $384,313.53 $384,313.53 LIABILITIES AND EQUITY Liabilities Current Liabilities Other Current Liabilities Payroll Liabilities $0.00 AK Unemployment Tax 31.40 31.40 $31.40 Federal Taxes(941/944) 422.44 422.44 $422.44 Wages Payable 1,806.09 1,806.09 $1,806.09 Total Payroll Liabilities 2,259.93 2,259.93 $2,259.93 Total Other Current Liabilities $0.00 $2,259.93 $2,259.93 $2,259.93 Total Current Liabilities $0.00 $2,259.93 $2,259.93 $2,259.93 Total Liabilities $0.00 $2,259.93 $2,259.93 $2,259.93 Equity Retained Earnings 2,576.07 448,459.22 451,035.29 $451,035.29 Net Revenue -3,090.04 -65,891.65 -68,981.69 $-68,981.69 Total Equity $-513.97 $382,567.57 $382,053.60 $382,053.60 TOTAL LIABILITIES AND EQUITY $-513.97 $384,827.50 $384,313.53 $384,313.53 Accrual Basis Thursday,Jul)21, 2023 09:14 AM GMT-08:00 1/1 Seward Prevention Coalition Statement of Financial Position As of June 30, 2023 HYPER DAY CARE CITY DONATION TOTAL HYPER TOTAL ASSETS Current Assets Bank Accounts Edward Jones Investments 399,058.19 399,058.19 $399,058.19 FNBA Checking -513.97 -14,230.69 -14,744.66 $-14,744.66 Total Bank Accounts $-513.97 $384,827.50 $384,313.53 $384,313.53 Other Current Assets Workers Comp Prepayment 0.00 0.00 $0.00 Total Other Current Assets $0.00 $0.00 $0.00 $0.00 Total Current Assets $-513.97 $384,827.50 $384,313.53 $384,313.53 TOTAL ASSETS $-513.97 $384,827.50 $384,313.53 $384,313.53 LIABILITIES AND EQUITY Liabilities Current Liabilities Other Current Liabilities Payroll Liabilities $0.00 AK Unemployment Tax 31.40 31.40 $31.40 Federal Taxes(941/944) 422.44 422.44 $422.44 Wages Payable 1,806.09 1,806.09 $1,806.09 Total Payroll Liabilities 2,259.93 2,259.93 $2,259.93 Total Other Current Liabilities $0.00 $2,259.93 $2,259.93 $2,259.93 Total Current Liabilities $0.00 $2,259.93 $2,259.93 $2,259.93 Total Liabilities $0.00 $2,259.93 $2,259.93 $2,259.93 Equity Retained Earnings 2,576.07 448,459.22 451,035.29 $451,035.29 Net Revenue -3,090.04 -65,891.65 -68,981.69 $-68,981.69 Total Equity $-513.97 $382,567.57 $382,053.60 $382,053.60 TOTAL LIABILITIES AND EQUITY $-513.97 $384,827.50 $384,313.53 $384,313.53 Accrual Basis Thursday,Jul)21,4023 09:14 AM GMT-08:00 1/1 Roll Call Present- Kaluza, Draper, Tustamena (on phone), Casagranda, Hatfield, Paquette, Dunham, McCracken Absent- Stauffer Agenda - how were we going to compile items for the future agendas? Agendas will be made at each meeting for the following meeting Agenda for 7/31/23 Unfinished business - Introductions because recordings weren't functioning last meeting Rob answers all the questions we submitted to council Discuss council's direction Discuss Timeline for delivery of documents submitted to ad hoc committee on 7/31/23 Discuss next Agenda for 8/7 Introductions - Tustemena - engineer retired from DOT and background education in power and electricity Draper- background in finance Dunham - Worked for Chugach Electric for 12 years, involved in electric utilities most of his career, about 40 years (which included time with MEA, HEA, CEA and other utilities in their day to day operations) Paquette - 30 year resident, outside city with 5 meters, involved in PACAB Kaluza - 6 years as an elected Nome joint utility board member and 6 additional years on Nome city council that had oversite of the Nome utility. Casagranda - Been in Seward all her life, served on city council, dad ran the Ft. Richardson power plant, serving as an opportunity to learn more in electricity McCracken - Here for the rate payers, been on fish and game committees and rate committees Hatfield - lived in Seward 10 years, 3 years on Seward's PNZ Questions Answered by Rob Montgomery Motgomery answers to committee questions had been sent via email in the morning of 7/31 Avg cost per kilowatt- A little over .12 for summer rates, COPA was a little over .11 so .23 cents per kilowatt for the summer for residential. Kaluza asked for an average of costs and Montgomery responded that he can get it to the committee after the rate study is completed. McCracken pointed out the rate comparisons on page 245 of the packet between Chugach, Homer, and Seward. Casagranda asked for a definition of rail belt— Motgomery replied it is the area from Seward to Fairbanks (where the railroad runs) including Homer Electric Dunham pointed out the Chugach South includes Moose Pass, Cooper Landing who pay lower rates than SES. Chugach South rate is .08 116 POWER FACTOR SES measures it, but does not bill for it for about 30-40 customers who have meters that read power factor. In order to read the power factor meters, personnel have to be near the meter to read them with the remote. Montgomery thinks that the numbers seem inaccurate and with the problems the utility has had with dealing with net metering for solar power, he feels it would be biting off more than the department could chew at this point. If there were more resources (staff) they could take that on. Dunham asked if we could get the data from the 30-40 customers who had power factor meters. We buy a full amount of power from Chugach and if our large corporations are doing something to incur losses within the Seward system which may account for some of the losses that the rest of Seward is paying for. Commercial operations that have old machinery or inefficient electrical usage could be the reason that Seward has nearly the double amount of line losses than the national average. The company that was chosen to outsource billing uses the same software that Seward uses so they can work within that system. Large companies are required to track their own power factor, but Montgomery confirmed that no company has been tested to ensure their power factor was adequate. Dunham asked if the significant 8-9% line losses that were reported included places that were not being metered (i.e. city buildings, etc.) and Montgomery said he was unsure and would get back to the committee. Dunham stated that those losses, if they were there, were just being passed on to the consumer base without anyone knowing. Montgomery replied that in order to test and bill for the power factor the department would need more resources. Montgomery's first priority when hired was safety - cleaning up the power lines and removing trees, deteriorating power poles on Nash Road. By focusing on those things first he has cut down on power outages by 75%. The other thing was to be interconnected, which he has made strides with but still has far to go. But he still has a lot of things to deal with in billing. Outsourced billing begins this month. Also had to renegotiate the contract with Chugach that was supposed to be done in 2016 but had not been completed - that has currently been updated. Montgomery will look into getting data from several large commmercial operations so we can see if this is a true issue - suggested consumers to look at were SMIC when they lift a ship, OBI, a school, and city buildings. If there are unmetered city buildings and we sold the electric ulitiliy it could result in much higher costs for the city after the sale because the new company will want everything metered. Casagranda clarified that lights on 3rd ave are metered, but it was unclear if the other lights in the city were. 117 CRUISE SHIP POWER City is not leading the charge, the railroad is. Conference calls were held about getting power to the cruise dock. Montgomery thinks that at some point there will be cruise ship power, but he can't determine when. He sees the industry moving that way and requiring ships to use shore power. Montgomery said that the city is well set up to make that happen in the future and it's not a huge project. The plan is to be ready to run the line to the cruise dock from Fort Raymond using the railroad easements. The 4-5 million dollar project to run lines to the dock was cancelled until it can move forward. Citizen Becky Dunn asked for an estimate on how much power the ships would use. Montgomery had an estimate done and was looking at a gross of$2 million and net of around $1.2 million. Typical load for a ship is typically 7-10 mega watts which is about double the load of the entire city of Seward. Casagranda asked if we can require that the ships plug into shore power. Kaluza suggested to get the state involved so that if the ships didn't want to plug in, they might go to Whittier or elsewhere. It was suggested that electric is cheaper for them than diesel. Reierson asked how many communities for the state require ships to hook up to shore power? How many towns have it? What is the cost to electrify one cruise ship dock? Approximately $12 million for the overall project, which includes transmission line upgrade, per Juneau's recent project. Montgomery said if that was made a requirement, the RR, Seward and the cruise companies would be able to work together to come up with the funds for the project. McCracken said the cruise ships should put the infrastructure in - Montgomery responded that that was part of the hiccup with the project is that the ships weren't able or willing to make it work. STAFFING Earnings for other communities' staff is included in the packet. Dunham said that he would like to see some communities that are absent such as Cordova. Discussion ensued about the necessity of having a dedicated position for a liaison. Montgomery said that SES is sitting on many committees and boards with the other rail belt utilities and there is currently one person trying to participate in all those meetings. Dunham replied that typically that person is the GM, or a couple other people (council members or a volunteer) to take that on and asked Montgomery why that couldn't be the case for Seward. Montgomery responded that some committees need someone with a specific background in electrical utilities. Casagranda asked if Montgomery had an alternate for the committees. He responded that he did not. Dunham asked if any other company has made an employee a railbelt liaison. Montgomery responded that other companies are thinking about it. The liaison would be tracking state and federal legislation, writing reports, and more. He sees it as being an expanded government relations position. Dunham said that price is going to be around $100k and Montgomery agreed. 118 Paquette asked if there was another community we could share that position with? Montgomery responded that they already have them. Also, with the constraints of the union contract, SES is not able to add responsibilities to someone's position without an increase in pay or renegotiating with the union. Montgomery made the point that although we're not like the other railbelt utilities, we are tied by a contract to the other utilities and Seward has to participate. Currently Dave Burlingame, owner of Electric Poweer Systems, has been volunteering approximately 12 hours a week as a representative for Seward. While Montgomery hopes to use volunteers in a lot of the committees he mentioned the RRC will need to be a paid employee, there was some discussion as to whether that should be the GM or a volunteer or an added position. Montgomery stated that a part of the problem the entire city has had is a revolving door of staff in key positions. Seward will need to pay enough to get people to be interetested in Seward and then stay. IN VS OUT CITY LIMITS 52% inside city limits and 48% outside city limits. Likely there are more KW being used inside city limits with the commercial usage. Chugach is asking for a 6.5% increase which will translate to approximately $5/month for residential customers using 600kW or less. CHUGACH CONTRACT Every 3 years, expires in 2025. To terminate the contract you have to give a year's notice. Chugach has always had the lower rate for a wholesale power contract. If the sale to Homer goes through this fall, we wouldn't end up with HEA until Jan 1, 2025. Seward owns 1.2% of Bradly Lake because they went by the total system load at the time the sale went through, which gives Seward a credit of approximately $200-$300k per year. Montgomery says that to rebuild we should have someone at the table to work with the other utilities for the Bradley Lake Project. CYBER SECURITY Seward isn't subject to all the cyber security standards, but there is some monitoring that we are subject to. There will be documents that are needed to be filled out and turned in to comply with new regulations. Seward doesn't have 24 hour monitoring of our substations, and that is one thing they are deciding on whether or not we would have to do. Motgomery stated although the IT department of Seward has doubled in the past few years, Dustin, the head of IT, sat in on a few meetings and determined that cyber security was over his head and he was unable to do that. Montgomery said that he didn't think it needed to be a FT position and it could be outsourced if that made the most sense, but it did need to be a person familiar with the electrical utility. 119 Citizen Dunn asked if we could get a cost from the outsourcing company for that position from the company that we are currently outsourcing our utility billing to and Montgomery said he could ask them. McCracken asked if other utilities (water/sewer) are also coming up against these cybersecurity issues to perhaps share a position. No one thought that they had and it was suggested that admin ask public works. Seward has responsibiities due to contracts with Bradley Lake and a memorandum of understanding with the RRC. Montgomery suggested that we hear from Burlingame (owner of Electric Power Systems and SES current RRC representative) via zoom, Curtis Sayer (executive director of the AK authority) in person, Mike Hubbard (rate study) could possibly attend via zoom about rates. Dwayne Atwood (Alaska Railroad) could be a good person to speak on the railroad. It was decided that these people would be scheduled one per meeting up to 20 minutes to present their perspective. DISCUSSION OF COUNCILS DECISION TO NOT ALTER THE MISSION STATEMENT Kaluza mentioned that he wished he could have seen the mission statement before he volunteered. McCracken stated that the volunteers for the ad hoc committee were approved and then the mission statement was approved after that, so it wasn't possible for any of the volunteers on the ad hoc committee to know what they were signing up for. The committee decided that they will stay on the council's mission covering the cost of rebuilding. DISCUSS THE TIMELINE OF DOCUMENT DISTIBUTION Paquette wanted to make it clear that the documents were not held up for any reason except general growing pains involving the creation of this new committee. Going forward, there shouldn't be any problem getting things and info we need in a timely manner (not the day of) to produce the deliverables. Paquette asked Montgomery if we had everything we needed to create the deliverables and there was a resounding "no". We need more info concerning office space, vehicles, etc. among other things. Paquette proposed that we tackle the first deliverable. Motion was made by Dunham and seconded by Hatfield. AGENDA FOR NEXT MEETING 1. Discuss where can we go to find information on each deliverable. 120 Although Montgomery has done extensive research on each of these deliverables, council would like the committee to come up with their own research. 2. Presentation by Curtis Sayer (if available) 3. Discuss packet provided at last meeting - questions, important pages, etc. 4. Dicuss next meeting agenda 5. Citizen comments 6. Committee comments CITIZEN COMMENTS Reierson thought it might be worthwhile to create a board of 5 members to help run the utility, a board of directors. Board could be responsible to communicate with the council to make sure priorities are being met and on track. Make a more efficient and streamlined practice. This could be added to the org chart. Because city government turns over every few years, this type of board would give some continuity to the city for a complicated task of running a utility. Becky wanted to reiterate that we need a finance director. Where is it being advertised and why is it taking so long to fill positions in the city. Why are we fixing up the utility if we're going to sell it? Get the Canadian company to give us a quote for cybersecurity. Dunham asked for a table of contents for the packet- Casagranda said she'd talk to the clerk about it. And can we get the password for the internet in the council chambers. COMMITTEE COMMENTS McCracken is looking forward to making some headway on this topic. Kaluza hopes we keep in mind what it will cost the ratepayers whatever is decided. Dunham would like to do a presentation on how the interconnected system works. Hatfield thanked Montgomery for putting together all of the information Draper asked if Jaffa's question about staffing in other communities' utitiliy departments. Montgomery said the best place to start is the AK Power Association. We may need to call each utility to learn a lot of this information about other communities and how they are organized. But there's a need to make sure that other communities are a part of the railbelt to make a clear comparison. Copper Valley could be a good comparison because they have distribution and transmission lines. They have a similar problem getting staff as well, although they're not on the railbelt. Paquette thanked everyone for their participation and hoped that we can assume that everyone is doing the best they can. 121 Blank Page 122 HIlks iff%ma KPMG LLP Suite 2800 401 Union Street Seattle,WA 96101 May 3, 2023 The Board of Directors Providence Health &Services—Washington and the City of Seward Seward, Alaska To the Board of Directors of Providence Health & Services—Washington and the City of Seward: We have audited the financial statements of Providence Seward Medical Center(the Medical Center) as of December 31, 2022 and 2021, and for each of the years then ended, and expect to issue our report thereon under date of May 3, 2023. Under our professional standards, we are providing you with the accompanying information related to the conduct of our audits. Our Responsibility Under Professional Standards We are responsible for forming and expressing an opinion about whether the financial statements, that have been prepared by Providence Health & Services—Washington (management)with the oversight of the Board of Directors, are presented fairly, in all material respects, in conformity with the financial reporting provisions of the Management and Operating Agreement between Providence Health &Services—Washington and the City of Seward. We have a responsibility to perform our audit of the financial statements in accordance with auditing standards generally accepted in the United States of America(AICPA). In carrying out this responsibility, we planned and performed the audit to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether caused by error or fraud. Because of the nature of audit evidence and the characteristics of fraud, we are to obtain reasonable, not absolute, assurance that material misstatements are detected. We have no responsibility to plan and perform the audit to obtain reasonable assurance that misstatements, whether caused by error or fraud, that are not material to the financial statements are detected. Our audit does not relieve management or the Board of Directors of their responsibilities. In addition, in planning and performing our audit of the financial statements, we considered internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances 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 Medical Center's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Medical Center's internal control. We also have a responsibility to communicate significant matters related to the financial statement audit that are, in our professional judgment, relevant to the responsibilities of the Board of Directors of Providence Health &Services—Washington and the City of Seward in overseeing the financial reporting process. We are not required to design procedures for the purpose of identifying other matters to communicate to you. Significant Unusual Transactions In connection with our audit of the Medical Center's financial statements, no significant unusual transactions were identified. Uncorrected and Corrected Misstatements Uncorrected Misstatements and Financial Statement Presentation and Disclosure Omissions In connection with our audit of the Medical Center's financial statements, we have discussed with management certain financial statement misstatements related to accounts and disclosures that have not been corrected in 123 Awi The Board of Directors Providence Health & Services—Washington and the City of Seward May 3, 2023 Page 2 of 3 the Medical Center's books and records as of and for the year ended December 31, 2022. We have reported such misstatements to management on a Summary of Audit Misstatements and have received written representations from management that the effects of the uncorrected financial statement misstatements related to accounts and disclosures are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Uncorrected immaterial misstatements, or matters underlying them, could potentially cause future-period financial statements to be materially misstated. Attached is a copy of the summary that has been provided to, and discussed with, management. Corrected Misstatements In addition, during the course of our audit, we identified and discussed with management a financial statement misstatement that was corrected by the Medical Center. Attached is a copy of the adjustment schedule that has been discussed with management and corrected by the Medical Center. Non-GAAP Accounting Policies and Practices The Medical Center has adopted certain accounting policies or practices that, if applied to significant items or transactions, are not in accordance with U.S. generally accepted accounting principles. The Medical Center has evaluated the effect of the application of such policies and practices on the financial statements and concluded that such effect is not material to the 2022 financial statements. Auditors' Report The auditor's report includes the following emphasis of matter paragraphs: We draw attention to Note 2 of the financial statements, which describes the basis of accounting. As described in Note 2 to the financial statements, the financial statements are prepared by the Medical Center on the basis of the financial reporting provisions of the Agreement, which is a basis of accounting other than U.S. generally accepted accounting principles, to meet the requirements of the Agreement. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified with respect to this matter. Additionally, as discussed in Note 2, in fiscal year 2022, the Medical Center adopted the provisions of Government Accounting Standards Board (GASB) Statement No. 87, Leases. Our opinion is not modified with respect to this manner. Significant Accounting Policies and Practices In connection with our audit of the Medical Center's financial statements, no new, or changes in, significant accounting policies and practices were identified. Qualitative Aspects of Accounting Practices We have discussed with the Board of Directors and management our judgments about the quality, not just the acceptability, of the Medical Center's accounting policies as applied in its financial reporting. The discussions generally included such matters as the consistency of the Medical Center's accounting policies and their application, and the understandability and completeness of the Medical Center's financial statements, which include related disclosures. Significant Accounting Estimates and Significant Financial Statement Disclosures The preparation of the financial statements requires management of the Medical Center to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of 124 WA�d The Board of Directors Providence Health &Services—Washington and the City of Seward May 3, 2023 Page 3 of 3 contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accounts Receivable Allowances Management's estimate of the allowance for contractual and bad debt deductions on patient accounts receivable is based on an analysis of historical rates of collection by payor for inpatient and outpatient services. Management's estimate considered the impact of price increases as well as historical collection rates of completion. We evaluated the key factors and assumptions used to develop the allowances, including possible management bias in developing the estimate, in determining that the allowance for contractual and bad debt deductions on patient accounts receivable is reasonable in relation to the financial statements taken as a whole. Noncompliance with Laws and Regulations, including Illegal Acts or Fraud In connection with our audit of the Medical Center's financial statements, no identified or suspected instances of non-compliance with laws and regulations, including illegal acts or fraud, have come to our attention. Significant Difficulties Encountered During the Audit We encountered no significant difficulties in dealing with management in performing our audit. Management's Consultation with Other Accountants To the best of our knowledge, management has not consulted with other accountants during the year ended December 31, 2022. Written Communications Attached to this letter please find copies of the following written communications between management and us: 1. Management representation letter Independence Affirmation of Independence In connection with our audit of the Medical Center, KPMG and relevant KPMG professionals have complied with relevant ethical requirements regarding independence, as that term is defined by the professional standards. 4 r r Yr v k W This letter to the Board of Directors of Providence Health &Services—Washington and the City of Seward is intended solely for the information and use of the Board of Directors of Providence Health & Services— Washington and the City of Seward and management and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, AMC, LOP 125 DocuSign Envelope ID:77CC7090-4271-42F1-BD43-87EEAA825A7A 4Providence 417 111 Ave, Seward,AK 99664 Seward Medical Center (907)224-5205 providence.org May 3, 2023 KPMG LLP 401 Union St, Suite 2800 Seattle, WA 98101 We are providing this letter in connection with your audit of the financial statements and the related notes to the financial statements of Providence Seward Medical Center(the Medical Center) as of and for the year ended December 31, 2022 and 2021, for the purpose of expressing opinions as to whether these financial statements present fairly, in all material respects, the respective financial positions, changes in financial positions, and, cash flows thereof in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. We confirm, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves, as of May 3, 2023 1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated November 4, 2D22, for the preparation and fair presentation of the financial statements in accordance with U.S.GAAP. 2. We have made available to you: a. All records, documentation, and information that is relevant to the preparation and fair presentation of the financial statements; b. Additional information that you have requested from us for the purpose of the audit; c. All minutes of the meetings of Providence Alaska Region's Community Ministry Board or summaries of actions of recent meetings for which minutes have not yet been prepared. All significant board and committee actions are included in the summaries; and d. Unrestricted access and the full cooperation of personnel within the entity from whom you determined it necessary to obtain audit evidence. 3. Except as disclosed to you in writing, there have been no communications from regulatory agencies, governmental representatives, employees or others concerning investigations or allegations of noncompliance with laws and regulations in any jurisdiction (including those 126 Docu.5ign Envelope ID:77CC7090-427142F1-BD43-87EEAA825A7A May 3, 2023 Page 2 of 5 related to the Medicare and Medicaid antifraud and abuse statutes), deficiencies in financial reporting practices, or other matters that could have a material adverse effect on the financial statements. 4. There are no known instances of non-compliance or suspected non-compliance with laws and regulations, such as those related to the Medicare and Medicaid antifraud and abuse statutes, including but not limited to the Anti-Kickback Statute, Limitations on Certain Physician Referrals (commonly referred to as the"Stark law"), and the False Claims Act, whose effects should be considered when preparing the financial statements. 5. All material transactions have been recorded in the accounting records and are reflected in the financial statements. 6. There are no side agreements or other arrangements (either written or oral). 7. All events subsequent to the date of the statement of net position and through the date of this fetter for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed. 8. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with paragraphs 96— 113 of Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and A1CPA Pronouncements. 9. We are not aware of any pending or threatened litigation, claims, and assessments whose effects should be considered when preparing the financial statements. 10. The effects of the uncorrected financial statement misstatements summarized in the accompanying schedule is immaterial, both individually and in the aggregate, to the financial statements for each respective opinion unit. 11. We acknowledge our responsibility for the design, implementation, and maintenance of programs and controls to prevent, deter, and detect fraud; for adopting sound accounting policies; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements and to provide reasonable assurance against the possibility of misstatements that are material to the financial statements, whether due to error or fraud. We understand that the term"fraud" is defined as an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception that results in a misstatement in financial statements that are the subject of an audit. 12. We have disclosed to you all deficiencies in the design or operation of internal control over financial reporting of which we are aware, which could adversely affect the Medical Center's ability to initiate, authorize, record, process, or report financial data. We have separately disclosed to you all such deficiencies that we believe to be significant deficiencies or material weaknesses in internal control over financial reporting, as those terms are defined in AU-C Section 265.07, Communicating Internal Control Related Matters Identified in an Audit. 127 DocuSign Envelope ID:77CC7090-4271-42F1-BD43-87EEAA825A7A May 3, 2023 Page 3 of 5 13. We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. 14. We have no knowledge of any fraud or suspected fraud affecting the Medical Center involving: a. Management, b. Employees who have significant roles in internal control, or c. Others where the fraud could have a material effect on the financial statements. 15. We have no knowledge of any allegations of fraud, or suspected fraud, affecting the Medical Center's financial statements communicated by employees, former employees, regulators, or others. 16. We have no knowledge of any officer or director of the Medical Center, or any other person acting under the direction thereof, having taken any action to fraudulently influence, coerce, manipulate, or mislead you during your audit. 17. The methods, data, and significant assumptions used by us in making accounting estimates and their related disclosures are appropriate to achieve recognition, measurement, or disclosure that is reasonable in accordance with U.S. GAAP. 18. We have disclosed to you the identity of all our related parties and all the related party relationships and transactions of which we are aware. 19. The following have been properly recorded or disclosed in the financial statements: a. Related party relationships and transactions, of which we are aware, in accordance with U.S. GAAP, including sales, purchases, loans, transfers, leasing arrangements, guarantees, ongoing contractual commitments and amounts receivable from or payable to related parties.The term "related party" refers to government's related organizations,joint ventures, and jointly governed organizations, as defined in GASB Statement No. 14, The Financial Reporting Entity, as amended; elected and appointed officials of the government; its management; members of the immediate families of elected or appointed officials of the government and its management; and other parties with which the government may deal if one party can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Another party also is a related party if it can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. 128 DocuSign Envelope ID:77CC7090-4271-42F1-BD43-87EEAA825A7A May 3, 2023 Page 4 of 5 b. Guarantees, whether written or oral, under which the Medical Center is contingently liable. c. The existence of and transactions with joint ventures and other related organizations. 20, The Medical Center has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets, nor has any asset been pledged as collateral. 21. The Medical Center has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. 22. Billings to third-party payors comply in all material respects with applicable coding guidelines (e.g., ICD-10-CM and CPT-4) and laws and regulations(including those dealing with Medicare and Medicaid antifraud and abuse) and only reflect charges for goods and services that were medically necessary, ordered in writing by a treating physician, properly approved by regulatory bodies (for example, the Food and Drug Administration), if required, and properly rendered. 23. We have disclosed to you all accounting policies and practices we have adopted that, if applied to significant items or transactions, would not be in accordance with U.S. GAAP. We have evaluated the impact of the application of each such policy and practice, both individually and in the aggregate, on the Medical Center's current period financial statements, and the expected impact of each such policy and practice on future periods'financial reporting. We believe the effect of these policies and practices on the financial statements is not material. Furthermore, we do not believe the impact of the application of these policies and practices will be material to the financial statements in future periods. 24. To the best of our knowledge and belief, we have provided you with a complete and accurate listing of our affiliates as defined by the AICPA Code of Professional Conduct interpretation ET 1.224.020, State and Local Government Client Affiliates. 25, Management is responsible for the accuracy and propriety of all cost reports filed and all the required Medicare, Medicaid, and similar cost reports have been properly filed. All costs reflected on such reports are appropriate and allowable under applicable reimbursement rules and regulations and are patient related and properly allocated to applicable payors. The reimbursement methodologies and principles employed are in accordance with applicable rules and regulations. All items required to be disclosed, including disputed costs that are being claimed to establish a basis for a subsequent appeal, have been fully disclosed in the cost report. Recorded third-party settlements include differences between filed (and to be filed) cost reports and calculated settlements, which are necessary based on historical experience or new or ambiguous regulations that may be subject to differing interpretations and audit adjustments by intermediaries, third-party payors, or other regulatory agencies. While management believes the entity is entitled to all the amounts claimed on the cost reports, management also believes the amounts of these differences are appropriate. 26. Based on our determination letter, the Entities have been classified as divisions of the City under Section 115(a) of the Internal Revenue Code, and since the date of our determination 129 DocuSign Envelope ID:77CC7090-4271-42F1-BD43-87EEAA825A7A May 3, 2023 Page 5of5 letters, no changes have occurred in the organization or its operations that would change this classification. 27. There are no representations provided in connection with your audits of the Entities' financial statements as of December 31, 2021 and for the year then ended that requires modification. 28. We have properly recorded or disclosed in the financial statements significant relationships with affiliated organizations, and the financial statements of those organizations, where required. 29. In accordance with Government Auditing Standards, we have identified to you all previous audits, attestation engagements, and other studies that related to the objectives of this audit, including whether related recommendations have been implemented. 30. KPMG LLP assisted management in drafting the financial statements and notes. In accordance with Government Auditing Standards, we confirm that we have reviewed, approved, and accept responsibility for the financial statements and notes. 31. The Medical Center have no plans or intentions that may materially affect the carrying value or classification of assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Very truly yours, Providence Seward Medical Center EDocu5igned 6y: 4ai� Maytag 8FC7MR4522046F... Amy Miller Regional Chief Financial Officer Docup � Si'gnedby: 53AG107218rB264F2 Jim Martin Group VP Controller 130 FNR,�arwdd.ew=w,.b M.aa.F�Nw sv c.r.od[ed.d.b.unMr)4ama M1le9rw VrMmLVenaty Ault Messxmenn.Reaore.rix[nW Nemr axt et _ m ana IwamwrNw n meankaxMua.ta arranlrctM ew�Wq nantumn [umix W4ARfwtntMtumn txnfM inmtln[ glrxwMs wmxaMmMa xewe sw.e.er x.e�nelx.rar...w.l u Imp'+] .k..rMa,b.p.nua awwNrew Faury k aweeunl lerrpew.rdt� I mpeb0d . aaaNi rrawti t Lta9YkNF +abiria PstlNlw MtMtln wma aewe �n� arca ]Mre xx a rNt wnzo[eme N IN rx F patkntserwrerererue Mekam wm xmm6reoeinNe 3].3?s - 39,39] - - - 135,39]V �] tort M.i)eretamwiuxelatM Fat[uel ucarrts In m;;I53Y lY'es MBriw weene kFamn.rt�awecw VkFlMtlant ramxa rererre 139,39]I fuz,3c61 Lm?49 13s,xe]I In,3s>1 IAs,3s>} 24)]paktl in]02]l539k1, are wn,<4evaar:d.y�vr,[ nwrad>c Is]s,0061 IS'/9 mel , k4�*eMe,rraer�lumeenaxusetl 9roaerrv.wetmx�:nmwr,t ]sa,3zr zw,3n nso,3zly elrt r.ercrdaea m.ewxes I� 3]/3]/103]As i[ixh xcwam payable s 33,�'S ]],39] 2?3921 M uMersoretl.�Na[WFemm[IXd r[x HnuN K�'nb Salaries aMreges expere'e 3]9f4] 3]9,]41 3]9,)Rl 319,EdS (3]5,xe]V NxtlrNwtm�rts�K cdaM SUPPIes 6Rrse )�2] l]32]y n x r rumlpial Nwn rru�ugermnYSVwepe<a.e. teroperatlrigamenw )9,1v. 19,114 I19,toy Ageveare erkam vmv$[ed aWl[mlss[a[er><nh @eweta.7- anaF) s)s,mF laxeMen'. ARFrzSa[eefkeFeruvvrMRtl a�dle minb[weeeb lNnetW ss]n Firaxlal statemeivametmtl{per fnllirramu NNemenn)laher FNd.- Wrtwrtthtlaxtlitmisiwummnasapwxcnlapcof Fiwrcial itaumrntamwrrs Whar ravl, x]S]% 1 xa33 �a�5% x11 p,14% x]�OOfi b�96% Uo0% 3 0 ryp4teelr..t N misxutmurc yalaRlPnrnatx MY[atwrwluuaprcwxapu InxM rxa sllxNiatrtxmrN ISA.VbI [Lm&tvA b awe, e.:te�x.eanev,a3...:se. Is3aPNl f].M>MW sz ,axrgate✓Iw[ �enwr[aRFeate s.wrornoa �wrvkernenue a)1 xt �fls,istaq vx smyxe F.p.mu e omereeeraayewenre v.ls LtnoAw Iee..N.kn.alruiMvr..ra FwaxRmerlNd.Feiw pvsiR)er 131 Summary of Audit Misstatements-Corrected Entity:Providence Seward Medical Center For Period Ended:December 31,2022 Amounts 1n7 currency units Entry Balance sheet Income statement Factual, Misstatement in ID Description of misstatement judgmental oraccounts or in Accounts(if applicable) Debit (Credit) Debit (Credit) projected disclosure? misstatement? Other current liabilities 234,417 An entry related to AM3 equipment additions was Factual Accounts incorrectly recorded, payable to Providence Health and Services (234,417� 234,417 (234,417) 132 �r PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health & Services — Washington) Financial Statements December 31 , 2022 and 2021 (With Independent Auditors' Report Thereon) 133 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Table of Contents Page Independent Auditors' Report 1 Financial Statements: Statements of Net Position —Contractual Basis 3 Statements of Revenues, Expenses, and Changes in Net Position —Contractual Basis 4 Statements of Cash Flows—Contractual Basis 5 Notes to Financial Statements 6 134 it 811LE49 Ed KPMG LLP Suite 2800 401 Union Street Seattle,WA 98101 Independent Auditors' Report The Board of Directors Providence Health &Services—Washington and the City of Seward: We have audited the financial statements of Providence Seward Medical Center(the Medical Center), a hospital owned by the City of Seward, Alaska (the City)and managed by Providence Health &Services— Washington (a Washington nonprofit corporation), which comprise the statements of net position—contractual basis as of December 31, 2022 and 2021, and the related statements of revenues, expenses, and changes in net position--contractual basis; and statement of cash flows—contractual basis for the years then ended, and the related notes to the financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the contractual basis net position of the Medical Center as of December 31, 2022 and 2021, and the contractual basis changes in net position and contractual basis cash flows thereof for the years then ended in accordance with the financial reporting provisions of the Management and Operating Agreement between Providence Health & Services—Washington and the City(the Agreement) in Note 2. Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Medical Center and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Emphasis of Matter Basis of Accounting We draw attention to Note 2 of the financial statements,which describes the basis of accounting. As described in Note 2 to the financial statements, the financial statements are prepared by the Medical Center on the basis of the financial reporting provisions of the Agreement, which is a basis of accounting other than U.S. generally accepted accounting principles, to meet the requirements of the Agreement. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified with respect to this matter. Adoption of New Accounting Pronouncement Additionally, as discussed in Note 2, in fiscal year 2022, the Medical Center adopted the provisions of Government Accounting Standards Board (GASB)Statement No. 87, Leases. Our opinion is not modified with respect to this manner. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of the Agreement. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. 135 Auditors'Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GARS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Medical Center's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in ourjudgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Medical Center's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Restriction on Use Our report is intended solely for the information and use of the Board of Directors and management of Providence Health &Services—Washington, the City, the State of Alaska Department of Health and Social Services, and Altman, Rogers& Co., and is not intended to be and should not be used by anyone other than these specified parties. OW(Cs LLP Seattle, Washington May 3, 2023 2 136 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services-Washington) Statements of Net Position-Contractual Basis December 31, 2022 and 2021 (in thousands of dollars) Assets 2022 2021 Current assets: Cash and cash equivalents $ 5,946 1,197 Accounts receivable, less allowance for bad debts of$1,798 in 2022 and $2,052 in 2021 5,471 6,395 Other current assets 506 797 Total current assets 11,923 8,389 Capital assets, net 1,775 1,134 Funds held for capital additions 1,243 1,175 Other long-term assets 77 70 Total assets $ 15,018 10,768 Liabilities and Net Position Current liabilities: Accounts payable $ 1,018 1,250 Accrued compensation 1,219 1,106 Payable to Providence Health & Services-Washington 3,842 2,222 Due to contractual agencies 166 581 Current portion of lease liabilities 113 131 Other current liabilities 754 1,014 Total current liabilities 7,112 6,304 Other long-term liabilities 1,573 1,336 Long-term lease liabilities 1,157 686 Total liabilities 9,842 8,326 Net position: Net investment in capital assets 505 317 Restricted 54 51 Unrestricted 4,617 2,074 Total net position 5,176 2,442 Total liabilities and net position $ 15,018 10,768 See accompanying notes to financial statements. 3 137 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health & Services—Washington) Statements of Revenues, Expenses, and Changes in Net Position—Contractual Basis Years ended December 31, 2022 and 2021 (In thousands of dollars) 2022 2021 Operating revenues: Net patient service revenues, net of provision for bad debts $2,586 in 2022 and$2,589 in 2021 $ 29,525 28,228 Other revenues 509 309 Total operating revenues 30,034 28,537 Operating expenses: Salaries and wages 15,024 13,778 Employee benefits 3,407 3,282 Professional fees 169 94 Purchased services 3,236 2,898 Supplies 1,378 1,104 Depreciation and amortization 379 250 Other 1,070 1,175 Total operating expenses 24,663 22,581 Operating income 5,371 5,956 Nonoperating revenues 306 1,486 Excess of revenue over expenses 5,677 7,442 Restricted contributions and other 3 (10) Change in net position before transfers 5,680 7,432 Transfers to the City of Seward (2,946) (3,084) Change in net position 2,734 4,348 Net position—beginning of year 2,442 (1,906) Net position—end of year $ 5,176 2,442 See accompanying notes to financial statements. 4 138 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health & Services—Washington) Statements of Cash Flows—Contractual Basis Years ended December 31, 2022 and 2021 (in thousands of dollars) 2022 2021 Cash flows from operating activities: Cash received for patient care $ 30,884 24,407 Cash received for other services 509 309 Cash paid to employees (18,318) (17,073) Cash paid to suppliers and others (5,055) (5,454) Net cash provided by operating activities 8,020 2,189 Cash flows from noncapital financing activity: Transfers to City of Seward (2,946) (3,084) Provider Relief Funding — 277 Repayments of Provider Relief Funding — (2,019) Net cash used in noncapital financing activity (2,946) (4,826) Cash flows from capital and related financing activity: Principal payments on financed purchase obligations (92) (72) Cash paid for principal and interest on leases (233) (170) Net cash used in capital and related financing activity (325) (242) Increase(decrease) in cash and cash equivalents 4,749 (2,879) Cash and cash equivalents, beginning of year 1,197 4,076 Cash and cash equivalents, end of year $ 5,946 1,197 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 5,371 5,956 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 379 250 Provision for bad debts 2,586 2,589 Changes in operating assets and liabilities (316) (6,606) Net cash provided by operating activities $ 8,020 2,189 See accompanying notes to financial statements. 