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HomeMy WebLinkAbout07282014 City Council Laydowns MEMORANDUM Date: July 28th, 2014 of sew, To: City Council, Jim Hunt 11:As0" From: Assistant City Manager, Ron Long Subject: Suggested amendment to Friends of the Jesse Lee Home Purchasing agreement language Administration suggests that council add the following clarifying language, by amendment, to section "10. Assignment" of the Purchasing Agreement, to read as follows: Buyer may transfer the Property and its obligations under this Agreement to an affiliate, which may perform the Work subject to the conditions and requirements of this Agreement including but not limited to applicable restrictive covenants, in order to facilitate a tax credit financing transaction if recommended by tax counsel, upon approval of Seller, such approval will not be unreasonably withheld. This language has been added after negotiating and cooperation with attorneys from both the City and the FJLH. 772--S/2-0 114 Resolution 2014—059 NAIAA04 • 4 a e rro In 2005-ALMOST 10 YEARS AGO- under Resolution 2005-01 and Resolution 2005 83 the City Council gave the Friends of the Jesse Lee Home (NW) ultimate authority to obta•n funding for rehabilitation and development of the property as an educational and residentia boarding facility, Total cost of the project has been estimated at 17 Million. Historic tax credits in he amount of 3.4 Million may be available if the buildings are fully restored. Over the last few ears millions of dollars have been acquired from the State through the Governors 0udget and :he Legislative political process. The FJLH have been very successful in their lobbying efforts, in acquiring funds fo this project t. However, where is the accountability for how these funds are being spent? I .nd rstand the up front administrative costs for a project of this magnitude represents a large perce tageof the total project costs. If FJLHdo not have to justify their expenditures to the City, w' o are they accountable to? On a pass thru grant the City handled, expenditures for one quarter (Oct. '11—De . 31—'11) totaled $1112,107.61. itemized indicated offices for Seward and Anchorage were o .fitted with furniture,computers, I-pods, etc. Lobbying efforts and travel does not come c he p, According to former coimcih-nember, Vanta Shafer, she indicated a consultant bill d FJLH $100. Pius per hour for a total of$20 Thousand Dollars for I month of compensation. V nta went on to comment that "Physicians in Seward don't get paid that much, and they are sa ing lives." So, if nothing else there should be financial accountability on the project up to thi point and into the future. It is still a City project!! Purchase and Sales Agreement—Page 2 under Item 2 "Consideration' rather than a "Due Diligence Period"of 5 years, I suggest 3 years to August30, 2017. Page 4—Item 2 of the Purchase and Sales Agreement is confusing because the FILH has had access and been involved in stabilization and inspection work since 2005. Also, Page 4--Item 4 "Extension to the The Due Diligence" Can go on FOREVER. Other issues that could be problematic is Planning&Zoning. Rezoning, Site development, Access roads, and parking have not been addressed by the City or the neighbors, Also, the Charter School application through the Kenai Peninsula Borough School strict is a distraction to our public school system here in Seward. Education funding statewi e is becoming more of a political issue every year. If this school is built, how will it be s stained and funded into the future? I feel we are heading for a another CLIFF ON THIS PROJECT!! 7/28/2014 WHEREAS, it is in the city's best interest to dispose of these properties at less than fair market value in the manner described herein, transfer the risk and liability of the abandoned properties and the necessary site hazardous material cleanup and abatement to the Buyer. Now,therefore, Buyer and Seller agree as follows: 1. Purchase and Sale: Subject to the terms and conditions of this Agreement, Seller agrees to sell and Buyer agrees to purchase good and marketable title in fee simple, subject to reversion, of the following real property, including all improvements, fixtures, and appurtenances, described as follows (the "Property"): Lots 15A and 15B, Jesse Lee Heights Subdivision Addition No. 4 according to Plat 89-18, Seward Recording District, Third Judicial District, State of Alaska. 