HomeMy WebLinkAboutRes2003-076Pulled 7-14
CITY OF SEWARD, ALASKA
RESOLUTION 2003-76
Sponsored by: Shealy
A RESOLUTION OF THE CITY COUNCIL OF TH ITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER O WITHDRAW FROM
PARTICIPATION IN THE CON5TRUCTIO OF THE "SOUTHERN
INTERTIE" BY NOTIFYING THE OTHER P TICIPANTS IN WRITING
OF OUR INTENTIONS
WHEREAS, the Southern Intertie design
been completed and the cost of the project is
estimated at $118 million; and
WHEREAS, the State of Alaska has equested and received the approximately $28 million
in interest which the original grant of $47 illion has earned since 1994; and
WHEREAS, the utilities rem mng in the project will have to finance approximately $71
million from their own resources; d
WHEREAS, Seward's 1 4% share of the $71 million will be approximately $1 million; and
WHEREAS, contin d participation in the Southern Intertie by the City of Seward will not
return benefits to Seward n excess of the money spent on the project.
NOW, THERE~~ RE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALA ,that:
Section 1. The City Manager is authorized to notify the remaining utilities in the project
that the City of S ward will not be a participant after July 15th, 2003, in accordance with Section
4(b)(3) of the P icipants Agreement.
2. This resolution to take effect immediately.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14th
day of July, 2003.
CITY OF SEWARD, ALASKA
RESOLUTION 2003-76
COUNCIL AGENDA STATEMENT
Meeting Date: July 14, 2003
Through: Phil Shealy, City Manager
From: Dave Calvert, Manager, Electric Utility
Agenda Item: Southern Intertie Participation/Non-Participation
BACKGROUND & JUSTIFICATION:
th
On January 10, 1994, the Seward City Council passed Resolution 94-014 authorizing the City
Manager to execute the Alaska Intertie Project Participants Agreement for and on behalf of the City
of Seward. This contract was one of four signed by the City of Seward and five other “Railbelt”
Utilities to construct a Southern and a Northern Intertie primarily funded by a $90 million State
Grant. $45 million was allocated to each Intertie. The Northern Intertie is now under construction.
The Environmental Impact Statement (EIS) took about eight years to complete at a cost of
approximately $6.5 million, funded out of the Original State Grant of $45 million for the Southern
Intertie. However, in the Intertie Grant Agreement, which transferred the funds to AIDA on behalf
of the participating utilities, it specifically says that “....grant funds held by AIDEA and all interest
earned thereon shall not be or constitute monies of the State.” In other words the interest earned on
the grant funds belong to the participants in the project. In 2003, the interest for the Southern
Intertie amounted to approximately $28 million. The Governor, in violation of these agreements,
requested and received from AIDEA the $28 million in interest funds to help balance his budget,
leaving only approximately $47 million in the fund to construct a $118 million dollar project. This
would mean that the participating utilities would have to fund approximately $71 million, of which
Seward’s share would be at least $1 million. There would not be that much in benefits for the City
of Seward. Further, other Railbelt Utilities have already indicated their intention to opt out of the
project, which would increase Seward’s share of the project and the related cost.
th
The “Decision Date”, set by the Intertie Participants Group (IPG), is July 15, 2003. Utilities can
opt out of the project up to and including that date without penalty. I recommend that Seward
exercise that option.
CONSISTENCY CHECKLIST:
Yes No
1. Comprehensive Plan
2. Strategic Plan
3. Other
4. Not applicable X
?????
1
FISCAL NOTE:
There are no City Funds to be expended.
Approved by Finance Department
RECOMMENDATION:
City Council approve Resolution 2003-76 authorizing the City Manager to notify the other
th
participating utilities in the Southern Intertie that Seward will not be a participant after July 15,
2003. This notice is given in compliance with Section 4(b)(3) of the Participants Agreement
?????
2