5 139 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) (1) Organization Providence Seward Medical Center(the Medical Center) is a hospital owned by the City of Seward, Alaska (the City)and managed by Providence Health & Services—Washington (a Washington nonprofit corporation)(the Corporation). The Medical Center is an acute care and long-term care facility located in Seward, Alaska. Effective October 8, 2008, the Corporation and the City entered into a Management and Operating Agreement(the Agreement)whereby the Corporation manages the Medical Center while all financial risks and rewards from the operations of the Medical Center remain with the City. The City will fund shortfalls at the Medical Center. The Medical Center property, including the facility, is owned by the City and is not recorded on the Medical Center's financial statements, and per the Agreement, the cost of such property is not charged to the Medical Center. Under the Agreement, the Medical Center pays only for directly identifiable administrative costs and overhead costs, up to a specified limit, attributable to the Medical Center. All management fees and costs reimbursed are included in purchased services in the accompanying statements of revenues, expenses, and changes in net position—contractual basis. The Medical Center pays a management fee to the Corporation according to the terms of the Agreement. Management fees were $856 and $865 for the years ended December 31, 2022 and 2021, respectively, and are included in purchased services in the accompanying statements of revenues, expenses, and changes in net position—contractual basis. (2) Summary of Significant Accounting Policies (a) Measurement Focus and Basis of Accounting The Medical Center reports as business-type activities, as defined by Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments. Business-type activities are those that are financed in whole or in part by fees charged to external parties for goods or services. The financial statements of the Medical Center are prepared in accordance with the Agreement between the Corporation and the City.Accordingly, the Medical Center's financial statements have been prepared using the economic resource measurement focus and the accrual basis of accounting in accordance with U.S. generally accepted accounting principles as prescribed by GASB, except they do not include capital assets or depreciation expenses related to property, plant, and equipment of the Medical Center, purchased or constructed by the City. These financial statements also do not include long-term debt and related interest expenses related to the funding of purchase or construction of property, plant, and equipment by the City. These financial statements also exclude Management's Discussion and Analysis, which is required by GASB Statement No. 34. 6 (Continued) 140 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) Measurement focus indicates the type of resources being measured, such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. Under the accrual basis, revenues are recognized when earned and expenses are recorded when liabilities are incurred without regard to receipt or disbursement of cash. (b) Use of Estimates The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Cash and Cash Equivalents Cash and cash equivalents include cash and investments in highly liquid instruments with an original maturity of three months or less. Custodial credit risk for deposits is the risk that in the event of a financial institution failure, the Medical Center's deposits may not be returned. The bank deposits are held with financial institutions and are insured or collateralized. For the periods disclosed, the Federal Deposit Insurance Corporation insurance was $250. As of December 31, 2022 and 2021, $5,745 and $958, respectively, of the Medical Center's bank balance was subject to custodial credit risk. (d) Classification of Revenues and Expenses The Medical Center's financial statements of revenues, expenses, and changes in net position — contractual basis distinguish between operating revenues, expenses, nonoperating revenues, and capital contributions. Operating revenues, such as patient service revenue, result from exchange transactions associated with providing healthcare services—the Medical Center's primary business. Exchange transactions are those in which each party to the transaction receives and gives up essentially equal values. Nonexchange revenues are reported as nonoperating revenues. As the City reports the Medical Center as a blended component unit, nonexchange transactions between the two entities are reported as transfers in the statements of revenues, expenses, and changes in net position—contractual basis. Operating expenses are all expenses incurred to provide healthcare services, other than financing costs. (e) Capital Assets and Depreciation Capital assets(primarily movable equipment)are stated at cost. Improvements and replacements of plant and equipment are capitalized. Maintenance and repairs are expensed as incurred. The cost of the capital assets sold or retired and the related accumulated depreciation are removed from the accounts, and the resulting gain or loss is recognized at the time of disposal. The provision for depreciation is determined by the straight-line method, which allocates the cost of capital assets equally over their estimated useful lives. The estimated useful lives of movable equipment used by the Medical Center are 3 to 15 years. 7 (Continued) 141 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health & Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (in thousands of dollars) (fJ Net Position Net position of the Medical Center is classified in the following three components: (i) Net Investment in Capita!Assets This component of net position consists of capital assets net of accumulated depreciation and leases net of accumulated amortization. (ii) Restricted This component of net position consists of noncapitai assets that must be used for a particular purpose, as specified by creditors, grantors, or contributors external to the Medical Center. When both restricted and unrestricted resources are available for use, generally it is the Medical Center's policy to use restricted resources first, and then unrestricted resources when they are needed. (iii) Unrestricted This component consists of all other funds available to the Medical Center that do not meet the definition of net investment in capital assets or restricted for capital acquisition. If expenses are incurred in excess of available funds the net position is reported as a deficit. (g) Income Taxes The Medical Center is a division of the City, and is exempt from federal income taxes, except on unrelated business income, under Section 115(a) of the Internal Revenue Code. (h) Leases The Medical Center enters into noncancellable leases primarily for buildings and equipment. For leases with a maximum possible term of 12 months or less at commencement, the Medical Center recognizes expense based on the terms of the lease contract. For all other leases,the Medical Center recognizes a lease liability, which is recorded within current portion of lease liabilities and long-term lease liabilities in the statements of net position and a right-to-use lease asset, net of accumulated amortization at the present value of payments expected to be made throughout the lease term,which is recorded in capital assets, net. The Medical Center uses its estimated incremental borrowing rate based on information available at the commencement date of the lease in determining the present value of lease payments unless the rate that the lessor charges is known. Variable lease payments, other than those payments that depend on an index or rate or are fixed in substance, are excluded from the measurement of the lease and are expensed as incurred. 8 (Continued) 142 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) Subsequently, the lease liability is reduced by the principal portion of lease payments made. Interest expense is recognized ratably over the contract term. The right-to-use lease asset is initially measured as the initial amount of the lease liability, plus lease payments made at or before the lease commencement date, plus any initial direct costs ancillary to placing the underlying asset into service, less any lease incentives received at or before the lease commencement date. Subsequently, the right-to-use lease asset is amortized on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset which is recorded within depreciation and amortization in the statements of revenues, expenses, and changes in net position. Some leases include one or more renewal options which are at the Medical Center's discretion and if it is reasonably certain that the renewal options will be exercised by the Medical Center, the renewal options' payments and term are included in the Medical Center's measurement of the lease liability and right-to-use lease asset. {i) Recently Issued Accounting Standards In June 2017, the GASB issued Statement No. 87, Leases, which is effective for the fiscal year ending December 31, 2022, as amended by the issuance of Statement No. 95. The Statement changes the previous classification of lease arrangements as either operating or capital leases and establishes a single mode for lease accounting based on the foundation principle that leases represent a financing transaction associated with the right to use an underlying asset. The Statement applies to contracts that the right to use a nonfinancial asset in an exchange or exchange-like transaction for a term exceeding 12 months. Lessees are required to recognize a lease receivable and deferred inflow of resources. The Medical Center applied the standard retroactively to the period ending December 31, 2021. For the year ended December 31, 2021, the cumulative effect of adopting GASB Statement No. 87 was a $202 increase in lease asset and lease liability and $0 change in net position. (3) Covid-19 Pandemic and CARES Act Funding The Medical Center has received relief in the form of grants and advance payments from the Coronavirus Aid Relief and Economic Security("CARES")Act. The Medical Center received cumulative payments of approximately$4,451 in total grants from the CARES Act, including $0 and $277 received during the years ended December 31, 2022 and 2021, respectively. Substantially all of these amounts have been recognized as other operating revenue, including $305 and $1,478 recognized during the years ended December 31, 2022 and 2021. During the year ended December 31, 2021, $2,019 was paid back to the U.S. Department of Health and Human Services. In 2020, the Centers for Medicare& Medicaid Services ("CMS")distributed $954 of COVID-19 Accelerated and Advance Payments("CAAPs")to the Medical Center in response to the COVID-19 Public Health Emergency, which were repaid to CMS through the offsetting of payments. $624 and $330 was paid back to Medicare during the year ended December 31, 2022 and 2021, respectively. 9 (Continued) 143 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) Under accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect reported amounts. Accordingly, the impact of COVID-19 has increased the uncertainty associated with several of the assumptions underlying management's estimates. COVID-19's overall impact on the Medical Center will be driven primarily by the severity and duration of the pandemic; the pandemic's impact on the United States economy and the timing, scope, and effectiveness of federal, state, and local governmental responses to the pandemic. Those primary drivers are uncertain and beyond management's control and may adversely impact the Medical Center's revenue growth, supply chain, investments, and workforce, among other aspects of the Medical Center's business. The actual impact of COVID-19 on the Medical Center's financial statements may differ significantly from the judgments and estimates made as of December 31, 2022. (4) Revenue Recognition (a) Net Patient Service Revenues The Medical Center has agreements with governmental and other third-party payors that provide for payments to the Medical Center at amounts different from its established charges. Payment arrangements for major third-party payors may be based on prospectively determined rates, reimbursed cost, discounted charges, and per diem payments. Net patient service revenue is reported at the estimated net realizable amounts due from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. Adjustments from finalization of prior year's cost reports and other third-party settlement estimates resulted in a decrease in net patient services revenues of$111 and $29 for the years ended December 31, 2022 and 2021, respectively. The mix of net patient charges for the years ended December 31, 2022 and 2021, from significant third-party payors was as follows: Patient service charges 2022 2021 Commercial and other insurance 30 % 36 % Medicare 13 11 Medicaid 57 53 Total 100 % 100 % 10 (Continued) 144 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health & Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) In 2020 and 2019, the Medical Center received $1,000 from the State of Alaska for Medicaid disproportionate share incentive payments. $0 was recognized in net patient service revenue, based on eligible patient encounters, for both the years ended December 31, 2022 and 2021. The remaining amount$551 as of December 31, 2022 and 2021, is included in other current liabilities in the statements of net position. (b) Provision for Bad Debts The Medical Center provides for an allowance against patient accounts receivable for amounts that ultimately become uncollectible. The Medical Center estimates this allowance based on the aging of accounts receivable, historical collection experience by payor, and other relevant factors. There are various factors that can impact the collection trends, such as changes in the economy, which in turn have an impact on unemployment rates and the number of uninsured and underinsured patients, the increased burden of copayments to be made by patients with insurance coverage, and business practices related to collection efforts. These factors continuously change and can have an impact on collection trends and the estimation process used by the Medical Center. The Medical Center records a provision for bad debts in the period of services on the basis of past experience, which has historically indicated the portion of the bill for which the patient is financially responsible is not expected to be collected. The estimates made and changes affecting those estimates for the Medical Center for the years ended December 31, 2022 and 2021, are summarized below: 2022 2021 Changes in allowance for bad debts: Allowance for bad debts at beginning of year $ 2,052 1,667 Write-offs of uncollectible accounts, net of recoveries (2,840) (2,204) Provision for bad debts 2,586 2,589 Allowance for bad debts at end of year $ 1,798 2,052 (c) Charity and Unsponsored Community Benefit Costs The Medical Center has policies that provide for serving those without the ability to pay. The policies also provide for discounted sliding scale payments based on the income and assets of the person responsible for the bill. In addition to uncompensated care, the Medical Center also provides services that benefit the poor and others in the community it serves. Charity care is reported at cost and is determined by multiplying the charges incurred at established rates for services rendered by the Medical Center's cost-to-charge ratio. The cost of charity care provided by the Medical Center for the years ended December 31, 2022 and 2021, was $863 and $268, respectively. 11 (Continued) 145 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health&Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) (5) Capital Assets Changes in capital assets for the years ended December 31, 2022 and 2021, are as follows: Balance, Balance, January 1, Changes in December 31, 2022 capital assets 2022 Capital assets, being depreciated/amortized: Movable equipment $ 739 407 1,146 Right-to-use lease assets 947 618 1,565 Total capital assets, being depreciatedlamortized 1,686 1,025 2,711 Total capital assets at historical cost 1,686 1,025 2,711 Less accumulated depreciationlamortization for: Movable equipment (391) (177) (568) Right-to-use lease assets (161) (207) (368) Total accumulated depreciationlamortization (552) (384) (936) Total capital assets, net $ 1,134 641 1,775 Balance, Balance, January 1, Changes in December 31, 2021 capital assets 2021 Capital assets, being depreciated/amortized: Movable equipment $ 304 435 739 Right-to-use lease assets 202 745 947 Total capital assets, being depreciated/amortized 506 1,180 1,686 Total capital assets at historical cost 506 1,180 1,686 Less accumulated depreciationlamortization for: Movable equipment (302) (89) (391) Right-to-use lease assets — (161) (161) Total accumulated depreciationlamortization (302) (250) (552) Total capital assets, net $ 204 930 1,134 12 (Continued) 146 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health& Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) For the year ended December 31, 2022,financed purchases of$435 and related accumulated depreciation of$203 are included in Capital assets. During the years ended December 31, 2022 and 2021, the City of Seward advanced funds to the Medical Center for costs related to constructed assets. The Medical Center is constructing these assets on behalf of the City of Seward. (6) Leases (a) Right-to-use Assets The Medical Center's right-to use lease asset and related accumulated amortization accounts for the fiscal years ended December 31, 2022, and 2021 is set forth below: Balance, Changes in Balance, January 1, right-to-use December 31, 2022 lease assets 2022 Right-to-use lease assets: Building $ 928 618 1,546 Equipment 19 — 19 Total right-to-use lease assets 947 618 1,565 Less accumulated amortization for: Building (155) (201) (356) Equipment (6) (6) (12) Total accumulated amortization (161) (207) (368) Total right-to-use lease assets, net $ 786 411 1,197 Balance, Changes in Balance, January 1, right-to-use December 31, 2021 lease assets 2021 Right-to-use lease assets: Building $ 183 745 928 Equipment 19 — 19 Total right-to-use lease assets 202 745 947 Less accumulated amortization for: Building — (155) (155) Equipment — (6) (6) Total accumulated amortization — (161) (161) Total right-to-use lease assets, net $ 202 584 786 13 (Continued) 147 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) (b) Lease liabilities Changes in lease liabilities during the fiscal years ended December 31, 2022, and 2021 are summarized below: Beginning Ending Current balance Additions Deductions balance portion Fiscal year ended: December31,2022 $ 817 618 (165) 1,270 113 December31,2021 202 745 (130) 818 131 (c) Lease maturities The following schedule shows future annual lease payments, for the next five years and in five-year increments thereafter, as of December 31, 2022, for both principal and interest: Princial Interest Total 2023 $ 113 62 175 2024 97 58 155 2025 106 53 159 2026 116 48 164 2027 126 42 168 2028—2032 712 103 815 Total payments $ 1,270 366 1,636 (7) Litigation and Contingencies The healthcare industry is subject to numerous laws and regulations from federal, state, and local governments. Compliance with these laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. Government monitoring and enforcement activity continues with respect to investigations and allegations concerning possible violations by healthcare providers of regulations, which could result in the imposition of significant fines and penalties, as well as significant repayments of patient services previously billed. Management is aware of certain asserted and unasserted legal claims and regulatory matters arising in the course of business. After consultation with legal counsel, management estimates that these matters will be resolved without material adverse effect on the Medical Center's future financial position, results of operations, or cash flows. 14 (Continued) 148 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services —Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) (8) Related Party Transactions (a) Transactions with the City In connection with the construction and operation of Seward Mountain Haven, the Medical Center earns additional reimbursement from Medicaid through the capital add-on rate. The City and the Medical Center have agreed on a formula to distribute the additional reimbursement to the City. In 2022 and 2021, $2,946 and $3,084, respectively, was transferred by the Medical Center to the City to pay debt service. The City made no transfers to the Medical Center to use at their discretion during the years ended December 31, 2022 and 2021, respectively. The Medical Center is not obligated to reimburse the City for transfers made in prior years. In certain circumstances, the Medical Center acquires and constructs assets on behalf of the City. When this occurs, the City transfers funds to the Medical Center who acquires the asset and then transfers the asset back to the City after acquisition has been completed. These balances are reflected in the statements of net position—contractual basis in funds held for capital additions with an offsetting obligation to the City reflected in other long-term liabilities.As of December 31, 2022 and 2021, the Medical Center held $1,243 and $1,175, respectively, on behalf of the City for asset acquisition and recorded offsetting liabilities of$1,417 and$1,025, respectively, in 2022 and 2021.Additionally, as of December 31, 2022 and 2021, the Medical Center held $196 and $287, respectively, of other current assets purchased and costs incurred for construction of assets on behalf of the City which will be transferred to the City upon completion. (b) Transactions with the Corporation (i) Payable to the Corporation The accounting, management, and human resource functions of the Medical Center are provided by the Corporation. All receipts and payments on behalf of the Medical Center are received or made by the Corporation and are recorded in the accompanying statements of net position — contractual basis. The amount payable to the Corporation has no set repayment terms and was $3,842 and $2,222 as of December 31, 2022 and 2021, respectively. (ii) Insurance Coverage The Medical Center is covered for professional and general liability insurance on an occurrence basis through the Corporation's self-insurance programs. The charge by the Corporation for annual insurance expense was $36 and $24 for the years ended December 31, 2022 and 2021, respectively, and was included in other operating expense on the statements of revenues, expenses, and changes in net position—contractual basis. 15 (Continued) 149 PROVIDENCE SEWARD MEDICAL CENTER (Managed by Providence Health &Services—Washington) Notes to Financial Statements December 31, 2022 and 2021 (In thousands of dollars) (iii) Employee Benefits All employees are employed by the Corporation. The Medical Center is not liable for employee benefits including retirement plans and vacation and sick leave, except for the contribution allocated by the Corporation. The Medical Center's contribution to these retirement plans for the years ended December 31, 2022 and 2021, was $747 and $709, respectively, and was included in the employee benefits expense on the statements of revenues, expenses, and changes in net position—contractual basis. 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U vo O O# t1A U — � O bD Q ' E O 41 -j bD (6 ate+ a-+ N UN N Q ++ O •.vim.: 0 f n 41 � 41 O N L aA c O C 4 bD N Ot" bDa) 41 O N b.0 N co ' bD 4A O C: C: � Q 41 C: E +, U N O 0 41 0 � Q �. U — U cn DC i..L ild -,.. uo Q) a- j r 4—) nX City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page CALL TO ORDER The July 24, 2023 regular meeting of the Seward City Council was called to order at 7:00 p.m. by Mayor Sue McClure. OPENING CEREMONY Police Chief Alan Nickell led the Pledge of Allegiance to the flag. ROLL CALL There were present: Sue McClure, presiding, and John Osenga Liz DeMoss Mike Calhoon Randy Wells eh Robert Barnwell comprising a quorum of the Council; and Norm Regis, Acting City Manager Stephen Sowell, Assistant City Manager Brooks Chandler, City Attorney Alan Nickell, Police Chief Kris Peck, City Clerk Jodi Kurtz, Deputy City Clerk Excused—Finch Absent—None CITIZEN COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING Skip Reierson, inside city limits, wanted to address the role that council played in the decision to sell the electric utility. Reierson felt the opportunity for public input was deprived due to the number of executive sessions. He would have preferred the work session format to include more feedback from the public. He requested Resolutions 23-088 and 23-089 be tabled indefinitely and instead develop a new plan to sell the electric utility. He was opposed to lowering the three- fifths voter threshold for selling the electric utility. Kevin Dunham, outside city limits, disagreed with the selection of Homer Electric Association (HEA) over Chugach Electric for the proposed sale of the electric utility. Chugach Electric had lower rates and also owned part of the natural gas field. He was opposed to the executive sessions and wanted more public input. Bruce Jaffa, outside city limits, spoke in opposition of Resolutions 23-088 and 23-089. He felt the three-fifths voting threshold was being changed simply so the city could get what they 164 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page wanted. The founding fathers all spoke to the important to super majority of the three-fifths voting. On another topic, Jaffa was surprised no members of city administration or council attended the first Seward Electric Utility Ad Hoc Committee meeting. Darryl Schaefermeyer, inside city limits, spoke in opposition to Resolution 23-088 and Resolution 23-089. There was no crisis or emergency that would necessitate a change to the Charter. Schaefermeyer didn't think that HEA could provide the same level of service as Chugach Electric. Sharyl Seese, inside city limits, addressed the parking issues at the Mt. Marathon hiking trailhead. She had been calling the police to report violators who were blocking emergency access. Seese said the current signage was inadequate and hoped it could be improved. Christiana Smith, outside city limits, wanted Resolution 23-083 removed from consent agenda. She felt the wording regarding children in the workplace was not specific enough. She encouraged the city to develop family friendly workplace policy. Carol Griswold, inside city limits, was opposed to amending the Charter to sell the utility with a simple majority vote. She hoped the newly formed Ad Hoc Committee would be allowed to finish their work without rushing. Griswold felt that attempting to change the Charter and repeat attempts to sell the utility was not a wise plan. She hoped council would not support Resolution 23-088 or Resolution 23-089. Laura Schneider, inside city limits, spoke in opposition to Resolution 23-088 and Resolution 23-089. She hoped council would give the Ad Hoc Committee enough time to do complete their mission statement. On another topic, Schneider recommended Action Memorandum 23-010 be removed from consent agenda. Casie Warner, inside city limits, requested Resolution 23-083 be removed from the consent agenda. She felt the city policy about children in the workplace left a lot to be desired. Lynda Paquette, outside city limits, spoke in opposition to changing the Charter's three- fifths vote to a majority vote. She didn't think a simple majority vote would be fair to everyone. Becky Dunn, inside city limits, said the intent of the Kenai Peninsula Borough changing the election day was to increase voter turnout. On another topic, she was impressed that the new Ad Hoc Committee had a lot of experts onboard. Dunn said she took a video recording of their first meeting and uploaded it to the SAKTOWN YouTube channel. The video had already received 90 views which reflected a lot of public interest in the committee. Dunn hoped council would fail Resolution 23-088 and Resolution 23-089 and give the Ad Hoc Committee a chance to work on their mission. Randall Stauffer, outside city limits, said he was a member of the new Ad Hoc Committee. He found it disconcerting to find out Resolution 23-088 and Resolution 23-089 were being presented to council tonight. Stauffer found it confusing as to what the Ad Hoc Committee would be doing with their time if it was a foregone conclusion decision to sell the electric utility. 165 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Shannon Thorn, inside city limits, wanted to speak to Resolution 23-083 about children in the workplace. She didn't think children should be around the public government work environment because it involved irate citizens. Thorn hoped the city could help with daycare for city employees. APPROVAL OF AGENDA AND CONSENT AGENDA Motion (DeMoss/Osenga) Approval of Agenda and Consent Agenda Wells removed Resolution 2023-83 from the consent agenda. DeMoss removed Action Memorandum 2023-010 from the consent agenda. Motion Passed Unanimous The clerk read the following approved consent agenda items: Approval of the June 12, 2023 City Council Meeting Minutes. Approval of the June 26, 2023 City Council Meeting Minutes. Approval of the July 10, 2023 City Council Meeting Minutes. Resolution 2023-082: Authorizing The City Manager To Purchase From Belyea Company One 1,200 Amp Siemens Circuit Breaker For Installation In The Spring Creek Substation In A Not-To- Exceed Amount Of$101,041.00 Resolution 2023-084: Authorizing The Matching Funds In The Amount Of$15,424 Towards The City's Share Of Funding For The Scheffler Creek Flood Mitigation Project, And Appropriating Funds Resolution 2023-085: Authorizing The City Manager To Enter Into A Contract With AK Tree Service, LLC, For The Purpose Of Clearing Transmission Line Corridors As Assigned By The City's Electric Utility In An Amount Not To Exceed $350,000 Action Memorandum 2023-009: Authorizing The City Manager To Approve A Services Agreement With Kelly Connect For The Provision Of Xerox Services Action Memorandum 2023-010: Opposing Kenai Peninsula Borough Resolution 2023-048, Regarding The Change In Election Date Re-Appoint Bruce Jaffa to the Port and Commerce Advisory Board (PACAB) with a term set to expire in July 2026 Non-objection to the renewal of liquor license #5400 —The Cookery, Restaurant/Eating Place 166 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Non-objection to the renewal of liquor license #5974 — Mermaid Grotto Cafe, Restaurant/Eating Place SPECIAL ORDERS, PRESENTATIONS,AND REPORTS Proclamations and Awards -None City Manager Report Acting City Manager Norm Regis addressed the recent tsunami alert that automatically triggered warnings on every cell phone. The local sirens did not go off, but cell phones even as far north as Fairbanks received the alert from the National Weather Service. In the future, this type of alert could hopefully be narrowed down to target a more specific area. Police Chief Alan Nickell said both the tsunami sirens and the phone alerts were valid forms of warning. There were quite a few people who evacuated correctly; however there were many other people chose to ignore the warning. During the incident, Police Dispatch had every phone line lit up asking for guidance on what to do. Nickell emphasized that people need to evacuate without hesitation and there was not time to call and ask questions. Nickell clarified that the evacuation shelter was the Seward High School and not the hospital. The hospital cannot do their job to help wounded people if the area is crowded with misplaced evacuees. Assistant City Manager Stephen Sowell confirmed with council that Saturday, December 2, 2023 would be a good day for the council training session. City Clerk Report—None City Attorney Report City Attorney Brooks Chandler noted that grievances were common and issues with employees does not necessarily reflect poorly overall on the City of Seward. Wells wanted to make it clear that the city council did as they were advised in regard to the sale of the electric utility. Both the bidders requested their proposals be confidential. Wells asked if Chugach was given an opportunity to make a last best offer. Chandler said that BEA updated their original offer and Chugach Electric did not. Other Reports and Announcements Presentations -None PUBLIC HEARINGS Ordinances for Enactment—None 167 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Resolutions Requiring Public Hearing Resolution 2023-086: Authorizing The City Manager To Enter Into A Lease With Duchess, LLC For Lot 5 Block 6 Fourth Of July Creek Subdivision, Seward Marine Industrial Center, Seward Recording District, Third Judicial District, State Of Alaska Motion (Osenga/DeMoss) Approve Resolutions 2023-086 Regis said the owner was great to work with and he recommended approval of Resolution 2023-086. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. Laura Schinder, inside city limits, spoke highly of the owner and her character. No one else appeared and the public hearing was closed. Motion Passed Unanimous Resolution 2023-087: Authorizing The Maintenance And Operating Agreement With JAG Alaska Inc. For An Additional Five-Year Period For The Shiplift And Dry Dock Area Motion (DeMoss/Osenga) Approve Resolutions 2023-087 Regis said the owner had just signed the contract and they were ready to move forward with this operating agreement. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. Bruce Jaffa, outside city limits, said JAG had brought stability and growth to the shipyard industry in Seward. Darryl Schaefermeyer,inside city limits, expressed his support and appreciation for JAG. No one else appeared and the public hearing was closed. Wells asked why the resolution was coming to council tonight because it was one day after the July 23, 2023 deadline for renewal of the lease. Regis said JAG was in default for one day, but the contract was now signed and they were moving forward. Motion Passed Unanimous UNFINISHED BUSINESS Ordinances 168 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Ordinance 2023-015: An Ordinance Of The City Council Of The City Of Seward, Alaska, Amending Seward City Code Title 6 —Purchasing, Contracts And Professional Services For The City Of Seward Recodification Project. This ordinance had a public hearing on June 12, 2023, and was postponed to July 24, 2023 Motion (Already on the floor) Enact Ordinance 2023-015 Regis said the original ordinance was unfortunately introduced with a lot of errors and would require several amendments to correct. A substitute ordinance had been provided a laydown with all these corrections. Motion (McClure/Wells) Enact Substitute Ordinance 2023-015 Motion Passed Unanimous Council recessed the meeting at 8:14 p.m. Council resumed the meeting at 8:19 p.m. NEW BUSINESS Resolutions Resolution 2023-088: Submitting The Question Of Amending Seward City Charter Chapter 13.4 Disposal Of Municipal Utility Plants And Utility Property At A Regular Election In And For The City Of Seward On October 3, 2023 Motion (Osenga/Wells) Approve Resolution 2023-088 Wells said he did research on the three-fifths super majority and asked if this was a common practice for other cities. Chandler said he represented around a dozen communities and was not aware of any other communities that used a super majority to sell a utility. However, most of these communities also lacked a Charter. There was precedent to using the three-fifths super majority in Anchorage with regard to raising taxes. Calhoon said there was nothing else in the Charter than required a three-fifths super majority vote. McClure wondered what the reason was behind requiring the three-fifths vote in the Charter. She felt the citizen feedback convinced her to vote no on this resolution. Osenga said he would vote in favor of the resolution and send it out to the voters to make the final decision. Barnwell said there was a lot of community feedback saying the city was moving too fast with this sale and the three-fifths rule would be a safeguard against hasty decisions. 169 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Calhoon said he had heard from many other citizens who were in favor of removing the super majority requirement. Motion Passed Yes: Calhoon, DeMoss, Osenga,Wells No: Barnwell, McClure Resolution 2023-089: Submitting The Question Of Selling The City Of Seward Electric Utility To The Qualified City Of Seward Voters At A Regular Election In And For The City Of Seward On October 3, 2023 Motion (Osenga/DeMoss) Approve Resolution 2023-089 Regis said that citizens had been asking when this item would come back on the ballot. Wells said the council did everything they were guided and instructed to do per the request of the bidders. He wished there was more time for everyone to ask more questions. At least now the voters would know the rates were going up no matter what. Barnwell wanted to point out to the Seward Electric Utility Ad Hoc Committee had not had time to reach a conclusion yet. The decision to sell the utility was ultimately going to be the voters decision. Barnwell felt the city was rushing into this and it would be wise to hit the brakes and get more information. Wells understood that HEA offer was extended through October and beyond that the city would start all over. The Ad Hoc Committee would continue their work regardless of which way the voters chose. Calhoon supported this resolution. He didn't see it as an emergency situation, but rather a projection of where Seward wanted to be down the road. DeMoss noted the Ad Hoc Committee's mission was not to make a decision on whether or not to sell the utility. McClure thanked her for the clarification. Wells felt it would be beneficial to sell the Seward electric utility because it was falling apart. Barnwell didn't think the electric utility was falling apart. He was waiting for the ad hoc committee to do their research. Osenga supported the resolution and emphasized that it would be up to the voters to decide. City Clerk Kris Peck asked if the ballot measure amending the Charter would take effect immediately in regard to the other ballot measure to sell the utility. Chandler clarified that lowering the threshold in the Charter would automatically convert the three-fifths requirement to a regular majority for this election. 170 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Wells said there would be new rate study information coming out before October that would be beneficial to the voters. The Ad Hoc Committee would be providing additional information as well. Motion Passed Yes: Calhoon,Wells, DeMoss, Osenga No: Barnwell, McClure Resolution 2023-083: Adopting Personnel Policy #2023-06: Children In The Workplace Motion (Osenga/DeMoss) Approve Resolution 2023-083 HR Director Tammy Nickell said she sympathized with the lack of available daycare. However,there had been several complaints about lack of productivity, crying babies, and children running loose in the workplace. There were workarounds to alter the employee schedule and take annual leave as needed. She said the City of Kenai allowed brief visits, while the City of Homer and City of Soldotna banned children outright from the workplace. Demoss appreciated the people speaking to this sensitive topic. She would love to see a HYPER city daycare opened up with the money HYPER was given. However, given the limited options, DeMoss understood why this policy needed to be in place. McClure said it seemed reasonable to have this policy in place. She would also love to see the HYPER money go towards daycare for city employees. Motion Passed Yes: DeMoss, Osenga, Wells, Calhoon, McClure No: Barnwell ACTION MEMORANDA Action Memorandum 2023-010: Opposing Kenai Peninsula Borough Resolution 2023-048, Regarding The Change In Election Date Motion (Wells/Osenga) Approve Action Memorandum 2023-010 Sowell said the KPB Resolution 2023-048 was an advisory vote and he cautioned against advisory votes in general due to their wishy-washy nature. Peck said the other city clerks around the borough were alarmed about changing the October election date to November. It would require the city to either follow suit or be forced to buy election equipment to use in October. Another possible issue was competing with the State of Alaska for the same small pool of election poll workers. 171 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page McClure said the plan to change the election date initially sounded like a good way to increase voter turnout, but the plan was heavily flawed. The possibility of purchasing election equipment or competing for poll workers were deal breakers. There might be issues with a partisan election as well. DeMoss said she pulled it from consent agenda at the request of a citizen who wanted to hear more information. Motion (Wells/Osenga) Approve Action Memoranda 2023-010 Motion Passed Unanimous OTHER NEW BUSINESS Discuss Public Works Facility Bond Regis said a special meeting would be required before August 11, 2023 to meet the 53-day window for adding items on the October ballot. Administration's recommendation would be to continue with the R&M design. Sowell felt it would be a significant property tax burden on the community. He wanted to do it in a way that did not have such an impact on the taxpayers. DeMoss asked if property tax increase was the only mechanism. Sowell responded a geo bond was also an option. Discuss Current Plans and Updates for Obihiro Exchange Council felt that citizens from both inside and outside city limits would be eligible for the exchange. Ultimately, they would be unified as representing Seward. Summary of Seward Electric Utility Ad Hoc Committee Meeting held on July 17, 2023 Regis said that Rob Montgomery would attend future Ad Hoc Committee meetings. Administration would work on sending the Ad Hoc Committee the documents they requested. Wells asked how many years of experience Montgomery had in the industry. Montgomery responded that he had nearly 25 years of experience. DeMoss did not want to change any of the mission statement. It was something it had already been approved by council. There was no interest from council in changing the mission statement. Montgomery said operational side of the utility was good, but the business side was lacking. The current salary for the utility manager was too low to entice much interest in the position. 