2. Consideration: The title of the property shall be transferred on August 29, 2014. There shall be a reversionary clause to transfer the property back to the City of Seward if the following improvements are not completed within a five (5) year term. The consideration for the transfer of the Property shall consist of previous studies necessary to evaluate the site plus site improvements (the "Work") to be performed by Buyer to the satisfaction of the seller, on, or before,the final date of the Due Diligence Period of August 30, 2019. The Work shall consist of the following: a. Hazmat Abatement(estimated at$216,000) b. 50% of Water Utilities: 270+/- feet 8" main @ $200 per foot and 2 hydrants (estimated at$74,000 X .5 =$37,000) c. 50% of Sewer Utilities: 220+/- feet 6"main @ $150 per foot, 100+/- feet 4"main @ $125 per foot, 3SSMHs@$10,000 each(estimated at$75,500 X .5 = $37,750) Total estimated required future improvements: $ 290,750.00. In addition, Buyer has coordinated $33,125.51 for the Environmental Study, Hazmat Study, and survey work listed in Appendix A, for total consideration of$323,875.51. Upon substantial completion of all Work, the reversionary clause shall remain in effect so that the properties shall revert to the City of Seward if the above work is not completed finally or the properties are used for any other purpose than as a public education and residential boarding facility, or are left vacant,unless the City and Buyer mutually and in writing agree to allow other uses and not initiate reversion. Seller Initial Buyer Initial Page 2 of 7 -7122/11-1 July 28, 2014 TO: Seward City Council, Mayor Bardarson FROM: Lynda Paquette, Resident, Property Owner and Business Operator on Lowell Point(AK ANGELS Care Inc.) I am here to speak to you this evening on 2 subjects pertaining to the Lowell Point Wastewater Treatment Lagoon. First, thank you to everyone involved for getting the RFP issued. Its exciting that there is a lot of interest from numerous vendors, although it's disappointing that you have had to delay the deadline. Those of us who live on Lowell Point, and especially those who operate businesses are extremely interested in the timeline of the proposed dredging project. Since there was no mention in the RFP itself that speaks to consideration of the residents and businesses(or of the predominance of lodging businesses that exist there), I am taking this opportunity to bring this issue to the forefront, before the bids are even opened. We really need to be kept appraised as to what the plans are,the schedule and timelines. Many lodging businesses are already taking reservations for 2015, which is making things especially difficult when the proposed deadline in the RFP is mid June of 2015 and many of our lodging businesses are busy as early as March, some are even open year round We understand there are weather concerns and a variety of other issues including the vendor themselves.As your neighbors,we are asking to be treated with more compassion and consideration when it comes to keeping us informed on the timeline and schedule of the dredge for the Lowell Point WW Lagoon. We will appreciate an opportunity to meet with the vendor,once one has been selected. The second issue is the hottest potato there may have ever been. The "cat's out of the bag" as the saying goes if you read the attached email in my handout. One of the lodging businesses had a customer who works in Wastewater stay with them, and as you will read in the email,they pointed out the health risks of breathing these fumes. Please take this seriously; as you can see in the attachment,there is good reason not to trust our noses when it comes to understanding how strong the fumes are.We need to have an official heath assessment conducted for the sake of everyone. Please identify who has the proper piece of testing equipment (if it does not exist here, perhaps a Fire or Police Department in the Borough has it?) and get some testing conducted. We as a community have a right to know officially what we are being subjected to, and those of us with Visitor venues need to have proper answers for our customers. Thank you. July 28, 2014 TO:Seward City Council Members&Public Works Staff FROM: Lynda Paquette,AK ANGELS CARE, Inc.,on behalf of all Lowell Point Property Owners, Residents and Visitors RE: Health Risk Issues pertaining to Hydrogen Sulfide fumes from the Lowell Point Wastewater Treatment Lagoon Attachments: Email from Laurie Millanie,Serenity by the Sea Cabins,Shady Lane, Lowell Point We are concerned that there is an ongoing health risk to everyone that is not being seriously addressed. Fumes are 24/7 now and have been since 7/10/2014. We are asking that the City of Seward be proactive in getting ahead of this concern and getting active monitoring set up of the air quality around the Lagoon. Please note the information below-your staff's noses have probably already been compromised! We need equipment, not people's noses telling us how bad these fumes are so we can KNOW definitively if we are at risk or not. Rumor and conjecture are not helpful. This information below was taken from the Federal OSHA Website: DO NOT rely on your sense of smel to indicate the continuing presence of hydrogen sulfide or to warn of harmful levels. You can smell the "rotten egg" odor of hydrogen sulfide at low concentrations in air. But after a while, you lose the ability to smell the gas even though it is still present(olfactory fatigue). This loss of smell can happen very rapidly and at high concentrations and the ability to smell the gas can be lost instantly(olfactory paralysis). If testing were to confirm elevated levels of Hydrogen Sulfide,this is "-, the kind of sign that would need to be posted. WARNING HAZARDOUS AREA We are hoping the City will be proactive enough to avoid having to f. resort to these measures! -4, HYDROGEN SULFIDE . EXTREME HEALTH . HAZARD FATAL OR HARMFUL IF INHALED L .: .