HomeMy WebLinkAboutRes2005-080
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Sponsored by: Corbridge
CITY OF SEWARD, ALASKA
RESOLUTION 2005-80
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING THE PORT AND HARBOR TARIFF BY
MODIFYING THE PASSENGER TRANSIT FEE TO CHANGE
PENALTIES FOR FAILURE TO TIMELY REMIT PAYMENT, AND TO
INCREASE THE PASSENGER FEE FROM $1.50 PER PASSENGER TO
$3.50 PER PASSENGER, TO FUND UPLAND WORK IN THE SOUTH
AND EAST HARBORS AND CONSTRUCTION OF STEP 2 OF THE
HARBOR EXPANSION PROJECT, INCLUDING CONSTRUCTING
NEW M, N, 0, P, AND Q FLOATS IN THE SOUTH HARBOR
WHEREAS, at its meeting of April 25, 2005, the Seward City Council approved
Resolution 2005-27 accepting a final harbor expansion configuration (reflected in the Harbor
Layout maps prepared by Tryck, Nyman. Hayes, Inc., dated 4/5/05) for the Harbor Expansion
Project ("the Project"); and
WHEREAS, at its meeting of May 23, 2005, the Seward City Council approved
Resolution 2005-36 and authorized Step 1 of three steps in the Project (extending E, F, J
Floats and moving the Fuel and X Floats) which was funded utilizing revenues from the
12.96% increase in moorage rates which was effective January 1, 2005; and
WHEREAS, this resolution pursues direction given to the City administration at
Council's April 25, 2005 meeting, aimed at funding Step 2 in the Project (constructing new
M, N, 0, P and Q Floats and upland work in the South and East Harbors) and authorizes an
increase in the Passenger Fee from $1.50 to $3.50 per passenger effective January 1, 2006, to
fund a portion of Step 2, with the remaining funds recommended to come from other sources
which may include revenues derived from the newly created slips and a proposed 10%
increase in harbor moorage fees; and
WHEREAS, this resolution also changes penalties and late filing fees associated
. with the late payment or non-payment of passenger fees, increases the amount oftime that
vendors have to remit payment from 10 days to 30 calendar days, and creates a mechanism
by which the city manager can assess passenger fees to an operator who fails to file a return,
in order to ensure that passenger fees are paid in time to meet the City's debt service
obligations; and
WHEREAS, it is necessary to establish an adequate revenue stream to support a
future revenue bond proposal, and failure to make a timely decision will result in further
. project delays and may result in higher project costs due to rising interest rates, drastically
increasing fuel prices, and the upsurge in the price of steel; and
CITY OF SEWARD, ALASKA
RESOLUTION 2005-80
moorage and 1,024 feet of skiff space, and will help to reduce the waiting list which currently
stands at more than 400 customers; and
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WHEREAS, a $2.00 per passenger increase in the passenger fee will generate
approximately $333,000 annually; and
WHEREAS, the Harbor Passenger Fee was originally instituted according to
Resolution 2000-093, with Section 4 ofthat resolution stating, "The passenger fees .,. shall
be collected and paid ... and shall continue until such time that there are no longer any
outstanding Parity Bonds as defined in Resolution No. 94 relating to the issuance of harbor
revenue bonds."; and
WHEREAS, the intent language of Resolution 2000-93 stated that "it is the intent of
the City Council to collect only those passenger fees sufficient to pay expenses and debt
service on the revenue bonds and for other capital improvements in the Seward Small Boat
Harbor"; and
WHEREAS, additional intent language in that same resolution states "it is the intent
ofthe City Council to not adopt new passenger fees while the revenue bonds are outstanding,
and that the passenger fees provided for in this resolution shall sunset on payment of the
revenue bonds;" and
WHEREAS, the scope ofthe desired harbor configuration has changed dramatically
since passenger fees were first imposed in 2000 (based on a lengthy and well-attended public
involvement process), leading new principals involved in the process to conclude that
additional passenger fees represent a justified and appropriate mechanism by which to
generate a stable revenue source to repay revenue bonds for additional harbor capital
improvements; and
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WHEREAS, it is within the purview of the present Council to increase the passenger
fee; and
WHEREAS, the revenue bonds proposed to be issued to pay for the future capital
improvements to the Seward Small Boat Harbor are parity bonds and as such, qualify to be
paid utilizing passenger and other fees; and
WHEREAS, it remains the intent of the current City Council to collect only those
passenger fees sufficient to pay expenses and debt service on the revenue bonds and for other
capital improvements in the Seward Small Boat Harbor, and the passenger fees provided for
in this resolution shall sunset on payment ofthe revenue bonds; and
CITY OF SEWARD, ALASKA
RESOLUTION 2005-80
....
