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CITY OF SEWARD, ALASKA
RESOLUTION 2003-143
A RESOLUTION OF THE CITY COUNCIL OF THE CI OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ITHDRAW FROM
PARTICIPATION IN THE CONSTRUCTION O THE "SOUTHERN
INTERTIE" BY NOTIFYING THE OTHER PART IPANTS IN WRITING
OF OUR INTENTIONS.
WHEREAS, The Southern Intertie desi has been completed and the cost of
the project is estimated at $118 million; and
WHEREAS, The State of Alask as requested and received the approximately
$28 million in interest which the origin grant of $47 million has earned since 1994; and,
WHEREAS, The utilities maining in the project will have to finance
approximately $71 million from t eir own resources; and,
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WHEREAS, Sewar~ 1.44% share of the $71 million will be approximately $1
million; and,
WHEREAS, C~ntinued participation in the Southern Intertie by the City of
Seward will not retu enefits to Seward in excess of the money spent on the project.
NOW, T~REFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY O SEWARD, ALASKA, that:
Section 1. The City Manager is authorized to notify the remaining utilities in the
project that e City of Seward will no longer be a participant in accordance with Section
4(b)(3) of e Participants Agreement.
This resolution to take effect immediately.
CITY OF SEWARD, ALASKA
RESOLUTION 2003-143
PASSED AND APPROVED by the City Council oft City of Seward, Alaska, this
24~' day of November, 2003.
T CITY OF SEWARD, ALASKA
David Brossow, Mayor
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Jean Lewis
City Clerk
(City Seal)
COUNCIL AGENDA STATEMENT
Meeting Date: November 24, 2003
Through: Phil Shealy, City Manager
From: Dave Calvert, Manager, Electric Utility
Agenda Item: Southern Intertie Participation/Non-Participation
BACKGROUND & JUSTIFICATION:
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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.
Utilities can opt out of the project 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
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FISCAL NOTE:
There are no City Funds to be expended.
Approved by Finance Department
RECOMMENDATION:
City Council approve Resolution 03- authorizing the City Manager to notify the other
participating utilities in the Southern Intertie that Seward will no longer be a participant in the
Southern Intertie. This notice is given in compliance with Section 4(b)(3) of the Participants
Agreement
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