•4 11 G»- I sign warn/nu WO A E,5 or P.ya,rooei su/Me na$a ds. iI Here's the Link to Submit Odor Complaints • Serenity by the Sea Cabins<laurie@serenitybytheseacabins.com> Mon, Jul 28, 2014 at 11:12 AM To: AK ANGELS Care Inc <ak.angels.care@gmail.com> Cc: Millers Reservations <reservations@millerslandingak.com>, Linda Pfisterer <linda.pfisterer@gmail.com>, Karl VanBuskirk Stormchasers <kari@stormchasersmarine.com>, Mica VanB-uskirk Stormchasers <micad@hotmail.com>, Mark Powers Silver Derby <markdpowers@hotmail.com>, Silver Derby Campground <thesilverderbycampground@gmail.com>, Jerri Powers Silver Derby <powersjerri@gmail.com>, Steve Miller <smiller@seward.net>, Kathy Miller <kathy@seward.net>, Mary Miller<mamdjak@hotmail.com>, Chance Miller Miller's Landing <millerslanding@alaska.com>, David Leech <dbleech@alaska.edu>, Maggie Davis <cjdmed@gci.net>, Jim McCracken <rvcampak@ptialaska.net>, Mayor Navarre <mnavarre@borough.kenai.ak.us>, Charlene Doris <ruflif@gci.net>, Kat Page Sunny Cove <kat@sunnycove.com>, John Page Kat Page <john@sunnycove.com>, Paul Paquette Angels Rest and Silhouette Shingles <paul@silhouetteshingles.com>, Mark Flanagahan & Helen Lindemuth <Helindemuth@yahoo.com>, Chip Arnold <chipa@alaskasealife.org>, Teri Arnold <teri.arnold@ravensway.net>, Kit Dumil PAC SeaFood <kdurnil@pacseafood.com>, Calvin & Terese Perry <coolpenys@hotmail.com>, Ray Simutus <raysimutis@yahoo.com>, Jim and Kathleen Barkley <aksalt@gci.net>, Kari Anderson <Captainkarialaska@gmail.com>, dboyce58 <dboyce58@yahoo.com>, Gloria Sears <ocean@seward.net>, Karol Fink <karolfink@yahoo.com>, Claire Horton <beachhousealaska@gmail.com>, Pam Wilson <nosliw.pd@gmail.com>, Joanne & Rob Pfisterer<jmpfist@alaska.net>, Bill Pfisterer <bpfisterer@gcsit.com>, George Walker Alaska Base Camp <alaskabasecamp@gmail.com>, George Walker <gtwalkerjr@hotmail.com>, Mike Miller Miller's Landing <captmikea@ak.net>, Sherrie Miller Miller's Landing <cabosherrie@gmail.com>, Alison & Alan Heavirland Alaska Paddle Inn <kayakcarpentry@gmail.com>, Nicki Shinners <wine4u2003@yahoo.com>, Van Hale <ak2fish@gci.net>, Lynda Paquette <lamp@angelsrest.com>, R8d Nibbe <rkn@rknibbe.com>, Sue Lang Cottage on the Bay <suelang@alaska.com>, Ken Lang <ken@langsurvey.com>, Ed & Dana Klinkhart <klinkhart@gci.net>, Deb Buzdor<dbuzdor@mtaonline.net>, Julie Hileman <juliesluvbug@yahoo.corn>, "Jack Blackwell (DNR)" <jack.blackwell@alaska.gov>, Thomas Kain LP State Park <thomas.kain@alaska.gov> We have been submitting complaints all summer long and did so again today. This morning we had guests from two of our cabins complain about the smell. One of our guests said that when he came out this morning he noticed the smell and immediately went back inside and closed all the windows. Stephanie told him that there is an odor problem and that they are working on it and the guest said he is in waste management and he knows crap when he smells it and that he also knows its not safe to breathe the air when its like it was this morning. They are concerned whether or not they will be able to picnic or do anything outside this evening. Laurie Millane RE: questions for tonight- Outlook Web App, light version ----/b047 /2 Page 1 of 2 l / i�' Outlook Web App Type here to search Entire Mailbox V/ Options 0 Sign out Mail El Reply a Reply All 4 Forward l x a Junk Close 4 t g , riv�r4� RE: questions for tonight al a!,Calendar Ron Long a_ Contacts Sent: Monday,July 28,2014 3:00 PM To: Christy Terry Deleted Items (280) % Attachments: 0 Arcadis.pdf(3 MB) [Open as Web Page]; D Lease V Sale at SMIC-2 Draflsl [15] 072"1.pdf(148 KB) [Open as Web Page]; f, Inbox (203) ICKME CAS Annual Surplus Tra,-l.doc(56 KB)[Open as Web Page] 1.j Junk E-Maill [5] lj Sent Items Christy, Click to view all folders Sorry for the delay. Very encouraging interviews for the PM position. ® Manage Folders... Jim has been working with John and Vernon on the 2014-063 stuff and should be getting that out, so I 've worked on other projects. Kris is at an AML-JIA meeting in Homer and unable to confirm, but my reading is that if the interest in 061 is waived the changes would be: -- In the second whereas, change $158, 276 to 33 IP) Oa. L 3 -- In Section 1, the same change; -- In Section 3, strike the language after $138, 382 . 