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA, that:
Section 1. The Port and Harbor Tariffis hereby amended to increase the Passenger
Fee by $2.00 per passenger, from the current rate of $1.50 per passenger to $3.50 per
passenger, with an effective date of January 1, 2006.
Section 2. Effective December 1,2005, Subsection 230 entitled "Passenger Fees" of
Section II entitled "Services and Charges" of the Rules, Rates, Charges and Regulations for
Port and Harbor Facilities, Seward, Alaska" is hereby amended to add Subsections 230 (b)
"Filing offorms and payment of fees" and 230 (c) "Failure to file" as follows:
230 (b) Filing of forms and payment of fees. Prior to January I of each year, operators of affected
passenger vessels shall complete a passenger fee registration form provided by the City. Passenger
fees shall be paid and reported to the City monthly, on a form, and in a manner, provided by the City,
within 30 calendar days of the month for which the fees are due. The City may require more or less
frequent filing, depending on the account status of the filer. A return must be filed every period, even
if no transactions have occurred. Failure to file areturn is subjectto a missed filing fee of$25 for each
missed filing. Failure to remit all taxes collected or later found to be due by the due date, is subject to
a penalty in the amount of 10% of the amount owed, plus interest charged at the maximum rate
allowed by law per year, compounded monthly.
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230 (c) Failure to file. When an operator fails to file a return, or when the city manager finds that a
return filed by an operator is not properly supported, the city manager may prepare and me a return on
behalf of the operator. Passenger fees estimated on a return filed on behalf of the operator may be
premised upon any information that is available to the city manager including, without limitation,
comparative data for similar businesses. An operator for whom an involuntary return is filed under
this subsection shall be liable for the passenger fees stated on the return as well as any applicable
penalties and interest as stated in 230 (b).
Section 3. The increase in the Harbor Passenger Fee shall continue until such
time as there are no longer any outstanding parity bonds relating to the issuance of
harbor revenue bonds.
Section 4. Section 5 of Resolution 2000-093 which states that "Passenger
fees shall be paid and reported to the City monthly, on a form provided by the City,
by the 10th of the month following the month for which the fees are due" is hereby
amended to be consistent with this resolution, since 230 (b) above extends the period
of time in which an operator has to file and remit passenger fees to the City, to 30
calendar days.
Section 5. This resolution shall take effect ten days after adoption.
PASSED AND APPROVED by the City Council of the City of Seward,
Alaska, this 12th day of September, 2005.
CITY OF SEWARD, ALASKA
RESOLUTION 2005-80
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AYES:
NOES:
ABSENT:
ABSTAIN:
Branson, Dunham, Valdatta, Amberg, Clark, Lorenz, Shafer
None
None
None
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COUNCIL AGENDA STATEMENT
Meeting Date: September 12, 2005
Through: Clark Corbridge, City Manager
From: Kristin Erchinger, Finance Director
Agenda Item: Harbor Passenger Fee Increase from $1.50 to $3.50 per Passenger
BACKGROUND & JUSTIFICATION:
The Seward City Council has made significant progress toward expanding the Small Boat Harbor, holding no
fewer than 23 meetings in the past 20 months (see attached listing), aimed at addressing harbor-related
expansion and funding issues. At its meeting of April 25, 2005, the Council approved Resolution 2005-27
accepting their final desired expansion configuration (reflected in the Harbor Layout maps prepared by
Tryck, Nyman, Hayes, Inc., dated 4/5/05) with a total price tag of $8,664,215, and directing the
administration to propose a harbor moorage rate increase to fund the entire Harbor Expansion Project (“the
Project”). The $8,664,215 project includes construction of Z-Float, at a price of $2,464,450. The major
hurdle to deciding the harbor configuration has been crossed, and the primary challenge now is to determine
how to fund the project.