172 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page INFORMATIONAL ITEMS AND REPORTS —None CITIZEN COMMENTS Christiana Smith, outside city limits, thanked the HR Director for providing background information on the children in the workplace policy. Smith was not against the policy, but rather concerned how the policy was written. She felt there was too much leeway for the supervisor to make exceptions which could result in inconsistencies across departments. Smith was happy to hear one positive experience from a city employee, but she wasn't convinced it would be that way for everyone. Smith noted was an article in the most recent Seward Journal that highlighted some recent accomplishments from HYPER in the field of childcare. Kevin Dunham, outside city limits, said he had 43 years of experience in the power system. Seward has had a power system over 100 years. He didn't believe the Seward power system was falling apart. Chugach Electric had always been a good player and felt that was untrue to say that Chugach Electric had lied or misrepresented themselves in the bidding process. There was no way HEA would be able to give Seward better rates than Chugach. Chugach had their gas fields in Cook Inlet and the Kenai Reserves. Chugach would still own the line that connects to Seward. No matter what HEA could offer, the power would still go through Chugach's line. Dunham felt that this father Willard Dunham would be rolling in his grave at the thought of these two upcoming ballot measures. Laura Schnider, inside city limits, thanked the city council, the clerk's office and administration for their work. She was disappointed that HEA and Chugach Electric were allowed to keep all the materials confidential for such a long time. Schnider felt that after the sealed bids were received, all presentations and materials should be open to the public. Moving forward, Schnider wanted to see a new rate comparison over the next 10 years. She hoped new information would help voters make an informed decision in October. Lasty, she was curious as to how HEA seemed to know exactly what numbers to submit on their counteroffer. Darryl Schaefermeyer,inside city limits, asked what the reasoning was behind the whole idea to sell the electric utility. Enterprise funds were a revenue source to help keep our taxes down. The electric fund allowed for many projects to be completed over the years while keeping property taxes down. Over the last 10 years the electric fund had contributed over $20 million dollars. He wanted an explanation how that divot would be replaced if the utility was sold. The money would go to the Central Peninsula and Homer and be kept out of Seward. Schaefermeyer felt the contract was deeply flawed and there was no mention of a stand-by plan. Schaefermeyer hoped for a real townhall meeting and not just an HEA meet & great. Lastly, he noted that council wrote the Request for Proposals and should have had complete control of the terms. Jason Emmerson, outside city limits, said it was a myth that the Seward utility was falling apart. The utility was running fine and there were no band aids required. Lynda Paquette, outside city limits, wondered if the city could form a childcare co-op with other large employers in Seward. On another topic, Paquette wished Rob Montgomery had attended the initial Ad Hoc Meeting so he could have clarified their questions about the mission 173 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page statement. She looked forward to Rob Montgomery attending the Ad Hoc Committee meetings. Paquette wanted to verify that administration would supply the Ad Hoc Committee with the requested documents. She thanked the clerk's office, administration, and council for all their work. Randall Stauffer, outside city limits, also wondered what drove the city to want to sell the electric utility. He hadn't seen any evidence to support the decision. Stauffer wondered how the city would replace the revenue lost from the Seward Electric Utility. If the people vote in October to sell the utility, then the deliverables of the Ad Hoc Committee would be meaningless. He urged council to be aware of the perceptions of the rate payer. Rob Mongomery, inside city limits, emphasized that the utility was not falling apart. However, repairs were expensive, and the costs of maintenance would impact the rates directly. One of his fears was not investing into maintenance and technology and then end up in a bad situation down the road. There were two options: Either rebuild from within or sell to a bigger utility. Skip Reierson, inside city limits, thanked council for their service. He noted that Seward owns the utility and council could have made the conditions of the RFP to be public. There was no need to let the bidders dictate the terms. Reierson felt a couple of work sessions would have been fantastic way to get more discussion. He emphasized there was no rush to sell the utility. Reierson was still waiting to see an actual rate comparison between HEA, Seward Electric, and Chugach Electric. Alan Nickell, outside city limits, spoke to the policy regarding children in the workplace. He simply would not be able to allow a child in the workplace for his police officers. However, the Police Department found creative solutions with scheduling to make it work. Nickell felt the answer was more daycare opportunities in Seward. COUNCIL AND ADMINISTRATION COMMENTS & RESPONSE TO CITIZEN COMMENTS Regis noted it was a tough meeting. Calhoon thanked everyone for their comments tonight. He made decisions based on the best information available and what was best for the community. Calhoon clarified that Seward would still own the utility for an additional 12-18 months after the sale went through. That was the reason to have the Ad Hoc Committee to continue their work regardless of the sale. Barnwell said council voted appropriately for approving the childcare policy. He appreciated Montgomery's candid comments as well as the citizen comments.He noted the electric sale was a very emotional issue. Barnwell felt strongly that council had done their homework on the issue. He found it hard to believe that HEA and Chugach rates would be much different in the long run. 174 City of Seward,Alaska City Council Meeting Minutes July 24, 2023 Volume 42, Page Wells hoped the community members felt their questions were answered and all the information was available. The number of huge upcoming repairs to the electric utility was the reason he had said the utility was falling apart. DeMoss said some of the public comments lately had been offensive and hurtful. She hoped citizens could treat the mayor and council with respect and refrain from abusive comments and online bullying. Osenga said council members took into account all public comments. He felt the Ad Hoc Committee would be very helpful over the next couple years. Osenga thanked the Obihiro Planning Committee for all their work and planning for the exchange programs with Japan. He lamented not being able to travel to Obihiro as originally planned. He had fond memories of traveling to Obihiro in high school. McClure thanked the Ad Hoc Committee for their efforts. She thanked Bruce Jaffa for his continued service on PACAB. She wanted to point out that Seward does not have a strong mayor form of government. The mayor presided at the meetings and cut ribbons at ceremonies. She did not appreciate online bullying from citizens. ADJOURNMENT The meeting was adjourned at 10:22 p.m. Kris Peck Sue McClure City Clerk Mayor (City Seal) 175 • Resolution 2023-090: Accepting The Return Of$56,310.58 In Funds From The Kenai Peninsula Borough That Was Intended For The Japanese Creek Feasibility Study Project, And Appropriating Funds Documents: • Agenda Statement • Resolution 2023-090 • Return of Funds Email from KPB • Resolution 2020-009 176 City Council Agenda Statement . Meeting Date: August 14, 2023 To: City Council ' From: Norm Regis,Acting City Manager Subject: Resolution 2023-090: Accepting The Return Of$56,310.58 In Funds From The Kenai Peninsula Borough That Was Intended For The Japanese Creek Feasibility Study Project,And Appropriating Funds Background and justification: Resolution 2020-009 authorized matching funds towards the Japanese Creek Feasibility Study, which was devoted to obtaining better data on the flooding potential of Japanese Creek and possible mitigation measures. The City of Seward contributed $135,000 towards the Japanese Creek Feasibility Study. Kenai Peninsula Borough Emergency Operations Manager Brenda Ahlberg notified the City of Seward on June 20 that $58,310.58 in funding would be returned and on July 17, the City received the funds. In order to "accept"the return of funds and place the funding back into the Capital Acquisition Account, the City must pass a Resolution Accepting and Appropriating the funds. on-Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: Strategic Plan: Other: rtification of Funds Total amount of funds listed in this legislation: $ 58,310.58 This legislation(✓): Creates revenue in the amount of $ 58,310.58 x Creates expenditure in the amount of $ Creates a savings in the amount of $ Has no fiscal impact Funds are (✓): Budgeted Line item(s): x Not budgeted Not applicable in Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking F1 Water F1 Healthcare Motor Pool x Other Capital Acquisition 177 Note: amounts are unaudited Available Fund Balance/Net Position $ 200,999 Finance Director Signature: c ell 6�1 MEff-Attorney Review RxYes Attorney Signature: Not applicable Comments: Administration Recommendation eAdopt Res. Other: 178 Sponsored by: Regis CITY OF SEWARD,ALASKA RESOLUTION 2023-090 A Resolution Of The City Council Of The City Of Seward, Alaska, Accepting The Return Of$56,310.58 In Funds From The Kenai Peninsula Borough That Was Intended For The Japanese Creek Feasibility Study Project, And Appropriating Funds WHEREAS, Resolution 2020-009 authorized matching funds towards the Japanese Creek Feasibility Study; and WHEREAS, The project was devoted to obtaining better data on the flooding potential of Japanese Creek and possible mitigation measures; and WHEREAS, The City of Seward contributed $135,000 towards the Japanese Creek Feasibility Study; and WHEREAS, The project was completed below the projected cost and the Kenai Peninsula Borough is returning $58,310.58 to the City of Seward; and WHEREAS, The returned funds will be appropriated back to the Capital Acquisition Account. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. Funding in the amount of$58,310.58 is accepted and appropriated from Japanese Creek Flood Mitigation— City account no. 80117-0000-3710 to Capital Acquisition Fund reserves account no. 80010-0000-3700. Section 2. This resolution is effective upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of August, 2023. 179 CITY OF SEWARD,ALASKA RESOLUTION 2023-090 THE CITY OF SEWARD,ALASKA Sue McClure, Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) 180 From: Ahlbera,Brenda To: Norm Regis;Stephen Sowell Cc: Naneth Ambrosiani; Harbaugh.Brandi;Cinereski.Heather;Hames.Janelle; Friedersdorff.Chad;Griffith.Christina Subject: Return of funds Date: Friday,June 30, 2023 12:25:22 PM Attachments: imaae001.pna CoSeward R2020-009.pdf Ordinance 2022-19-68.pdf External Email:This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Greetings Team Seward The borough was recently awarded FEMA/State funds under disaster declaration DR4161 to repair and mitigation work on Dieckgraeff Road. The award also reimburses of preaward costs that included a portion of the City's contribution to the USACE feasibility study in the amount of $58,310.58. Please see attached legislation for your reference. Please feel free to contact us if you have questions; otherwise, "da check is in the mail." Happy Independence Day, B Brenda Ahlberg Emergency Manager Community & Fiscal Projects bahlbergCkpb.us 907-262-2098 direct 907-231-6505 mobile 907-714-2415 duty officer 24/7 00 8816 3153 0508 sat phone 907-714-2395 fax Kenai Peninsula Borough Emergency Response Center 253 Wilson Lane Soldotna, AK 99669 bahlbera@kpb.us www.kpb.us- Information by department info.kpb.us- Updates from agencies responding to area-wide emergencies (new URL) @KPBAlerts- Facebook Page KENAI PENINSULA BOROUGH 144 Noah Binkley Street ,; k', .i S-oldotna, Alaska 99669 •r R iy 181 CITY OF SEWARD, ALASKA Sponsored by: Meszaros RESOLUTION 2020-009 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING MATCHING FUNDS IN THE AMOUNT OF $135,000 TOWARDS THE CITY'S SHARE OF FUNDING FOR THE JAPANESE CREEK FEASIBILITY STUDY, AND APPROPRIATING FUNDS WHEREAS, Seward was built by diverting the two rivers that created our alluvial fans: Lowell Creek was diverted by the diversion tunnel and Japanese Creek was diverted 90 degrees to the north by a levee built following the 1986 and 1995 flood events; and WHEREAS, the Seward City Council has adopted federal and state legislative priority lists for many years, seeking federal and state funds to create a Japanese Creek Drainage Area Improvement Plan; and WHEREAS, the Japanese Creek levee now protects over $140 million in infrastructure, including all three of our borough schools, city power plant, and Providence Mountain Haven elder care facility; and WHEREAS, the Japanese Creek has a history of stream damming and surge-release floods. Debris-laden flood events have been reported I times in the last five decades, with major flood events in 1986, 1995, 2006, and 2012; and WHEREAS, the most recent study found the levee could be overtopped and breached in a 10 to 20 year flood event. In the event of a landslide in the canyon, and a subsequent debris- laden surge release, flows would have an unpredictable flow path and could cause severe and possibly catastrophic damages along the alluvial fan; and WHEREAS, the estimated cost of the feasibility study is $900,000, with the U.S. Army Corps of Engineers (USACE) providing $450,000 towards this. The three local partners are to provide the $450,000 match: the Kenai Peninsula Borough Mayor is in support of providing a $135,000 match and a resolution will go before the assembly in February, 2020; and the Seward Bear Creek Flood Service Area has allocated $180,000 of its funds; and WHEREAS, following the feasibility study, construction of the selected preferred alternative will require a local match of up to 35%. The feasibility study on its own will provide important information regarding the current status of the levee and alternatives for flood risk mitigation and sediment management. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: 182 CITY OF SEWARD,ALASKA RESOLUTION 2020-009 Section 1. The City Council hereby authorizes a City matching contribution of$135,000 toward the Japanese Creek Feasibility Study. Section 2. Funding in the amount of$135,000 is hereby appropriated from the Capital Acquisition Fund reserves account no. 80010-0000-3710-0000-80117 to the project contracted services account no.80117- 0000-7009. Section 3. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 271'day of January, 2020. T MSE , ASKA Christy T rry, M r 0. AYES: Osenga, Baclaan, Butts, McClure, Terry NOES: None ABSENT: Seese, Lane ABSTAIN: None ATTEST: Brenda Y. ffafl , MMC City Clerk •ynsa+arr�� (City Se 01i SE.!,`•.� Of + SEAL• Q r 9 . � .n • , 6 *rF OF A N:" 183 Council Agenda Statement Meeting Date: January 27, 2020 To: City Council Through: Scott Meszaros, City Manager From: Jackie C. Wilde, Community Development Director Agenda Item: A Resolution of The City Council of The City of Seward, Alaska, Authorizing Matching Funds in The Amount Of$13 5,000 Towards the City's Share ofFunding for The Japanese Creek Feasibility Study, and Appropriati ds BACKGROUND & 3-USTIFICATION: The Seward City Council has adopted federal and state legislative priority lists for many years, seeking federal and state funds to create a Japanese Creek Drainage Area Improvement Plan. Seward was built by diverting the two rivers that created our alluvial fans. Lowell Creek was diverted by the diversion tunnel and Japanese Creek was diverted 90 degrees to the north by a levee built following the 1986 and 1995 flood events. Japanese Creek has a history of stream damming and surge-release floods. Debris-laden flood events have been reported 11 times in the last 5 decades with major flood events in 1986, 1995, 2006, and 2012. The most recent study found the levee could be overtopped and breached in a 10 to 20-year flood event. In the event of a landslide in the canyon, and subsequent debris laden surge release, flows would have an unpredictable flow path and could cause severe and possibly catastrophic damages along the alluvial fan. The Japanese Creek levee now protects over $140 million in infrastructure, including all three of our borough schools, city power plant, and Providence Mountain Haven elder care facility. The Seward/Bear Creek Flood Service Area Board has determined Japanese Creek levee as their number one priority for risk mitigation. In 2010, the City requested assistance from the USACE under the Continuing Authorities Program Section 205 of the 1948 Flood Control Act, as amended. In 2013, the US Army Corps of Engineers completed a $1 OOK preliminary study and authorized the project to progress to the feasibility study phase. In 2019, the Borough Mayor, Seward City Manager and SBCFSA board chair requested the USACE move forward with the feasibility study and agreed to share the cost of the required funding match. The estimated cost of the feasibility study is $900K, with the USACE providing $450K towards this. The three local partners are to provide the $450K match. The Kenai Peninsula Borough Mayor is in support of providing a$135,000 match and a resolution will go before the assembly in February and the Seward Bear Creek Flood Service Area has allocated$180,000 of its funds. Following the feasibility study, construction of the selected preferred alternative will require a local match of up to 35%. 184 INTENT This $ 135,000 contribution will be used to conduct a feasibility study that will provide important information regarding the current status of the levee and alternatives for flood risk mitigation and sediment management. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan (2030, approved by Council May 30, 2017) x 14 Natural Hazards 14.2 14.2.3 (Pages 31 &32) 2. Strategic Plan (Approved by Council Resolution 99-043): x 3. Other x FISCAL NOTE: Matching funds for this study will be appropriated from the Capital Acquisition Fund. Current reserve levels in this fund are just over$1.6 million. ,---Approved by Finance Department —1 � ATTORNEY REVIEW: Yes No Not Applicable—X RECOMMENDATION: City Council approves Resolution 2020- 009 Authorizing Matching Funds in The Amount Of $135,000 Towards the City's Share of Funding for The Japanese Creek Feasibility Study, and Appropriating Funds. 185 • Resolution 2023-091 : Approving An Employment Agreement Between The City Of Seward And Kathleen Sorensen For City Manager Services Documents: • Agenda Statement • Resolution 2023-091 • Employment Agreement 186 City Council Agenda Statement Meeting Date: August 14, 2023 `x To: City Council From: Sue McClure, Mayor Subject: Resolution 2023-091:Approving An Employment Agreement Between The City Of Seward And Kathleen Sorensen For City Manager Services Background and justification: On March 10, 2023, City Manager Janette Bower gave her resignation with a final date of May 10, 2023. The City Manager position was listed on the city of Seward web page and various other sites. A total of five applications were received and a special meeting was scheduled for June 12, 2023,to review all applications. City Council chose to schedule interviews for all five candidates to be held on June 28, 2023. City Council made a motion to hire Kathleen Sorensen based on successful salary and contract negotiations. Salary and contract negotiations are completed. on—Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: 3.7.1.3 Improve quality of City Governmental Services Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: S 145,000 This legislation(✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ x Has no fiscal impact Funds are (✓): x Budgeted Line item(s): City Manager Personnel Budget Not budgeted Not applicable Fund Balance Information Affected Fund(✓): x General SMIC Electric Wastewater Boat Harbor Parking Water Healthcare Motor Pool Other Note: amounts are unaudited Fund Balance/Net position—restricted $ Fund Balance/Net position unrestricted/unassigned $ 187 Available Unrestricted Cash Balance: $ No fiscal impact, already in Finance Director Signature: budget Attorne Review eYes Attorney Signature: Not applicable Comments: Administration Recommendation x Approve Res. Other: 188 Sponsored by: McClure CITY OF SEWARD,ALASKA RESOLUTION 2023-091 A Resolution Of The City Council Of The City Of Seward,Alaska,Approving An Employment Agreement Between The City Of Seward And Kathleen Sorensen For City Manager Services WHEREAS, City Manager Janette Bower gave her resignation on March 10, 2023, with a final date of May 10, 2023; and WHEREAS,the City Manager position was listed on the city of Seward web page and various other sites; and WHEREAS, A total of five applications were received and a special meeting was scheduled for June 12, 2023, to review all applications; and WHEREAS, City Council choose to schedule interviews for all five candidates to be held on June 28, 2023; and WHEREAS, after the interviews were conducted, City Council made a motion to hire Kathleen Sorensen based on successful salary and contract negotiations. WHEREAS, salary and contract negotiations are completed. NOW, THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The Seward City Council hereby approves the contract between the City of Seward and Kathleen Sorensen in substantial form as attached hereto. Section 2. The official date of hire for Kathleen Sorensen is September 10, 2023. Section 3.Funding for this contract shall come from the City Manager budget. Section 4. This resolution shall take effect upon adoption. PASSED AND APPROVED by the City Council of the Cit of Seward, Alaska, this 14th day of August 2023. 189 CITY OF SEWARD,ALASKA RESOLUTION 2023-091 THE CITY OF SEWARD,ALASKA Sue McClure, Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) 190 1 .40 CITY MANAGER EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement"), effective as of, September 10, 2023, is between the City of Seward, Alaska ("City") and Kathleen Sorensen ("Manager"). RECITALS WHEREAS, the City wishes to employ Kathleen Sorensen as City Manager and Kathleen Sorensen has agreed to serve the City in the capacity of City Manager as provided for in this Agreement, NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants set forth in this Agreement, the City and Manager agree as follows: Section 1. Duties of Manager. A. Scope of Duties. Manager shall be employed by City as, and hold the title of, "City Manager" of the City. Manager shall serve at the pleasure of, and report directly to, the Seward City Council ("Council"). Manager shall perform all duties and discharge all responsibilities of that position as prescribed by law, including but not limited to Seward City Code 2.20.035. City Manager shall be aware of any changes in the laws governing her duties and obligations under law and comply with those changes. Manager shall maintain residency within ten miles from mile marker zero of the Seward Highway during the entire term of this Agreement. B. Confidentiality. Manager recognizes that she will receive and have access to information of a confidential nature. Manager agrees any confidential information obtained as a result of the City Manager position will be maintained as confidential to the extent authorized by law. The City may terminate this agreement without notice and hold Manager accountable to the greatest extent permitted by law if she violates this provision. In order to find a violation of this provision, Manager's breach of confidentiality must be evident in a document, at a public event or conceded by Manager. Section 2. Compensation and Benefits of Manager. A. Salary. Manager shall receive an annualized salary of ONE HUNDRED FORTY-FIVE THOUSAND DOLLARS ($145,000.00) during the term of this Agreement, payable in regular installments at the time other City employees are paid. All compensation paid to Manager shall be subject to required employment deductions, taxes, and contributions. B. Exempt Status. Manager acknowledges that the position of Manager is exempt from the overtime requirements of state and federal wage and hour laws and as such, Manager is expected to work the hours necessary to accomplish the goals and requirements of the position. 191 1 .40 C. Retirement Benefits. Manager shall be enrolled in the Alaska Public Employees Retirement System (PERS) during the term of this Agreement, so long as the City participates in the System. D. Health and Welfare Benefits. Manager shall receive group medical and dental insurance coverage as provided to the employees of City, including coverage for family members, subject to the requirements of the applicable plan. E. Paid Leave. Manager shall accrue leave of 13 1/3 hours per month (160 hours per year) for use for personal absences, vacation, and sick leave. Notwithstanding the leave accrual provided under this section, Manager shall additionally receive a one- time allotment of ninety (90) hours of leave effective at the commencement of the term of this agreement. Leave continues to accrue when Manager is on paid leave. Manager shall keep the Council generally apprised of planned absences; leave exceeding five (5) consecutive days in duration must be approved by the Council. Upon employment separation, including expiration of this Agreement, Manager shall receive payment for all accrued, unused leave, in accordance with City policy and practices, so long as Manager is in compliance with this Agreement. Any payment of accrued unused paid leave shall be subject to all deductions, taxes and contributions required by law. F. Travel, Meetings, and Professional Development Expenses. Manager shall receive reimbursement from City for reasonable lodging and meal expenses while travelling out-of-town for meetings or professional development in the interests of the City, specifically to include the AML annual conference, and any other events as may be approved by Council. City shall pay for professional dues for ICMA membership, and other subscriptions or dues for participation in national, regional, state, and local associations and organizations for the Manager's continued professional growth and advancement, as may be approved by the Council. G. Use of City Vehicle. City shall provide Manager with a vehicle for business use in accordance with City policy on employee use of city vehicles. H. Holidays. Manager will receive compensation for holidays recognized in SCC 3.50.010 as set forth in SCC Chapter 3.50. Section 3. Term And Termination. A. Term. The term of Manager's employment under this Agreement shall begin on the Effective Date and end three years after the Effective Date, unless extended in writing or terminated as provided in this Agreement. The City and Manager shall advise the other party of their intent to seek negotiation of a renewal or extension of this Agreement, no later than sixty (60) days before the expiration of this Agreement. B. Termination. 1. Manager's employment under this Agreement is terminable "at will" it being expressly and explicitly understood and agreed by Manager that she holds the position 192 1 .40 of City Manager and serves as City Manager at the will of the Council. The City may terminate this Agreement for any reason of for no reason following the affirmative vote of at least four members of Council at a properly posted and duly authorized public meeting. Manager acknowledges that any action by the Council in connection with terminating Manager's employment under this Agreement is not subject to any administrative or grievance procedure, and Manager hereby waives the benefit of any right to prior notice, pre- or post- termination hearing or any other procedure that may now or hereafter apply to any such action by the Council or be available to other City employees. Upon termination pursuant to this paragraph, City shall be responsible for payment of three months' severance pay inclusive of health insurance COBRA premiums in addition to the balance of the Manager's accrued paid leave as the of the date of termination. Accrued paid leave shall be paid as a lump sum. 2. In addition to termination for any reason or no reason, the City may terminate Manager for "just cause" based upon the performance and professional conduct of Manager. Should City intend to terminate Manager for "just cause", Manager shall be given written notice of the reasons for the termination and an opportunity to respond in person before the Council in either open or executive session at Manager's sole option prior to the effective date of the termination of employment. If the City terminates Manager for "just cause", separation pay will include only accrued leave and wages earned to the date of termination, no severance will be paid. 3. Prior to any termination by the City, whether with or without "just cause" the Council or a representative thereof shall consult with the City Attorney. C. Resignation. Manager may resign her position upon sixty (60) days written notice to City Council. Should Manager resign under this Agreement, she shall be entitled to no additional compensation under this Agreement beyond the effective date of her separation, other than accrued but unused paid leave in accordance with the terms of this Agreement. At its option, the City may release Manager from her obligation to continue working through the notice period upon payment of salary through the effective resignation date; however, on no account shall Manager receive compensation in lieu of service for a period longer than sixty (60) days regardless of the length of notice provided by Manager. In the event Manager resigns prior to September 10, 2024, Manager shall be obligated to reimburse City for all moving expenses and costs advanced or reimbursed by the City. The City, in its sole discretion, may waive this obligation, in writing, in the event circumstances warrant. Section 4. Other Employment. It is recognized that Manager must devote a great deal of time outside normal office hours to business of the City, including but not limited to attendance at regular and special City Council meetings. Normal work hours in a regular workweek hereunder shall be construed to mean Monday through Friday, an 8-hour period between 7.00 a.m. and 6.00 p.m. Manager shall not take nor undertake employment with any other person, entity or business, without prior approval of the City Council. 193 1 .40 Section 5. Indemnification by City. The City shall indemnify, hold harmless and defend Manager against all claims and liability which may result from any claim, action or suit by person based upon alleged injury to or death of a person or alleged loss of or damage to property that may occur or that may be alleged to have been caused by Manager in the course of performance of her official duties during the duration of her employment with City under this Agreement, provided, however, that City shall not be obliged to indemnify, hold harmless or defend Manager against any such claim that was caused by Manager while acting outside the course of performing her official duties, or from any false, deceptive, dishonest or criminal act or omission under the laws and regulations of the United States of America, the State of Alaska and/or any political subdivision thereof. The City shall not be responsible for the defense costs or indemnification of any legal counsel or costs or fees under this section unless Council approves reimbursement or payment of those costs and fees in writing and before such costs and fees are incurred. Section 6. Performance Evaluation. Manager shall be evaluated by Council upon completion of six months of employment. Thereafter Manager shall be evaluated annually on or near her anniversary date. The procedure for evaluation of the Manager shall be as established by City Council Resolution. Section 7. General Provisions. A. No Conflict of Interest. During the term of this Agreement, Manager will not enter into any activity, employment or business arrangement which conflicts with the best interests of the City, or otherwise interferes with performance of her duties under this Agreement, as may be determined in the sole discretion of Council. Manager shall comply with Seward City Code 2.01.020(a). Manager shall advise Council of any activity, employment or business arrangement she is contemplating entering which might conflict or give the appearance of conflicting with the City's interests; failure to do so may subject Manager to termination. B. Choice of Law and Venue. Any controversy or claim arising out of or related to this Agreement or the breach thereof shall be governed by the laws of the State of Alaska, and the City of Seward, Alaska, and the venue for any legal proceedings thereon shall be the Superior Court for the State of Alaska, Third Judicial District. C. Entire Agreement. This Agreement supersedes all prior oral or written agreements, if any, between Manager and City, and constitutes the entire agreement between Manager and City and approved by the Council. D. Modification or Amendment. This Agreement shall not be supplemented, modified or amended, except by a written agreement signed by Manager and approved 194 1 .40 by Council. E. Severability. If any provision of this Agreement shall be declared invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect. F. Title 3 Provisions. Sections 3.45.065 (military leave), 3.45.070 (jury duty leave), 3.45.075(d) (FMLA leave), 3.45.075(e) (fitness for duty certification), 3.60.010 (gifts and gratuities), 3.60.020 (employment of family members), 3.60.025 (travel expenses), and Chapters 3.70 (standards relating to drugs and alcohol), 3.75 (standards relating to employee conduct) and 3.80 (workers' compensation) of Title 3 of the Seward City Code apply to this Agreement. No other provision of Title 3 shall apply. IN WITNESS WHEREOF the City has caused this Agreement to be signed and executed on its behalf by its Mayor, and duly attested by its City Clerk. Kathleen Sorensen has signed and executed this Agreement for and on behalf of herself, both in duplicate, as of the day and year first above written. CITY OF SEWARD CITY MANAGER Sue McClure, Mayor Kathleen Sorensen CITY OF SEWARD ATTEST: Norm Regis, Acting City Manager Kris Peck, City Clerk [City Seal] 195 • Resolution 2023-092 A Resolution Of The City Council Of The City Of Seward, Alaska, Authorizing The City Manager To Enter Into A Loan Agreement With The Alaska Department Of Environmental Conservation Documents: • Agenda Statement • Resolution 2023-092 • Attachments: o DEC Online Application System (OASys) —ADWF Loan Application o Seward Project Information 196 City Council Agenda Statement . Meeting Date: August 14th, 2023 To: City Council Through: Norm Regis,Acting City Manager From: Doug Schoessler, Public Works Director Subject: Resolution 2023-092: Authorizing The City Manager To Enter Into A Loan Agreement With The Alaska Department Of Environmental Conservation Background and justification: The current SMIC water system uses chlorine gas cylinders in the SMIC water pumphouse. The declining availability and hazards of chlorine gas cylinders necessitates a change to the same system that was already installed at the North Seward Water Plant facility. CRW Engineering investigated sizing and other requirements for infrastructure in the SMIC water pumphouse. City staff utilized the CRW report as part of a master project list to identify potential funding sources. The SMIC Hypochlorite Generator Project was placed on the master project list because of issues outlined in both reports and staff observations. If the City is successful in procuring funding, it will construct the SMIC Hypochlorite Generator to the SMIC Water Pumphouse,which will serve the clean water needs of the Seward Marine Industrial Complex on the East side of Resurrection Bay well into the future. The City of Seward loan requires the City to commit to the State of Alaska(ADEC) and its intent to fund $476,000 for the Hypochlorite Generator Pumphouse Project, with an estimated principal forgiveness of $238,000 for a total repayment of $238,000 from the State of Alaska Department of Environmental Conservation Drinking Water Fund. The repayment terms are over 20 years at a rate of interest equal to 1.5%, resulting in annual payments of approximately $15,470. This debt payment was not previously budgeted in the Water Fund and will be subject to annual appropriations. Unfortunately, the Water Fund does not have adequate cash reserves to fund the project without assistance. However, the most recent Financial Capacity Assessment found the fund healthy enough to cover existing and potential loan obligations.The Water fund generates sufficient revenue to fully pay anticipated expenses attributed to the operation of the water system and also pay all debt service for existing loans and the proposed SRF loan during the next 5 years. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: Strategic Plan: Other: 197 Certification of Funds Total amount of funds listed in this legislation: S This legislation(✓): Creates revenue in the amount of: $ x Creates expenditure in amount of: $ 238,000/$15,470 Annually Creates a savings in the amount of: $ Has no fiscal impact Funds are (✓): Budgeted Line item(s): x Not budgeted Not applicable EMU Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking X Water Healthcare Motor Pool Other Note: amounts are unaudited Available Fund Balance/Net Position $ 9,269,962 Finance Director Signature: Attorney Review Ion RxYes Attorney Signature: Not applicable Comments: Administration Recommendation eAdopt Resolution Other: 198 Sponsored by: Regis CITY OF SEWARD,ALASKA RESOLUTION 2023-092 A Resolution Of The City Council Of The City Of Seward, Alaska, Authorizing The City Manager To Enter Into A Loan Agreement With The Alaska Department Of Environmental Conservation WHEREAS, city staff identified several issues necessitating the addition of a Hypochlorite Generator for the SMIC water pumphouse, and WHEREAS, staff completed and submitted the required questionnaire to for loan monies being offered by the Alaska Drinking Water fund, and WHEREAS accepting the total loan amount of $476,000 with loan forgiveness of $238,000 from the Department of Environmental Conservation Clean Water Fund is in the best interest of the city by allowing the city to utilize the fund to invest in infrastructure,follow regulations set forth by the Alaska Department of Environmental Conservation and remain in compliance with the current permit, WHEREAS, the City of Seward seeks to obtain the necessary financial assistance to complete the SMIC Hypochlorite Pumphouse Addition Project by obtaining a loan from the State of Alaska Department of Environmental Conservation's Alaska Drinking Water Fund. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City of Seward hereby confirms its commitment to the State of Alaska (ADEC) and its intent to fund $476,00 for the SMIC Hypochlorite Generator Pumphouse Project, with an estimated principal forgiveness of$238,000 for a total repayment of$238,000 subject to receiving a loan from ADEC. Section 2. The City Manager is authorized to apply for a loan in the amount of $238,000 from the State of Alaska Department of Environmental Conservation, Drinking Water Fund for the water system improvement known as SMIC Hypochlorite Generator Pumphouse Addition Project. Section 3. The City Manager is hereby authorized to execute any and all documents that may be necessary to affect a $238,000 loan from ADEC, the terms of its repayment over 20 years at a rate of interest equal to 1.5% subject to annual appropriations, including but not limited to an agreement for the loan and a promissory note. Annual loan payments shall not exceed $15,470. Section 4. This resolution shall take effect immediately upon adoption. 199 CITY OF SEWARD,ALASKA RESOLUTION 2023-092 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of August 2023. THE CITY OF SEWARD,ALASKA Sue McClure, Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) 200 7/27/23, 12:00 PM Application Review Department of Environmental Conservation DEC Online Application System (OASys) ADWF Loan Application Status: Submitted Status Details: Completed Signed-Administratively signed on 12/2/2021 9:25:21 AM Application Submitted SMIC Water Pumphouse Tracking#: ADWFLA-0252 Facility: Addition&Hypochlorite Type: ADWF Loan Application Gen Org: City of Seward-Public Works General Information Details Project Title: SMIC Water Pumphouse Addition&Hypochlorite Gen Data Universal Numbering System 037996634 (DUNS)Number: Location Latitude: Converter 60.095973 Location Longitude: -149.342382 General Project Location: SMIC Water Pumphouse Total Community Population: 1000 Population served by the system: 1000 Population served by the project: 1000 Project Type: New Construction Is the proposed project an amendment to No an existing SRF Loan? If yes,exiisting SRF Loan Number: Please indicate the type of amendment: Project Scope Water Treatment Distribution System Capacity/Restructuring Project Need: Upgrade to onsite Hypochlorite Generator System and Pumphouse Addition. Project Description: Upgrade to onsite Hypochlorite Generator System and Pumphouse addition. Disinfects organisms/bacteria for safe and healthy water distribution.Benefiting area for 25-30 years with system.Eliminating the issues with gas chlorine usage. Public Health Benefit(s): Water efficiency&rehabilitation of distribution: Elimination the issues with Chlorine Gas usage and upgrade to onsite Hypochlorite Generator.Also,new pumphouse addition-structure and equipment benefiting area for 25-30 years. This will also reduce costs in the future from eliminating Chlorine Gas usage.By eliminating Chlorine it reduces the risk of exposure to this harmful chemical. Providing fire protection? No Expand the drinking water system to No attract future population growth? Expand the drinking water system to an No undeveloped area? https://dec.alaska.gov/ApplicationsM/ater/OASys/PrintForRecords.aspx 201 1/5 7/27/23, 12:00 PM Application Review Contacts Details Signatory Official Doug Schoessler Public Works Director,City of Seward-Public Works PO BOX 167 SEWARD,AK,99664-0167 US Phone: 9072244058 doug*cityofseward.net Financial Contact Sam Hickok Deputy Financial Director,City of Seward PO Box 167 Seward,AK,99664 US Phone: 907-224-4067 shickok*cityofseward.net Application Preparer Kirsten Loertscher City of Seward 434 6thAvenue Seward,AK,99664 US Phone: 9072244058 kloertscher*cityofseward.net Project Costs Details Administration: 8,500 Engineering Design: 55,000 Engineering Construction: 25,000 Construction: 275,000 Equipment: 70,000 Contingencies: 42,500 Other(Identify Cost): Amount: 0 Other(Identify Cost): Amount: 0 Other(Identify Cost): Amount: 0 Total of Other Costs: 0 Total Cost: (Sum of Above) 476,000 https://dec.alaska.gov/ApplicationsM/ater/OASys/PrintForRecords.aspx 202 2/5 7/27/23, 12:00 PM Application Review Green Project/Component Information Details Is this a green project? Yes Identify the most appropriate"Green" Water Efficiency-the use of improved technologies and practices to deliver category type. equal or better services with less water.Examples:water meters;fixture retrofit,replace/rehabilitation of distribution,and,leak detection equipment. Green Project/Component Description: Water efficiency&rehabilitation of distribution: Elimination the issues with Chlorine Gas usage and upgrade to onsite Hypochlorite Generator.Also,new pumphouse addition-structure and equipment benefiting area for 25-30 years. This will also reduce costs in the future from eliminating Chlorine Gas usage.By eliminating Chlorine it reduces the risk of exposure to this harmful chemical. Is a project cost estimate attached? No Administration: 8,500 Engineering Design: 55,000 Engineering Construction: 25,000 Construction: 275,000 Equipment: 70,000 Contingencies: 42,500 Other Component(description): N/A Other Amount: 0 Other Component(description): N/A Other Amount: 0 Other Component(description): N/A Other Amount: 0 Total Costs: (Sum of Above) 476,000 Estimated Project Schedule Details Is this application for a construction Yes loan? Loan Agreement Signed: 03/31/2022 Preliminary Engineering Report: 02/28/2022 Design Engineering: 02/27/2022 Preparation of Bid Documents: 02/14/2022 Award of Construction Contract: 03/15/2022 Construction Initiation: 03/31/2022 Construction Completion: 09/30/2022 Initiation of Operation: 04/01/2022 Anticipated first payment request: 01/01/2023 Other Funding Details Federal Funds From: Amount: Other State Funds From: Amount: Other Local Funds From: Amount: Other(Identify Source): Amount: Other(Identify Source): Amount: Describe how these other funds will be used for this project: https://dec.alaska.gov/ApplicationsM/ater/OASys/PrintForRecords.aspx 203 3/5 7/27/23, 12:00 PM Application Review Financial Information Details Loan Amount: 476,000 Desired Repayment Term(yrs): 20 Estimated Annual Payment: (Given the above information,we will provide this if you wish.) General Funds 238,000 Capital Reserves 0 User Fees 0 Assessments,LIDS 0 Taxes(identify type) N/A Amount 0 Other(identify) N/A Amount 0 Describe whether or not any of these sources of funding or revenue have been previously pledged and,if so,please indicate the type of pledge or encumbrance(such as a previous bond sale,special assessment,legal or judicial settlement,etc.),amount pledged and any balance remaining: (If none,enter'no') N/A Please describe any litigation that could affect your community's ability to repay this loan: (If none,enter'no') N/A Does your community have a debt No ceiling? If so,what is it? How much remains available? Does your community have bonded No indebtedness? What is your current level of bonded indebtedness? Date: Rating: Amount: Operating Revenues: 1,275,656 User Fees Collected: 1,275,656 Non-Operating Revenues: 55,139 TOTAL Revenues: 2,606,451 Operating Expenses: 1,320,878 Annual Debt Service: 893,570 Other Non-Operating Expenses: TOTAL Expenses: 2,214,448 Reserves: 0 If User Fees are intended to repay any Current fee structure portion of this loan, please submit: Number of existing residential and 1015 commercial users: Number of proposed residential and 1015 commercial users: How much will this loan repayment 0 increase user fees? Please describe the increase: N/A Current Ave Monthly Residential 54 Customer Charge for Service: Number of days in billing cycle: 30 Frequency of rate setting: Annually https://dec.alaska.gov/ApplicationsM/ater/OASys/PrintForRecords.aspx 204 4/5 7/27/23, 12:00 PM Application Review Number of changes in past 10 years: 10 _ Date of last rate increase: 01/15/2021 Description of guidance in rate setting: Water and Sewer Tax Tariff. ttached Document Checklist Details ttachments Title(Type),Description Other Documents Type ADWF Loan Application Signature ADWFLoanApplicationSignPageV l0.pdf Page.pdf Xerox Scan_12022021092912.PDF Hardeopy signature page for ADWF Loan Application,Tracking Number: ADWFLA-0252, Signed By:Doug Schoessler,Title:Public Works Director, Authority:Not Applicable ADWFLA-0252.pdf ADWF Loan Application.pdf https://dec.alaska.gov/ApplicationsM/ater/OASys/PrintForRecords.aspx 205 5/5 State Revolving Fund Program—Alaska Drinking Water Fund Financial Capacity Assessment Project Name: Seward Marine Industrial Center(SMIC)Water Pumphouse Addition Hypochlorite Generator System Upgrade Project Number: 769121-S Loan Applicant: City of Seward Project Description: This project will include an addition to a pumphouse and upgrade the hypochlorite generator system to eliminate the use of chlorine gas. Date: 11/29/2022 Loan Amount $476,000 Proposed Principal Forgiveness $238,000 Loan Principal to be Repaid $238,000 Estimated Annual Debt Service $14,555 Assumed Loan Finance Rate (to be determined at time of loan offer) 2% Loan Repayment Term 20 years City of Seward—Population (2020 U.S. Census)' 2,717 Number of commercial and residential accounts 11015 Population served by project 1,000 Median Household Income $74,110 Audit Findings Fiscal Year(FY) 2021—Type of Opinion Issued: Unmodified Finding 2021-001—Lack of Internal Controls over Billings A Corrective Action Plan was prepared to address this issue. FY2020—Type of Opinion Issued: Unmodified Finding 2020-001 —Lack of Internal Controls over Governmental Activities Capital Assets Finding 2020-002—Lack of Internal Controls over Lack of Year End Close Procedures. Finding 2020-003—Lack of Internal Controls over Utility Billing Corrective Action Plans were prepared to address these issues. FY2019—Type of Opinion Issued: Unmodified Finding 2019-001 —Lack of Internal Controls over Year End Inventory Balances Finding 2019-002—Lack of Internal Controls over Lack of Year End Close Procedures Corrective Action Plans were prepared to address these issues. FY2018—Type of Opinion Issued: Unmodified No material weakness or significant deficiency was identified. FY2017—Type of Opinion Issued: Unmodified No material weakness or significant deficiency was identified. ' https://data.census.gov/cedsci/all?q=seward,alaska%20population Z https://data.census.gov/cedsci/all?q=seward,alaska%20median%20household%20income SOURCE OF REPAYMENT State Revolving Fund (SRF) Program borrowers are required to submit documentation of the availability of, and the commitment to use, one or more dedicated sources of revenue for repayment of the financial assistance and sufficient 206 reserves for the loan as may be necessary.The City of Seward (City) has indicated that the proposed loan will be repaid with the General Fund. OPERATING RATIO The operating ratio indicator measures the utility's self-sufficiency—whether the revenues are sufficient to operate the facility.The natural benchmark for the operating ratio is 1.0, or break-even, but often a higher number is desired. An operating ratio of 1.2 with depreciation and 1.5 without depreciation is recommended to cover daily expenses, debt service, capital replacement costs, emergencies, and unexpected revenue shortfalls. As shown in the table below,the operating ratio with depreciation fell below 1.0 in two of the past five years, specifically in 2018 and 2020. For the past five years, when depreciation is excluded from the calculation,the operating ratio is below the recommended EPA level of 1.5, except for two years: 2017 and 2021. Expenses dropped to the lowest in the five-year period in 2020 due primarily to a drop in administration expenses in that year. Operating Ratio—Water Enterprise Fund 2017 2018 2019 2020 2021 Operating Revenues $1,441,320 $1,356,104 $1,453,343 $1,275,656 $1,511,295 Operating Expenses $955,270 $1,084,964 $1,032,225 $897,206 $969,217 Depreciation $396,426 $393,587 $423,612 $423,672 $417,881 Operating Ratio(with Depreciation) 1.07 0.92 1.00 0.97 1.09 Operating Ratio(without Depreciation) 1.51 1.25 1.41 1.42 1.56 The table below shows projected water utility operating revenues and expenses that were provided by the City of Seward. The projected operating ratio is above the recommended ratio of 1.5. It should be noted that the revenue and expense projections are considerably higher than the amounts recorded in recent financial statements.The applicant pointed out the fact that the projections were prepared using a cash accounting method, as opposed to the accrual method used for past financial statements, as an explanation for the higher revenue and expense projections during the next five years. In addition,the provided projections include