73 (and debt service interest is increased by $19, 893. 27; and 2) Motor Pool interes- 25 1ntlrasti..ggss is increased by $18, 893. 27) . Attached are the memos for tonight ' s meeting re the item for reconsideration. Also, at page 32 - 33 are typos that make a substantial difference in the context of the agenda statement. A corrected version is attached. Thanks, Ron Original Message From: Christy Terry Sent: Monday, July 28, 2014 10: 20 AM To: Jim Hunt; Ron Long https://ares.cityofseward.net/owa/?ae=Item&t=IPM.Note&id=RgAAAAARR1wxUINzQp6... 7/28/2014 L dowY, • The most recent Municipal Land Use Plan recommended by P&Z and adopted by Council was in 1996.Though P&Z is working their way through an update to present to Council, it remains the policy until changed by Council.That policy states that SMIC properties will be retained for lease. Of course that doesn't prevent Council from directing that any or all of the lands be sold instead, but it does call into question the need or value of having such a plan or policy. • Leased lands are currently taxed,so the argument to"put them on the tax rolls" is moot. City lands that aren't leased of course aren't taxed,so the City derives no revenue from either lease fees or taxes. When they are leased or sold,the Borough is the entity that gains the most in property taxes, at roughly 2:1 ratio. • We're told that new economic activity will offset the future years cash flow lost in a sale v. lease comparison. On a$100,000 parcel,at current lease,sales tax and property tax rates, unadjusted for inflation or appreciation,that parcel would need to generate an extra$200,000 in taxable sales each year over what would otherwise occur, have taxable improvements assessed at —$2.5M over what would otherwise be developed, or some combination of the above in order to equal the revenue stream derived from lease fees. • Revenue to the City is of course not the only consideration, but to the extent that revenue taken out of the stream will have to be made up somewhere else or costs cut to account for the difference,it shouldn't be ignored. • Since the land has never been publicly offered for, it would be prudent to,at the very least, request sealed bids for the sale of the properties to encourage competition, rather than to take the first offer that comes along. It may be that other operators(CIRI?Vigor?Shell?) might be interested in purchasing the land if they were aware the City was now selling off the SMIC properties. • Since this has appeared on the agenda,the City has received other expressions of interest in purchasing SMIC parcels,though none have yet formalized a request. Will all SMIC properties now be for sale, be considered on a case by case basis,or shall the MLUP stand as the policy? • Arguments in favor of selling the land: o The buyer is more likely willing to invest significantly in improvements to the property (although the market will drive the buyer's willingness to invest,whether the land is owned or leased) o Private investment may lead to increased demand for the properties at SMIC, spurring development o Lenders are more likely to loan to land owners than those holding leases,without a strong business plan and financial capacity (although harbor businesses—such as True Value, Breeze Inn,etc. have demonstrated that banks are willing to loan to businesses with a good business plan and a long-term lease) • Arguments opposing the sale option are compelling. o the City will lose control over the land's future utilization o the opportunity for a single, contiguous land owner to operate a major industry/business may be compromised if parcels are sold piecemeal o construction of storage/warehouse facilities is a good use of properties at SMIC, but would be better suited for areas on the perimeter of the SMIC properties, rather than in the middle,where higher and better use opportunities may be lost o City-owned properties leased to taxable entities ARE on the property tax rolls and are taxed at a rate similar to the value of privately-owned land and improvements. There is no property tax benefit to the City from selling property. o Properties leased for 30+years are able to obtain bank financing at rates comparable to privately-owned properties o While it is definitely in the private interest to purchase land for the purpose of development,the City is charged with ensuring the highest and best use of its properties for the public good, and the lease of properties generates significantly higher revenues for the public, in the long-term. Over a 30-year period,the property is "sold" approximately three times over(an approximately 300% increase in revenues to the City). o The lease option provides a perpetual income stream to generations of Seward residents, helping