The City administration has consistently recommended a three-step approach to funding the entire project:
Step 1 extends the concrete floats on E, F, and J Floats, relocates X Float and the Fuel Float, and moves
water service to X Float; Step 2 constructs the South Harbor, including new M, N, O, P and Q Floats, and
associated upland items in the South and East Harbor; and Step 3 constructs Z Float. A primary goal of the
City has been to complete as much of the project as possible, by the end of 2006. Failure to move forward on
the project immediately may result in higher project costs due to rising interest rates, drastically increasing
fuel prices, and the price of steel. It is for this reason that the administration proposes moving forward with a
rate increase effective January 1, 2006.
At the meetings of May 9 and May 23, 2005, the administration and Council proposed three separate
resolutions aimed at following Council’s April 25 direction to increase moorage rates to fund the expansion
project. All three resolutions failed. There appeared to be broad Council support for easing the rate shock
that would come with substantial moorage rate increases.
At the meeting of May 23, 2005, the Council approved Resolution 2005-36, authorizing Step 1 of the
Project. Step 1 will construct approximately 34 new slips and add 382 linear feet of moorage. This action
was followed by Resolution 2005-52 and 2005-58 approved in June, 2005, authorizing the issuance of up to
$1.5 million in harbor revenue bonds to fund Step 1, utilizing the moorage rate increase of 12.96% which
went into effect January 1, 2005, to pay the bonded indebtedness.
The City Council held public work sessions in July and August to solicit input on funding alternatives to
finance Step 2 of the harbor expansion project. As a result of those work sessions, there appeared to be
consensus on the Council not to consider a marine fuel tax to fund the project, but to consider a mixture of
increase in moorage rates and passenger fees to fund the project.
CITY OF SEWARD, ALASKA
RESOLUTION 2005-80
PAGE TWO
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The administration recommends financing Step 2 of the harbor expansion project (at an estimated cost of $4.5
million, including bond issue costs), through a combination of new slip revenues, increased passenger transit
fees, and harbor moorage rate increases. Step 2 will construct approximately 106 new slips, add 377 linear
feet of moorage, and 1,024 feet of skiff space, and is expected to generate $180,576 in new revenue. The
remaining annual cost burden of $449,000 would be spread among individuals who benefit from year-round
moorage space (10% moorage rate increase generates $116,000), as well as the approximately 166,000
visitors impacting the harbor’s infrastructure as passengers aboard vehicles-for-hire ($2.00 increase in
passenger fee, to $3.50 per person, generates $333,000).
This resolution specifically seeks approval to increase the Harbor Passenger Fee by $2.00 per passenger,
effective January 1, 2006, bringing the per passenger fee rate from the current $1.50 to $3.50. It makes
additional changes to the passenger fee, including changing penalties and late filing fees associated with the
late payment or non-payment of fees, to provide an incentive for operators to pay on time. This has been a
problem since the passenger fee was implemented. We have further increased the amount of time that we
given operators to file their reports and remit payment, from the current 10 days following month-end, to 30
calendar days, and we have created a mechanism by which the city manager can assess passenger fees to
operators who fail to file a return.
The Harbor Passenger Fee was originally instituted per Resolution 2000-093 approved September 11, 2000
(see attached). Section 4 of that resolution stated, “The passenger fees ... shall be collected and paid ... and
shall continue until such time that there are no longer any outstanding Parity Bonds as defined in Resolution
No. 94 relating to the issuance of harbor revenue bonds.” The administration fully intends that revenue bonds
being proposed to pay for future capital improvements to the Small Boat Harbor will be issued on par with
those bonds.
The intent language of Resolution 2000-93 stated that “it is the intent of the City Council to collect only
those passenger fees sufficient to pay expenses and debt service on the revenue bonds and for other capital
improvements in the Seward Small Boat Harbor.” {emphasis added} Thus, this intent language does
contemplate the use of passenger fees to pay for capital improvements other than E-float and the fish cleaning
stations. However, further intent language in the same resolution states that, “it is the intent of the City
Council to not adopt new passenger fees while the revenue bonds are outstanding, and that the passenger fees
provided for in this resolution shall sunset on payment of the revenue bonds.”