a gradual increase in the number of customers throughout the projection period from 1,017 in 2022 to 1,058 in 2026. Operating Ratio Projections—Water Enterprise Fund (not including depreciation) 2022 2023 2024 2025 2026 Operating Revenues $2,121,597 $1,877,529 $1,909,080 $1,941,262 $1,974,087 Operating Expenses $1,204,169 $1,227,153 $1,251,696 $1,276,730 $1,302,264 Operating Ratio 1.76 1.53 1.53 1.52 1.52 The General Fund operating ratio has been included in this financial capacity assessment because, as stated in the SRF loan application,the applicant has indicated that the General Fund will be the source of loan repayment.The General Fund operating ratio remained at or above the 1.0 benchmark from 2017 to 2021. Both revenues and expenditures decreased significantly in 2020.The City of Seward 2020 financial report states that"General Fund revenues came in $2.9 million lower than in 2019, mainly due to the lack of tourism due to COVID-19, and expenditures came in $1.2 million dollars less." It should be noted that the revenue/expenditures and the operating ratio increased considerably in 2021 compared to the previous year; in fact,the 2021 revenues/expenditures were the highest in all of the five past years.The operating ratio was the highest in this period as well, and this can be explained by a return of the tourism industry and "normal"financial conditions in that year. 207 General Fund Operating Ratio(not including Depreciation) 2017 2018 2019 2020 2021 Operating Revenues $11,472,454 $12,382,548 $12,814,693 $9,941,142 $15,212,200 Operating Expenses $10,055,269 $10,513,847 $11,028,343 $9,934,619 $12,730,903 Operating Ratio 1.14 1.18 1.16 1.00 1.19 DEBT SERVICE COVERAGE The debt service coverage ratio (DSCR) helps determine whether there are sufficient revenues available after operating and maintenance expenses to pay debt service on existing and anticipated loans. A coverage ratio greater than 1.0 shows that revenues exceed expenses; many lenders require a minimum coverage ratio greater than 1.0. The City of Seward is currently repaying existing Alaska Drinking Water Fund loans. Repayment of those loans is reflected in the DSCR shown in the table below.The DSCR was well above 1.0 for all five past years between 2017 and 2021. DSCR—Water Enterprise Fund 2017 2018 2019 2020 2021 Operating Revenues $1,411,320 $1,356,104 $1,453,343 $1,127,656 $1,511,295 Operating Expenses $955,270 $1,084,964 $1,032,225 $897,206 $969,217 Debt Service $156,844 $156,844 $156,844 $156,844 $156,844 Result 2.91 1.73 2.68 2.41 3.46 The DSCR for the General Fund for 2017 through 2021 is also included in the table below and remained above 1.0 for all years, except for 2020 when the ratio fell to 0.02 due to the COVID-19 pandemic and the significant decrease in tourism revenue in that year. General Fund DSCR 2017 2018 2019 2020 2021 Operating Revenues $11,472,454 $12,382,548 $12,814,693 $9,941,142 $15,212,200 Operating Expenses $10,055,269 $10,513,847 $11,028,343 $9,934,619 $12,730,903 Debt Service $921,839 $1,030,497 $454,106 $434,581 $492,976 Result 1.54 1.81 3.93 0.02 5.03 The General Fund Beginning Ending and Change in Balance for the years 2017 through 2021 can be seen in the table below. Overall,the table demonstrates a gradual increase in the Fund's Ending Balance within this time frame, although there is some variability in both the Fund revenue and expenditures during the period between 2017 and 2021. It should be noted that the General Fund is used for a variety of the City's programs, only one of which includes water projects such as the proposed project discussed in this assessment. In addition, as has been mentioned above,the General Fund fluctuates with the source of revenue.The low Change in Fund Balance in 2020 demonstrates how the recent COVID-19 pandemic and the subsequent loss in tourism-related tax revenue affected the Fund. General Fund Beginning, Ending, and Change in Balance 2017 2018 2019 2020 2021 Beginning Balance: $7,957,498 $7,477,288 $8,540,289 $10,031,708 $10,224,310 Ending Balance: $7,477,288 $8,540,289 $10,031,708 $10,224,310 $11,583,494 Change in Fund Balance -$480,210 $1,063,001 $1,491,419 $192,602 $1,359,184 208 The Water Fund DSCR is projected to remain well above 1.0 throughout the projection period.This indicates that there is adequate revenue to cover operating expenditures and any debt service in each of the projected years.The City of Seward expects to begin repaying the proposed loan (769121-S) in 2024 and this explains the increase in debt service and the decrease in the DSCR in that year and subsequent years. DSCR Projections 2022 2023 2024 2025 2026 Operating Revenues $2,121,597 $1,877,529 $1,909,080 $1,941,262 $1,974,087 Operating Expenses $1,204,169 $1,227,153 $1,251,696 $1,276,730 $1,302,264 Debt Service $156,844 $156,844 $171,399 $171,399 $171,399 Result 5.85 4.15 3.84 3.88 3.92 AFFORDABILITY In order to determine the affordability of user rates,the U.S. Environmental Protection Agency(EPA) uses the user rates as a percentage of Median Household Income (MHI).Typical benchmarks used by EPA are 1.5%for water rates, 2%for sewer rates, and therefore, 3.5%combined. The current average rate for residential water service, $54 per month, has been in effect since 2021.The user rate is approximately 0.88%of MHI which is well under the EPA's benchmark for water rate affordability. Current User Rates as Percentage of Median Household Income Annual Water User Fees -Current $648 Median Household Income $74,110 User Fees as a%of MHI 0.88% The City of Seward 2022 Utilities Tariff includes a provision for annual rate adjustments that reflect an average of the five previous published years' annual increases in the Consumer Price Index published by the Alaska Department of Labor. Because the current rate is under the affordability benchmark,the anticipated rate increases to adjust for inflation are not expected to create unaffordable rates in the next five years. SUMMARY Some of the important summary points of this financial capacity assessment are listed below. • Based on financial records provided for 2017-2021,The City of Seward's Water Enterprise Fund has operated below the break-even point with an operating ratio including depreciation below 1.0 during two of the past five years; however,the City's General Fund has operated at or above the break-even point for all of the past five years. • The General Fund Ending Balance increased annually between 2017 and 2021. • Projected operating revenues for the Water Enterprise Fund exceed expenses in the next 5 years according to information prepared by the City of Seward. • The City's utility tariff includes a provision to allow for annual rate adjustments to reflect an average of the five previous published years' annual increase in the Consumer Price Index. Current water rates are well below the EPA benchmark for affordability;therefore, rates are anticipated to remain affordable over the course of the next 5 years. • The City is currently repaying existing Alaska Drinking Water Fund loans, and these are reflected in the Water Enterprise Fund's debt service coverage ratio for the past five years (2017-2021);the coverage ratio remained above the target of 1.2 during this period. 209 • The debt service coverage ratio for the past years (2017-2021)for the General Fund also remained above the target of 1.2 except for one year: 2020. • The Water Enterprise Fund projected coverage ratio through 2026 remains above a target of 1.2 Based on the information supplied by the applicant,the City of Seward generates sufficient revenue to fully pay anticipated expenses attributed to the operation of the water system and also pay all debt service for existing loans and the proposed SRF loan during the next 5 years. RECOMMENDATION Based on the assessment of financial capacity, acceptance of the City of Seward's request for a loan of$476,000 with $238,000 in principal forgiveness from the Alaska Drinking Water Fund is recommended. It is also recommended that the SRF Program conduct an annual review of the City of Seward Certified Annual Financial Report to detect changes in indicators such as the operating ratio and the debt service coverage ratio that may indicate short-term weakness. 210 , X <tiv� j 1 Resolution 2023-093 : Authorizing The City Manager To Enter Into A Management And Operating Agreement With Providence Health & Services Washington d/b/a Providence Health & Services Alaska Documents: • Agenda Statement • Resolution 2023-093 • Management and Operating Agreement 211 City Council Agenda Statement . Meeting Date: August 14, 2023 To: City Council ' From: Norm Regis,Acting City Manager Subject: Resolution 2023-093: Authorizing The City Manager To Enter Into A Management And Operating Agreement With Providence Health & Services Washington d/b/a Providence Health& Services Alaska Background and justification: The City owns certain real property consisting of land, a hospital, and a nursing home facility, Seward Mountain Haven ("SMH"), which together with improvements thereon, but exclusive of any space occupied or used for purposes of operating the Seward Community Health Center Inc's federally qualified health center, shall be referred to collectively herein as the Providence Seward Medical Center ("PSMC"). Since operations by Providence began in 1996, the Operating Agreement has been amended numerous times. The current Management and Operating Agreement expired in June 2023. The City of Seward and Providence have been working together for the past several months to update the agreement to reflect current practices. The process has included numerous meetings which included Management, Finance, and Legal representatives from both entities. This operating agreement incorporates all of the relevant portions of the relevant amendments and reflects the current operational relationship between the City of Seward and Providence. The City desires to engage a company with sufficient healthcare knowledge and expertise, and Providence has successfully operated the co-located hospital and long-term care facilities on behalf of the City since 2002. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: 2.2.6 Health Care Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: S 0 This legislation(✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ x Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted x Not applicable 212 AIIU Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking RWater R Healthcare Motor Pool Other Hospital Fund Enterprise Note: amounts are unaudited Available Fund Balance/Net Position $ 4,718,396 Finance Director Signature: No direct fiscal impact Attorney Review x Yes Attorney Signature: Sam Severin 7/19/23 Not applicable Comments: Administration Recommendation eAdopt Res. Other: 213 Sponsored by: Regis CITY OF SEWARD,ALASKA RESOLUTION 2023-093 A Resolution of the City Council of the City of Seward, Alaska, Authorizing The City Manager To Enter Into A Management And Operating Agreement With Providence Health & Services Washington d/b/a Providence Health & Services Alaska WHEREAS, the City owns certain real property consisting of land, a hospital, and a nursing home facility, Seward Mountain Haven ("SMH"), which together with improvements thereon, but exclusive of any space occupied or used for purposes of operating the Seward Community Health Center Inc's federally qualified health center, shall be referred to collectively herein as the Providence Seward Medical Center("PSMC"); and WHEREAS, Providence has administered hospital and primary care clinic operations in Seward since June 28, 1996, and long-term care operations since April 28, 2002; and WHEREAS, effective February 15, 2014, the primary care clinic operations was assumed by a newly formed 501(c)(3) organization, Seward Community Health Center, Inc., operating a federally qualified health center under Section 330 of the Public Health Service Act as a co- applicant with the City of Seward, and PSMC will no longer include the provision of primary care clinic services within its prescribed scope of work or have responsibility for any aspect of the management or operation of the FQHC; and WHEREAS, the City desires to continue quality, affordable health care for its residents; and WHEREAS, the City desires a single delivery service for acute care and long-term care services; and WHEREAS,the City desires cost effective health care services with emphasis on reducing duplication and inefficiencies in the delivery system; and WHEREAS, the City desires to engage a company with sufficient healthcare knowledge and expertise, and Providence has successfully operated the co-located hospital and long-term care facilities on behalf of the City since 2002; and WHEREAS, Providence owns and operates a number of health care facilities that are operated in keeping with its philosophy, mission and values. 214 CITY OF SEWARD,ALASKA RESOLUTION 2023-093 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City Manager is authorized to Enter into a Management and Operating Agreement With Providence Health& Services Washington d/b/a Providence Health& Services Alaska. Section 2. This resolution is effective upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of August, 2023. THE CITY OF SEWARD,ALASKA Sue McClure, Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) 215 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD City of Seward Management and Operating Agreement This Management and Operating Agreement(Agreement)is made and entered into by and between the City of Seward, a municipal corporation (the City) and Providence Health & Services Washington d/b/a Providence Health & Services Alaska, a Washington non-profit corporation (Providence). WHEREAS, the City owns certain real property consisting of land, a hospital, and a nursing home facility, Seward Mountain Haven ("SMH"), which together with improvements thereon, but exclusive of any space occupied or used for purposes of operating the Seward Community Health Center Inc's federally qualified health center, shall be referred to collectively herein as the Providence Seward Medical Center("PSMC"); and WHEREAS, Providence has administered hospital and primary care clinic operations in Seward since June 28, 1996, and long-term care operations since April 28, 2002; and WHEREAS, effective February 15, 2014, the primary care clinic operations was assumed by a newly formed 501(c)(3) organization, Seward Community Health Center, Inc., operating a federally qualified health center under Section 330 of the Public Health Service Act as a co- applicant with the City of Seward ("FQHC"), and PSMC will no longer include the provision of primary care clinic services within its prescribed scope of work or have responsibility for any aspect of the management or operation of the FQHC; and WHEREAS, the City desires to continue quality, affordable health care for its residents; and WHEREAS, the City desires a single delivery service for acute care and long-term care services; and WHEREAS,the City desires cost effective health care services with emphasis on reducing duplication and inefficiencies in the delivery system; and WHEREAS, the City desires to engage a company with sufficient healthcare knowledge and expertise, and Providence has successfully operated the co-located hospital and long-term care facilities on behalf of the City since 2002; and WHEREAS, Providence owns and operates a number of health care facilities that are operated in keeping with its philosophy, mission and values. NOW THEREFORE, the City and Providence agrees on the following: Page 1 of 17 216 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD 1. Operations a. Agreement to Operate/Manage. The City hereby contracts with Providence to be the sole and exclusive operator and manager of PSMC with respect to the hospital and long term care components of that facility for the term of this Agreement; provided, however, that nothing in this Agreement shall require Providence to provide any services to the FQHC, bear any responsibility for any aspect of the FQHC's operations, or assume any liabilities or obligations related to the operation of the FQHC within PSMC's building. Notwithstanding anything to the contrary, both parties understand and agree that any and all services provided by Providence during the term of this Agreement shall be provided solely for the benefit of the City. During the term of this Agreement and subject to the other provisions of this Agreement, Providence shall operate PSMC, and may perform or arrange for the provision of the following: 1. Ensure timely deposits into the Accounts (as defined in Section 6) of all receipts and moneys arising from the operation of PSMC and shall make disbursements from such accounts in such amounts and at such times as the same are required. 2. Establish all prices, price schedules, rate, and rate schedules for PSMC. 3. Negotiate, prepare and execute any such other contracts reasonably necessary or desirable in connection with the operation of PSMC in the usual course of business. 4. Hire or retain any consultants, accountants, attorneys, or other professional personnel necessary and appropriate to assist Providence in carrying out its duties and responsibilities in accordance with this Agreement. 5. Operate PSMC in a manner that is consistent with applicable federal, state and local anti-discrimination laws, including the provision of services to persons at PSMC without regard to race, creed, color, national origin or financial circumstances. 6. Operate PSMC in a manner consistent with their Medical Staff Bylaws, as applicable. The parties hereby specifically agree to allow Providence, while acting in the name of PSMC, to enter into certain exclusive contracts for the practice of medical care. 7. Provide physician credentialing services and any and all other services as reasonably required to facilitate and perform credentialing functions (as applicable) at PSMC. 8. Employ or otherwise retain and be responsible for selecting, hiring, training, supervising, and firing all management, professional, administrative, clerical, secretarial, bookkeeping, accounting, payroll, billing and collection and other personnel that are reasonably necessary and appropriate for the operation of PSMC. 9. Take all such actions reasonably necessary to cause PSMC to continue as participating providers under the Medicare and Medicaid programs. 10. Prepare, execute and file any required documents with governmental or accrediting agencies, including without limitation any Medicare cost reports, provider agreements, and licensing documents. 11. Provide or arrange for the provision of all marketing and public relations services that are reasonably necessary and appropriate for the operation of PSMC. The parties hereby agree that Providence may, during the term of this Agreement, identify PSMC as an entity under the operational management of Providence. Page 2 of 17 217 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD 12. Providence may, in its sole discretion defend, assert, settle, or otherwise dispose of any claims, litigation,judgments, or liabilities in connection with PSMC, and will notify the City of same. 13. Provide to the City a capital budget annually for PSMC by September. 14. Negotiate, contract for and generally supervise the disposal of all medical waste and/or garbage refuse. 15. Conduct medical educational training programs at PSMC, including training of interns and residents and other medical/technical personnel, in a manner consistent with applicable governmental regulations and Providence's policies. 16. Unless otherwise specifically provided in this Agreement, Providence shall be responsible for the performance of all other acts reasonably necessary in connection with the operation of PSMC in accordance with the approved annual budget and the terms and conditions of this Agreement. Notwithstanding anything to the contrary in this Agreement, Providence shall not have authority to bind the City or PSMC as to the following matters or to perform any of the following on behalf of the City or PSMC without first obtaining approval from the City: (i) any sale, lease, exchange, mortgage, pledge, or other transfer or disposition of all or substantially all the assets of any of PSMC other than in the ordinary course of business; (ii) any fundamental change in the nature of PSMC's businesses; (iii) any merger, consolidation or affiliation of any of PSMC with another entity; and (iv) any material change with respect to the insurance coverage obtained or provided through Providence, unless such change is beyond Providence's reasonable control. b. General Control of PSMC. Although the City has contracted day-to-day operations and management of PSMC to Providence during the term of this Agreement, the City shall continue to own and have financial responsibility for PSMC. The City shall also have control over the facility other than day-to-day operations. The City represents that, as of the Effective Date, it has a license as owner of PSMC, and has listed Providence on the license as the manager to operate the PSMC with respect to its hospital and long-term care operations. Providence agrees that it will take all steps necessary to maintain and continue the PSMC and licenses, permits, and certifications for the term of this Agreement, and the parties agree to take all steps necessary to preserve the designation of colocation of the critical access hospital and long-term care facilities at PSMC, as such designation is outlined in the regulations published by the State of Alaska Department of Health and Social Services. The City grants Providence the authority and responsibility for all related business licenses. c. Required Notifications. Providence shall notify the City in writing with twenty-four (24) hours of the occurrence of any one or more of the following events: 1. Any loss of licensure by PSMC. 2. At such time as Providence becomes aware of any material governmental investigation or disciplinary proceeding relating to PSMC. Page 3 of 17 218 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD 3. At such time as PSMC becomes debarred, suspended or otherwise ineligible to participate in any federal or state health care program, including the Medicare and Medicaid programs. 4. At such time as Providence becomes aware of any act of nature or any other event 5. which has a material adverse effect on Providence's ability to operate PSMC. 6. At such time as Providence becomes aware of any issue which may have a material adverse financial impact on the operations of PSMC. 2. Effective Date and Term. This Agreement shall become effective upon execution by both parties following adoption of a Resolution (the "Resolution") by the Seward City Council (the "Effective Date"). The term of this Agreement shall be five (5)years from May 8, 2023 unless sooner terminated as provided herein. The Parties may extend the Term for an additional five (5) years based upon mutual written agreement. Such renewal (if applicable) shall be on the same terms and conditions of this Agreement. Any change in the Annual Fixed Periodic Fee ("AFPF") above the CPI increase allowed in Section 7, is subject to approval by the Seward City Council. Providence understands that under the Charter and Code of Ordinances of the City, the Resolution may be voided by referendum. Providence agrees that if the Resolution is the subject of a referendum petition filed with the City Clerk, this Agreement shall be ineffective unless and until the Resolution is approved by the voters of the City, and Providence shall not be entitled to any damages or other relief against the City in the event the Resolution is not so approved. In such an event, on the Effective Date, the Prior Agreement shall terminate. 3. Operating Expenses.In accordance with the operating budget adopted annually,Providence will incur costs generally associated with the operation of a health care facility providing acute and long-term care services. Costs associated with the Providence Alaska Regional Office and Providence System Office are deemed to be recovered in the form of the Annual Fixed Periodic Fee as described in Section 7 and will not be billed to PSMC in addition to the AFPF. It is the City's expectation that Providence will exercise due care as it centralizes services keeping in mind that all services are provided solely for the benefit of the City and that services must be able to disconnect from Providence without undue complication should the relationship end. Further, in the event that such centralization of services is deemed by the City to have a significant adverse impact on the operational efficiencies or cost of operations of PSMC,the City shall have the right to request PSMC seek alternative procurement of such affected services. In the event the City and Providence discontinue their contractual relationship,the costs incurred by PSCMCC in winding down and closing out its relationship with the City shall be deemed Operating Expenses. 4. Capital Expenditures.Following completion of the annual capital budget, Providence may purchase the listed items as cash flow allows. In addition to capital budget items purchased from PSMC operating funds, the City may, from time to time, provide additional funding for capital needs at PSMC. To the extent that capital budget request items were identified by PSMC on a Capital Budget Plan submitted Page 4 of 17 219 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD to, and accepted by the City, PSMC may spend City capital funds on those items in addition to any other item whose individual item cost does not exceed $10,000, without further City approval. All capital purchases procured in this manner will be the property of the City. 5. Equipment. a. Providence shall maintain all equipment at PSMC, regardless of ownership. The City will establish a separate account based on capital budget funds approved by the City Council, to be used for PSMC capital purchases that will require only approval of both the City and the facility administrator to access as a way to streamline the capital purchasing process. b. The City will retain title to all PSMC equipment owned by the City. Providence may purchase replacement or additional equipment to be used in the maintenance or improvement of Providence's operations of PSMC. Such additional equipment shall be the City's property, and shall be tagged and recorded in the financial records, as such. Providence shall annually provide a list of equipment to the City detailing these assets as of December 31 of each year. This list should be provided no later than February 281h of the following year. 6. Admission Policy. Providence agrees to accept any and all bona fide emergency patients PSMC can accommodate. Providence shall treat patients in accordance with the services and capacity available at PSMC. Providence agrees it shall not discriminate in the admission of patients or delivery of outpatient services on the basis of race, religion, national origin or color. Providence agrees that any patient seeking treatment at PSMC and requiring for medical reasons transport to a larger facility, has the right to select the health provider(s) and hospital of the patient's preference. Providence agrees to honor such determinations by patients and will relate such directives to emergency transportation services. Providence acknowledges the importance to the people of Seward of having a long-term care facility within the City boundaries and operating at its fullest capacity, and agrees that except to the extent necessary to meet patient choice, or the particular health or safety needs of a patient, and only for such time as is necessary to meet such needs, Providence will not move or cause patients to move to other facilities owned, operated or managed by Providence. The City has the right to retrospectively review reasons for all such transfers, so long as such review is in compliance with patient confidentiality laws. The "Green House" model was chosen by the people of Seward for the long-term care facility in 2008 due to its emerging reputation as the latest, state-of-the-art thinking for providing long term care services, and because of its vast improvement over Seward's previous institutional model of care. After a full decade of operations however, the practical limitations of the model constrain the ability of staff to best meet the specific needs of fragile elders with high acuity needs, operate the facility at maximum efficiency and address safety issues unique to Alaska's climate (e.g. covered walkway). For example, the increased need for higher care delivery is constrained by certain Greenhouse rules (e.g. restrictions on lifts in common areas), restrictions on charging mechanisms, and the physical separation of nursing staff from the elders. From an efficiency standpoint, some services have been shifted away from the Shabazim (laundry, activities, housekeeping) in order to provide improved focus on elder care, but represent Page 5 of 17 220 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD deviations from particular requirements of the Green House model. Fundamentally, the Green House is a trade-marked concept that provides care in home-like settings where services are brought to the residents rather than bringing residents to the services. The parties intend to continue to support many of the concepts fundamental to the Green House model of care, but find that the nature of process improvement in Seward requires changes which are not in full conformance with the Green House model. It is determined therefore, that Seward Mountain Haven and its elders are best served by retaining many qualities of the Green House model while no longer seeking to qualify as an official "Green House" so that Seward is better able to accommodate specific needs of a more vulnerable population of elders with high acuity, to drive process improvements and seek better operational efficiencies, and to perform facility modifications which are not entirely consistent with the Green House model. Providence further acknowledges the importance to the people of Seward of being able to receive care and treatment in a local hospital, rather than to be transported out of town, and agrees that except to the extent necessary to meet patient choice, or the particular health or safety needs of a patient, Providence will not move or cause patients to move to other facilities. The City has the right to retrospectively review reasons for all such transfers, so long as such review is in compliance with patient confidentiality laws. 7. Disposition of Funds, Reporting and Administration. a. Funds originating from the operation of PSMC and collected by Providence pursuant to this Agreement shall be received, handled, managed and disposed of as follows: 1. Providence shall deposit all funds received by it from the operation of PSMC and all amounts advanced by the City in a j ointly held bank account or accounts bearing the name of PSMC(hereinafter the "Accounts") in a bank or trust company approved by the City and Providence. Such funds shall in no event be commingled with other City or Providence funds. Providence shall have no liability or responsibility for any loss resulting from the insolvency, malfeasance or nonfeasance of the bank or banks in which such funds are deposited. 2. Providence has the right to make withdrawals from and use the Accounts for the purposes of operating PSMC and performing their obligations hereunder and paying Providence's compensation herein until the expiration or termination of this Agreement, at which time Providence shall resign as co-signatory for the Accounts. 3. Signatories and approvals as to the amounts on all checks drawn from the Accounts shall be in accordance with the policies and procedures mutually agreed to by Providence and the City. b. Providence will perform all billing and collection activities for PSMC accounts receivables, will process accounts payable, and will provide such other administrative, accounting and clerical services as are necessary. All revenues and cash collections including those from patients, third-party payers and other sources billed and collected by Providence, and arising out of or related to services rendered during the term of this Agreement, and all grants or portions thereof attributed to PSMC arising out of or related to PSMC during the term of this Agreement, shall be used first to pay debt service on Seward Mountain Haven bonds issued by the City, then to offset Operating Expenses of PSMC incurred on or after the Effective Date. Providence shall aggressively collect all Page 6 of 17 221 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD amounts billed for services provided at PSMC. The excess, if any, of such revenues over such expenses shall accrue to the City's account, and be applied in the City's sole discretion, to pay debt service on the City's existing general obligation and/or revenue bonds related to the PSMC, the costs of repairs, renewals, improvements or additions to PSMC, or to cover past, present or future operating losses. c. Providence shall provide the City with audited year-end financial statements for the PSMC as a co-located entity within 150 days after the end of each year. Upon request by the City, Providence will make a representative available to make presentations to Seward City Council and community groups concerning the annual report. The information to be shared under this paragraph shall not include protected health information covered by the Health Insurance Portability and Accountability Act of 1996 and regulations adopted thereunder("HIPAX). d. Providence shall maintain all financial, medical and hospital records,including admitting register books, schedules of room rentals, patients' insurance records, pertinent hospital personnel records and such other books and records as are necessary to the continued operation of PSMC. Original copies of medical and hospital records shall be maintained and stored at PSMC or at another facility acceptable to Providence. e. Providence will use reasonable efforts to operate PSMC consistent with the annual budget. Under the terms of this Agreement, the City shall have the right to review and approve Providence's budget. Providence shall provide the Advisory Council with monthly updates comparing PSMC's actual financial performance to the approved budget during the course of each year to ensure that the City is fully aware of the financial performance of PSMC on a monthly basis. The parties acknowledge that the budget is only a projection for the upcoming year and changed circumstances may require budgetary modifications. Providence will notify the City of the following modifications to the budget: (i) instigation of any litigation on behalf of PSMC against a third party where the amount in controversy exceeds $1,000,000; and (ii) settlement of any litigation on behalf of PSMC where the amount in controversy exceeds $1,000,000 or the proposed settlement involves payment by PSMC of an amount in excess of$1,000,000. 8. Annual Fixed Periodic Fee. Beginning January 1, 2024 and each January 1st thereafter, the AFPF will be payable by the City in equal quarterly amounts, and will be based upon the total AFPF applicable in calendar year 2023, as adjusted by the Consumer Price Index for the second preceding twelve-month period ended December 31 (Anchorage Alaska, All Urban Consumers - Not Seasonally Adjusted, Base: 1982-1984). (For example, January 1st 2024 will be adjusted based on the CPI for the full year which ended December 31, 2022.) Partial years shall be pro-rated. Both parties understand and agree that the City has other financial obligations to Providence pursuant to the terms of this Agreement. 9. Medicare and Medicaid Reimbursement. Page 7 of 17 222 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD From and after the Effective Date, Providence shall maintain Medicare and Medicaid certification and shall prepare all Medicare/Medicaid cost reports in a timely manner and shall provide all draft cost reports to the City for review and comment no less than 30 days prior to the date of submission, understanding that Providence may not be able to include the "Home Office" cost report at that time. Alternatively, the parties may agree to have the City hire an independent consultant to prepare the cost report. All expenses incurred within this Section are considered Operating Expenses and shall be paid as costs from Providence. The City may, as Operating Expenses, have the cost reports prepared and/or analyzed by a financial consultant. 10. Working Capital and Cash Flow. a. Providence will pay Operating Expenses as they become due, using funds from the Accounts and provide the City with information satisfactory to the City supporting such transfer of funds from City to Providence. Providence will assure that all Operating Expenses are paid consistent with the various terms and conditions of vendors, as well as the operating budget and applicable regulations governing employee pay practices. In the event insufficient funds are available to pay Operating Expenses, Providence will notify the City verbally and in writing via Email. Providence will then have the sole discretion to require payment as described in Subsection 11 (b) or Subsection 11 (c). In the event the City fails to transfer funds adequate to support Operating Expenses in accordance with Section 11 (b) or 11(c), and such failure is not cured within 60 days of the original notice, Providence may terminate this Agreement by providing the City with 30 days' advance written notice of such termination. b. The City shall place a minimum of $500,000 of Emergency Funds into the City of Seward General Fund account reserved for healthcare operation and capital shortfalls. Such funds may be used for capital or operating shortfalls only and require the prior written approval of the City Manager or designee. In the event that shortfalls are expected to be in excess of$500,000,Providence will notify the City and within sixty (60) days of receiving such notice, the City will transfer sufficient funds to PSMC to cover the shortfall. c. To the extent that the Accounts do not have sufficient cash available to reimburse Providence for costs, Providence may, at its sole discretion, charge interest for the cumulative unpaid portion of the monthly amount due. d. Interest will be calculated monthly at the Prime Rate+ 1%on the average outstanding balance for the month, where the Prime Rate is defined in the Wall Street Journal Financial Section. Principal plus unpaid interest must be fully paid by December 31, provided however,that this date may be extended by Providence only upon its written consent. In the event the City fails to make such required payments, the City agrees to pay on demand, all costs of collection, including reasonable legal expenses and attorneys fees, incurred in enforcing this repayment. 11. Supplies. Providence shall, as part of its Operating Expenses, supply and maintain all expendable supplies as may be required in Providence's discretion for the proper operation of the PSMC. Upon termination of this Agreement, Providence will leave Page 8 of 17 223 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD behind all of the supplies in inventory as well as floor stock items maintained at the Property. 12. Condition on Surrender.Upon termination or expiration of this Agreement,Providence shall surrender the Property to the City in substantially the same condition as exists on the Effective Date, except for reasonable wear and tear, construction and demolition required or permitted under the terms of this Agreement, and damage by fire and other risks covered by the insurance policy in Section 15. 13. Alterations. Providence shall have the right to make alterations, additions, improvements and renovations to PSMC as Operating Expenses, provided: (a) Providence shall notify the City with respect to any such work requiring any substantial expenditure; (b) such work shall not adversely affect the structural integrity of PSMC or diminish the value thereof, (c) any such work shall be performed in a good and workmanlike manner and in conformance with all applicable building, fire and health regulations; and (d) the City shall have approved in writing all such work exceeding $50,000,in advance, in the City's sole discretion. 14. Insurance. a. Providence shall either obtain or continue, occurrence-based, professional (including medical malpractice)and general liability insurance relating to PSMC as Providence, in its sole opinion, deems necessary and sufficient, and maintain such liability insurance coverage for PSMC during the term of this Agreement. Such insurance shall provide coverage for personal injuries, death or property damage to PSMC in an amount of at least $5 million per occurrence and $10 million annual aggregate; provided, however that Providence's reasonable allocated cost for providing or continuing such insurance on the City's behalf shall be deemed an Operating Expense. In addition, Providence shall maintain insurance, in reasonable amounts, subject to reasonable terms, provisions and customary exclusions, for professional liability and workers' compensation for all Providence employees who provide services at PSMC pursuant to this Agreement. Providence shall also maintain automobile, crime, directors and officers, property earthquake and fiduciary insurance coverage (as requested by the City) relating to PSMC and maintain such insurance coverage for PSMC during the term of this Agreement. Any insurance obtained or provided by Providence under this Section may be provided by insurance or alternative risk programs which may include self-insurance programs,provided such alternative risk or self-insurance programs are fully funded (confidence level of 80% or higher) for any reasonably projected liabilities, and contain customary and reasonable deductible and coinsurance amounts. The City hereby acknowledges that Providence has informed it of Providence's insurance's deductible/co- insurance amounts. The Operating Expenses will include the payment of such deductible/coinsurance amounts. All costs incurred by Providence under the terms of this Section 15 (a) shall be deemed Operating Expenses and paid by City to Providence pursuant to the terms of this Agreement. The Operating Costs shall include the payment of such Page 9 of 17 224 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD deductibles/co-insurance in the event of any loss or casualty covered under the insurance provided by Providence hereunder. b. The City hereby acknowledges and agrees that upon the earlier of termination or expiration of this Agreement, Providence shall no longer provide nor arrange for the provision of any insurance of any kind whatsoever to PSMC. c. The minimum amounts and types of insurance required under this section shall be subject to revision in accordance with standard insurance practices, in order to provide continuously throughout the Term, a level of protection consistent with good business practice and accepted standards in the industry. Such factors as increases in the cost of living shall be utilized in assessing whether the minimum insurance requirements should be increased. The City shall notify Providence of any required changes in insurance coverage. All insurance policies shall include a waiver of subrogation and shall provide for 30 days' notice to the City of cancellation and/or material change in policy terms. All such policies shall be written either by insurance companies legally authorized to do business in the State of Alaska and acceptable to the City, or by self-insurance under the same terms as the policies for healthcare centers, hospitals, or long-term care facilities owned or operated by Providence, and acceptable to the City. The City shall be named as an additional insured party on each such policy of insurance, and certificates thereof shall be furnished to the City. Nothing herein shall be construed as a representation by the City as to the sufficiency of any insurance coverage for any purpose. 15. No Assumption of Liability: Indemnification. a. During the term of this Agreement, Providence shall not assume or be liable for any claim, liability, or obligation of PSMC, whether known or unknown, fixed or contingent, accrued or unaccrued, arising from Providence's operation of PSMC pursuant to this Agreement, except where such claim, liability or obligation arises from Providence's negligence or material breach of this Agreement. b. During the term of this Agreement, the City shall not assume or be liable for any claim, liability or obligation arising from its responsibilities and duties under the terms of this Agreement, whether known or 'unknown, fixed or contingent, accrued or unaccrued pursuant to this Agreement, except where such claim, liability or obligation arises from the City's negligence or material breach of this Agreement. c. The parties will defend,indemnify and hold each other harmless from any loss, claim or damage arising from the negligent acts and omissions of their respective employees, officers and agents, including negligence connected with performing their obligations under this Agreement. In the event that loss or damage results from the conduct of more than one party, each party agrees to be responsible for its own proportionate share of the claimant's total damages under the laws of the state of Alaska. d. The obligations under this Section 16 shall survive any termination or expiration of this Agreement and shall continue until the expiration of the applicable statute of limitations (with extensions)relating to the causes of action at issue. Page 10 of 17 225 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD e. Providence shall have no obligation for, and the City shall indemnify and hold Providence harmless from and against, any and all liability with respect to any claims resulting from the negligence of the City or its agents or employees, or any claims arising out of acts or omissions which occurred: (a)prior April 28, 2002 with regard to the previous Wesley facility long-term care site; or (b) prior to 1996 with regard to the hospital site; or(c) on or after February 15, 2014, with respect to the operation of the FQHC or any uses of the FQHC space within the PSMC building. 16. Assignment. This Agreement may not be assigned by Providence except in whole to an affiliate of Providence, as "affiliate" is defined in AS 10.06.990(2). Each and every provision of this Agreement shall inure to the benefit of and shall be binding upon the successors in interest of Providence and the City. This assignment provision is specifically excluded as pertains to the Seward Community Health Center. 17. Early Termination. Either party shall have the option in its sole discretion, to terminate this Agreement upon twelve (12)months written notice to the other party. 