to reduce the property tax burden on future generations, rather than a one-time payment from the sale of land. This synopsis considers only the direct cost/benefits of a lease versus sale of a particular property.The indirect and induced costs and benefits (economic stimulus, benefits to private interests relative to the public interest, etc.)are beyond the scope of this discussion and would be a part of a larger SMIC or City- wide development or Land Use Plan. Recommendation: Retain the parcel for lease as per the Municipal Land Use Plan adopted by Council through the public process. If a future LUP and/or SMIC upland development plan recommends SMIC lands for sale, consider crediting lease fees to date towards the negotiated purchase price. 1 0 �1 - (1 LC urc CREW SPACE DATA Timeline: 05 May 2013 Invitation to Bid on architectural service. No bids received. 23 July 2013 Quote from Harmon Const. to provide architectural service. ($42,000) 08 Oct. 2013 Harmon delivers stamped architects plans. Bldg. department accepts. 01 May 2014 EPS delivers proposal to engineer heating for warehouse ($17, 966) 01 May 2014 Invitation to Bid on construction of crew space. 09 June 2014 Added ventilation in warehouse to Crew Space ITB per preliminary engineered heating design drawings. 16 June 2014 Received bids for Crew Space. One bid submitted. ($325,500) 17 June 2014 Bid rejected, too high cost/benefit ratio. Negotiations set for 09 July 23 June 2014 Council is notified of our intent to negotiate with Harmon Construction in a Document entitled"Seward Power Plant Integration Project(AEA Grant#7910011)Tasks to Completion", per SCC 6.10.145. 11 July 2013 EPS delivers stamped drawings for warehouse heating and ventilation. 11 July 2014 Negotiated new proposal. ($221,231) Details: • The Building Department requires stamped architectural plans for City buildings to ensure that all City construction is in compliance with applicable Code. Code compliance requires a three hour firewall which was not anticipated in consultation with Building officials before the project started. • The Building Department requires stamped mechanical engineer's plans for City buildings to ensure that all City construction is in compliance with applicable Code. Code compliance requires a ventilation in the warehouse which was not anticipated in consultation with Building officials before the project started. • Harmon Construction was the only bidder for this project. When their bid came in too high, it was rejected and we entered into negotiations with them to reduce the price per SCC 6.10.145. • Negotiations successfully reduced the price from$325,500 to $221,231 by loosening the requirements for finishing of walls and by the substitution of less expensive materials for those specified by the architect. In addition, we agreed to purchase plumbing, heating and cabinetry ourselves, thereby saving the markups such materials would have had, if we had allowed the contractor to provide them. Harmon Construction will still provide the construction materials, but we will provide the rest. • According to BuildingJournal.com average new home construction cost, in Anchorage and adjusted for Davis-Bacon wages, is $139.14/Sq. Foot. Costbook.com shows the same comparison at$143.04/ Sq. Foot. In analyzing Harmon Construction's new bid, we found that, allowing for the City purchasing of some of the materials, their bid was $105.20/Sq. Foot. Seward Power Plant Integration Project (AEA Grant # 7910011) Tasks to Completion 17 June 2014 Warehouse: A. Complete Erection (Harmon Construction Contract#C13-061) a. Install Heating System b. Punch List B. Complete Erection (CoS Task List) a. Design, purchase and install secondary (receptacles, etc) electrical system based on proposed equipment layout. b. Purchase heating system. C. Design, purchase and install internal Crew Spaces a. Bids opened June 16, 2014. Harmon Construction only bidder. i. Cost/benefit ratio too steep. Bid rejected by City management. ii. Will negotiate with successful bidder iii. Will prepare alternate scenario in case agreement cannot be reached D. Outfit Warehouse (shelves, pallet jacks, etc) CoS MATERIALS FOR CREW SPACE CONTRACT Please note that this list does not include the electrical wiring components, as we have not yet received that list from the electrical contractor. HVAC: • 5 Ea. Electric Baseboard, Fahrenheat#F25408W, 240V, 2500W W/thermostat#FTA2A • 2 Ea. Electric Wall Unit, Fahrenheat#FSSH04004 w/Mounting Frame#HTWHSM, 240V • 1 Ea. Ceiling Exhaust Fan, 195 CFM, 120/60/1, Greenheck SP-B200, w/backdraft damper. • 1 Ea. Ceiling Exhaust Fan, 79 CFM, 120/60/1, Greenheck SP-B80, w/backdraft damper • 1 Ea. Transfer Air Door Grille, 18 X 12, Titus#CT-700 PLUMBING • 1 Ea. Toilet • 1 Ea. Janitor's deep sink • 2 Ea. Urinal • 1 Ea. Faucets for Janitor Sink • 1 Ea. Flush