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Home My WebLink AboutRes2005-037 FAILED Sponsored by: Amberg CITY OF SEWARD, ALASKA RESOLUTION 2005-37 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ,. SEWARD, ALASKA, AMENDING THE PORT AND HARBOR TARIFF BY INCREASING MOORAGE RATES OVER A THREE- YEAR PERIOD (12.58% INCREASE EFFECTIVE JANUARY 1,2006, 12.0% INCREASE EFFECTIVE JANUARY 1, 2007, AND 11.0% INCREASE EFFECTIVE JANUARY 1, 2008), TO FUND CONSTRUCTION OF EAST HARBOR, SOUTH HARBOR, AND UPLAND AMENITIES WHEREAS, the Army Corps of Engineers is nearing completion of the dredging work in the Small Boat Harbor basin and construction of a new breakwater; and WHEREAS, since assuming ownership of the harbor from the State of Alaska in February, 1999, the City has: upgraded portions of the existing harbor infrastructure; conducted extensive public meetings to determine the desired configuration of the inner- harbor improvements; and is now prepared to move forward with plans to expand the Small Boat Harbor; and WHEREAS, Resolution 2005-27 was approved by the Seward City Council on April 25,2005, directing the administration to pursue Alternatives 1 and 2, plus construction ofZ- float, as reflected in Tryck, Nyman, Hayes, Inc. Harbor Layout maps dated 4/5/05, for a total - estimated cost of $8,664,215, and to forward to Council the required moorage rate increase necessary to facilitate these improvements, which would have required a moorage rate increase of 57.4%; and WHEREAS, in order to reduce the rate shock associated with the harbor expansion proj ect, it is necessary to delay the construction ofZ- float in the initial phase ofthe project, at an estimated cost savings of$2,607 ,970 or a total cost of$6,056,245, resulting in a required moorage rate increase of35.58%; and WHEREAS, in order to pursue revenue bond financing for these capital improvements, a reliable revenue source must be identified to support repayment of the annual debt service costs; and WHEREAS, the Seward City Council desires to increase harbor moorage rates as reflected in the Port and Harbor Tariff, by an amount necessary to finance the annual operating and capital costs associated with this expansion, equating to a 35.58% increase in rates with said increase being implemented incrementally, as follows: 12.58% increase effective January 1, 2006 raises per-foot rates from $35.80 to $40.30; 12.0% increase effective January 1,2007 raises per-foot rates from $40.30 to $45.14; and 11.0% increase effective January 1, 2008 raises per-foot rates from $45.14 to $50.11 per lineal foot. - CITY OF SEWARD, ALASKA RESOLUTION 2005-37 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: I ...,,; Section 1. The City Council of the City of Seward hereby rescinds Resolution 2005- 27 approved on April 25, 2005. Section 2. The City Council ofthe City of Seward hereby adopts Alternatives 1 and 2 (as reflected in Tryck, Nyman, Hayes, Inc. Harbor Layout maps dated 4/5/05) with the exception that Z-float and the associated water service to Z-float be deleted from the initial phase of this project. Section 3. The City Council of the City of Seward resolves to amend the Port and Harbor Tariffby incrementally increasing the moorage and dockage rates as follows: 12.58% increase effective January 1,2006, with the per-foot charge changing from $35.80 to $40.30; 12.0% increase effective January 1, 2007, with the per-foot charge changing from $40.30 to $45.14; and 11.0% increase effective January 1, 2008, with the per-foot charge changing from $45.14 to $50.11 per lineal foot. Section 4. This resolution shall take effect 10 days after adoption. PASSED AND APPROVED by the City Council ofthe City of Seward, Alaska this 23rd day of May, 2005. l ...J THE CITY OF SEWARD, ALASKA V~"'Mff::I- AYES: NOES: ABSENT: ABSTAIN: Amberg Branson, Dunham, V aldatta, Clark, Lorenz, Shafer None None ATTEST: .Jc~AJ~/h'1I!20c.L cAohanna Dollerhide Acting City Clerk ","II"", .........' OF S!2~"##. (City Seal) ......r~.......<;;;o..~.... 'AIL>. ~" '1, v .' C,pr '....1;."\, #. ~~;o, .-0 .. v ~ .: ...~ -... ~.. ~ -~ i \ : ~ 0: SEAL !.: :I ':. : = ~ '. -....- .. ~ n'.~. .. l :: .,. tJ ,-,..VA. ^...-v..