18. Religious and Ethical Directives: Termination. Providence shall not be obligated to provide any services at PSMC that are in conflict with the Providence St Joseph Health System Mission and Core Values and the Roman Catholic moral tradition as articulated in such documents as The Ethical and Religious Directives for Catholic Health Care Facilities, as amended from time to time. Providence shall at all times have the right, power and duty to operate PSMC in accordance with, and to make decisions that in Providence's reasonable discretion are necessary or desirable to comply with such Directives. If at any time during the term, as a result of changes to Alaska law or regulations, Providence shall be required to operate PSMC in a manner that is not consistent with such Directives, then at its option, Providence may terminate this Agreement upon 60 days advance written notice. 19. Termination for Cause. a. Either party may terminate this Agreement in the event of breach of this Agreement by the other party where such breach is not cured within thirty (30) calendar days after the non-breaching party gives written notice of the breach to the breaching party. b. This Agreement shall automatically terminate in the event either party files a petition in voluntary bankruptcy, makes an assignment for the benefit of creditors, or takes any other action voluntarily or involuntarily under any state or federal statute for the protection of its debtors. c. Either party may immediately terminate this Agreement in the event the other party attempts to limit or otherwise avoid its obligations set forth in Section 16 of this Agreement. d. The dissolution or liquidation of Providence, other than as the result of merger or consolidation under conditions permitting continued full compliance with the terms of this Agreement, shall be cause for termination by the City. e. The cessation by Providence of use of the Property for the purposes contemplated hereby for a period of thirty (30) consecutive days, except for periods when the same Page 11 of 17 226 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD may be untenantable shall be cause for termination by the City, and no Annual Fixed Periodic Fee shall be owed following such cessation of use. 20. Winding Up. This Section 21 shall survive termination or expiration of this Agreement. Upon the termination or expiration of this Agreement, the following procedure shall be followed after the effective date of expiration or termination ("termination date"): a. Providence shall work cooperatively with the City to facilitate a smooth transition of the operation/management of PSMC. b. The City shall retain as its property any equipment on the Property as of the expiration or termination of the Term to the extent that such equipment was acquired with the PSMC or City funds. The City may purchase, free and clear of any encumbrances, any equipment owned by Providence at its then net book value. Notice of the City's exercise of this option shall be effected by notice given at any time before the expiration date. Providence shall remove from the Property at its expense, any or all equipment that the City has not elected to retain under this paragraph. c. Providence shall give the City, or such other person identified by the City, all records required for continued operations of PSMC. d. All licenses and permits incident to operation of the PSMC will be transferred to an operator identified by the City, including, but not limited to transfer of permits for and inventories of alcohol, narcotics and dangerous drugs. Providence will file a final cost report within 45 days after termination. e. Upon termination, all accrued revenues and expenses related to the ordinary course of business shall be the City's. Such expenses shall include any fees owed to Providence under this Agreement, including an amount equal to the final bi- weekly payroll costs. 21. Notices. Any notice permitted or required hereunder shall be in writing and shall be deemed given on the date delivered in person, sent by electronic mail or fax, or deposited in the United States certified or registered mail, postage prepaid, and addressed as follows: To the City: City of Seward P.O. Box 167 410 Adams Street Seward, Alaska 99664-0167 ATTN: City Manager Phone: 907.224.4047 Fax No.: 907.224.4038 Email: citym r a,cityofseward.net To Providence: Providence Health and Services - Washington d.b.a. Providence Health and Services - Alaska 3760 Piper Street P.O. Box 196604 Anchorage, Alaska 99519-6604 Page 12 of 17 227 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD ATTN: Chief Executive, Alaska Service Area Fax No.:907-261-3041 Email: ella. oss(c_,providence.org Such addresses may be changed by either party by ten (10) days' prior written notice to the other party. 22. Authority.Each individual executing this Agreement on behalf of Providence or the City represents and warrants that he or she is duly authorized to execute and deliver this Agreement on behalf of such party, that all actions by such organization have been taken to authorize execution, delivery and performance of this Agreement, and that this Agreement is binding upon such party. The individuals signing on behalf of Providence further warrant and represent that they are authorized to act on behalf of Providence in all matters relating to this Agreement. 23. Representations and Warranties of Providence. As of the Effective Date, Providence hereby represents and warrants as follows: a. Providence is a Washington non-profit corporation in good standing under the laws of the State of Washington and authorized to do business in Alaska. b. Providence has full corporate power and authority to carry on its business as now conducted and to enter into this Agreement. The execution and delivery of this Agreement has been authorized by proper corporate action, and this Agreement constitutes a valid and legally binding obligation of Providence. c. Except as may have already been obtained, no consent or approval of any trustee or holder of any indebtedness or obligation of Providence, and no consent, approval, permission, authorization, order, or license of any governmental authority,is required to be obtained by Providence for the execution and delivery of this Agreement or any other instrument or agreement required of Providence under this Agreement. d. Providence is not subject to any charter, bylaw, or contractual limitation or provision of any nature whatsoever which in any way limits, restricts, or prevents Providence from entering into this Agreement or from performing any of its obligations hereunder. e. Neither the execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the provisions hereto, materially conflicts with, violates, or breaches any charter, bylaw, or stock provision of Providence, any of the material terms, conditions, or provisions of any indenture,instrument, or agreement to which Providence is a party or by which Providence is bound, any statute, rule or regulation, or any judgment, decree, or order of any court or agency binding on Providence, or constitutes a default under any of the foregoing which has not been waived or consented to in writing by the appropriate party or parties, or results in the creation or imposition of any lien, charge, security interest, or encumbrance of any nature whatsoever upon any of the property or assets of Providence not permitted under the terms of any restriction, agreement,instrument, statute, governmental rule or regulation, court order,judgement, or decree. f. To the knowledge of Providence, there is no action, suit, proceeding, inquiry, or investigation by or before any court, governmental agency, or public board or body Page 13 of 17 228 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD pending or threatened against Providence which (i) affects or seeks to prohibit, restrain, or enjoin the execution and delivery of this Agreement, (ii) affects or questions the validity or enforceability of this Agreement, or(iii)questions the power or authority of Providence to carry out the transactions contemplated by, or to perform its obligations under, this Agreement. g. When duly executed, this Agreement will be enforceable against Providence according to its terms, except as may be limited by bankruptcy, insolvency, reorganization, or other laws affecting creditors' rights generally as amended from time to time. h. Any certificate signed by an officer of Providence duly authorized to execute such certificate and delivered pursuant to this Agreement shall be deemed to be a representation and warranty by Providence as to the statements made therein. i. The execution, delivery, or performance of this Agreement or consummation of the transactions contemplated by this Agreement or compliance by Providence with any of the provisions of this Agreement will not violate any statute (including Alaska's Certificate of Need laws), rule, regulation, ordinance, code, order,judgment, ruling, writ, injunction, decree, or award. 24. Representations and Warranties of the City. The City hereby represents and warrants that neither the execution, delivery or performance of this Agreement nor the consummation of the transactions contemplated by this Agreement, nor compliance by the City with any of the provisions of this Agreement, will: a. violate or conflict with any provision of Seward's City Charter or the Seward City Code; b. violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice and/or lapse of time, would constitute a default) under, terminate, accelerate the performance required by, or result in a right of termination or acceleration under any of the terms, conditions or provisions of any material contract, plan, indebtedness, note, bond, indenture, security or pledge agreement, commitment, license, lease, franchise, permit, agreement, or other instrument or obligation (i) to which the City is a party or (ii) by which the assets relating to PSMC are bound; or c. violate any statute (including Alaska's Certificate of Need laws), rule, regulation, ordinance, code, order,judgment, ruling, writ, injunction, decree or award. 25. Parties in Interest.Nothing in this Agreement expressed or implied is intended or shall be construed to confer upon any person, other than the parties hereto, any right, remedy or claim, legal or equitable, under or by reason of this Agreement, this Agreement being intended to be and being for the sole and exclusive benefit of the parties hereto. 26. Confidential Information. Providence shall comply with all laws, regulations, directives or requirements in any form related to operating and managing hospitals and long- term care facilities, including, but not limited to the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), and regulations adopted under HIPAA. The City shall not have access to Protected Health Information as defined by HIPAA. City has read 45 C.F.R. 164.504(e), understands Providence's position is that 45 C.F.R. Page 14 of 17 229 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD 164.504(e) applies to this Agreement, and that Providence therefore has the following obligations: Providence agrees to hold all individually identifiable patient health information ("Protected Health Information") that may be shared, transferred, transmitted, or otherwise obtained pursuant to this Agreement strictly confidential, and provide all reasonable protections to prevent the unauthorized use or disclosure of such information, including, but not limited to the protection afforded by applicable federal, state and local laws and/or regulations regarding the security and the confidentiality of patient health care information. Providence further agrees to make every reasonable effort to comply with any regulations, standards, or rules promulgated pursuant to the authority of the HIPAA, including those provisions listed below, as soon as possible. Providence may use and disclose Protected Health Information when necessary for Providence's proper management and administration (if such use or disclosure is necessary), or to carry out Providence's specific legal responsibilities pursuant to this Agreement. Specifically, Providence agrees as follows: ( 1)to maintain safeguards as necessary to ensure that the Protected Health Information is not used or disclosed except as provided herein; (2) to mitigate, it possible, any harmful effect known to Providence of a use or disclosure of Protected Health Information by Providence; (3) to ensure that any subcontractors or agents to whom it provides Protected Health Information will agree to the same restrictions and conditions that apply with respect to such information; (4) to make available respective internal practices, books and records relating to the use and disclosure of Protected Health Information to the Department of Health and Human Services or its agents; (5) to incorporate any amendments or corrections to Protected Health Information when notified that the information is inaccurate or incomplete; (6)to return or destroy all Protected Health Information that Providence still maintains in any form and not to retain any such Protected Health Information in any form upon termination or expiration of this Agreement, if feasible or, if not feasible, Providence agrees to limit any uses of Protected Health Information after this Agreement's termination or expiration to those specific uses or disclosures that make it necessary for Providence to retain the information; (7) to ensure applicable policies are in place for providing access to Protected Health Information to the subject of that information; (8) if requested by the City, report to City any use or disclosure of Protected Health Information which is not provided for in the Agreement; and(9)to make Protected Health Information and an accounting of disclosures available to the individual who is the subject of the information or to City, to the extent required by HIPAA. Breach of this section shall be considered material. 27. Access to Books and Records. Pursuant to 42 U.S.C. Section 1 3995x(v)(1 ), until the expiration of four (4) years after the furnishing of services under this Agreement, Providence shall make available and provide copies to the City, upon written request by the Comptroller of the United States Department of Health and Human Services, or upon request by the Comptroller General of the United States General Accounting Office, or any of their duly authorized representatives, a copy of this Agreement and such books, documents and records as are necessary to certify the nature and extent of the services furnished by Providence under this Agreement. If Providence carries out any of its duties Page 15 of 17 230 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD under this Agreement through a subcontract, with a value or cost of ten thousand dollars ($10,000) or more over a twelve (12) month period, with a related organization of Providence, such subcontract shall contain a clause to the effect that until the expiration of four (4) years after the furnishing of such services pursuant to such subcontract, the related organization shall make available and provide copies to the City, upon written request by the Secretary of the United States Department of Health and Human Services or upon request by the Comptroller General of the United States General Accounting Office, or any of their duly authorized representatives, a copy of such subcontract and such books, documents and records as are necessary to verify the nature and extent of such costs. 28. Miscellaneous. a. This Agreement constitutes the entire agreement between the parties with respect to the Property and operation of PSMC. Any prior representations and agreements are of no effect except to the extent provisions of the Prior Agreement survive termination by its terms.No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the City or Providence unless reduced to writing and executed by the parties. b. This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska, and venue for all disputes shall be in Anchorage, Alaska. c. If any term, covenant or condition of this Agreement, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to other persons and circumstances shall be valid and enforceable to the fullest extent permitted by law. d. The terms, covenants and conditions hereof shall be binding upon and shall insure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. e. One City resident will be eligible to participate as a voting member on the Providence Alaska Region Community Ministry Board which will vote on the operations of PSMC. f. Nothing in this Agreement expressed or implied is intended or shall be construed to confer upon any person, firm, or corporation, other than the parties hereto, any right, remedy or claim, legal or equitable, under or by reason of this Agreement, this Agreement being intended to be and being for the sole and exclusive benefit of the parties hereto. g. Nothing in this Agreement, and no performance of either party hereunder shall cause the relationship of the parties to be that of principal and agent, partners, or joint venturers, or cause the parties to be associated in any manner other than as independent contractors. h. The parties to this Agreement will perform their obligations hereunder consistent with applicable federal, state and local laws. Page 16 of 17 231 DocuSign Envelope ID: DFAF177E-CBE6-4328-96DB-E179A80144AD In witness whereof, the parties have caused this Agreement to be executed by their duly authorized representatives as of the dates set forth below. AGREED TO BY AND BETWEEN: FOR CITY OF SEWARD: Norm Regis,Acting City Manager Date FOR PROVIDENCE HEALTH & SERVICES-WASHINGTON DBA PROVIDENCE HEALTH& SERVICES ALASKA: DocuSigned by: ,S�l 7/20/2023 'Jelski, Administrator-PSMH/PSMC Date rDocuSigned by: UL 7/21/2023 Wf62 RffliffiT5cecutive Director Date Real Estate & Strategic Operations -Alaska DocuSigned by: GbSS 7/21/2023 fia C oss,D1U'gional Chief Executive -Alaska Date Page 17 of 17 232 • Resolution 2023-095 A Resolution of the City Council of the City of Seward, Alaska, Authorizing the City Manager To Enter An Independent Contractor Agreement With Selena Soto for GIS Technical Services and Appropriating Funds Documents: • Agenda Statement • Resolution 2023-095 • Attachments: o Work Contract o Information/ Work To Be Completed o Flo Analytics GIS Needs Assessment 233 City Council Agenda Statement Meeting Date: August 14, 2023 `x To: City Council Through: Norm Regis,Acting City Manager From: Jason Bickling, Community Development Director Subject: Resolution 2023-095: Authorizing The City Manager to Enter An Independent Contractor Agreement with Selena Soto for GIS Technical Services and Appropriating Funds Background and justification: The City of Seward has contracted for GIS services for on number of small projects in the past 20 years or so at rates between $95 and $130 per hour. hi 2021,the City contracted with Flo Analytics to create a comprehensive GIS needs assessment of the current status and needs going forward of the City's GIS system. The summary of the GIS Needs assessment is that: - We need to have a full-time person dedicated to the tasks of cleaning up from the past and building our GIS for the future. - Across all departments,there was an articulated need for an accurate and modern GIS system. - An accurate,up to date GIS system will save the City significant money in worker efficiency as well as ensure the accurate information is being used for decision making. (The City is significantly behind compared to most other municipalities which is costing us time and money in efficiency.) We cancelled the work portion of the contract with Flo Analytics because the rate was $220/hour and our own internal employee (Selena Soto)could do higher quality work,more efficiently, at a significant savings. Selena will be moving, and we would like to continue to work with Selena and have her complete the projects that she has started. Her GIS skillset is not a common skillset which is why the city has contracted out for it in the past. We already know the rates that other entities that we have worked with charge. Selena has demonstrated a very high quality of work and efficiency in getting work done. If approved, Selena would continue to work as an integral part of the Community Development Department. She would provide monthly detailed reports on work completed which would be included in the Community Development CMR Report. By Code we cannot do more than a two-year contract. After two years,we would evaluate and could then enter another contract if both parties agree. The amount budgeted is a not to exceed amount and based on a$55 and hour rate for 40 hours a week for 50 weeks. This does not remove a union position. She was originally hired as a Department Admin but was reclassified to a GIS Tech. We will be posting for the department admin position in the near future. 234 Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: 3.2.2, 3.7.1.3 Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: S $110,000 (not to exceed amount) This legislation(✓): Creates revenue in the amount of: $ X Creates expenditure in amount of: $ 110,000 Creates a savings in the amount of: $ Has no fiscal impact Funds are (✓): Budgeted Line item(s): X Not budgeted Not applicable Fund Balance Information Affected Fund(✓): X General SMIC Electric Wastewater Boat Harbor Parking Water Healthcare Motor Pool Other Note: amounts are unaudited Available Fund Balance $ Finance Director Signature: Attorney Review X Yes Attorney Signature: Sam Severin Not applicable Comments: Administration Recommendation XeAdopt Resolution Other: 235 Sponsored by: Regis CITY OF SEWARD,ALASKA RESOLUTION 2023-095 A Resolution of the City Council of the City of Seward,Alaska,Authorizing the City Manager To Enter An Independent Contractor Agreement With Selena Soto for GIS Technical Services and Appropriating Funds. WHEREAS, According to the 2021 GIS Needs Assessment conducted by Flo Analytics, the City of Seward needs a full-time staff person dedicated to cleaning up, building, and maintaining our GIS system; and WHEREAS,According to the 2021 GIS Needs Assessment, there was an articulated need for an accurate and modern GIS system across all departments; and WHEREAS, Having an up to date and maintained GIS system will save the city significant money in worker efficiency and provide accurate information for decision making; and WHEREAS, over the last two years, Selena Sota has made significant progress in cleaning up our GIS and beginning to lay the groundwork for getting it up to date; and WHEREAS, Selena Soto has demonstrated her work ethic and ability to work well with all departments and go above and beyond what is required of her; and WHEREAS, the City wishes to continue our working relationship with Selena Soto in our GIS development. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City Manager is authorized to enter into an Independent Contractor Agreement with Selena Soto for GIS Technical Services. Section 2. Funding in the amount of$110,000. 00 is appropriated from the General Fund Unassigned Account Number 01000-0000-3400 to Contracted Services Account Number 01000-1122- 7009. Section 3. This resolution is effective upon adoption. 236 CITY OF SEWARD,ALASKA RESOLUTION 2023-095 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th day of August, 2023. THE CITY OF SEWARD,ALASKA Sue McClure, Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) 237 INDEPENDENT CONTRACTOR AGREEMENT The parties to this Independent Contractor Agreement ("Agreement") are Selena Soto ("Soto") and the City of Seward (the "City"). WHEREAS, Soto, as the current GIS Technician with the City will be leaving the state in the fall for personal reasons; and WHEREAS, Soto has been a significant asset to the city with exceptional performance in regard to the GIS work she has completed; and WHEREAS, Soto has proposed an agreement to continue her work on the GIS needs of the City as determined by the needs assessment conducted in the fall of 2021; and WHEREAS, the City desires to contract with Soto for this purpose. NOW, THEREFORE, the City of Seward and Soto agree as follows: 1. Professional Services Soto will contract as the City's GIS Technician to continue the work determined by the GIS needs assessment. Soto will be bound by all rules, policies, procedures, and ordinances about the position and its duties, including, but not limited to, City ordinances, state and federal law. Soto shall be directly supervised by Community Development Director Bickling and shall have such authority and responsibilities as may be delegated by the Community Development Director, consistent with City Code. The work will be conducted remotely; however, Soto is expected to be reasonable available during City work hours to answer questions, receive assignments, participate in meetings and to conduct work-related tasks. 2. Independent Contractor Status It is the intent of Soto and the City that Soto is and should be classified as an independent contractor and not an employee of the City. As such, Soto is not entitled to additional or procedural due process as may be applicable to City employees. Soto agrees to provide 1 238 the City with the appropriate tax identification information and assumes responsibility for reporting and withholding any and all income taxes. Soto will procure and maintain during the life of the contract professional liability insurance coverage to include coverage for errors and omissions, in a form and amount satisfactory to the City and have it on file with the City. 3. Compensation Soto will invoice the City bi-monthly for her services at the rate of $55 per hour up to a maximum of 40 hours per week for a maximum of 50 weeks a year. 4. Conflict of Interest Soto will devote full-time efforts to the position. Soto may accept or continue employment for other business entities during the term of this Agreement subject to meeting the performance obligations herein. In the event Soto learns of a potential conflict of interest, whether actual or perceived, Soto shall provide written notice of said conflict to the City Manager as soon as practical upon learning of the potential conflict. 5. Termination The City may terminate this Agreement at any time upon written notice. Termination may be for any reason or no reason and is at the sole discretion of the City. Upon termination, Soto shall be paid through the last day worked. Soto shall provide the City thirty (30) days written notice of her intent to terminate the Agreement; the City, at its election, may continue to retain Soto's services or terminate the Agreement effective immediately. In the event of such termination, Soto shall be entitled to compensation as stated herein, but no other benefits. 6. Term This contract shall not exceed two years. It may be evaluated and a new contract developed at that time. 7. Assignment Contractor may not assign or delegate this Agreement, or any part of it, except with the prior consent of the City. 8. Indemnification z 239 To the fullest extent permitted by law, Soto agrees to defend, indemnify and hold harmless the City of Seward, its elected and appointed officials, employees, and volunteers against any and all liabilities, claims, demands, lawsuits, or losses, including costs and attorney fees incurred in defense thereof, arising out of or in any way connected or associated with this contract. 9. Severability Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 10. Choice of Law and Forum Any controversy or claim arising out of or related to this Agreement, or the breach thereof shall be governed by the laws of the State of Alaska, and the venue for any legal proceedings thereon shall be the Superior Court for the State of Alaska, Third Judicial District, at Seward, Alaska. 11. Voluntary Execution Soto represents and acknowledges that prior to signing this Agreement, she has read the Agreement, understands its terms, conditions and provisions, and has voluntarily executed this Agreement without coercion. Soto additionally represents that she has had an adequate opportunity to consider entering into this Agreement, and if so desired, to discuss the terms conditions and provisions of this Agreement, as well as all related legal consequences, with an attorney of her choice. 12. Entire Agreement This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the performance of services by Soto and contains all of the covenants and agreements between the parties with respect to the rendering of such services in any manner whatsoever. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise. have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, or promise not 3 240 contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing signed by the party to be charged. DATED: Norm Regis Acting City Manager City of Seward DATED: Selena Soto 4 241 GIS Proposal: Work to be Completed Included: - Specific Needs and Recommendations from the Needs Assessment - Work already completed - Schedule of work to be completed Detail Excerpt of Needs and Recommendations from the Needs Assessment: From the needs survey.- City departments identified a significant amount of desired data and data improvements Overall, the majority of departments have outstanding data needs(capture and updates)and a need to know they are always using the latest data. Data should be stored in a single location, marked as authoritative,and contain sufficient metadata to assist users in understanding any specific requirements or restrictions around its use. Overall staff identified the following as high priorities • Improved spatial control and data accuracy for internal datasets: • Parcel accuracy improvements A ,parcel adjustment has been done that has markedly improved the locations of parcel lines along the highway corridors As the data moves away from the main roads, the quality of the data degrades and could benefit from ongoing improvements • Updated imagery. • Updated addresses—especially campgrounds,,parks, etc. • Data sharing between government organizations and internally. • Community gardens,,parks, cemeteries,,parking lots, trails • Infrastructure and utility datasets including meters, outfalls,,port, campgrounds • Easements • Setbacks • Leases • Ability to capture additional and temporary data as needed. • Automated generation ofMapBooks as backups • Emergency preparation data, tools, and processes • Custom datasets for specific purposes(e.g., harbor spill recording). Recommendations 1. Identify and address urgent data update requirements with data capture and update projects Consider using external resources to minimize impact on existing staff. Projects Include.- Fire Hydrants(generating lat/long values and unique IDs)and addresses • Attribute updates on all data • Pipe/flow direction • Leases and converting from MS Access to a GIS structure • Incorporating as builts 2. Update existing AGO map links that use external layers 242 3. Migrate GIS,project data to a network (mapping drive) and off the GIS workstation in preparation for workstation replacement or retirement 4. Update ,project data management from ,personal geodatabases to file geodatabases Archive obsolete data and maps 5. Prepare to move to service based editing over local data. • Prepare file geodatabase with domains, structure etc as needed to support data capture, field editing and synchronization • Prepare authoritative City data for upload to AGO, upload and set as authoritative, then archive local copies of the data. • Establish scripts to create a backup file geodatabase of AGO hosted data. • Review existing map documents and convert to ArcGIS Pro documents, or update file paths to the AGO backup file geodatabase if conversion is not possible. Archive any map documents deemed no longer necessary to maintain. 6. Review and document file structure, standards and naming conventions for map documents and GIS project data management Establish CAD file best practices and network locations 7. Build and automate mapbooks for regular pdf and paper map production requirements 8. Establish data specific sharing mechanisms Enter into discussions w1th the borough (and other external parties) regarding data sharing agreements, and (optionally) the possibility of the borough providing data hosting in their Enterprise environment Data owned and managed/updated by the borough should be accessed directly using GIS services If direct access is not available, automation of data updates from the external sources should be set up. 9. Review potential geodatabase replication and synchronization process for data in Public Works and offsite edits E. WORKFLOWS AND END USER REQUIREMENTS Findings In general, the GIS data flow has been to update AGO from locally edited and maintained datasets This workflow has not been effective for communicating needed changes, and it is difficult to know when updates were performed. In addition, some AGO-hosted data has received updates (notably electric, storm drain, and Public Works features) that have not been brought back into the local geodatabase(s). As a result, the datasets are not in sync. View-only and editable field data access is increasingly important Most departments have a use case for being able to edit or create features in the field and edit attributes themselves, but they do not have the resources to do this via the desktop GIS software. There is a clear need for specialized, task-centric web applications, particularly related to property(building inspections, easements,property lines, addresses, and streets). These need to provide easy search and filtering tools as well as other functions such as an easy way to access latitude and longitude coordinates via hover or click. Maps and data need to be available offline. Data accuracy information is required for decision-making and use. 243 The Harbor department would benefit from the ability to easily generate and capture GPS coordinates for spill response. This could be achieved via a GIS web/mobile application that allows the user to capture and classify an event or location and provide a log and tracking of related events The City relies heavily on paper records Because of this, staff experience delays when looking for Anding information. They are also uncertain what data are available. The City receives a considerable quantity of calls and requests for information from residents and visitors These can be substantial especially during the summer. Many of these requests may be mitigatable via self-service tools Address updates and creation. There is a clear need to ensure that all locations that may be required for E911 or other use should have an address assigned. These addresses should be sent to the Borough. Notable landmarks should be considered for addressing. Leases are managed across departments Leases and municipal lands data were consolidated in an access database for the Municipal Lands report. This database was on the GIS computer and has been inaccessible for some time so is not considered current CAD users require access to current GIS data to inform their work The City does want to ensure that CAD data representing final locations and attributes is brought back into GIS. The Electric Department is interested in an internal GIS app and field data collection tools to be able to see data and make edits in the field. There is an internal map and electric data that includes transformers and pictures Recommendations 1. Build personalized AGO maps and dashboards to provide task-based information and address specific work requirements (such as field data lookups or updates, providing a system overview, or quickly Anding property information). Each department will be in volved in defining the specifc needs and number of tools required. There are identirled requirements for., • Harbor spill tracking and mapping • Parks inventory and assets • Electric systems • Housing/planning tools • Code compliance • Hydrant map • Leases, easements etc. • Property viewers for all staff • Public self-service tools 2. Refine processes related to the cemetery, including data management and mapping tools 3. Evaluate parks department requirements for GIS support for the Asset Management Systems (AMS) being considered. GIS data will likely be required for effective 244 implementation and use, and there may be opportunities for electronic forms outside of work orders and maintenance. 4. Engineering and,project managers to ,nut,procedures in place to ensure undated as- builts are requested and,provided after each,project and subsequently,put into GIS. It is recommended that projects not be considered complete until GIS data loading, or as- built readiness review is completed. 5. Ensure address updates and changes are propagated to the relevant departments/authority and develop policies,procedures and training as needed. Work Completed: 2022 Work Year • Established a Mapping/GIS webpage to provide maps and mapping resources to the public o Created a Parks & Rec map for campgrounds, parks, and facilities o Created a Murals points of interest map o Created a Subdivision map • Updated imagery from the Kenai Peninsula Borough given to us in March of 2022 o Used in multiple ArcGIS Online (AGO) mapping applications as a basemap layer o Used in the Municipal Lands Management Plan for 2023 update • Updated and created more maps for the Municipal Lands Management Plan 2022 update • Created a heat map for Fire Department on emergency calls frequency • Finished mapping the City cemetery and created two maps for the public to use o Created new webpages for the cemetery maps • Identified a possible solution on how to share/store data with all departments via SharePoint 2023 Work Year • Attached as-builts and photos to Public Works data • Created a new mapping application for the Public Works office to be able to edit features and updated the public map to Esri's new mapping template (Experience Builder) • Purchased mobile field workers' licenses that allow Public Works personnel to update features in the field • Created a Master Address Table (MAT) and helped establish GIS flags for OpenGov 245 • Designed an address form to update addresses within city limits • Created static maps for different departments o Parks & Rec o Harbor — SMIC development plan maps • Created a Conditional Use Permits mapping application with permits/resolutions attached to features • Conducting a zoning and future land use map audit Work to be Completed: 2023 Work Year Continued • Update online zoning map to include ordinances/revisions and a future land use layer • Create a dashboard on zoning history • Design a new zoning map format to include all of city limits on one page for the Comp Plan review • Organize ArcGIS Online data and archive old datasets • Fix geodata and update geodatabases • Continue creating instructions for departments on how to use certain mapping applications • Update fire hydrants data with Fire Department's ESO software • Work on setting up an internal utility network map for Public Works and Fire Department data (flow/direction of utilities) • Work on creating a leases map • Create an address locator and check that all addresses are up to date in MSAG/KPB • Create a map with mosaic imagery from aerial imagery from the 1970s-1990s • Start working on moving items to SharePoint • Help create maps for the Cemetery Master Plan • Maintain zoning updates, cemetery databases, OpenGov updates, Municipal Land Management Plan updates • Other departmental needs that may come up 2024 Work Year • Continue working on utility network for Public Works/Fire department o Create inspection forms if needed o Find free online trainings available for staff to use software • Finish setting up an open data portal for the public to download shapefiles/data • Move items such as property files over to SharePoint for departments to access and easily search for documents 246 • Work on Emergency Operations maps and processes o FEMA/Haz - Floodplain mapping updates o Harbor Spill Map o EOC maps o Streams flow/direction, surface water flow/direction • Update maps for Comp Plan Review (water/sewer, zoning, etc.)/Strategic Plan • Start and continue working on ROW/Easements solutions o Create a public mapping application • Organize GIS Mapping Drive and consolidate data • Maintain other GIS tasks, help with other GIS departmental needs that may come up 2025 Work year • Continue working on ROW/Easements solution o Create a public mapping application • Continue moving items to SharePoint and making documents easy access and search • Look into grants for lidar/any other GIS projects o If lidar data becomes available for the City: ■ Viewshed analyses ■ Site selection analyses • Create a building layer/update it with accurate information • Create other custom maps for departments, organizations, public o Map of National Registry of Historic Sites o Story map for Comprehensive Plan o Story map for a possible cemetery walking tour (collaborate with HP) o Mobile vendor map o Building Permits map o Violations/Code Enforcement map o Ownership map (state, city, private lands, etc.) • Maintain other GIS tasks/Open Data Portal, help with other GIS departmental needs that may come up • Create more instructions for staff and find any helpful trainings through Esri • Create scripts to help automate certain GIS tasks 247 ,aw�� Rnalytics FLOMEMORANDUM To: Courtney Bringhurst, Jason Bickling Date: February 24, 2022 From: Grant Herbert, Gary Greenberg Project No.: F1948.01.001 RE: City of Seward GIS Needs Assessment The purpose of the Geographic Information System (GIS) needs assessment is to better understand the necessary requirements for further optimizing and integrating GIS at the City of Seward, Alaska (City). The findings can be used to guide recommendations, priorities, and actions for implementing both short- and long-term GIS program implementation tasks. The needs assessment includes the following discussion topics: • Understanding the City's short-and long-term general goals and objectives. • Evaluating personnel resources and responsibilities. • Evaluating the current use of GIS and GIS adjacent relevant software technologies. • Identifying relevant spatial data repositories and needs. • Evaluating hardware, server, and network resources, including mobile devices. A series of interviews were held with City staff and associated parties during October 2021. A list of participants is provided below: • Courtney Bringhurst(Community Development Planner) • Jason Bickling(Community Development Director) • Dustin Phillips (IT Director) • Patrick Burnett(Electrical Field Engineer) • Clinton Crites (Fire Chief) • Marcus Mueller (Kenai Peninsula Borough Land Management Officer and GIS Manager) • Derek Haws (Kenai Peninsula Borough Addressing Officer) • Bobbi Lay(Kenai Peninsula Borough GIS Specialist) • Celina Robinson (Kenai Peninsula Borough GIS Specialist) • Matt Chase (Deputy Harbormaster) • Tyler Florence (Parks & Recreation Director) • Doug Schoessler (Public Works Director) • Nate Crossley (Building Official) The purpose of these interviews was to better understand the current use of GIS tools, GIS, and other data available to the organization, and establish the desired GIS state. Our findings are summarized in this document and accompanied by recommendations in both descriptive and table form. To the extent possible, our recommendations have been aligned with what we perceive to be City's general short- and long-term priorities and goals, use the software technologies the City is currently using or would like to better leverage, and keep the needs of the City's various users in mind. FLOANALYTICS 1 1-888-847-0299 1 WWW.FLO-ANALYTICS.COM R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 2418ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.01.001 February 24, 2022 Page 2 Abbreviations and Acronyms AGO ArcGIS Online Borough Kenai Peninsula Borough CAD computer aided drafting City City of Seward, Alaska GIS Geographic Information System AMS Asset Management System GOALS AND OBJECTIVES Based on conversations during the project kickoff meeting and subsequent interviews, it is our understanding that the City has several priorities related to furthering its internal GIS program. In general, the organization aims to: • Improve business processes • Capture institutional knowledge • Reduce City departmental data silos • Ensure the use of common data across all applications • Establish departmental data responsibility and data management • Have GIS be compatible with future applications RECOMMENDATIONS OVERVIEW The City has a vision to provide self-service public tools, and access to accurate and up-to-date information to all staff whether in the office or field, that is compatible with other systems. This can only be achieved with a comprehensive web application platform with centralized data. As the City currently has Esri licenses and familiarity, we believe that AGO offers the best cost-benefit option available related to internal management capacity. Using AGO for authoritative data storage, map hosting, and field data access and capture, and moving to online applications will enhance public and departmental access to data, capture institutional knowledge, and consolidate data editing and management. Departments will have agency and ownership over their data without requiring advanced GIS skills. Users and applications will connect directly to authoritative web services to ensure a single point of GIS truth and reliable up to date information. Task specific tools and dashboards will provide better data access, self service capabilities and enable staff to make field data updates directly. GIS project work can be carried out on network and local GIS resources, with any authoritative data being promoted to the AGO environment as needed. A series of data update projects will be required to ensure data is current. Establishing departmental data stewardship and documenting data management practices will help ensure that data remains up to date in the future, particularly as-builts and internal data capture efforts. Additional users will need to be purchased in the AGO environment to handle field workers and editors, however these are considerably cheaper than self-hosted alternatives. A scripted download of AGO data to a file geodatabase can serve as a backup and source for map documents that must remain ArcMap based for the interim. GIS specialists will migrate to using ArcGIS Pro (with training) and convert old map documents as needed. A relationship with a consulting firm is recommended to provide greater GIS capacity and support as required. Completion of all the recommendations in this document will result in the development of comprehensive GIS based tools available to all staff and the public, with editing capabilities and R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 2489 es, 8 ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.01.001 February 24, 2022 Page 3 additional analysis available as needed. This system will provide for easier data and staff continuity, reduce institutional knowledge silos, and be easier for the City and external partners to support. Sharing of authoritative data between entities will improved data trust and decision making A. PERSONNEL RESOURCES AND ROLES Findings The City has experienced sufficient staff turnover and loss of institutional knowledge. This has impacted the ability of departments to easily manage their data responsibilities and handle transitions. Departments are putting in place tools and processes to address some of these issues, but the efforts are not centrally coordinated. In addition to staff turnover, the City has a seasonal workforce that increases during the summer. Onboarding the seasonal staff requires simple and clear processes so people can get up to speed quickly and be effective. No staff have been specifically dedicated to maintaining GIS data and systems, but traditionally Community Development has had GIS trained staff and equipment available and provided some degree of GIS resources (especially printing large-format maps). Overall, most departments reported that they had insufficient resources to handle the data updates required to get (and keep)their data up to date. Historically,the City has used external contractors to handle GIS data updates and specific projects, but this has been more sporadic in the recent past few years due to turnover. Contractor support was traditionally regular and planned to ensure quality and currency of data. City staff have varying amounts of GIS expertise,with the majority having minimal exposure, butthere is a willingness to learn how to update and manage their data and to use electronic systems where these provide a benefit.The City's strong preference is for mobile and web map tools in many departments for ease of use and flexibility in data access. Overall, departmental staff desire to be capable of making GIS edits directly with training in the use of appropriate tools.Some departments do not have any potential GIS resources. Departments may have split responsibility for facility management, and poor interdepartmental communications and inconsistent data access has caused errors and issues. Data management responsibilities may be poorly defined. One example is managing the cemetery, which currently involves the city clerk (for gravesite purchases) and Parks & Recreation (that maintains the cemetery and are notified where people are to be buried). Currently, any GIS and attribute data updates related to the cemetery require Community Development resources. Another example is lease management which is decentralized. Departments are frequently reliant on asking other departments to provide up- to-date information, and important details like data quality and completeness are often unknown. Overall, the City gets a significant number of calls from the public requesting information about City facilities and processes, particularly during the summer. Departments have instituted new processes and systems to help address this, such as the Parks & Recreation use of camp spot to handle campground reservations (although they still must handle cancellations via telephone).The volume of calls can be a significant workload for departments, and all expressed a desire to provide self-service options. Kenai Peninsula Borough (the Borough)is a significant partnerto the City in the management of shared GIS data. Although they have more resources than the City, the Borough states they do not have personnel resources available to assist the City. The Borough recognizes data sharing across organizations is essential. This is most significant for Addressing and a-911 where each City is the local addressing authority and the Borough is responsible for maintaining the Borough wide e-911 system. The Borough desires to coordinate GIS data and processes between the City, Borough and state (via the new State of Alaska Geospatial Information Officer)to promote standardization. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 250ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.01.001 February 24, 2022 Page 4 Recommendations 1. Identify GIS training required (particularly related to the move to ArcGIS Pro)for internal staff and budget for yearly training updates. 2. Contract with external GIS contractors to fill skills gaps, quickly implement data updates and provide GIS support as needed. 3. Establish Departmental data governance policies and personnel. This includes defining the department responsible for specific GIS data updates (receiving updates or creating new data) and the staff who undertake the data updates (this can be delegated). 4. Data sharing and data management conversations between borough, city and state as applicable. B. GIS SOFTWARE AND TOOLS Findings • Esri ArcGIS Desktop. The City has two ArcGIS Desktop Basic licenses (one in Community Development and one in Public Works). The departments manage and fund the GIS licenses. • Esri ArcGIS Online (AGO). The City has two logins for AGO (based on their current ArcGIS Desktop licenses) and the platform is working well for most staff. Currently there are electric,water and sewer, cemetery and zoning applications available on the City's GIS and Mapping Portal (https://seward.maps.arcgis.com/home/index.html), although there are several external links to layers that are no longer working. • FIREHOUSE Software.The City is replacing the existing fire software with ESO Fire Records Management System software. • ESO Fire Records Management System.The Fire Department is implementing the ESO Fire RMS software (https://www.eso.com/fire), and this is expected to be operational in January. The system will handle building and life safety inspections and hydrant activity. The system does not receive data from the Borough.An application programming interface is available to query the system if needed (e.g., extracting the last 20 updated incident records)and can supply data in XML or JSON formats.There is no GIS integration at present but the system can display hydrant locations if latitude and longitude fields are included in the import. • Autodesk AutoCAD 3D Mapping 2021 is used by the Electric Department to capture location and as-built information. • Microsoft SQL Server. The City has an installation of Microsoft SQL Server (slated for upgrade soon) but would need to establish a new SQL Server instance if required to support an Enterprise GIS. • The City uses Laserfiche document management software to store and make available City documents. Aweb portal is available. • OpenGov. The City Clerk's office uses OpenGov Online cloud platform. • Harmari.A cloud-hosted system for monitoring short term rental compliance (also used by Kenai Peninsula Borough). • Google Maps. Used by Parks & Recreation to provide public information via Google Business listings that link to the City website. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 25PTent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.01.001 February 24, 2022 Page 5 • The Borough is undertaking an internal GIS update to Esri Enterprise 10.9. The Borough uses GeoCortex internally and has SQL Server Enterprise geodatabases. GIS Services provided by the Borough have been used for City web maps. • onX Hunt application. This mobile application is popular with City staff as it has better imagery than most applications, shows property lines, and works offline. Recommendations 1. Add additional AGO users for individual Iogins for all departments that require editor capabilities or above. Individual Iogins are recommended for security reasons. If desired,AGO Iogins could be connected to the City Active Directory to provide for a more seamless login experience. At the time of evaluation Esri yearly pricing for AGO users is: Creator: $500, Field Worker: $350, Editor: $200, and Viewer: $100. Suggested additional AGO Licensing by department is below: a. Seward Electric - 1 Field Worker License b. Parks and Recreation - 1 Field Worker License c. Harbor - 1 Field Worker License d. Fire Department - 1 Field Worker License e. Community Development - 1 Viewer License f. City Manager - 1 Viewer License g. Police - 1 Viewer License 2. Upgrade the community development ArcGIS license level from Basic to Standard to ensure accurate editing and data management. 3. Ensure Esri ArcGIS licenses remain under maintenance to keep access to ArcGIS Pro. 4. Confirm the procedures for required data flows between the ESO RMS and GIS. Undertake a project to fully evaluate the ESO RMS API for extracting inspection and test data for GIS linking and visualization if needed. C. HARDWARE,SERVER,AND NETWORK RESOURCES,AND MOBILE DEVICES Findings The City Information Technology department reports that, if required,they have sufficient resources to accommodate additional virtual servers to support GIS activities. There is sufficient network storage space for anticipated data needs. The City is comfortable with either on-premise or cloud-based solutions. Currently, the primary GIS machine (a Dell Precision GIS Workstation that is due for replacement) is located in Community Development. City office computers generally have 15 processor, 16GB memory, and an integrated Graphics Processing Unit and are not suitable for heavy GIS software use, but are fine for GIS web applications. Community Development is in the process of moving into City Hall from the existing annex building, which is expected to improve their general network speed. Public Works is in a satellite building with good connectivity.A site-wide virtual private network handles secure connections to the network. Office internet access has improved over the past three to four years, and further enhancements are planned. Internet access in the field can be variable, and apps and data access require offline capability. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 252ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.01.001 February 24, 2022 Page 6 The City budgets separately for mobile devices and departments request them on a case-by-case basis. Departments prefer to use Apple iPads. A large-format plotter is available in Community Development for in-house printing. The plotter is connected to the network. Recommendations 1. Local GIS editors should have a computer with GPU (required for Pro).With only two staff likely to require access to GIS software directly it may be more cost-effective to provide computers of sufficient capability and retire the GIS workstation. If the workstation is still required (particularly for occasional/remote access), ensure that the system requirements are sufficient for ArcGIS Pro and that workstation access can be provided remotely for users. With AGO hosted data many users will be able to use web and mobile applications for data edits and creation. Project data will be managed locally and stored on the network. D.SPATIAL AND NONSPATIAL DATA REPOSITORIES Findings Almost all spatial data created by the City is considered public and freely accessible. The City has significant dependencies on data provided by external entities, especially the Kenai Peninsula Borough. The City AGO account hosts a number of datasets, but updates have been infrequent, and the data are generally of uncertain provenance. There are several broken external data layer links to Borough GIS Services that need to be repaired—these data are very important and used by all departments. The City uses a mix of personal and file geodatabases to store data. Copies of these geodatabases are used by departments (particularly Public Works)to get around network issues they experienced. The Community Development geodatabase is located on the GIS workstation computer while the Public Works geodatabase is located on their server.The M (mapping) drive location is currently shared from the GIS workstation in Community Development. We were unable to establish if there is a backup process. Existing M mapping drive structure and contents are shown below: R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 251ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.O1.001 February 24, 2022 Page 7 Figure 1: Mapping Drive Folder Structure i]`5c _-]"C ni::;r CJ Type Size 2019 �AVZ3249:A6AM Filefolder 9555bca012933d2504d16724E4e 9/112020&52PM Filefolder Bringhurst 10IT12WI1;27PM Filefolder Dalabase 11122120di 10:54AM He folder Eng-GIS_Final E11412019Z-21PM Filefolder EXPRESSIONS 101121202012d14 PM Filefolder Geodata 1112.2120211&54AM Filefolder Imagery V41201610;37 AM Fire folder Maps 3/1 31201 6 9-58 AM File folder profiles from c Q1412619 2!15 PM Filefolder RecordDrawings I1115120211QZ9AM Filefolder Selena 1V2./2CF2111:31AM Filefolder Support 5/512016 5:37 PM Filefolder TEMP 1 d13120N 3;23 PIM1 File folder dfirm-2-I9 1011SJMb0 2:11.6 PM JPG File 156 KE dfinn-4-I9 1011W2024 2•138 PM JPG File 255 KO IN fort raymond whrte 912512017 3,30 PM Microsoft Edge P... 662 Itfl Q fort roymond 9125120171;40 PM ArcGISAr€Map D,-, 1,115 Ke IW fort reymond 917512017139 PM Mimsofr Edge P-.. 3,457 IU hops 1Qlt$+20262:1d PM Microsoft Word D_,. 27 Q j tJnhdled 1011&+213201,42 PM JPG File M KB Figure 2: Mapping Drive Database Folder with Planning Personal Geodatabase piny i;M:j Database Name Date modified Type Size 12 CityParcels 7/24/20132:33 PM Microsoft Excel C,,, 4B KB In IutZoningLanduse 11/71201 3 1 1:41 AM Microsoft Excel C,,, 1 KB FJ IutZoningLanduse 11/71201 3 1 1:41 AM XML Document 1 KB Muni Lands Plan2009withcorrections.DR... 7/24/20132:33 PM Microsoft Word 9... 1,029 KB schema 1 1/71201 3 2:22PM Configuration sett... 1 KB LJ SewardPlanningDatabase,Idb 12/212021 11:36 AM LDB File 1 KB FJ SewardPlanningDatabase.mdb 11/29/2021 10:49AM MDB File 1,052 KB In tblLanduse 11/7/201 3 2:22 PM Microsoft Excel C,,, 7 KB Figure 3: Mapping Drive Imagery Folder with File Geodatabase ping(U) > Imagery Name Date modified Type Size Aerial-photos 7/16/2020 2:23 P M Filefolder Q LiDARW 3/1 3/201 6 9:36AM Filefolder Q Murals 3/1 3/201 6 9:36AM Filefolder D SBCFSA-Deliverables 7/16/2020 2:37 P M Filefolder D Seward_Imagery,gdb 121212021 11:51 AM Filefolder SewardHope 3/1 3/201 6 9:47AM Filefolder D tiff 3/1 3/201 6 9:55AM Filefolder R:\1`1948.01 City of Seward\Document\001_2022.02.24 Needs 254ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.O1.001 February 24, 2022 Page 8 Figure 4: Mapping Drive Geodata Folder with Personal Geodatabase loping(M:) > Geodata Name Date modified Type addresses 11/9/2021 5:33 PM Filefolder AsBullt 3/1 3/201 6 9:33AM Filefolder cemetery 8/15/2017 2:17 P M Filefolder census 7/6/2021 12:50 PM Filefolder ChugachNationalForest 3/1 3/201 6 9:33AM Filefolder DFIRM 2 3/13/2016 9:33 AM Filefolder Electric 11/20/2013 1:53 PM Filefolder FEMA 1 0/1 21201 5 2:41 PM Filefolder GPS 10/15/2020 2:57 P M Filefolder KPBData 6/4/2019 4:40 P M Filefolder Lease 3/1 3/201 6 9:34AM Filefolder Levee 3/1 3/201 6 9:34AM Filefolder MiscRoadsData 2,/1/201$11:46AM Filefolder smic 11/291202110:47AM Filefolder soil_ak639 3/13/2016 9:34 AM Filefolder StateofAlaska 3/1 3/201 6 9:34AM Filefolder Tsunami_Innundation_Maps 3/1 3/201 6 9:34AM Filefolder Control 11/1 91201 4 2:32 PM Microsoft Excel97,,. 25 K6 schema 3/30/2017 11:03 AM Configuration sett... 2 KB Seward Geodata.ldb 121212021 11:36AM LDB File 1 KB Seward_Geodata.mdb 12/1/2021 2:51 PM MDB File 149,252 KB Y Seward-Geodata 10/4/2021 2:12 PM Compressed[xipp.., 62,449 KB 1p UnplacedBurials 3/30/2017 11:03 AM Microsoft Excel C,.. 124 KB UnplacedBurials.txt 3/30/2017 11:03 AM XML Document 13 K6 IM UnplacedBurials 3/30/201711:11 AM Microsoft Excel W... 90 KB Data location accuracy and spatial control has been a big issue in the past, particularly related to parcel boundaries. Projects to improve spatial accuracy have improved the situation, but not all datasets may have been adjusted fully. Overall, the data quality, accuracy, and completeness are considered low. Many datasets need to be further evaluated to determine if additional attributes are required. The Borough is the platting authority and is responsible for parcels. It has processes to keep these up to date with assessment and other attributes. The Borough also updates emergency management data by inputting updates received from cities and pushing the combined data to emergency services. Managing street data involves receiving notification from the City, approving street names, and generating the GIS features and attributes. These are also fed into the network dataset used for emergency dispatch. Address range information is applied differently between City and Borough streets. Addresses are a shared responsibility between the City and Borough, with address points maintained by the Borough and submitted by the cities through an online tool. Other spatial data are generally stored in computer aided drafting(CAD)files, paper charts, and maps, which may be digitized and available in Laserfiche. CAD files may not be georeferenced, or use local coordinate systems. In addition, data captured was referenced to old parcel locations and so these are now out of position spatially and will need to be corrected. CAD staff generally do not access GIS data in the software.Some personal CAD files were used in the past, and an unknown number of these are reported as being lost. Parks& Recreation has some informal work-task maps, a Google Earth map of snow clearing areas, and paper maps. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 255ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.O1.001 February 24, 2022 Page 9 The City gets and provides some information from the Borough E911 system, but this process appears to be informal. Departments reported that they would like access to more data from the City E911 system. Some datasets may require renumbering or identifying, such as hydrants. They use a numbering system from previous firehouse software that does not match the sequential numbering used by Public Works. There is a significant amount of nonspatial data, generally managed in systems like Excel, or as documents in Laserfiche. This includes various numbering system tracking sheets, headstone data, and building inspection records(since 2013). Leases and municipal lands data were consolidated into a Microsoft Access database for reporting. This data has not been updated and the data is not generally accessible to all as it is hosted on the GIS workstation. Data Wish List City departments identified a significant amount of desired data and data improvements. Overall, the majority of departments have outstanding data needs (capture and updates)and a need to know they are always using the latest data. Data should be stored in a single location, marked as authoritative, and contain sufficient metadata to assist users in understanding any specific requirements or restrictions around its use. Overall staff identified the following as high priorities: • Improved spatial control and data accuracy for internal datasets. • Parcel accuracy improvements. A parcel adjustment has been done that has markedly improved the locations of parcel lines along the highway corridors.As the data moves away from the main roads, the quality of the data degrades and could benefit from ongoing improvements. • Updated imagery. • Updated addresses—especially campgrounds, parks, etc. • Data sharing between government organizations and internally. • Community gardens, parks, cemeteries, parking lots, trails. • Infrastructure and utility datasets including meters, outfalls, port, campgrounds. • Easements. • Setbacks. • Leases. • Ability to capture additional and temporary data as needed. • Automated generation of MapBooks as backups. • Emergency preparation data, tools, and processes. • Custom datasets for specific purposes (e.g., harbor spill recording). Recommendations 1. Identify and address urgent data update requirements with data capture and update projects. Consider using external resources to minimize impact on existing staff. Projects include: • Fire Hydrants (generating Iat/long values and unique IDs)and addresses • Attribute updates on all data • Pipe/flow direction • Leases and converting from MS Access to a GIS structure • Incorporating as-builts 2. Update existing AGO map links that use external layers. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 256ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.01.001 February 24, 2022 Page 10 3. Migrate GIS project data to a network (mapping drive) and off the GIS workstation in preparation for workstation replacement or retirement. 4. Update project data management from personal geodatabases to file geodatabases. Archive obsolete data and maps. 5. Prepare to move to service based editing over local data. • Prepare file geodatabase with domains, structure etc. as needed to support data capture, field editing and synchronization • Prepare authoritative City data for upload to AGO, upload and set as authoritative, then archive local copies of the data. • Establish scripts to create a backup file geodatabase of AGO hosted data. • Review existing map documents and convert to ArcGIS Pro documents, or update file paths to the AGO backup file geodatabase if conversion is not possible. Archive any map documents deemed no longer necessary to maintain. 6. Review and document file structure, standards and naming conventions for map documents and GIS project data management. Establish CAD file best practices and network locations. 7. Build and automate mapbooks for regular pdf and paper map production requirements. 8. Establish data specific sharing mechanisms. Enter into discussions with the borough (and other external parties) regarding data sharing agreements, and (optionally) the possibility of the borough providing data hosting in their Enterprise environment. Data owned and managed/updated by the borough should be accessed directly using GIS services. If direct access is not available, automation of data updates from the external sources should be set up. 9. Review potential geodatabase replication and synchronization process for data in Public Works and offsite edits. E.WORKFLOWS AND END USER REQUIREMENTS Findings In general, the GIS data flow has been to update AGO from locally edited and maintained datasets. This workflow has not been effective for communicating needed changes, and it is difficult to know when updates were performed. In addition, some AGO-hosted data has received updates (notably electric, storm drain, and Public Works features) that have not been brought back into the local geodatabase(s). As a result, the datasets are not in sync. View-only and editable field data access is increasingly important. Most departments have a use case for being able to edit or create features in the field and edit attributes themselves, but they do not have the resources to do this via the desktop GIS software. There is a clear need for specialized, task-centric web applications, particularly related to property (building inspections, easements, property lines, addresses, and streets). These need to provide easy search and filtering tools as well as other functions such as an easy way to access latitude and longitude coordinates via hover or click. Maps and data need to be available offline. Data accuracy information is required for decision-making and use. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 257ent\City of Seward GIS Needs Assessment.docx City of Seward Project No. F1948.O1.001 February 24, 2022 Page 11 The Harbor department would benefitfrom the ability to easily generate and capture GPS coordinates for spill response. This could be achieved via a GIS web/mobile application that allows the user to capture and classify an event or location and provide a log and tracking of related events. The City relies heavily on paper records. Because of this, staff experience delays when looking for finding information. They are also uncertain what data are available. The City receives a considerable quantity of calls and requests for information from residents and visitors. These can be substantial especially during the summer. Many of these requests may be mitigatable via self-service tools. Address updates and creation. There is a clear need to ensure that all locations that may be required for E911 or other use should have an address assigned. These addresses should be sent to the Borough. Notable landmarks should be considered for addressing. Leases are managed across departments. Leases and municipal lands data were consolidated in an access database for the Municipal Lands report.This database was on the GIS computer and has been inaccessible for some time so is not considered current. CAD users require access to current GIS data to inform their work. The City does want to ensure that CAD data representing final locations and attributes is brought back into GIS.The Electric Department is interested in an internal GIS app and field data collection tools to be able to see data and make edits in the field. There is an internal map and electric data that includes transformers and pictures. Recommendations 1. Build personalized AGO maps and dashboards to provide task-based information and address specific work requirements (such as field data lookups or updates, providing a system overview, or quickly finding property information). Each department will be involved in defining the specific needs and number of tools required.There are identified requirements for: • Harbor spill tracking and mapping • Parks inventory and assets • Electric systems • Housing/planningtools • Code compliance • Hydrant map • Leases, easements etc. • Property viewers for all staff • Public self-service tools 2. Refine processes related to the cemetery, including data management and mapping tools. 3. Evaluate parks department requirements for GIS support for the Asset Management Systems (AMS) being considered. GIS data will likely be required for effective implementation and use, and there may be opportunities for electronic forms outside of work orders and maintenance. 4. Engineering and project managers to put procedures in place to ensure updated as-builts are requested and provided after each project and subsequently put into GIS. It is recommended that projects not be considered complete until GIS data loading, or as-built readiness review is completed. 5. Ensure address updates and changes are propagated to the relevant departments/authority and develop policies, procedures and training as needed. R:\F1948.01 City of Seward\Document\001_2022.02.24 Needs 258ent\City of Seward GIS Needs Assessment.docx • Resolution 2023-094: Repealing Resolution 2023-058: Personnel Policy 2023-01 : Phone Use and Recording Policy Documents: • Agenda Statement • Resolution 2023-094 • Resolution 2023-058 • June 12, 2023 City Council Meeting Minutes 259 City Council Agenda Statement Meeting Date: August 14, 2023 `x To: City Council From: Norm Regis,Acting City Manager Subject: Resolution 2023-094: Repealing Resolution 2023-058:Personnel Policy 2023- 01: Phone Use and Recording Policy Background and justification: Seward City Code 3.05.015 A. 2. states the City Council shall adopt all personnel policies. City Council approved Resolution 2023-058:Adopting Personnel Policy 2023-01 on May 8th 2023. On June 12, 2023 City Council Directed the City Manager to draft a resolution to repeal personnel policy 2023-01: Phone Use and Recording Policy. The Acting City Manager worked with the City Attorney after this meeting to discuss repealing the policy. This resolution repeals Resolution 2025: Personnel Policy 2023-01: Phone Use and Recording Policy. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: Strategic Plan: Other: ertification of Funds Total amount of funds listed in this legislation: S 0 This legislation(✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ x Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted x Not applicable Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking Water Healthcare Motor Pool Other Note: amounts are unaudited Available Fund Balance $ 260 Finance Director Signature: No fiscal impact Attorney Review x Yes Attorney Signature: A r.J Sam Severin 7/28/23 Not applicable Comments: Administration Recommendation x Approve Res. Other: 261 Sponsored by: Regis CITY OF SEWARD,ALASKA RESOLUTION 2023-094 A Resolution Of The City Council Of The City Of Seward,Alaska, Repealing Resolution 2023-058: Personnel Policy 2023-01: Phone Use and Recording Policy WHEREAS, City Council approved Resolution 2023-058: Adopting Personnel Policy 2023-01 on May 8th 2023 ; and WHEREAS, On June 12, 2023 City Council Directed the City Manager to draft a resolution to repeal personnel policy 2023-01: Phone Use and Recording Policy. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA,that: Section 1. Resolution 2023-058 is hereby repealed. The Phone Use and Recording Policy adopted on May 8, 2023 is rescinded. Section 2. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska this 14th day of August, 2023. THE CITY OF SEWARD,ALASKA Sue McClure, Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Kris Peck City Clerk (City Seal) 262 CITY OF SEWARD,ALASKA Sponsored by: Bower RESOLUTION 2023-058 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA,ADOPTING PERSONNEL POLICY#2023-01: PHONE USE AND RECORDING POLICY WHEREAS, Seward City Code 3.05.015 A. 2. states the city council shall adopt all personnel policies; and WHEREAS,the city manager requests the city council adopt Personnel Policy#2023- 01; and WHEREAS, Personnel Policy #2023-01 provides the parameters and restrictions concerning phone use and surreptitious recording; and WHEREAS, the policy is applicable to all employees. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1.The Seward City Council adopts Personnel Policy#2023-01: Phone Use and Recording in its entirety as attached herein. Section 2. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 8cn day of May, 2023. THE CITY OF SEWARD,ALASKA Sue McClure,Mayor AYES: Calhoon, Barnwell, DeMoss, Osenga, Wells, Finch, McClure NOES: None ABSENT: None ABSTAIN: None 263 CITY OF SEWARD,ALASKA RESOLUTION 2023-058 ATTEST: /&J-(,-� Brenda J. Ballc City Clerk (C e,++�5 . 9�... .•'•� aRp°fir �4' G SEAL •On....� T�of ALP..•• 264 City Council Agenda Statement Meeting Date: May 8, 2023 To: City Council Through: Janette Bower, City Manager From: Tammy Nickell, Human Resources Manager Subject: Resolution 2023-058: Adopting Personnel Policy #2023-01: Phone Use and Recording Policy Background and justification: Seward City Code 3.05.015 A. 2. states the city council shall adopt all personnel policies and the city manager requests the city council adopt Personnel Policy #2023-01. Personnel Policy #2023-01 provides the parameters and restrictions concerning phone use and surreptitious recording the policy is applicable to all employees. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation (✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ ✓ Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted ✓ Not applicable Fund Balance Information Affected Fund (✓): General SMIC Electric Wastewater Boat Harbor Parking F1 Wat F1 Healthcare Motor Pool Other 2'65 Note: amounts are unaudited Fund Balance/Net position — unrestricted/unassigned $ n/a Finance Director Signature: Attorney ew ✓ Yes Attorney Signature: Not applicable Comments: Administration Recommendation Approve Res. Other: 2'� City of Seward Phone Use and Recording Policy Approved by City Council Resolution 2023-058 May 8, 2023 Personnel Policy #2023-01 Applicable to All Employees Phone Use and Recording Policy A. Phone use. 1. While at work, employees are expected to exercise discretion in using personal phones and smartphones. 2. Excessive personal calls or text messages or smartphone use during the workday can interfere with employee productivity and be distracting to others. 3. Employees are expected to make any personal calls and or text messages and personal use of smartphones during nonwork time when possible. B. Surreptitious recording with a phone or other audio or visual device is prohibited. 1. Surreptitious recording is defined as the video and/or audio recording, on any device, of clients, coworkers, other city employees, city manager, or city officials, without their knowledge, on or adjacent to the recorder's work time or the work time of the one being recorded. 2. Surreptitious recording is prohibited without the express prior written permission of the recording employee's supervisor, with violations subject to discipline up to or including dismissal for cause. 3. The sole exception to this prohibition is that employees who believe they have a legal right or a concerted activity right to surreptitiously record must notify, or have their legal or union representative notify, city management in advance of or concurrent with the start of any surreptitious recording. 4. Failure to do so will result in discipline or dismissal regardless of the eventual justification given for the surreptitious recording. 5. Video, photos, or audio recording in restrooms and/or locker rooms is strictly prohibited. 6. This policy does not prohibit employer-owned cameras from recording for business purposes. Personnel Policy #2023-01 May 8, 2023 Page 1 of 1 267 City of Seward,Alaska City Council Meeting Minutes June 12, 2023 Volume 42,Page 333 CALL TO ORDER The.tune 12, 2023 regular meeting of the Seward City Council was called to order at 7:00 p.m.by Mayor Sue McClure. OPENING CEREMONY Police Chief Alan Nickell led the Pledge of Allegiance to the flag. ROLL CALL There were present: Sue McClure, presiding, and John Osenga Liz DeMoss Mike Calhoon Randy Wells Kevin Finch Robert Barnwell comprising a quorum of the Council; and Norm Regis, Acting City Manager Stephen Sowell, Assistant City Manager Jason Bickling, Community Development Director Sully Jusino, Deputy Finance Director Tammy Nickell, Human Resources Manager Brooks Chandler, City Attorney Karen Corrigan, Acting Deputy City Clerk Excused—None Absent—None CITIZEN COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING Alan Nickell, outside city limits, stated he was the Police Chief and announced the grand opening for the animal shelter was held and they received an additional S818.11 for donations, thanked the citizens and appreciated the support. APPROVAL OF AGENDA AND CONSENT AGENDA Motion (OsengalDeMoss) Approval of Agenda and Consent Agenda Mayor McClure requested Action Memorandum 2023-006 to be removed from the consent agenda. Motion Passed Unanimous 268 City of Seward,Alaska City Council Meeting Minutes June 12, 2023 Volume 42,Page 334 The clerk read the following approved consent agenda items: Approval of the May 22,2023 City Council Meeting Minutes. Introduction of Ordinance 2023-016, Amending Seward City Code Chapter 5.20 Improvement Districts. Introduction of Ordinance 2023-017, Amending Seward City Code Chapter 2.15 Ordinances and Resolutions. Resolution 2023-070, Accepting The State Of Alaska, Healthy & Equitable Communities Grant In The Amount Of $49,162.00, Acting As A Pass-Through Agency For Seward Prevention Coalition And Appropriating Funds Proclamations and Awards-None City Manager Report Acting City Manager Norm Regis advised that the harbor had a second vessel sink in the harbor due to unknown causes and there was no fuel spill from it. Community Development Director Jason Bickling advised that preparation for a planning and zoning meeting required four staff members' time to prepare the materials and attend. He added there was an inconvenience when commissioners do not attend with no previous notice. Agenda items for the commission were delayed due to the cancellation of the meeting when a quorum cannot be met. Deputy Finance Director Sully Jusino said that the net billing is planned to be in use in July with the help of the company Utility Assist. Bickling stated that there were three short term rental businesses not currently licensed and his department was working with the owners to resolve the issue. Regis advised that the road construction on Third Avenue would be an inconvenience for the businesses during the day, but citizens complained that they cannot sleep at night due to construction noise. Electric Lineman Brian Thrall, said the generators leased for the Seward Industrial Marine Center project required additional workers to maintain them, thus overtime hours should be expected. [Utility Manager Rob Montgomery said that he believed the rate increase for electricity might be as high as 15%. City Clerk Report was in the packet. 269 City of Seward,Alaska City Council Meeting Minutes June 12, 2023 Volume 42, Page 335 City Attorney Report City Attorney Brooks Chandler clarified that executive sessions were appropriate for the city council to receive legal advice from the city attorney. Chandler added that actions by the city council would always be made in public and not in an executive session. Other Reports and Announcements Kenai Peninsula Borough Assembly Report was not presented. Presentations Presentation on updates from the Kenai Peninsula Economic Development District PUBLIC HEARINGS Ordinances for Enactment Ordinance 2023-015, Amending Seward City Code Title 5 Purchasing, Contracts and Professional Services (This ordinance was introduced on May 22, 2023, and was coming tonight for public hearing and enactment) Motion (DeMoss/BarnweII ) Enact Ordinance 2023-015 Regis requested the ordinance to be postponed, due to corrections required, until the city council meeting on July 10, 2023. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. No one appeared and the public hearing was closed. Motion (OsengalWells) Postpone Ordinance 2023-015 until July 10,2023 Motion Passed Unanimous Resolutions Requiring Public Hearing Resolution 2023-068, Updating the Municipal Lands Inventory and Management Plan to Include Recommendations to Improve and Designate Parking and Access at the Fourth of July Beach and Plat the Area into One Parcel and Rezone to Park. Motion (Osenga/DeMoss } Approve Resolution 2023-058 Bickling stated that funding would be required for the replating and rezoning costs. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. 270 City of Seward,Alaska City Council Meeting Minutes .Tune 12,2023 Volume 42, Page 336 Carol Griswold, inside city limits, spoke in support of the ordinance and stressed the importance to protect the area as a park and to provide increased parking for the public. No one else appeared and the public hearing was closed. Finch stated his support for this resolution. Motion Passed Unanimous Resolution 2023-069, Updating The Municipal Lands Inventory And Management Plan To Include Recommendations To Increase Day Use Parking At The Spring Creek Campground, Request An Easement To Maintain Beach Access To The North Of The Campground, And Plat The Area Into One Parcel And Rezone To Park Motion (DeMosslWells) Approve Resolution 2023-069 Bickling spoke on the point that access the area to the north was actually trespassing on private land and this resolution allowed for a conversation with the owners and to provide for better signage in the area. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. Carol Griswold, inside city limits, spoke in favor of the resolution and recommended a change to include the city owned beach in the language. No one else appeared and the public hearing was closed. McClure suspended the rules to allow discussion with Griswold on a graphical correction on a property line she suggested. The city council concluded that the graphical representation on property lines was correct. McClure went back on the rules. Motion Passed Unanimous UNFINISHED BUSINESS Resolutions Resolution 2023-046, Authorizing The City Manager To Enter Into A Recruitment Services Contract With GovHR In The Amount Of$30,000.00,And Appropriating Funds (This resolution was postponed on April 24, 2023) Regis requested to postpone until the July 10, 2023 city council meeting. 271 City of Seward,Alaska City Council Meeting Minutes .Lune 12, 2023 Volume 42,Page 337 Motion (OsengalDeMoss) Postpone Resolution 2023-046 until July 10, 2023 Motion Passed Unanimous NEW BUSINESS Action Memorandum 2023-006,Opposing KPB Ordinance 2023-11. Motion (DeMosslFinch) Approve Action Memorandum 2023-006 McClure advised that the memorandum was created due to possible borough legislation that would have eliminated the city's position on the borough's planning and zoning commission. However, the borough had revised their legislation and the city's seat on the commission was secured. McClure advised that the city council did not need to oppose this ordinance. Motion Failed Unanimous Other New Business Future Of The City of Seward Electric Utility Montgomery presented to the city council four options to consider for the electric utility: Option 1 — Do Nothing, Option 2 - Rebuild the Utility, Option 3 — Services Contract, Option 4— Place Sale on Future Ballot. At Barnwell's request, Montgomery elborated further on Option 2 — Rebuild the Utility. The additional six positions were required to properly operate the electric utility and perform the upgrades. Salaries needed to be increased to be competitive in the industry. Montgomery spoke on the aging infrastructure and replacement. He advised that another seven to eight million dollar bond would be needed to upgrade the system. Barnwell asked why Seward had difficulty being self reliant with electricity compared to other small Alaskan towns. Montgomery replied that because Seward's electricity was tied into other electrical systems which have special requirements and specifications that must be met. He added that Seward had a seat on several railbelt power projects and had to compete with other electric utility providers in the area. The city council discussed the requirements and timelines required to place the sale of the electric utility back on the ballot. Chandler advised there were no restrictions on when an item could be brought back to an election ballot, only that a 60 day notice was required for a special 272 City of Seward,Alaska City Council Meeting Minutes June 12,2023 Volume 42,Page 338 election. Regis advised a 53 day notice was required for a proposal to be placed on the ballot for a regular municipal election. DeMoss noted that Option 2—Rebuild the Utility would require a large amount of time to research the funding and budget required to move forward in rebuilding the utility and adding staff. Calhoon recommended an ad hoc committee could perform research for Option 2 and Option 4. Council determined that the administration could bring forward Option 4, to place the sale of the electric utility on the ballot for the regular municipal election in October this year, leaving the ad hoc committee to handle researching Option 2 Motion (DeMoss/Osenga) Direct the clerk to advertise for a seven member ad hoc committee, consisting of four from inside city limits, three from outside city limits within the utility service area, to discuss the current status of the Seward Utility Motion Passed Unanimous Council recessed the meeting at 9:21p.m. Council resumed the meeting at 9:27 p.m. Sixth Avenue Public Works Facility Location Determinations Sowell mentioned the location on Sixth Avenue was to be prepared for sale and rezoned to Urban Residential. Administration requested direction from the city council as to what lot sizes they wanted the property replated. Administration's recommendation were for 30 feet by 100 feet and 50 feet by 100 feet lots. Administration suggested that the lot could be sold to a developer as another choice. Wells stated that the lots should be saved for individual purchases. Motion (Wells/DeMoss) Direct Administration to exclude a developer from purchasing the property and leave to purchase by the individual. Motion Passed Unanimous Motion (McClure/Wells) Direct Administration to create 60 feet by 100 feet lots on Ballaine Blvd. and 30 feet by 100 feet lots on Sixth Avenue. 273 City of Seward,Alaska City Council Meeting Minutes June 12,2023 Volume 42,Page 339 Calhoon stated that creating lots of 45 feet by 100 feet on Ballaine Blvd would add additional lots. Wells stated that having a plat drawing with different layouts would assist the city council in a decision. The motion was withdrawn by McClure with no objections from the city council. Council directed administration to bring forward two plat designs: 30 feet by 100 feet on Sixth Avenue, 60 feet by 100 feet on Ballaine Blvd, 30 feet by 100 feet on Sixth Avenue, 45 feet by 100 feet on Ballaine Blvd. for the city council to give direction at the June 24, 2023 city council meeting. Council Member Finch Requests Appointed Officials To Draft A Resolution To Repeal Personnel Policy #2023-01 Phone Use and Recording Policy Motion (Finch/DeMoss } To Draft A Resolution Repeal Personnel Policy#2023-01 Phone Use and Recording Policy. Qsenga clarified if policy 2023-01 was repealed in its entirety, that the city would default to following state law. Brooks stated the city council could create more restrictive policies than the state law required. The difference he added would be if the violator could be charged with a crime or with a condition suitable for discipline. Finch stressed the state had a one person consent for recording and that the current approved policy took that legal right away from staff, Wells pointed out that the policy did not stop the person from recording,nor did it require their permission. The employee just needed to advise the other party of being recorded. Motion Passed Yes: Wells, DeMoss, Calhoon, Finch, Qsenga No: Barnwell, McClure CITIZEN COMMENTS Skip Rierson, inside city limits, hoped that the utility could be sold, yet agreed that we have a utility to run. He suggested that Seward may need to create a board of directors to help with the utility. Skip emphasized that the finance department would need help researching the information for the utility. 274 City of Seward,Alaska City Couned Meeting Minutes .Tune 12, 2023 Volume 42,Page 340 Cindy Ecklund, inside city limits,verified that the City of Seward did meet the minimum population requirement to have a seat on the Kenai Peninsula Borough Planning & Zoning Commission, and that the city's seat on the commission would remain in place. Beck Dunn, inside city limits, thanked the city council for the work on adding more residential space. She recommended that some of the 30 feet lots be expanded to 40 feet. She thanked the city council for moving to create an ad hoc committee and for including those out of city limits to participate. Bob Valdetta, inside city limits, wanted someone like Norm Regis as city manager. He advised the city council to not cut parts out of projects to save money because past projects have proven the shortfalls of this action. Alan Nickell, outside city limits, stated he was a city department head and that pay wage was a problem for all of the departments. Employees under pay scale grade 6 could not live here on their city wages. COUNCIL AND ADMINISTRATION COMMENTS & RESPONSE TO CITIZEN COMMENTS Regis noted that the finance director position was $20,000 less than the normal average pay for this position. Sowell appreciated the city council review of board and commissioner attendance and the direction on the municipal land plan. He thanked Tim Dillon for his dedication to his position on KPED❑ and would miss the base of knowledge that he provided. Barnwell thanked Tim Dillon for his presentation.He believed the ad hoc committee would be a good start to our resolution of the electric utility issue. He thanked Montgomery for his presentation. He mentioned that the Obihiro planning committee had met three times and stated they would need to request more funds at a future city council meeting for the adult delegation traveling to Obihiro. Finch thanked community development for what they are doing at the Spring Creek and Fourth of July Creek recreational areas. In regard to the public works property, Finch was interested in what the selling price of the individual lots would be. Wells thanked everyone who helped with the animal shelter opening. Thanked the Seward Pride Alliance for hosting a well-organized, positive event. He thanked the administration for creating clear reports and answering questions. Wells thanked the city attorney for the detailed explanation on executive sessions. Calhoon reminded everyone that Wednesday was Flag Day, and patriotic proclamations will be coming forward in the future, Calhoon stated that our nation's flag represents all of us and that flag allows all other flags to fly without issue. 