valves for Toilet • 1 Ea. Double (Kitchen) sink • 2 Ea. Flush Valves for Urinals • 1 Ea. Faucet for Kitchen Sink • 2 Ea. Lavatory • 1 Ea. Soap Dispenser • 2 Ea. Faucet for Lavatory • 1 Ea. Paper Towel Dispenser • 1 Ea. Shower Stall • 1 Ea.Toilet Paper Holder • 1 Ea. Faucet Set for Shower • 1 Ea. Set of Handicapped Grab Rails CABINETRY/KITCH.ENETTE: Economy class cabinets and appliances: • 1 Ea. Wall Cabinet, 30 X 24 X 18 Deep • 1 Ea. Wall Cabinet, 39 X 12 X 18 Deep • 1 Ea. Wall Cabinet, 24 X 12 X 18 Deep • 1 Ea. Base Cabinet, 60 X 24 Deep • 1 Ea. Countertop w/Backsplash, 60 X 24. • 1 Ea. 1000W Microwave • 1 Ea. Refrigerator, 30 wide. WAREHOUSE COSTING AND REVENUE FLOW REVENUE SOURCES 28-Jul-14 SOURCE AMOUNT COMMENTS TOTAL REVENUE $2,541,748 All Confirmed Sources to Date FUNDS AUTHORIZED/ENCUMBERED ACTIVITY AUTHORIZED ENCUMBERED SPENT REMARKS TOTAL BUILDING COSTS $301,342 $313,993 $338,210 SHIPPING COST OVER-RUN TOTAL CIVIL/SITE COSTS $527,632 $576,615 $527,632 Contract Closed TOTAL ERECTION COSTS $521,815 $569,615 $478,015 $43,800 left on Contract MISC.CONSTRUCTION COSTS $104,244 $103,974 Lighting Package(Flourescent) $19,419 $15,535 TOTAL FUNDING COMMITMENT TO DATE $1,474,452 $1,460,223 $1,463,366 PROJECTED FUTURE COSTS (Estimated) Heat, per engineered package $25,000 Internal Buildout (Consisting of) $400,000 Crew space, furnishing, shelves, etc Total Projected Costs $1,899,452 Estimated Total Spent to Date $1,463,366 -,4v31% mdtd Mehda /2 /I Qt0 ��° 880 H Street,Suite 101 ARCADIS 4 '^ °`� � Anchorage,Alaska 99501 Tel 907.276.8095 lnfTd,1ruch:re Water Frivilownef,f Buildings Fax 907.276.8609 www.arcadis-us.com March 11, 2014 Mr.James Hemsath, PE, PMP Alaska Industrial Development&Export Authority 813 West Northern Lights Blvd. Anchorage,AK 99503 RE: Seward Marine Industrial Center Development-Strategic Advisory Services Dear Mr. Hemsath: ARCADIS is pleased to present this revised proposal to provide AIDEA with Strategic Advisory Services in support of the Seward Marine Industrial Center(SMIC) Development.Our team will assist AIDEA in developing a sustainable business plan and funding strategy for the SMIC project and identify near, mid-and long-term development options for the prioritization of public investment in infrastructure and facilities. Our original scope of work identified five key tasks, and, as AIDEA directed us at our February 28th meeting,ARCADIS will now initially focus efforts on the first two of these five phases: 1) Formulate the Business Case and 2) Project Communication, Stakeholder Management,and Public Outreach. Below are details on the modified scope of work,our project team and fee estimate. SCOPE OF WORK PHASE 1: FORMULATE THE BUSINESS CASE ARCADIS will hold a kick-off meeting in Seward with AIDEA and City of Seward(City)project leadership to confirm project objectives identify critical stakeholder issues and discuss project schedule.ARCADIS will review existing literature and reports that are relevant to the SMIC Expansion project and assemble a record of project data and information.We will identify and conduct interviews with current and potential users and business partners regarding their interests and future development goals to identify viable business opportunities for SMIC. Our team will conduct an analysis of potential demand for services and businesses and then produce an initial projection of potential revenue using existing tariffs adjusted for inflation through future years. ARCADIS will investigate the development potential of SMIC marine facilities and adjacent upland areas for meeting identified business opportunities. Our in-house civil engineers will provide preliminary cost estimates for required infrastructure,facilities and development. Concurrent with investigating potential business models with the City and AIDEA, our team will conduct an economic and financial analysis to determine the initial viability of development plans. Deliverable:Business Case Report PHASE 2: PROJECT COMMUNICATION, STAKEHOLDERS MANAGEMENT AND PUBLIC OUTREACH Concurrently,ARCADIS will clarify lines of communication, establish reporting protocols and manage disciplined internal and external communications to maintain SMIC project integrity and transparency. At the onset of this project,our team will meet with AIDEA and the City to plan and develop a robust Stakeholder Management and Public Outreach Plan that keeps stakeholders well informed, engaged, and participating in creating forward momentum. We will develop a dynamic and persistent public outreach program that continues to inform and raise awareness of SMIC project significance and encourages ongoing conversation with the public. ARCADIS will confirm existing stakeholders and continue to cultivate a broad base of diverse stakeholders and potential partnerships on local,state and global level to continue