~ .:!!Ii ",.. ,.' .. 'v'-1 ,\w.. ~ .> ....~......... I ..' -. ,~~ "~jL JI, f.r: ...... \J ,'" <I"'i'e' OF p.,\.t\."", ""lin,,'" j 1 ...... COUNCIL AGENDA STATEMENT Meeting Date: May 23, 2005 Through: Clark Corbridge, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Harbor Tariff Increase of 35.58%, Phased-in Over 3 Years, to Fund Harbor Expansion Project (excluding construction of Z-Float at this time) BACKGROUND & JUSTIFICATION: The Seward City Council approved Resolution 2005-27 on April 25, 2005, directing the administration to put forward a harbor moorage and dockage rate increase necessary to fund Alternatives 1 and 2, plus construction of Z-float, as reflected in the Harbor Layout maps prepared by Tryck, Nyman, Hayes, Inc., dated 4/5/05. The total cost of this project would have been $8,664,215. Pursuit of this harbor expansion configuration would have resulted in a rate increase of 57.4%, raising per-foot moorage rates from $35.80 to $56.35. At its meeting of May 9, 2005, the Seward City Council failed to support resolution 2005-28. The City Council supports completing the entire harbor expansion project, but the rate shock associated with attempting to fund the entire project solely through moorage and dockage fee increases is problematic. Therefore, Council wishes to delay the construction of Z-float, and pursue the remainder of the project, including: 1) Construction of South Harbor, including new M, N, O, P and Q Floats, and associated upland items in the South Harbor; 2) Extension of concrete floats on E, F, and J Floats; 3) Relocate X-float and the fuel float, and move water service to X- float; 4) Purchase all piling for all phases of the project utilizing existing EDA grant funds; and 5) Upland items in the East Harbor. All of these items are reflected in the Harbor Layout maps described in the first paragraph, with the exception that we are delaying construction of Z-float until a funding mechanism can be determined. The attached Resolution modifies action taken by Council on April 25, 2005, by rescinding Resolution 2005-27 and pursues the entire project minus construction of Z-Float and the water service to Z-Float. The cost of this configuration is $6,056,245. The City has approximately $500,000 available to fund this project, and it is therefore necessary to pursue revenue bonds to finance the remainder of the project. After accounting for available City monies, plus approx. $267,500 available from EDA to pay for pilings, the City will need to bond approximately $5,334,955. In order to estimate the moorage rate increase needed to support this project, assumptions were made about the interest rate on the bond, debt coverage ratio required by the financing, and the estimated annual added operating costs associated with the project. Annual debt service payments on a 20-year bond at 6.25%, with a debt coverage of 1.20, are $565,175. Adding estimated annual operating costs of $160,000, the total additional annual revenues required to complete this project total $725,175. The rate increase of 12.96% implemented in January, 2005 is expected to generate $117,288 per year, and the additional slips created by the harbor expansion (excluding Z-Float) are expected to generate $180,576. This leaves an annual CITY OF SEWARD, ALASKA RESOLUTION 2005-30 _______________________________________ shortfall in revenue of $427,311. Given that there are 33,544 total available feet of moorage space in the harbor configuration contemplated by the expansion project excluding Z-Float, the per-foot increase in rates is equal to $12.74, representing a 35.58% increase in harbor moorage rates necessary to fund this project. FISCAL NOTE: The City of Seward intends to issue revenue bonds in an amount necessary to fund the project, totaling approximately $5.4 million, and will secure these bonds through an increase in rates of 35.58% phased in over a three-year period. Finance Approval _____________________________________ RECOMMENDATION: Council approve Resolution 2005- 37, amending the Port and Harbor Tariff as follows: a 12.58% increase effective January 1, 2006; 12.0% increase effective January 1, 2007; and a 11.0% increase effective January 1, 2008.