The actions taken by a former City Council are not binding upon future Councils, which means that the intent
of the previous resolution can be honored by today’s City Council, and the Council can decide not to increase
passenger fees, or the present City Council can decide that the passenger fee represents a fair mechanism by
which to generate a stable revenue source to repay revenue bonds. Ultimately, the administration supports an
increase in the passenger fees as a way to spread the burden of capital improvement costs among the broadest
base, with all of the passengers who utilize the harbor paying a portion of that cost. We further support a
sunset clause that would terminate the passenger fee upon maturity of all harbor revenue bonds.
CITY OF SEWARD, ALASKA
RESOLUTION 2005-80
PAGE THREE
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FISCAL NOTE:
An increase in passenger fee from $1.50 to $3.50 per person generates approximately $333,000 per year in
revenues, helping to fund Step 2 of the harbor expansion. The City of Seward expects to utilize this increase
in rates to secure revenue bonds of approximately $4.5 million.
Finance Approval _____________________________________
RECOMMENDATION:
Council approve Resolution 2005-80, amending the Port and Harbor Tariff by increasing the passenger fee
from $1.50 to $3.50 per person, changing the payment penalty to 10% and including a missed filing fee of
$25, and authorizing the city manager to file a return on behalf of an operator who fails to properly and timely
file.
CITY OF SEWARD
HARBOR EXPANSION PROJECT
MEETING LIST SINCE JANUARY, 2004
The following list represents the meetings held by the Seward City Council since January, 2004, dealing with the Harbor Expansion
Project and/or harbor financing actions:
January 28, 2004 - Worksession to discuss port and harbor tariff rates
February 23, 2004 - Resolution 2004-19 0 Phase I of the SBH Planning and Development Guide (postponed)
March 8, 2004 - Resolution 2004-19 - Phase I of the SBH Planning & Development Guide (postponed)
April 12, 2004 - Resolution 2004-19 - Phase I of the SBH Planning & Development Guide (failed)
May 10, 2004 - Resolution 2004-56 - TNH contract change #2 re: Phase I contract
May 25, 2004 - Worksession - East Harbor Expansion - Phase I
July 13, 2004 - Worksession - East Harbor Expansion - Phase I
July 26, 2004 - Council discussion on East Harbor Expansion - Phase I
September 16, 2004 - Worksession with PACAB to discuss East Harbor Expansion
October 11, 2004 - Council accepts inner harbor improvements proposal except X-float
December 13, 2004 - Resolution 2004-128 - Port and Harbor Tariff revision
January 10, 2005 - Resolution 2004-128 - Reconsideration of Port and Harbor Tariff revision
March 14, 2005 - Resolution 2005-15 - Pursuing State funding for harbor
April 20, 2005 - Worksession - TNH - East Harbor Expansion
April 25, 2005 - Resolution 2005-27 - Adopting development alternative for East Harbor Expansion
May 9, 2005 - Resolutions 2005-28 and 30 - Proposed moorage rate increase (fails)
May 23, 2005 - Resolution 2005-37 - Proposed moorage rate increase(fails); Resolution 2005-36 authorizes extending E, F, J floats,
move fuel and X-floats, purchase piling, pursue capital financing
June 13, 2005 - Resolution 2005-52 - Transpac Marina Float Contract and Resolution 2005-51 expressing intent to issue bonds to
finance harbor expansion, Phase I
June 27, 2005 - Resolution 2005-58 authorizes harbor revenue bonds to pursue Phase I
July 13, 2005 - Worksession on Harbor Expansion funding alternatives
August 11, 2005 - Resolution 2005-70 - Contract for purchase of pilings
August 24, 2005 - Worksession on Harbor Expansion funding alternatives
September 12, 2005 - Resolutions 2005-___ - Proposed 10% moorage rate increase to fund Harbor Expansion; Resolution 2005-
____ - Proposed $2.00 passenger fee increase to fund Harbor Expansion