to grow critical mass support and build the confidence needed by public funders and private investors,as well as by local residents when deciding local funding initiatives. We will create collateral project materials that deliver clear,accurate and consistent information as the foundation for good decision-making and to continue pro-active dialogue. This effort will be integral and Imagine the result �� AIDEA March 11,2014 Page 2 of 4 proceed in parallel with the formulation of the business case,and work to build community support and secure industry support for the development plan. Deliverables:Stakeholder Management and Public Outreach Plan;Communication Materials as defined in the Stakeholder Management and Public Outreach Plan PHASE 3: DEVELOP SMIC EXPANSION AND DEVELOPMENT PLAN ARCADIS will work closely with City of Seward and AIDEA to generate two conceptual design options for both the marine facilities and the upland area. Development plan will include planning for required utilities and infrastructure. Our environmental professionals will investigate any socioeconomic,environmental and permitting issues related to the development options and include recommended mitigation measures and cost/schedule impacts. ARCADIS will develop an overall development concept for SMIC integrating the waterside and uplands developments as needed in phases,with a master schedule that includes near term, mid-term and long term milestones. Deliverables:Integrated Facilities Development Plan&Schedule(GIS Map and Plan Drawings) PHASE 4: CREATE FINANCING STRUCTURE&FUNDING STRATEGY The ARCADIS team will conduct a financial feasibility analysis of the SMIC Expansion and Development Plan. Using this financial analysis as a base,we will investigate and recommend optimal financing structures that best match the Business Case. Public and private sector funding opportunities will be identified and investigated.Our team will conduct a sensitivity analysis looking at various scenarios of financing structures,users,fees, rates, and phases to determine financial viability of development plans in the face of economic uncertainty. Deliverable:Financing Structure and Funding Strategy Report PHASE 5: FINAL REPORT ARCADIS will combine the above project deliverables and prepare business plan recommendations to formulate the final project report. Deliverables:Business Plan Recommendations and Final Project Report PROJECT TEAM The proposed ARCADIS team for this scope of work includes the following experienced professionals: • Roe Sturgulewski, Project Manager—Roe has over 30 years of project management experience in Alaska, leading strategy and finance planning for multiple large,complex, public infrastructure projects including: Goose Creek Correctional Center,Alaska SeaLife Center,Ted Stevens Anchorage International Airport, Fairbanks International Airport, Anchorage Jail, Kodiak Launch Complex and MEA Eklutna Generation Station. • Le Griffin, Ph.D.,Terminal Planning and Engineer/Financial Analysis—Hold a doctorate in Civil Engineering from Japan, Le brings 22 years of experience specializing in port and marine terminal development and layout design, market and financial feasibility analysis,terminal operating efficiency and technology, and global logistics and shipping industry practices. AIDEA March 11, 2014 Page 3 of 4 • Mark Griffin,AICP, Land Use Infrastructure Planner-Mark is a seasoned international gateway planner and project manager for marine port and intermodal infrastructure development programs projects in the US, Canada and overseas for major ports in Los Angeles, Long Beach, Vancouver,Japan and Hong Kong.With 30 years of project management experience,he has performed planning and economic analysis to secure funding for development programs with numerous port authorities and communities. • Carsten Becker, PE,Civil/Geotechnical Engineer-Carsten has 15 years of experience as a civil/geotechnical engineer on waterfront and onshore projects. He has been performing project roles in conducting technical analyses, and developing design recommendations to developing plans and specifications, performing cost analyses, and managing design teams as the lead design engineer. His geotechnical experience includes settlement analysis of foundation soils and unconsolidated sediments,foundation design,slope stability,geotechnical earthquake engineering including seismic site response and liquefaction analyses, deformation-based analyses using finite element methods,and design of retaining structures and bulkheads. He also has extensive experience in soft soil engineering. • Amy Kearns, Environmental Scientist- Amy has over 16 years of experience as an environmental scientist, 12 of them in Alaska. While in Alaska,she has been conducting clean air act compliance and permitting for various clients;as well as conducting