275 City of Seward,Alaska City Council Meeting Minutes June 12, 2023 Volume 42,Page 341 DeMoss stated that the city needed to look at employee housing. Businesses have built their own housing for employees, and the city should consider the same. DeMoss stated there should be another wage study due to the large increase in wages that resulted from the recent COVID crisis. She congratulated Nickell on the animal shelter opening. She thanked Seward Pride Alliance for their event. Osenga thanked Tim Dillon for everything he had helped Seward with. Mayor McClure stated she enjoyed swearing in the new City Clerk Kris Peck. She met with several other mayors who spoke highly of the work our city council was doing in Seward. McClure attended the groundbreaking ceremony for the Chugachmuit Clinic and the animal shelter opening. She mentioned the solstice cemetery tour would be held at the city cemetery at 10:30 pm on June 21, 2023. ADJOURNMENT The meeting was adjourned at 10:45 p.m. Karen Carrigan Sue McClure Acting Deputy City Clerk Mayor (City Seal) �••••��[ G F SE�y'% ■` G� ARP a ? ': AL - ■ : 276 • Action Memorandum 2023-011: Determining It Is In The Best Interest Of The Seward Community To Sell The Electric Utility And Specifying The Primary Reasons Documents: • Action Memorandum • Resolution 2022-067 • Letter from Tony Izzo 277 City of Seward Action Memorandum 2023-011 Meeting Date: August 14, 2023 To: City Council From: Council Members DeMoss and Wells Subject: Action Memorandum 2023-011: Determining It Is In The Best Interest Of The Seward Community To Sell The Electric Utility And Specifying The Primary Reasons Background and justification: The topic of selling the City of Seward Electric Utility has been an item of discussion, various action, and community interest for several decades. On May 9,2022;the Seward City Council passed Resolution 2022- 067, directing the City Manager to develop a timeline and process for examining the advantages and disadvantages of selling the Electric Utility and bring recommendations back to City Council for adoption. Since that time,the question was placed on the ballot for a Special Election in May 2023. The proposition obtained approval from 58.4%of voters and did not meet the Charter provided threshold of 60% in order to pass. During the City Council meeting on July 24t'', City Council passed resolutions to place the question on the October 3, 2023 ballot and provide voters another opportunity to vote on the question of selling the Electric Utility. In recent City Council meetings, members of the public have stated a desire to formally hear from City Council members on "why selling the electric utility is a good thing for Seward". City Council members have verbally discussed the reasons they believe selling the Electric Utility is a positive action for the community,but no formal legislation has been passed which explicitly stated the reasons. The intent of this Action Memorandum is to provide a formal list of those reasons so that the public can hear from City Council as a body and put to rest any lack of clarity for the public. City Council believes the following reasons are primary motivating factors for selling the Electric Utility: 1. RATES. Rates Over the next 10 to 15 years,the city' s electric system faces multiple rate increases as the utility plays catch-up on deferred maintenance, and begins updating technology to modern standards. Economic modeling shows ratepayers can expect several of these rate increases to reach 10 percent or more. This is the reality of a small utility that cannot spread costs over a large population—the city of Seward has fewer than 3, 000 electric meters.When regular maintenance is postponed, eventually bigger investments are required to get back on track. This is the situation in Seward today. 2. RESOURCES.A larger utility brings more resources to bear,both human and financial. Our system in Seward operates with only 10 employees, most in positions that are operations focused. Additionally, limited personnel results in coverage gaps when an employee retires or otherwise moves on from the utility.And as we all know,finding skilled new employees is often hard because of Seward' s relatively remote location. Seward' s staffing limitations also mean the utility cannot rely on in- house expertise offered by larger utilities, especially in areas like billing, engineering, rate design, cybersecurity, and communications. Instead, Seward' s electric department relies on consultants for these services, which is expensive and inefficient. This reality routinely results in project delays. 278 3. RELIABILITY. Running an electric utility is expensive. It requires regular investments in maintenance, new infrastructure, updated technology, and employee training and retention. In Seward,it is even harder when only 2,900 meters are available to drive revenues and system growth is stagnant. These factors make ongoing upgrades difficult to achieve. Overtime, this places the utility in the difficult position of weighing system investments against the impact those costs will have on customer rates,which could directly impact reliability. on—Comprehensive and Strategic Plan ConsiMy Information This legislation is consistent with(citation listed): Comprehensive Plan: Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation(✓): Creates revenue in the amount of $ Creates expenditure in amount of: $ Creates a savings in the amount of $ x Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted x Not applicable AEF—Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking R Water Healthcare Motor Pool Other Note: amounts are unaudited Fund Balance/Net position—restricted $ Fund Balance/Net position—unrestricted/unassigned $ Available Unrestricted Cash Balance: $ Finance Director Signature: No fiscal impact Attorney Review RxYes Attorney Signature: Not applicable Comments: 279 Administration Recommendation rq Adopt AM Other: Disposition (Completed by the City Clerk's Office) 280 Sponsored by: Mayor Terry & Council Member Calhoon CITY OF SEWARD,ALASKA RESOLUTION 2022-067 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, DIRECTING THE CITY MANAGER TO DEVELOP A TIMELINE AND PROCESS FOR EXAMINING THE ADVANTAGES AND DISADVANTAGES OF SELLING THE ELECTRIC UTILITY AND BRING RECOMMENDATIONS BACK TO CITY COUNCIL FOR ADOPTION WHEREAS,the City of Seward currently owns and operates an electric utility; and WHEREAS,on November 7,2000,City Council set a ballot proposition to sell the electric utility based on deregulation, industry changes, and benefits to the public that included a future trust fund from sale proceeds. The proposition failed to receive the required three-fifths of the electors; and WHEREAS, at various instances since that time, Administration, Elected Officials and Public Members have proposed reviewing again the prospect of selling the Electric Utility; and WHEREAS,it is crucial to have ample public involvement, full vetting of the advantages and disadvantages, and education prior to conducting another ballot proposition in preparation of a sale; and WHEREAS, some items under consideration will include the continuation of quality electric services and reasonable rates while at the same time seeking to manage City assets for the long-term benefit of the citizens; and WHEREAS, other items to consider include safety, accessibility for customers,providing timely responses to inquiries, planning for and making system improvements, future economic development, retaining local generation and staff; and WHEREAS,the process moving forward could include involving the Port and Commerce Advisory Board with task items,customer and employee surveys,public comments and questions, town hall meetings, valuation reports of current and future infrastructure, and entertaining or continuing discussions with potential purchasers; and WHEREAS,the outcome of the process will provide a current evaluation of the question and a recommendation for or against moving forward with an updated ballot proposition to sell the utility. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 3. The City Council directs the City Manager to develop a process and timeline to 281 CITY OF SEWARD,ALASKA RESOLUTION 2022-067 study the option to sell our electric utility. Section 2. The City Manager will bring the process and timeline recommendations to Council for approval at the June 13, 2022 Regular Council Meeting. Section 3. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 91h day of May, 2022. TH CI Y F S ARD 7 isty Terry, ayor AYES: McClure, Osenga, Calhoon, Casagranda, DeMoss, Terry NOES: None ABSENT: Wells ABSTAIN: None ATTEST: /2 Brenda J. Ball , M C City Clerk (City Seal) 0.■■' `•,� ���, •,� F S 1y . . of SEALe N o- may. OF A '.�•'`. 282 City Council Agenda Statement Meeting Date: May 9, 2022 _ To: City Council From: Mayor Terry and Council Member Calhoon Agenda Item: Resolution 2022-067: Directing the City Manager to Develop a Timeline and Process for Examining the Advantages and Disadvantages of Selling the Electric Utility and Bring Recommendations Back to the City Council for Adoption Background and justification: On November 7, 2000, the City Council set a ballot proposition to sell the electric utility based on deregulation, industry changes, and benefits to the public that included a future trust fund from sale proceeds. The proposition failed to receive the required three-fifths of the electors. Since that time, administration, elected officials and public members have proposed reviewing the prospect of selling the electric utility. The current resolution proposes to direct the city manager to develop a process and timeline to study the option to sell the electric utility and to bring the process and timeline to the city council on June 13, 2022. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation (*"): x Creates revenue in the amount of: $ 0 _ Creates expenditure in amount of: $ Creates a savings in the amount of: $ Has no fiscal impact Funds are (V): Budgeted Line items): x Not budgeted Not applicable 283 El-u—nassigned Fund Balance and Available Unrestricted Cash Balance Information Fund {v"}: General SMIC Electric Iq Wastewater Boat Harbor Parking Water Healthcare Motor Pool Other Finance Signature: Atto"ey RevieWV Administration Recommendation RxYes x Adopt Resolution Not applicable B Other: 284 AMEA MATANUSKA ELECTRIC ASSOCIATION August 8, 2023 Sent via electronic mail nregisCa)_cityofseward.net Norm Regis Interim City Manager 410 Adams Street City Hall Building Seward, AK 99664 Dear Mr. Regis My name is Tony Izzo and I am the CEO of Matanuska Electric Association which serves the Mat- Su Valley and Eagle River. During my seven years as CEO at MEA as well as my time serving as the President of Enstar Natural Gas, I have prioritized and valued input and feedback from colleagues at Seward Electric and been impressed with the resulting contributions and perspectives. MEA understands the City of Seward is at a crossroads as you consider options for providing power to your residents. This also comes at a time when our natural gas supply is uncertain, our transmission system limits our solutions, physical and cyber security threats are at their highest, there are significant federal funds at play, and we have a Governor and legislature who are very actively engaged and committed to solving these issues. As we continue to face significant challenges and opportunities within our industry and our regional system, no time has been more critical for Seward Electric to have a seat at the table than right now. Seward has an equal voice and vote to the other interconnected Railbelt utilities in our collaborative structures. Rob Montgomery has established himself as a competent and valued asset and informal leader in Railbelt discussions. He excels at highlighting Seward's needs, perspectives, priorities and issues to his utility peers, critical stakeholders and policy makers as we navigate sustainable, long-lasting change for the Railbelt electric system. Without his voice and sustained presence in key discussions at both the leadership level as well as on key committees, the City of Seward's needs and perspectives would not be represented in our decision-making process. As the person accountable for keeping the lights on in Eagle River and the Mat-Su valley, I understand possible concerns with competing priorities for providing an essential service to the residents of Seward. Rob is judicious and his time spent engaging in region-wide activities is always focused and well considered. I am impressed by his ability to set boundaries with his time when regional work threatens to interfere with his numerous other duties for the City of Seward. I also firmly believe that his active participation in setting policy and operational standards for the Railbelt region is essential for the City of Seward's future success and optimizing your options in whatever capacity you choose to continue to provide power. MATANUSKA ELECTRIC ASSOCIATION, INC.•P.O.Box 2929•2aM,Alaska 99645•t 907.745.3231 •f 907.761.9368•www.mea.coop Mr. Norm Regis, Interim City Manager August 8, 2023 Page 2 The Railbelt utilities and the City of Seward would find themselves at a large disadvantage without Rob Montgomery's continued participation in region-wide activities. As you continue to consider your path forward, I encourage the City of Seward to maintain its commitment to active regional participation as we work together to define the future of the Railbelt system. The City of Seward's input and Rob Montgomery's contributions are critical to our shared success. I am happy to make myself available to provide further comments or additional information if it is helpful. Sincerely, �C Anthon ,. I o aj Chief Executive Officer 286 • Action Memorandum 2023-012: Clarifying the Reasons Homer Electric Association is the Preferred Electric Utility to Purchase Seward Electric Documents: • Action Memorandum • Resolution 2022-114 287 City of Seward Action Memorandum 2023-012 Meeting Date: August 14, 2023 To: City Council From: Council Members DeMoss and Wells Subject: Action Memorandum 2023-012: Clarifying the Reasons Homer Electric Association is the Preferred Electric Utility to Purchase Seward Electric Background and justification: On May 9, 2022, the Seward City Council unanimously approved Resolution 2022-067 to develop a timeline and process for examining the advantages and disadvantages of selling the electric utility and bring recommendations back to City Council for adoption. Subsequently to this, the City has undertaken a thorough process to determine the pros and cons of selling the utility as well as whether to sell the Electric Utility to Homer Electric Association or Chugach Electric.Both entities submitted proposals to the City Council. After several meetings to discuss and review the proposals, the City Council voted unanimously on Resolution 2022-114 during the November 14, 2022 meeting; which selected Homer Electric Association. The public has recently asked the City Council to provide clarification on the reasons that Homer Electric Association was selected. This action memorandum serves as a formal mechanism to communicate those reasons. City Council believes the following reasons are primary motivating factors for selling the Electric Utility to Homer Electric Association: • HEA's long-term strategic plan and investments already made in its infrastructure and operations. • HEA being further along than other Railbelt utilities in its investments in cybersecurity and other system technologies. • HEA's plan for integrating into the Seward community. • HEA ensuring Seward representation on the HEA board of directors. • Existing synergies between HEA and Seward Electric since both utilities are located on the Kenai Peninsula and each works closely with the Kenai Peninsula Borough. • A merger between HEA and SES makes the Kenai Peninsula stronger. • HEA's commitment to freeze consumer rates for at least three years. • HEA effectively outline its long-term rates strategy. • We are comfortable with the leadership stability of HEA. • We are comfortable with the financial health of HEA. • HEA offers grant opportunities not available with other utilizes. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: Strategic Plan: Other: 288 Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation(✓): Creates revenue in the amount of $ Creates expenditure in amount of: $ Creates a savings in the amount of $ x Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted x Not applicable AM Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking F1 Water F1 Healthcare Motor Pool Other Note: amounts are unaudited Fund Balance/Net position—restricted $ Fund Balance/Net position—unrestricted/unassigned $ Available Unrestricted Cash Balance: $ Finance Director Signature: No fiscal impact OR Attorney Review RxYes Attorney Signature: Not applicable Comments: Administration Recommendation rq Adopt AM Other: Disposition (Completed by the City Clerk's Office) 289 CITY OF SEWARD,ALASKA Sponsored by: Bower RESOLUTION 2022-114 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, SELECTING HOMER ELECTRIC ASSOCIATION AS THE PREFERRED ELECTRIC UTILITY TO PURCHASE SEWARD ELECTRIC WHEREAS, on August 8, 2022, the Seward City Council passed Resolution 2022-087: Submitting the Question of Selling the City of Seward Electric Utility to the Qualified City of Seward Voters at a Special Election in and For the City of Seward on May 2, 2023; and WHEREAS, the resolution directed that prior to voter approval of the proposition to sell the electric utility, the city issue a Limited Solicitation Request for Proposals from interested and qualified electric utilities in Alaska to provide electric services; and WHEREAS, the resolution directed that following receipt of the proposals, the city will negotiate with, and select, the utility most qualified to meet the electric service needs of Seward while also sharing the City's community-focused values; and WHEREAS, the resolution further directs the selected utility be announced to the public prior to the vote on selling the utility and the selected utility be authorized to provide public information to City voters; and WHEREAS,the city received two proposals from qualified Alaskan electric utilities; WHEREAS, pursuant to Seward City Code 2.10.033 C, the city council met in three executive sessions to discuss the electric utility proposal and sale negotiations; and WHEREAS, following the executive session on October 27, 2022, the city council unanimously passed a motion to direct the city manager to bring a resolution before the council on November 14, 2022, stating the city council unanimously selected Homer Electric Association as the preferred electric utility to purchase Seward Electric. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The Seward City Council hereby selects Homer Electric Association as the preferred electric utility to purchase Seward Electric. Section 2.The sale of the electric utility will only occur upon the affirmative vote by three- fifths of the qualified electors voting on the proposition to approve the sale of the municipal utility at the May 2,2023 special election. 290 CITY OF SEWARD, ALASKA RESOLUTION 2022-114 Section 3. The city manager is hereby authorized to negotiate a sales contract with Homer Electric Association and to sign all documents related to the negotiations prior to the May 2, 2023, special election subject to approval by City Council resolution of the negotiated purchase and sale agreement. Section 4. If the voters approve sale of the electric utility at the May 2, 2023 special election the city manager is hereby authorized to sign all documents related to the sale following certification of the May 2, 2023 special election. Section 5. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14tn day of November, 2022. THE CITY OF SEWARD, ALASKA Sue McClure, Mayor AYES: Calhoon, DeMoss, Osenga, Wells, Finch, McClure NOES: None ABSENT: None ABSTAIN: None VACANT: One ATTEST: A�a�— — 'Brenda J. Ballo , MMC City Clerk •I��1uurprr ,'' ri (City Seal) +,�04 O�oEyV.giQ��. • SEAL 291 City Council Agenda Statement Meeting Date: November 14, 2022 To: City Council Through: Janette Bower, City Manager From: Rob Montgomery, General Manager - Electric Agenda Item: Resolution 2022-114: Selecting Homer Electric Association as the Preferred Electric Utility to Purchase Seward Electric Background and justification: On May 9, 2022, Seward Mayor Christy Terry and Council Member Calhoon introduced and the council unanimously approved Resolution 2022-067 to develop a timeline and process for examining the advantages and disadvantages of selling the electric utility and bring recommendations back to city council for adoption. On July 25, 2022,the city council held a special meeting the purpose of assessing Seward's electric utility future. At that meeting, the council directed the city manager to bring forward a resolution to conduct a special election on May 2, 2023, and a resolution appropriating funds to influence the outcome of an election. On August 8, 2022, the city council approved Resolution 2022-087: submitting the question of selling the City of Seward electric utility to the qualified City of Seward voters at a special election in and for the City of Seward on May 2, 2023. The resolution language authorized the issuance of a Limited Solicitation Request for Proposals from interested and qualified electric utility in Alaska to provide electric services. The city council also approved Resolution 2022-088: appropriating funds in the amount of $25,000 to influence the outcome of an election. A Limited Solicitation Request seeking proposals from interested utilities was issued on August 17. Homer Electric Association (HEA) was one of two utilities that submitted proposals. Following three executive sessions, including one where the utilities presented to City Council, HEA was selected by Council as its preferred electric service provider. Council then directed the City Manager to negotiate a proposed contract with HEA, should citizens vote to approve the sale in the Special Election on May 2. Council selected HEA based upon several factors, including: • HEA's long-term strategic plan and investments already made in its infrastructure and operations; • HEA being further along than other Railbelt utilities in its investments in cybersecurity and other system technologies; • HEA's plan for integrating into the Seward community; • HEA ensuring Seward representation on the HEA board of directors; • Existing synergies between HEA and Seward Electric since both utilities are located on the Kenai Peninsula and each works closely with the Kenai Peninsula Borough; • HEA's commitment to freeze consumer rates for at least three years. HEA also addressed its future strategy for consumer rates. While higher today than four of the five Railbelt utilities, HEA pointed to the investments it has already made in operations, infrastructure and technology that are expected to stabilize future rates. HEA discussed how these investments 2V2 have positioned it well, since other Railbelt utilities will be making similar investments in the years ahead, thus putting upward pressure on their respective rates. HEA indicated that its investments were strategic, knowing the longer-term benefit of rate stabilization for consumers would outweigh the upward pressure on rates in the short term. For the City of Seward, the discussion related to rates is important since Seward Electric is facing significant rate increases over the next several years. Should voters not approve the sale in May, Seward Electric will move forward with a rate study that is expected to increase consumer rates by no less than 10 percent in late 2023 or early 2024. This increase would be followed by future double-digit increases every two to four years, as the utility plays catch up with its investments in operations, infrastructure and technology. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: 3.7.1.4"Continue to upgrade and expand utilities to meet existing needs and encourage future development." Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation (✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted Not applicable Finance Signature: IS Attorney Review ✓ Yes Attorney Signature: Not applicable Comments: Administration Recommendation e✓ Approve Resolution Other: 213 • New Business Item: Seward City Tours Request to Purchase Property Documents: • Agenda Statement • Appraisal • Letter to Council • Letter to Purchase • Letter of Support Seward Community Health Center • Letter of Support Seward Senior Center • Letter of Support Qutekcak 294 City Council Agenda Statement . Meeting Date: August 14, 2023 To: City Council ' From: Norm Regis,Acting City Manager Subject: Seward City Tours Request to Purchase Property Background and justification On August 4t'', Seward City Tours sent the City Manager a letter requesting discussion with City Council regarding a proposal to purchase the North Portion of Lot 10A, Fort Raymond Subdivision Replat No. 1 905 Sea Lion Avenue from the City of Seward. Please note the attached documentation which includes an appraisal of the parcel and information sent by Seward City Tours. Administration requests City Council discussion on whether to bring a Resolution to Council at a future meeting to approve the sale of this parcel. The parcel is 1.4 acres, bordered on the north by Sea Lion Avenue, Seward Highway to the East, and Dimond Blvd to the West. A June 2022 appraisal determined the fair market value of the parcel to be $290,000. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with(citation listed): Comprehensive Plan: Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: S This legislation(✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ x Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted x Not applicable Fund Balance Information Affected Fund(✓): General SMIC Electric Wastewater Boat Harbor Parking Water Healthcare Motor Pool Other Note: amounts are unaudited Available Fund Balance $ 295 No direct fiscal impact for this Finance Director Signature: discussion item Attorney Review RxYes Attorney Signature: Not applicable Comments: Administration Recommendation Adopt Resolution x Other: Provide Administration direction on whether to bring a resolution to sell forward at a future City Council meeting. 296 MACSWAIN ASSOCIATES LLC 4401 Business Park Boulevard, Suite 22, Anchorage, Alaska 99503 APPRAISAL REPORT City of Seward Land- 60,984± SF (1 .40± Acres) North Portion of Lot 10A, Fort Raymond Subdivision Replat No. 1 905 Sea Lion Avenue, Seward, Alaska NJSea Lion Avenue ti•,'= t SFA LIULJ AVE ... - - t.,• wT4r F y Iy 0.k 4 r •' ` Appraised Landloll V. 60,984±SF(1.40±Acres) I vm' Ir } Dimond Boulevard 4 . ... S� .�- � .�.. . a� - ,�,' •'�� `���� ?;:.gyp .'� i r`. � Seward Highway w Date of Value: June 28, 2022 File No. 22-3700 Submitted To: Janette Bower, City Manager City of Seward PO Box 167 Seward, AK 99664 297 MacSwain Associates LLC 4401 Business Park Blvd.,Suite 22 Anchorage,Alaska 99503 Phone: 907-561-1965 Fax. 907-561-1955 s.macswainUnacswain.com July 1, 2022 Janette Bower, City Manager City of Seward PO Box 167 Seward, AK 99664 Re: City of Seward Land: 60,984± SF (1.40±Acres) North Portion of Lot 10,Fort Raymond Subdivision Replat No. 1 905 Sea Lion Avenue, Seward,Alaska Dear Ms. Bower: We have prepared an Appraisal Report of the above-referenced City of Seward-owned land fronting the Seward Highway in Seward, Alaska. The appraised parcel consists of 60,984± square feet or 1.40± acres of vacant land, which is legally part of a 2.116-acre lot. It is a hypothetical condition of the appraisal that the appraised 1.40± acres is legally separated and developable to its highest and best use. The purpose of the appraisal is to assist the client with a potential sale of the subject 1.40± acres. The type of value estimated is market value. The property rights appraised is the fee simple estate. The report is prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). Based on the data, reasoning, and analysis that follows, the market value of the appraised property, as of June 28, 2022, is estimated as follows. TWO HUNDRED NINETY THOUSAND DOLLARS $290,000 We direct your attention to the Scope of Work, Certificate of Appraisal, and Assumptions and Limiting Conditions for an explanation of restrictions and limitations of this report. We also direct your attention to the hypothetical condition of the appraisal. If you have any questions,please contact our office. Respectfully submitted, r Alex Kleinke Steve MacSwain, MAI State of Alaska Certificate No. 148873 State of Alaska Certificate No. 42 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 298 MacSwain Associates LLC Appraiser Certification The undersigned certifies that to the best of their knowledge and belief- 4 The statements of fact contained in this report are true and correct. 4 The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 4 We have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. 4 We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 4 We have not performed any services as an appraiser or in any other capacity, regarding the property that is the subject of this report,within the three-year period immediately preceding acceptance of this assignment. 4 Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 4 Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 4 The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 4 The reported analyses, opinion, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 4 The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 4 Alex Kleinke inspected the property on June 28, 2022. Steve MacSwain, MAI is familiar with the property from other appraisal assignments in Seward. 4 No one provided significant real property appraisal assistance to the persons signing this certification. 4 As of the date of this report, Alex Kleinke and Steve MacSwain, MAI are certified General Real Estate Appraisers in the State of Alaska and have completed the education requirements through June 2023. 4 As of the date of this report, Steve MacSwain,MAI has completed the Standards and Ethics Education Requirements for Designated Members of the Appraisal Institute. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 299 MacSwain Associates LLC 4 As of the date of this report,Alex Kleinke has completed the Standards and Ethics Education Requirements for Practicing Affiliates of the Appraisal Institute. 4 As of the date of this report, Steve MacSwain,MAI has completed the continuing education program for Designated Members of the Appraisal Institute. 4 As of the date of this report,Alex Kleinke has completed the continuing education program for Practicing Affiliates of the Appraisal Institute. 711122 Steve MacSwain, MAI Alex Kleinke Date State of Alaska Certificate No. 42 State of Alaska Certificate No. 148873 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 300 MacSwain Associates LLC Table of Contents Title Page Transmittal Letter Appraiser Certification Table of Contents Appraisal Summary 1 Chapter 1: Definition of the Appraisal Problem 5 Chapter 2: Seward Area and Market Summary 9 Chapter 3: Neighborhood Description and Analysis 13 Chapter 4: Site Description and Analysis 15 Chapter 5: Highest and Best Use Analysis 18 Chapter 6: Land Valuation - Sales Comparison Approach 20 Addendum Assumptions and Limiting Conditions Hypothetical Condition Appraiser Qualifications 22-3700 North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 301 MacSwain Associates LLC Appraisal Summary Value Type: Market value Property Type: Vacant Institutional-zoned land Property Rights Appraised: Fee simple estate Location: Southwest corner of Seward Highway and Sea Lion Avenue, fronting east side of Dimond Boulevard, near Seward Highway MP 2.1, approximately one mile north of the Seward Small Boat Harbor, Seward,Alaska Legal Description: North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1, Plat No. 87-12. Tax Parcel No: 145-026-08 (portion) Physical Address: 905 Sea Lion Avenue, Seward,Alaska Property Owner: City of Seward(per KPB) Zoning: INS —Institutional Site Description: Irregular-shaped parcel containing 60,984± square feet or 1.40± acres per client Topography: Generally level to undulating/sloping, near to slightly below access grade Access/Frontage: No direct Seward Highway access, ingress/egress constructed off Sea Lion Avenue (north boundary) and Dimond Boulevard (west boundary), property has 206± feet frontage on Seward Highway, 325± feet frontage on Sea Lion Avenue, 229± feet frontage on Dimond Boulevard Utility Service: Public water, sewer, electricity, and telephone Soil and Subsurface Based on observations of surrounding development, soils Conditions: appear to be suitable for development Hazardous Substances: None known Wetland Designation: None Flood Hazard Restrictions: Zone X, an area outside the 0.2% annual chance floodplain Easements and Restrictions: Per plat 87-12: 30-foot utility easement along east boundary and 25-foot utility easement along west boundary 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1,Seward,Alaska 1 302 MacSwain Associates LLC Sale/Lease History: No known sales or leases of property in past three years Highest and Best Use: Commercial development Extraordinary Assumptions: None Hypothetical Condition: The appraised 1.40f acres is legally separated and developable to its highest and best use. Date of Property Inspection: June 28, 2022 Effective Appraisal Date: June 28, 2022 Date of Report: July 1, 2022 Market Value Estimate: $290,000 ($4.75t/SF) 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1,Seward,Alaska 2 303 MacSwain Associates LLC Subject Property Photographs Date: June 28,2022 Taken By: Alex Kleinke y "a - T Southeast view of property from corner of Sea Lion Avenue and Dimond Boulevard T Z *Ti3r North view of small clearing on property 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1,Seward,Alaska 3 304 1 1 1 alllM ; I?fir ` n AV r' iz 01 tit R: a 5 .f' A MacSwain Associates LLC Chapter 1: Definition of the Appraisal Problem Overview We prepare an Appraisal Report that analyzes a 60,984± square foot (1.40± acre)parcel located approximately one mile north of the Seward Small Boat Harbor. Currently,the appraised land is part of a 2.116-acre parcel owned by the City of Seward. Thus, we invoke a hypothetical condition that the appraised 1.40± acres is legally separated and developable to its highest and best use. The purpose of the appraisal is to assist the City of Seward with selling the subject property to Seward City Tours; however, the City of Seward is the only intended user of this Appraisal Report. The report is intended to comply with the Uniform Standards of Professional Appraisal Practice (USPAP). Value Type Market value Client City of Seward Intended Use of Assist client with selling property to Seward City Tours Appraisal Report Intended User of City of Seward,property owner Appraisal Report Property Inspection June 28, 2022 Date Effective Appraisal June 28, 2022 Date Date of Report July 1, 2022 Identification of Real The appraised property contains 1.40± acres, which is a portion of a Estate Appraised 2.116-acre vacant lot. The Kenai Peninsula Borough identifies the property as Parcel ID 145-026-08 and the physical address as 905 Sea 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 5 306 MacSwain Associates LLC Lion Avenue, Seward, AK. The land fronts the west side of Seward Highway, approximately one mile north of the Small Boat Harbor. Definition of The type of value estimated is market value. Market value is defined as Market Value follows. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: a. buyer and seller are typically motivated; b. both parties are well informed or well advised, and acting in what they consider their own best interests; C. a reasonable time is allowed for exposure in the open market; d. payment is made in terms of cash in US dollars or in terms of financial arrangements comparable thereto; and e. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. I We estimate the market value of the fee simple estate,which is defined Property Rights as follows. Appraised Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain,police power, and escheat.2 1 Appraisal of Real Estate,Fifteenth Edition(2020),by the Appraisal Institute,p.49. 2 Appraisal of Real Estate,Fifteenth Edition(2020),by the Appraisal Institute,p. 60. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 6 307 MacSwain Associates LLC Legal Description The property is a portion of a 2.116-acre parcel. For the purpose of this appraisal assignment, the legal description is as follows: North Portion of Lot 10, Fort Raymond Subdivision Replat No. 1, Plat No. 87-12. Property Owner Public Records indicate the owner of the appraised property is as follows. City of Seward PO Box 167 Seward,AK 99664-0167 Assessed The property is owned by the City of Seward and exempt from taxation. Value The property's assessment history applies to the entire 2.116-acre parcel, rather than the appraised 1.40± acres, and is not considered applicable. Three Year Sale and There have been no known sales or leases of the property in the past Lease History three years. The property is being considered for purchase by Seward City Tours,but no sale price has been established or was reported to the appraisers. Report Type and This Appraisal Report develops the sales comparison approach to Methodology estimate market value. Neither the cost nor the income capitalization approach reflects market behavior for vacant land. Qualitative techniques are used to measure differences between the comparable sales and the subject. The appraisal report is a summary of the appraisers' data, analyses, and conclusions with supporting documentation retained on file. Scope of Appraisal Alex Kleinke of MacSwain Associates, LLC performed the inspection of the appraised property, data collection, and analysis. Steve MacSwain, MAI has observed the property during the course of other Seward appraisal assignments and is familiar with the neighborhood. In addition, Steve MacSwain, MAI administered the appraisal process, reviewed draft appraisals, and concurred with an opinion of value. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 7 308 MacSwain Associates LLC Preparation of this report encompassed the following scope of work that concluded with an opinion of market value. 4 Inspected the appraised property on June 28, 2022; 4 Discussed the property with Stephen Sowell, Assistant City Manager with the City of Seward; 4 Reviewed aerial mapping indicating appraised property premises provided by City of Seward; 4 Reviewed KPB assessor map 145-026; 4 Reviewed Plat Map 87-12; 4 Reviewed City of Seward Zoning Map and zoning codes; 4 Reviewed City of Seward 2030 Comprehensive Plan Update prepared by PDC Engineers, adopted May 30, 2017; 4 Gathered data from the KPB Assessor's office and State of Alaska Recorder's office regarding ownership, assessments, and general property information; 4 Interviewed Seward real estate Brokers,agents,and property owners regarding land sales; 4 Interviewed Seward market participants regarding current commercial land market conditions, trends, and expectations; 4 Gathered and confirmed information on comparable land sales; 4 Inspected the primary comparable sales we relied upon in our comparative analysis; and 4 Applied the sales comparison approach to arrive at a market value indication. Exposure Time We have collected and analyzed market and economic data that projects real estate trends and activity for similar land. Discussions with Brokers and analysis of similar property sales indicate that a period of approximately 6-9 months prior to our effective date of value is a reasonable exposure period. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 8 309 MacSwain Associates LLC Chapter 2: Seward Area and Market Summary Overview We present a summary analysis of factors that define the socio- economic factors defining the Seward economy and real estate market. The map below depicts Seward location within Southcentral Alaska. Seward is located at the head of Resurrection Bay, on the southeast side of the Kenai Peninsula. It lies 70 air miles south of Anchorage or 126 miles via the Seward Highway. Seward has an ice-free port with year- round access to the Alaska Railroad. Location Map Anchorage ► w tN nnchora +.I 1 Tyonek V_U U N I T E S T A T E S Whittier Nikiski 65alamatof c Kenai oSterling Chugach State Park Soldotna bsoldotna Cooper Cohoe o g Clam Gulch Kenai National Wildlife Refuge a ook Inlet Ni ward s Homer enai Fjords National Park y + oAnchor loint .' � Resurrection Bay Kachemak City Hnm r Co- ri ht62o03 Micro-so-ft`G'oY`Y+andfor its mrliers.All-ri hts reserved. Population Within city limits, Seward's 2020 Census population was 2,717 and 2021 population estimate was 2,603,representing stability over the past decade. Community growth areas are principally rural residential neighborhoods to the north outside city boundaries. According to the State of Alaska Division of Community and Regional Affairs (DCRA), a table containing Seward's historic population follows. 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2,603 2,717 2,545 2,569 2,512 2,663 2,740 2,768 2,487 2,752 22-3700-North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 9 310 MacSwain Associates LLC The actual contributory population to the Seward economy is 4,700± residents with the inclusion of rural residential districts located outside of city boundaries. Moreover, the seasonal population swells to nearly 6,000±during the prime summer months. Seward Employment Seward employment is gradually shifting from trades and fishing to leisure, hospitality, and government. Although Seward employment is projected to increase,we anticipate unemployment to remain above the statewide rate due to the seasonal character of the economy. Because of high demand for seasonal employment,part of the work force resides outside of the Seward residential sphere. Seward Area Map J - and ° 0 Small Boat Seward Harbor Townsite `S h R�o4( pJLL'L'I;iG�'q YF .J. U NI' .. POW n' u O l o �M z 'u Seward Economic Ice-free deep-water port facilities integrated with road and rail service Sectors to interior Alaska drive the Seward economy. The port is home to a commercial fishing fleet, and is the impetus for thriving tourism and recreation. These latter economic sectors have enhanced retail and service industries as well as increased demand for petroleum products. 22-3700-North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 10 311 MacSwain Associates LLC Diversification of the Seward economy has been a central theme of city management, planning, and infrastructure development over the past few decades. Examples of economic diversification include expansion of the Small Boat Harbor, Alaska Vocational and Technical Center (AVTEC),Aurora Energy Services Coal Terminal (not operating), and the Spring Creek Correctional Facility. Furthermore, construction of a breakwater to protect Seward Marine Industrial Center (SMIC) from prevailing weather and seas will improve the economic viability as a market alternative for shipbuilding and repair. Evolving economic diversification is a stabilizing influence and cause to enhance growth opportunities for corollary industries. Despite the seasonal character of the Seward economy, government, natural resources, health care, and transportation sectors contribute year-round employment. A summary analysis of the primary components of the Seward economy follows. Tourism: Tourism has continued to be a strong economic sector of the Seward Economy since the recovery from the national recession. Over the five-year period from 2014 to 2018, the City of Seward reported a 17%increase in sales tax revenue,and a 31%increase in hotel/motel tax over the same period, with 2019 figures anticipated to grow further. New hotel construction in 2020 has the potential to further increase revenues in future seasons. Cruise ship port calls increased from year to year since 2013 (50 ships) to 2016 (67 ships) to 2019 (87 ships and 95 days with cruise ships in port). Consequently, Seward cruise ship visitation increased by 84 percent over the same period,with 125,000± passengers in 2013 to 230,000± passengers estimated in 2019.3 The 2013 figures represent an average passenger/ship ratio of 2,500 passengers,while 2019 figures indicate 2,640 passengers. The increase is due to not only fuller ships, but also the industry replacing medium- sized cruise ships with larger cruise ships. Conversely, expedition style trips with 100 to 200 passengers are becoming increasingly common. These ships,while lowering the passenger/ship average,offer exclusive, high-cost ecotrips. As this trend continues, passenger volume should continue to increase over the long term,with exception to the substantial decline experienced for 2020 and 2021 due to the COVID-19 Pandemic. According to the Cruise Line Agencies of Alaska Calendar, 76 cruise ship dockings are planned for the Summer 2022 season. PortActivity:As an industrial port, Seward has not reached the potential that was invested in port infrastructure. However, over the past several years, SMIC has benefited from increased demand for lease property. 3 City of Seward,Comprehensive Annual Financial Reporting. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 11 312 MacSwain Associates LLC Companies that commenced leases in SMIC in 2013 and 2014 include Raibow Fiberglass and Boat Repair and Vigor Alaska. Raibow continued to expand their lease footprint, entering into new leases in 2016 and 2019. JAG Alaska, Inc. became the new operator at the Seward shipyard after Vigor announced its withdrawal. Additional new lessees in SMIC include SEWMAR, LLC and Hamilton Construction. Established marine industrial uses that enhance economic productivity include bulk fuel storage, ship repair and dry-dock, and fish processing. The US Coast Guard has expressed interest in commencing land leases in SMIC,however no official commitments have been made as of early 2021. SMIC recently completed a new $27M± rubble mound breakwater, intended to improve protection and enable moorage of larger ships,with a new dock rounding out recent SMIC construction. Construction: A summary of construction projects that had a measurable effect on the Seward economy include: 4 $30 million Seward Long-Term Care Facility (LTCF) in 2010 4 16,300± square foot, $5 million± Seward Community Library and Museum in 2012 $13 million student housing complex for Alaska Vocational Technical Center in 2014 4 Conversion of the 13,500± square foot former Elks Lodge into a brewery/restaurant in 2013 New 80±room hotel on the corner of 4th Avenue and Van Buren Street 4 19,000± square foot special-use marine industrial building located north of the Seward Small Boat Harbor Real Estate Market We anticipate the Seward real estate market to remain stable over the Summary medium and long-term with upward trending prices for properties with high demand and limited supply. Importantly,the real estate market has a direct link to the health of Seward's economic sectors. For example, increases in tourism and recreation cause greater demand for properties that can accommodate cruise ships. These market dynamics will cause upward price pressure. Short-term uncertainty existed throughout the Summer 2021 tourist season; however, many expect a return to normalcy for Summer 2022 as COVID-19-related worries subside. Offsetting this optimism is rising fuel prices, which could dampen demand. Moreover, an employee shortage has prevented many businesses, primarily restaurants, from operating at full capacity and taking advantage of the return of tourism, as hesitancy to travel has diminished. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 12 313 MacSwain Associates LLC Chapter 3: Neighborhood Summary Overview The subject neighborhood is approximately one mile north of the Small Boat Harbor, bounded by the Seward Highway. The neighborhood is mixed-use in character, with commercial development evident on properties fronting the west side of Seward Highway. The reader is referred to the zoning map below illustrating neighborhood land use and assisting with the description and analysis that follows. City of Seward Zoning Map tN ro�s, F.rh O � f L­A,, Subject rRural Residential r f Single Family Residential . Two Family Residential I Multi Family Residential . urban Residential r ■ Office Residential H n❑r o Harbor Commercial r ■ Auto Commercial r _ f Central Business District mar-Q ■ Industrial Institutional ■f Park - Resource Management Neighborhood The neighborhood is situated along the Seward Highway corridor north Description of the Seward Small Boat Harbor. Industrial use comprises the east side of the highway with Leirer Subdivision and Alaska Railroad Corporation land. In the subject's immediate vicinity, commercial development fronts the west side of the Seward Highway extending south to the harbor. Businesses along this corridor include Safeway, Wells Fargo, Tesoro, Shore Side Car Wash, The Cup Espresso, and Saltwood Smokehouse. Just to the northwest of the subject is the Seward Military Resort. Further north, and to the west, development consists of schools, athletic fields, and parks. 22-3700-North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 13 314 MacSwain Associates LLC While the neighborhood is mixed-use in character and includes a multitude of zoning designations, the majority of land along the Seward Highway is zoned Auto Commercial (AC), a highly regarded zoning designation affording a wide range of uses including office, personal services, retail and residential support which do not detract from residential areas. However,the subject is within the Institutional Zoning District, intended for public and private educational, administrative, government and health care uses, including public land reserve for future development. Summary In summary, with tourism industry as the economic focal point, Seward's outlook is promising. The subject neighborhood is just north of the Seward Small Boat Harbor and benefits from its frontage on the Seward Highway. Based on these factors, the outlook for the subject neighborhood is positive. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 14 315 MacSwain Associates LLC Chapter 4: Site Description and Analysis Overview Analysis of land describes the characteristics that enhance or detract from its utility or marketability. The site description and analysis is based on our property inspection and review of the Plat Map No. 87-12, aerial, Borough, and other mapping. The plat map below overlaid with the approximate dimensions provided by the client, as well as the aerial mapping on the following pages assist in the description and analysis of the parcel that follows. Plat Map No. 87-12 —.r------r).--- tLL \ti' i ''y,\�\``Y�,.Y'+:;f,:►' S ..:.K iw _ Sea Lion Avenue ++ter tN Appraised Land60,984±SF r r a SF � r � x- '`• ¢` Dimond Boulevard h rwr .rxw. y' i c, Seward Highway Ij lil14 l Site Description Location: Southwest corner of Seward Highway and Sea Lion Avenue, fronting the east side of Dimond Boulevard, near Seward Highway MP 2.1, approximately one mile north of the Seward Small Boat Harbor, Seward,Alaska Shape and Land Irregular-shaped parcel containing 60,984± Area: square feet or 1.40± acres Access: No direct Seward Highway access,ingress/egress off Sea Lion Avenue on north boundary and 22-3700 North Portion of Lot 1 OA, Fort Raymond Subdivision Replat No. 1, Seward,Alaska 15 316 MacSwain Associates LLC Dimond Boulevard on west boundary(paved,two lane roads) Zoning: Institutional (INS) District, intended for public and private educational, administrative, government and health care uses,including public land reserve for future development. Frontage and 206±feet frontage on Seward Highway,325±feet Exposure: frontage on Sea Lion Avenue, 229± feet frontage on Dimond Boulevard Easements and Per plat 87-12: 30-foot utility easement along east Restrictions: boundary and 25-foot utility easement along west boundary Public Utilities: Public water,sewer,electricity, and telephone Topography: Generally level to slightly sloping, slightly below highway grade, dirt mound on west portion of property GIS Aerial Map (Kenai Peninsula Borough) 2020 Sea Lion Avenue .' ti EA Ll.uN AL'E ' Y s .K. y' I. �,-: • F'�' i f � ,ate Appraised Land :;t 60,984±SF Dimond Boulevard P fc. �. t Seward Highway A&AIV AML 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 16 317 MacSwain Associates LLC Vegetation: Heavily vegetated with spruce, cottonwood, alder, and low-lying vegetation Soil Conditions: Based on observations of surrounding development, soils appear to be suitable for development Wetland None noted on KPB Wetland Mapper Designation: Flood Hazard: Zone X, an area outside the 0.2% annual chance floodplain Environmental The existence of any hazardous material or other Conditions: type of environmental contamination,which may or may not be present on the property, was not observed by the appraisers nor do the appraisers have any knowledge of the existence of such substances. Our value conclusion assumes that the property is free of environmental and hazardous contaminants. Site Minimal clearing and signage; signage excluded Improvements: from valuation Site Utility: The site is suitable for commercial-related development. Due to highway frontage, exposure, and Auto Commercial zoning,coupled with relative proximity to other commercial areas including the Small Boat Harbor, the site is well suited for commercial development. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 17 318 MacSwain Associates LLC Chapter 5: Highest and Best Use Analysis Overview The parcel is located within the City of Seward, subject to zoning regulations. Zoning is INS, Institutional. According to the City of Seward Zoning Code, this designation was: Intended for public and private educational, administrative, government and health care uses, including public land reserve for future development. The development standards are intended to set a high standard to assure that the activities provide visual amenity to the surrounding area. Within the Institutional District, a variety of commercially-related uses are permitted, such as medical clinics, offices, governmental and quasigovernment administrative developments. Additional commercial uses require conditional use or administrative permits. Industrial uses allowed with conditional use permits include storage and distribution warehousing and industrial cargo uses. Other permitted uses include parking lots, recycling, schools, passenger dock, emergency services, library, dorm-style housing, museum, impound lot, and utility facility. After analysis, zoning limits the scope of physically possible uses. Essentially, the intent of the zoning district does not accommodate purely commercially-motivated uses,but rather those that serve a public purpose in conjunction with a profitable use. The appraised parcel contains 60,984± square feet or 1.40± acres, and benefits from 206± feet of frontage on the Seward Highway, but lacks direct access. Instead, access is from the north and west boundaries on secondary streets. The property is generally level with a gentle slope, and near access grade. There has been some clearing, but the majority of the property is in a raw state and heavily vegetated. Public water, sewer, electricity, and telephone are available. Surrounding development varies; however, commercial development is evident on parcels fronting the west side of the Seward Highway. The adjacent property to the south is being developed for a medical clinic. The location one mile north of the Small Boat Harbor coupled with highway frontage encourages commercial development, however zoning limits the scale and type of development permitted. Determining the specific land use alternative that maximizes productivity is a difficult analytical task. Based on highway frontage, relative proximity to the Seward Small Boat Harbor and other commercial areas, commercial development is considered financially feasible. Thus, commercial development consistent with Institutional 22-3700—North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 18 319 MaCSwain Associates LLC zoning restrictions is the highest and best use of the property, as vacant. The most probable buyer is an owner-user. Highest and Best Use As Vacant Commercial Development 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 19 320 MacSwain Associates LLC Chapter 6: Land Valuation - Sales Comparison Approach Overview The sales comparison approach is a systematic procedure of estimating the subject's market value by comparing it directly to property sales afforded similar physical and economic character. The approach is founded on the principle of substitution, theorizing value is a function of a knowledgeable investor's (buyer) intent to pay no more for a specific property than the cost of acquiring an alternative property offering similar utility (economic satisfaction). The sales comparison approach is the best approach for valuing vacant land. Comparative Market Our sales search focused on vacant land with similar zoning, physical, Analysis and economic character to the subject, located in the immediate neighborhood. This search criteria produced a paucity of sale data, compelling us to expand our search to alternatives locations with varying zoning designations. This search produced four closed transactions that transpired in from 2017 to 2021. Of these, three transactions are land sales and one transaction is a land lease on ARRC land. We also analyzed a pending sale of the adjacent property to the south. The primary land transactions we relied upon are listed in the table below. Additional details of the comparables are retained on file. Summary of Primary Land Transactions No. Location Zone Sale Date Sale Size $/SF Price (SF) 1 Northwest corner of Seward Highway and AC 8/21 $663,500 144,184 $4.60 Aspen Lane, one mile north of SSBH (pending) 2 Southeast corner of Port Avenue and Fourth HC 10/21 $311,000 22,194 $14.01 Avenue 3 Northeast corner of Seward Highway and N/A 11/18 $130,000 74,923 $1.74 Seward Park Drive 4 North side of Seward Highway between N/A 7/18 $85,000 98,881 $0.86 Seward Park Drive and South Fork Lane 5 West side of First Avenue at corner of Madison INS 11/17 $200,000 41,818 $4.78 Street ---- Southwest corner of Seward Highway and INS o o -- -- 60,984 ---- Sea Lion Avenue, one mile north of SSBH (Subject) 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 20 321 MacSwain Associates LLC Elements of The elements of comparison that have the greatest influence on market Comparison behavior and the price paid for similar land in Seward is market conditions, location, zoning, and physical character, including clearing/grading, frontage/access, and size. We use a qualitative comparison technique that rates elements of comparison as superior, inferior, or similar. Comparable Land Sales Map 4 � 3 3 1 Seward Highway 6 ., t , - k Subject _ t,: 1 + A R ❑ >, 2 3` y„ 4 Pending Land Sale 1 Pending Land Sale 1 is the August 2021 pending sale of a property just southwest of the subject fronting the Seward Highway. The irregular- '` shaped parcel contains 3.31±acres or 144,184±square feet. At the time of the purchase agreement, the property was a portion of a larger 11- acre parcel. Thus the pending sale requires a replat prior to closing. The platting process has caused an extraordinarily lengthy sale process The +� property has public water, sewer, electricity, and telephone. Zoning is -- r 22-3700-North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 21 322 MacSwain Associates LLC AC, Auto Commercial. The property has direct highway access and benefits from 448± feet of frontage. It was previously used as the US Air Force Recreation Center and is primarily cleared. The pending sale price of$663,500 indicates a unit price of$4.60 per square foot. It is based on the average of two appraisal reports; one completed for the City of Seward (seller), and one completed for Chugachmiut (buyer). The buyer intends to construct a medical clinic on the site. By comparison, downward adjustments are required, primarily to reflect superior zoning, access, and clearing. An offsetting upward adjustment is necessary for inferior size differential. The net adjustment is marginal, indicating a unit value approximating $4.60 per square foot for the subject. Land Transaction 2 Land Transaction 2 is the October 2021 lease of ARRC land located at a the north end of the Seward Small Boat Harbor on the southwest corner of Port Avenue and Fourth Avenue. The nearly-trapezoidal shaped site .4 contains 22,194± square feet or 0.51± acre, including a small portion S encumbered by public use easements. Access is from paved, two-lane streets and all public utilities are available. Zoning is HC, Harbor Commercial. The property is currently used for restaurant and tourism- oriented uses, benefitting from its proximity to the harbor and railroad depot. The lease rate of$24,880 per year indicates a capitalized value of$311,000 using an 8% rental rate specified in the lease. The lease is subject to five-year renewals based on an MAI appraisal. It indicates a unit indicator of $14.01 per square foot. By comparison, downward adjustments are required, primarily to reflect superior location, zoning, and size differential. Thus, a unit value substantially less than $14.01 per square foot is indicated for the subject. Land Sale 3 Land Sale 3 is the November 2018 sale located on the northeast corner of the Seward Highway and Seward Park Drive, approximately 3.5 r�ti j miles north of the Small Boat Harbor. The irregular-shaped lot contains 74,923± square feet or 1.72± acres. Situated outside of Seward City f, Limits, the parcel is unzoned. The listing Broker indicated there was a ` �. 700 square foot shop on the property connected to electric service, but that power was turned off. Additionally, it was revealed the well and septic on-site likely did not meet ADEC standards, and the well lacked a well pump. The property was exposed to the market for 104 days, originally listed for $150,000. The sale price of $130,000 indicates a unit price of $1.74 per square foot. By comparison, downward adjustments are necessary for lack of zoning restrictions, access, and 22-3700-North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 22 323 MacSwain Associates LLC improvements on the property at the time of sale. Conversely, overriding upward adjustments are required for inferior market conditions, lack of public water and sewer, and inferior location. Thus, Land Sale 3 indicates a unit value greater than $1.74 per square foot for the subject. Land Sale 4 Land Sale 4 is the July 2018 sale located on the north side of the Seward Highway between Seward Park Drive and South Fork Lane, approximately 3.5 miles north of the Small Boat Harbor. The irregular- 4; shaped lot contains 98,881±square feet or 2.27±acres. Situated outside of Seward City Limits, the parcel is unzoned. The listing Broker indicated the lot has been cleared, and a building pad was prepped for a structure approximating 40 feet by 70 feet. It was also revealed an engineered septic system would be required to facilitate development. The property was exposed to the market for 107 days, originally listed for $95,000. The sale price of$85,000 indicates a unit price of$0.86 per square foot. Subsequent to the sale, a dental clinic was constructed on the site. By comparison, downward adjustments are necessary for site improvements at the time of sale and lack of zoning restrictions. Conversely, overriding upward adjustments are required for inferior market conditions, size differential, lack of public water and sewer, and inferior location. Thus, Land Sale 4 indicates a unit value greater than $0.86 per square foot for the subject. Land Sale 5 Land Sale 5 is November 2017 located on the west side of First Avenue near the corner of Madison Street, just north of the Seward Hospital. The nearly rectangular-shaped lot contains 41,818±square feet or 0.96± lot acre. Access is from First Avenue, a paved, two-lane road running w a " north/south on the west side of the townsite. Zoning is INS, Institutional, which also allows some commercial uses. At the time of L r sale, the property was vacant as the original structure had been razed f -` prior to 2012. The property was exposed to the market for 108 days before selling at the list price of$200,000. This indicates a unit price of $4.78 per square foot. The motivation for the purchase was for eventual medical-related expansion due to its adjacency to the hospital campus. By comparison, downward adjustments are necessary for size differential and to reflect the degree of clearing at the time of sale,which reduces site preparation expenses. Offsetting upward adjustments are necessary for inferior market conditions and lack of highway frontage. The net adjustment is minimal, indicating a unit value approximating $4.78 per square foot for the subject. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 23 324 MacSwain Associates LLC Reconciliation of Presented below is a rating grid and analysis of the comparables used in Comparative Market comparative analysis. Analysis No. $/SF Rank Net Adjustment 2 $14.01 Superior 5 $4.78 Similar -- -- 1 $4.60 Similar -- -- Subject -- -- -- -- -- -- 3 $1.74 Inferior T 4 $0.86 Inferior The comparables indicate a wide value range from $0.86 to $14.01 per square foot. Land Sales 3 and 4 are rated inferior indicating a unit value greater than $1.74 per square foot. Conversely, Land Transaction 2 (which is a land lease) is rated superior indicating a unit value significantly less than$14.01 per square foot. Pending Land Sale 1 and Land Sale 5 are rated similar, indicating a unit value approximating $4.60 and$4.78 per square foot. After comparative analysis and making the necessary adjustments,we conclude with a unit range from $4.50 to $5.00 per square foot. This develops the following indicators. 60,984 SF x $4.50/SF= $274,428 60,984 SF x $5.00/SF= $304,920 Based on the preceding analysis, we reconcile with a value near the middle of the range. Therefore,the market value of the appraised land, as of June 28, 2022, is estimated as follows. Market Value Estimate $290,000 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 24 325 Addendum 326 MacSwain Associates LLC Assumptions and Limiting Conditions This appraisal is subject to the following assumptions and limiting conditions. 4 No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumed to be marketable unless otherwise stated. 4 The property is appraised free and clear of all liens or encumbrances unless otherwise stated. 4 The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. 4 All maps, plot plans, and other illustrative material are believed to be accurate, but are included only to help the reader visualize the property. 4 It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them. 4 It is assumed the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the appraisal report. 4 It is assumed the property conforms to all applicable zoning,land use regulations,and platting restrictions unless the nonconformity is identified, described, and considered in the appraisal report. 4 Possession of this report, or a copy thereof, does not carry with it the right of publication. 4 The appraisers, by reason of this appraisal, is not required to give consultation or testimony or to be in attendance in court with reference to the property in question unless arrangements have been previously made. 4 Neither all nor any part of the contents of this report shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraisers. 4 The existence of any hazardous material or other type of environmental contamination,which may or may not be present on the property, was not observed by the appraisers nor do the appraisers have any knowledge of the existence of such substances. However, the presence of these substances may affect the value of the property. Therefore, the client is urged to retain an environmental assessment for discovery and evaluation. Hypothetical Condition This appraisal is subject to the following hypothetical condition. 4 It is a hypothetical condition of this appraisal that the appraised 1.40± acres is legally separated and developable to its highest and best use. 22-3700—North Portion of Lot IOA,Fort Raymond Subdivision Replat No. 1, Seward,Alaska 327 MacSwain Associates LLC 4401 Business Park Boulevard, Suite 22,Anchorage,Alaska 99503 Appraiser: Alex Kleinke State of Alaska, Certified General Real Estate Appraiser—License 9148873 Education: Bachelor of Business Administration,Finance,University of Alaska Anchorage (2009) Master of Business Administration(MBA),University of Alaska Anchorage (2012) Professional Experience: 2009 to Present—MacSwain Associates LLC Real estate appraiser of all property types throughout Alaska including commercial, industrial, land, rights-of-way, and special-purpose properties. Appraisals performed for financing, right-of-way acquisitions, conservation easements,leasing,insurance,taxation,estate planning,investment analysis, and buy-sell decisions. Appraisal Education: The following is a list of recently completed appraisal courses and seminars. 2022—Fundamentals of UASFLA by the Appraisal Institute,Online 2021— Cool Tools:New Technology for Real Estate Appraisers by the Appraisal Institute,Online 2021—Analyzing Operating Expenses by the Appraisal Institute,Online 2021—Business Practices and Ethics by the Appraisal Institute,Online 2020— 7-Hour National USPAP 2020-2021 Update Course by the Appraisal Institute,Anchorage,AK 2017—Business Practices and Ethics by the Appraisal Institute,Online 2017— 7-Hour Equivalent USPAP Update Course by the Appraisal Institute,Online 2016—Advanced Market Analysis and Highest and Best Use by the Appraisal Institute,Chicago,IL 2016— General Sales Comparison Approach by the Appraisal Institute, Chicago,IL 2015—Real Estate Finance, Statistics, and Valuation Modeling by the Appraisal Institute, San Diego, CA 2015— General Report Writing and Case Studies by the Appraisal Institute,Las Vegas,NV 2015— General Income Approach Parts I and II by the Appraisal Institute, San Diego,CA 2013— The Discounted Cash Flow Model: Concepts,Issues, and Apps. by the Appraisal Institute, San Diego,CA 2013— General Appraiser Site Valuation and Cost Approach by the Appraisal Institute,Fort Lauderdale,FL 2012— General Market Analysis and Highest and Best Use by the Appraisal Institute, San Diego,CA 2011— IS-Hour National USPAP Course by the Appraisal Institute,Anchorage,AK 2010—Basic Appraisal Procedures by the Appraisal Institute,Anchorage,AK 2010—Basic Appraisal Principles by the Appraisal Institute,Anchorage,AK Sample of Significant and Project Assignments: 2020-21 —Eight right-of-way appraisals for Knik-Goose Bay Road Reconstruction Project 2020—43 City of Seward Lease Parcels including commercial,industrial,and marine-type properties 2020—41 City of Kenai Lease Parcels including aviation,commercial,industrial,and marine-type properties 2019—City of Kodiak Lease Parcels including aviation and communication sites, seaplane base, and shipyard 2018—Fractional interest of land and sandwich leases for Anchorage hotel and fuel station properties 2017—Pacific Spaceport Complex,market rent of launch complex facilities within PSCA on Kodiak Island 2016-2017—Provided insurable value project appraisals for properties in Utgiagvik, Dillingham, Iliamna, Kotzebue, Nome,Cordova,Naknek,Angoon,Haines,Hoonah,Juneau,Kake,Anchorage,Bethel,and Yakutat 2015 —40 City of Seward Lease Parcels including commercial,industrial, and marine-type properties 2015 —97 City of Kenai Lease Parcels including aviation,commercial,industrial, and marine-type properties 2015 —Assisted with cost estimate to acquire lands to develop proposed AKLNG from Pt.Thomson to Nikiski 2014-2020— 50+Right-of-way appraisals for Parks Highway MP 48.8 to 52.3 Reconstruction Project 2014—Assisted with project management and appraisals of Nikiski properties for Alaska LNG acquisitions 2012—Assisted in the income analysis portion of the Trans Alaska Pipeline System(TAPS) 2010-2022—Alaska Railroad Corporation(ARRC)land lease appraisals in Anchorage, Seward, and Whittier Professional Affiliation: Practicing Affiliate—Appraisal Institute Or License is, 148813 Effective:5123/2021 State of Alaska Expires:06130)2023 Department of Commerce, Community, and Economic Development Division of Corporations, Business, and Professional Licensing Board of Certified Real Estate Appraisers Licensee: ALEXANDER H KLEINKE License Type: Certified General Rea! Estate Appraiser Status: Active Commissioner: Julie Anderson MacSwain Associates LLC 4401 Business Park Boulevard, Suite 22,Anchorage,Alaska 99503 Appraiser: Steve MacSwain, MAI Member of Appraisal Institute -No. 5700 State of Alaska, Certified General Real Estate Appraiser-No. 42 Professional Experience: 1986 to Present-MacSwain Associates LLC 1976 to 1986 -Appraisal Company of Alaska-President 1970 to 1975 -Real Estate Services Corporation—Appraiser 1969 to 1970 - State of Alaska Department of Highways -Right of Way Agent Real estate appraiser and consultant of all property types throughout Alaska including commercial, industrial, subdivisions and special-purpose properties. Appraisals have been performed for financing, leasing, insurance, condemnation,taxation,property damages,investment analysis,and buy-sell decisions. Appraisals include valuation of both real property and business enterprises. Professional experience totals 49 years. Life-long Alaskan resident of Alaskan Native descent. Education: Bachelor of Business Administration,Finance (1969), University of Alaska Fairbanks Appraisal Education: The following is a list of completed appraisal courses and seminars. 2021 Cool Tools:New Technology for Real Estate Appraisers by the Appraisal Institute 2021 Desktop Appraisals (Bifurcated, Hybrid) and Evaluations by the Appraisal Institute 2021 Hot Topics &Myths in Appraiser Liability by LIA Administrators &Insurance Services 2020 Uniform Standards of Professional Appraisal Practice Update by the Appraisal Institute 2019 How Tenants Create or Destroy Value:Leasehold Valuation and its Impact on Value by the Appraisal Institute 2017—Appraising Environmentally Contaminated Properties by the Appraisal Institute 2017 Residential& Commercial Valuation of Solar by the Appraisal Institute 2017 Right of Way Acquisition for Pipeline Projects by the International Right of Way Association 2015 Litigation Appraising: Specialized Topics and Applications by the Appraisal Institute 2015 Business Practices and Ethics by the Appraisal Institute 2013 Complex Litigation Appraisal Case Studies by the Appraisal Institute 2013 Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book)by the Appraisal Institute 2012 Appraisal Curriculum Overview by the Appraisal Institute 2010 Reviewing Appraisals in Eminent Domain by the International Right of Way Association 2010 Commercial Appraisal Engagement and Review Seminar for Bankers and Appraisers by the Appraisal Institute 2009— The Appraiser as an Expert Witness:Preparation and Testimony by the Appraisal Institute 2009 Attacking and Defending an Appraisal in Litigation by Whitmer Education 2008 Uniform Standards of Professional Appraisal Practice by the Appraisal Institute 2007 Business Practices and Ethics by the Appraisal Institute 2007 Eminent Domain Law for Right of Way Professionals by the International Right of Way Association 2007 Appraisal Review for Federal Aid Programs by the International Right of Way Association 2007 Analyzing Operating Expenses by the Appraisal Institute 1969-2006: Numerous appraisal classes pertaining to principles, income capitalization, cost analysis, sale comparison approach, and highest and best use analysis by the Appraisal Institute, Society ofReal Estate Appraisers, International Right-of-Way Association, International Association of Assessing Officers, and Marshall Valuation Service Membership and Organizations: Member of Appraisal Institute — No. 5700, International Right of Way Association (IRWA), and Building Owners and Managers Association(BOMA) Public Service: Past Chairman of the State Board of Certified Appraisers Past Member of Board of Equalization, Municipality of Anchorage,National Experience Review Committee of the Appraisal Institute, and Regional Ethics and Counseling Panel of the Appraisal Institute Past President of Alaska Chapter 57 of the Appraisal Institute Significant Assignments: 4 Appraised Pacific Spaceport Complex-Alaska (PSCA) land and facilities for Alaska Aerospace Corporation on Kodiak Island. 4 Appraised proposed LNG Pipeline, a FERC-regulated 860-mile pipeline transporting liquefied natural gas. 4 Appraised the Trans-Alaska Pipeline System, a FERC-regulated 800- pipeline that transports crude oil from Prudhoe Bay to Valdez, for TAPS ownership. 4 Appraised remote lands (65,000± acres) owned by three Native corporations damaged by the Selendang Ayu grounding and subsequent oil spill. 4 Appraised Calais Company,Inc.,a real estate holding company consisting of 39 commercial parcels in Anchorage. 4 Principal real estate consultant and expert witness for all lands affected by the Exxon Valdez oil spill. Project involved over 2,000,000 acres of remote land and nearly 2,000 private property owners. 4 Appointed as a representative of a three-member panel that analyzed and valued over 1,000,000 acres and 8,000 parcels for the Mental Health Lands Settlement. Contract assessor for the North Slope Borough, Kodiak Island Borough, City of Nome, and the City of Valdez. Represented Seibu Alaska, Inc. (Alyeska Resort and Alyeska Prince Hotel) in preparing of their property tax appeal with the Municipality of Anchorage that resulted in a$65 million reduction in assessed value. 4 Appraised submerged tideland parcels and wetlands parcels located in Womens Bay on Kodiak Island for the purpose of an exchange between Koniag,Inc. and U.S. Fish and Wildlife Service. 4 Appraised Common Carrier Pipeline right-of-ways leased and operated by BP Transportation Alaska and ConocoPhillips Alaska. 4 Appraised 3,600 acres consisting of the former Adak Naval Air Station and Submarine Base conveyed to the City of Adak and the State of Alaska. Expert Witness Experience: Steve MacSwain, MAI is qualified as an expert witness in both the United States Federal Court and the State of Alaska Superior Court. Steve has testified as an expert witness in State and Federal courts. In addition, Steve has testified as expert witness in numerous Alaskan municipal tax courts,public hearings, and depositions on matters related to real property. Arbitrator Experience: Appointed a Master by the Superior Court of Alaska and Municipality of Anchorage to serve as an arbitrator in determining just compensation. FffeOe: "12021 State of Alaska EHeMive:6l812021 Expires:0 613012 0 2 3 Department of Commerce,Community,and Economic Development Division of Corporations,Business,and Professionai Licensing Board of Certified Real Estate Appraisers Licensee:STEVEN JAMES MACSWAIN License Type:Certified General Real Estate Appraiser Status:Active Commissioner:Julie Anderson POBOX 2031 Seward,Alaska 99664 907-231-5773 1 info@sewardcitytours.com 65eward 6"';%ty Jours SEWARD, AK — Dear Members of the Seward City Council, Thank you for considering our land use request for: City of Seward Land: 60,984f SF(1.40f Acres) North Portion of Lot 10A,Fort Raymond Subdivision Replat No. 1905 Sea Lion Avenue, Seward,Alaska As the operators of Seward City Tours, our shuttle service has proudly served our local community and tourists for almost six years. We recently renewed our contract for another three years, with two potential three-year extensions. However, to ensure our service's sustainability, we need to secure a dedicated area for vehicle maintenance, parking, and affordable housing for our seasonal employees. Our operation has suffered from repeated vandalism to our vehicles during winter storage on our property and various rented lots. Coupled with the challenge of providing affordable seasonal housing, the urgency for dedicated land is paramount. Despite these challenges, we accepted the contract extension to maintain our commitment to the community. Continued service at our current rate requires regular vehicle maintenance, which new bus purchases won't sustain, given the escalating costs of fuel,labor,and replacements. This was evident when we extended the city rates far below any competitors',ensuring our shuttle operation's survival. Therefore, we propose purchasing city land to establish a maintenance shop and seasonal staff housing. Given the challenges the current real estate market poses,this request is critical for our service's continuity. We understand the city's reluctance for land sale proposals, but we request that you consider our request, given our partnership with the city and the community service we provide. By approving this request,you directly contribute to our local community's access to affordable and reliable transportation during the summer months. Thank you for your time and consideration. We eagerly await your response and the opportunity to discuss this proposal further. Respectfully, Jonah Swiderski Yen Ly 332 POBOX 2031 Seward, Alaska 99664 907-231-5773 1 info@ sewardcitytours.com ► cSewarct fG., ty Jours S E W A R D, AK - To City of Seward, This letter is a statement of SewardCityTours, LLC interest in purchasing: City of Seward Land: 60,984± SF(1.40±Acres) North Portion of Lot 10A, Fort Raymond Subdivision Replat No.1 905 Sea Lion Avenue, Seward,Alaska SewardCityTours, LLC (STC) intends to use this property for building a maintenance facility for the vehicles and housing for employees. We would like to proceed with negotiations with the City of Seward for the purchase of this property. With Regards, Jonah Swiderski and Yen Ly 333 • SEWARD COMMUNITY HEALTH CENTER PO Box 2895/ 417 First Avenue — Seward, AK 99664-2895 °COMMUNITY PHONE (907) 224-2273 H EALTH FAX (907) 224-8501 CENTER www.sewardhealthcenter.org August 2, 2023 To Whom it May Concern: Seward Community Health Center(SCHC)is pleased to learn of SewardCityTours' intention to purchase undeveloped land from the City of Seward. We have had several discussions with SewardCityTours and know them to be a reputable company operating in Seward. They strive to provide service beyond the standard in transportation and we have partnered with them in the past to provide a much-needed service to our community. A strong transportation system is critical to a community's health. Without reliable and consistent transportation,people are unable to make it to their jobs, school, grocery store, doctor appointments,post office, and so many other places that contribute to a full and healthy life. To continue providing a high level of transportation service, SewardCityTours requires some infrastructure. This is why we support their proposal to acquire land to build maintenance services for their vehicles and housing for their employees. We feel that with the purchase of this land, SewardCityTours will improve their ability to provide reliable and safe transportation in Seward during the summer months, as they have been for the last six years.This planned investment may be the beginning of addressing the larger community need for year-round public transportation. Seward Community Health Center looks forward to continuing to work with SewardCityTours in the future and supports their efforts to improve transportation options for our community. Sincerely, Craig Ambrosiam Executive Director Where your health matters August 2nd, 2023 Seward City Council ti c/o City of Seward PO Box 167 ��R C Seward, AK Board of Directors 2023 Francis Azzad-Smith, Chair RE: Purchase of Land from City for SewardCityTours, LLC Rhonda Spurr, Vice Chair Sharon Ganser,Sec/Treasurer Dear City Council: Carol Souza Randy Nabb The Seward Senior Center is pleased to learn of SewardCityTours, intention to purchase undeveloped land from the City JJ Kaiser of Seward. We have had several discussions with SewardCityTours and know them to be a reputable company operating in Seward. We know Linda Amberg that they strive to provide service beyond the standard in transportation and have partnered with them in order to provide service to our OPEN community, which is an unduplicated and essential service to serve the Executive Director resident and Seward visitors. Dana Paperman We understand that in order to continue to provide a high level of Our Mission Statement service this company requires some infrastructure, and would support To insure honor,dignity,security,and their proposal to acquire land in order to build maintenance services for independence for older Alaskans their vehicles as well as housing for their employees. through support services that assist them in maintaining meaningful and We feel that with the purchase of this land SewardCityTours will quality lives. continue to improve their ability to provide the public reliable and safe transportation in Seward during the summer months, as they have been Serving older Alaskans since 1978. for the last six years. A non-profit agency We at senior center hope to continue to work with SewardCityTours in TAX ID:92-0072425 the future and deeply support their efforts to pursue property that will benefit their efforts to improve the service they provide to the community. Email: sscnseward.net Web: www.sewardsenior.ore Facebook: Seward Senior Center Kind Regards, Dana Paperman Executive Director MEALSOWHEELS AMERICA 2023 MEMBER Senior Center, PO Box 1195,Seward,AK 996641907-224-5604 335 ib "Changing with the tides in harmony with Our people, land and heritage." City Council Members Seward, AK July 31, 2023 RE: Purchase of Land from City for SewardCityTours, LLC Dear City Council Members of Seward, We are pleased to learn of SewardCityTours, intention to purchase undeveloped land from the City of Seward. We have had several discussions with SewardCityTours and know them to be a reputable company operating in Seward. We know that they strive to provide service beyond the standard in transportation and have partnered with them to provide service to our community. We understand that in order to continue to provide a high level of service this company requires some infrastructure and would support their proposal to acquire land in order to build maintenance services for their vehicles as well as housing for their employees. We feel that with the purchase of this land SewardCityTours will continue to improve their ability to provide reliable and safe transportation in Seward during the summer months, as they have been for the last six years. We at Qutekcak Native Tribe hope to continue to work with SewardCityTours in the future and deeply support their efforts to pursue property that will benefit their efforts to improve the service they provide to the community. Kind Regards, Jamilyn Fenn Finance Manager Qutekcak Native Tribe 336 City of Seward,Alaska Planning&Zoning Commission Meeting Minutes June 6 2023 Volume 8, Page 16 CALL TO ORDER The June 6, 2023 regular meeting of the Seward Planning & Zoning Commission was called to order at 7:00 p.m. by Chair Clare Sullivan. OPENING CEREMONY Commissioner Charbonneau led the Pledge of Allegiance to the flag. ROLL CALL There were present: Clare Sullivan presiding, and Vanessa Verhey Nathaniel Charbonneau Brenan Hornseth Troy,Staggs Sean Ulman Comprising a quorum of the Commission; and Jason Bickling, Community Development Director Courtney Bringhurst, City Planner Selena Soto, GIS Technician Kris Peck, City Clerk Excused—None Absent—Monaco, Staggs CITIZEN COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING—None APPROVAL OF AGENDA AND CONSENT AGENDA Motion (CharbonneauNerhey) Approval of Agenda and Consent Agenda i Motion Passed Unanimous The clerk read the following approved consent agenda items: Approval of the May 9, 2023 Planning and Zoning Commission Meeting Minutes. SPECIAL ORDERS,PRESENTATIONS AND REPORTS Proclamations and Awards—None City Administration Report 337 City of Seward,Alaska Planning&Zoning Commission Meeting Minutes June 6, 2023 Volume 8,Page 17 Community Development Director Jason Bickling stated he would like to add the most recent City Manager Report to the P&Z packets to keep the commissioners updated. Sullivan asked about compliance issues with short term rentals. Bickling said their compliance was very high, but the few that were out of compliance tended to be very difficult to deal with. Other Reports and Announcements—None Presentations—None PUBLIC HEARINGS Resolutions Requiring Public Hearing Resolution 2023-014,A Resolution of the Planning and Zoning Commission of the City of Seward, Alaska, Recommending the City Council Amend Portions of Seward City Code; 15.10.222 Development Requirements—Table Notes,Letter E Motion (CharbonneauNerhey) Approve Resolution 2023-014 Community Development Planner Courtney Bringhurt said the item was brought back to P&Z at the request from city council.The main difference from the previous version was Harbor Commercial Zone was not listed in Table Note E with the minimum of 9000 square feet. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. No one appeared and the public hearing was closed. Charbonneau wanted to postpone the resolution until P&Z could have a dedicated work session on the topic. Motion to Postpone(CharbonneauNerhey) Postpone Resolution 2023-014 Motion Passed Unanimous UNFINISHED BUSINESS—None NEW BUSINESS Other New Business Items Discuss creation of an ad hoc committee to review the compliance status of approved Conditional Use Permits. Bickling said there were a lot of Conditional Use Permits that had been issued, but there was not a review process in place. He was interested in forming an ad hoc committee to review 338 City of Seward,Alaska Planning&Zoning Commission Meeting Minutes June 6, 2023 Volume 8,Page 18 the permits that had been issued. Motion (Sullivan/Charbonneau) Direction to Form an Ad Hoc Committee to Review Compliance Status of Approved Conditional Use Permits. Motion Passed Unanimous Discuss topic for work session on June 20,2023 The commission wanted to focus on Title 15 —Signs and push the Comprehensive Plan to a later date. INFORMATIONAL ITEMS AND REPORTS Reminder: Tuesday, June 20, 2023 Planning and Zoning Work Session at 6:OOpm in the Council Chambers, City Hall. Reminder: Tuesday, July 11, 2023 regular meeting at 7:00 pm in the Council Chambers, City Hall. CITIZEN COMMENTS—None COMMISSION AND ADMINISTRATION COMMENTS AND RESPONSES TO CITIZEN COMMENTS Charbonneau thanked administration for their work. Bickling noted that P&Z Work Sessions started at 6:00 p.m.and the regular meeting started at 7:00 p.m. Bickling wanted to standardize the P&Z meeting times so both the work sessions and meetings were at a consistent start time. Sullivan supported both earlier and more consistent start times. She noted this would be a public hearing item to change city code. ADJOURNMENT The meeting was adjou d at 7:51 p.m. Kris Peck �.•••""'�•,, lare Sullivan City Clerk �.�':� OF SEI,Z,� Chair ��'� .•�Ap Ol d.•�Q (City Seal) SEAL IJ OF A,0 .•�', 1,„ 339 August 202 r� Aug We Th3 September ✓{ SuMo TuWe Th Fr Sa SuMo TuWe Th Fr Sa 1 2 3 4 5 1 2 6 7 8 9 10 11 12 3 4 5 6 7 8 9 13 14 15 16 17 18 19 10 11 12 13 14 15 16 20 21 22 23 24 25 26 17 18 19 20 21 22 23 27 28 29 30 31 24 25 26 27 28 29 30 SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRI DAY SATURDAY Jul 30 31 (8:00pm 1 2 3 4 5 pm P&Z eeting P&Z WS Cemetery mmediately after meet' 6 7 8 9 10 11 12 7:00pm Seward 6:00pm Electric Utility Rescheduled- Ad Hoc HPC Work 7:00pm Rescheduled- HPC Regular Meeting to 13 14 15 16 17 18 19 7:00pm CC Mtg 6:00pm P&Z (Council Work Session (Council 20 21 22 23 24 25 26 7:00pm Seward 6:00pm HPC 6:00pm 55th Electric Utility Work Session Sister City Ad Hoc (Rescheduled Community Potluck 7:00pm HPC (Branson Regular Meeting 27 28 29 30 31 Sep 1 2 5:30pm CC Work Session 7:00pm CC Mtg Council Calendar 1 8/7/2023 9:31 AM 340 September 2023 September 2023 October 2023 SuMo TuWe Th Fr Sa SuMo TuWe Th Fr Sa 1 2 1 2 3 4 5 6 7 3 4 5 6 7 8 9 8 9 10 11 12 13 14 10 11 12 13 14 15 16 15 16 17 18 19 20 21 17 18 19 20 21 22 23 22 23 24 25 26 27 28 24 25 26 27 28 29 30 29 30 31 SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRI DAY SATURDAY Aug 27 28 29 30 31 Sep 1 2 3 4 5 6 7 8 9 Holiday- Labor 7:00pm P&Z 12:00pm PACAB Day 7:00pm Seward Electric Utility Ad Hoc 10 11 12 13 14 15 16 7:00pm CC Mtg (Council 17 18 19 20 21 22 23 7:00pm Seward !6:00pm P&Z 12:00pm PACAB Electric Utility Work Session WS Ad Hoc (Council 24 25 26 27 28 29 30 7:00pm CC Mtg Council Calendar 2 8/7/2023 9:31 AM 341 October 2023 October 2023 November 2023 SuMo TuWe Th Fr Sa SuMo TuWe Th Fr Sa 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 29 30 SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRI DAY SATURDAY Oct 1 2 3 4 5 6 7 7:00pm Seward 7:00pm P&Z 12:00pm PACAB Electric Utility eetong Ad Hoc 8 9 10 11 12 13 14 7:00pm CC Mtg (Council 15 16 17 18 19 20 21 7:00pm Seward !6:00pm P&Z Holiday-Alaska Electric Utility Work Session Day Ad Hoc (Council 12:00pm PACAB 22 23 24 25 26 27 28 7:00pm CC Mtg 29 30 31 Nov 1 2 3 4 7:00pm Seward Electric Utility Ad Hoc Council Calendar 3 8/7/2023 9:31 AM 342