regulatory applicability reviews for her clients as new rules have been promulgated or changes to client facilities have occurred. She has experience with preparing environmental assessments and is adept at land permitting within the State of Alaska. • Paul Cartier,Technical SupportlGlS Mapping-Paul has over 7 years of environmental, mining and oil and gas industry experience involving a variety of projects with extensive experience in development and management of GIS databases. Paul's background also includes field sampling,site investigations, regulatory compliance,task management, biological investigations and desktop review of published reports and data on applicable biological resources(avian, mammals and plants)to help quantify wildlife composition,distribution and to identify data gaps. • Sarah Barton(ConsultNorth), Strategic Planner and Facilitator-Sarah has over 35 years of project management experience in Alaska leading strategic planning, regulatory and public process for large-scale infrastructure, port and transportation projects, including high profile, politically-charged public projects across the state. • Judi Andrijanoff,Stakeholder Communications Manager-Judi has over 20 years managing complex, high profile, politically visible projects and programs in Alaska. She brings extensive experience effectively coordinating multiple funders, agencies and stakeholder groups; providing leadership to deliver successful projects through effective facilitation; aligning stakeholder goals and expectations; and establishing clear protocols and communication among participants. She is known for her ability to craft creative approaches to navigating program complexities,stakeholder management and problem solving.A long-time Seward resident,Judi is active in the community and has long-term relationships with many resident and industry stakeholders. Locally,significant roles include the Alaska SeaLife Center, Seward Community Library Museum, and private development of Seward Boat Harbor Uplands. • Cynthia Oistad,Technical Writer and Public Involvement Specialist-Cynthia has 12 years of Alaska experience providing public involvement and stakeholder communications for the design and project management industry. She is also an experienced technical writer that develops, edits and produces high quality report documents. ico clecl a erria Pac e,#' Gth cuuhO�(� Y � t -7 z8 r� dog, S� • The most recent Municipal Land Use Plan commended by P&Z and adopted by Council was in 1996.Though P&Z is working their way through an update to present to Council, it remains the policy until changed by Council.That policy states that SMIC properties will be retained for lease. Of course that doesn't prevent Council from directing that any or all of the lands be sold instead, but it does call into question the need or value of having such a plan or policy. • Leased lands are currently taxed, so the argument to"put them on the tax rolls" is moot. City lands that aren't leased of course aren't taxed,so the City derives no revenue from either lease fees or taxes.When they are leased or sold,the Borough is the entity that gains the most in property taxes,at roughly 2:1 ratio. • We're told that new economic activity will offset the future years cash flow lost in a sale v. lease comparison. On a$100,000 parcel,at current lease,sales tax and property tax rates, unadjusted for inflation or appreciation,that parcel would need to generate an extra$200,000 in taxable sales each year over what would otherwise occur, have taxable improvements assessed at —$2.5M over what would otherwise be developed,or some combination of the above in order to equal the revenue stream derived from lease fees. • Revenue to the City is of course not the only consideration, but to the extent that revenue taken out of the stream will have to be made up somewhere else or costs cut to account for the difference, it shouldn't be ignored. • Since the land has never been publicly offered for, it would be prudent to,at the very least, request sealed bids for the sale of the properties to encourage competition, rather than to take the first offer that comes along. It may be that other operators(CIRI?Vigor?Shell?) might be interested in purchasing the land if they were aware the City was now selling off the SMIC properties. • Since this has appeared on the agenda,the City has received other expressions of interest in purchasing SMIC parcels,though none have yet formalized a request. Will all SMIC properties now be for sale, be considered on a case by case basis,or shall the MLUP stand as the policy? • Arguments in favor of selling the land: o The buyer is more likely willing to invest significantly in improvements to the property (although the market will drive the buyer's willingness to invest,whether the land is owned or leased) o Private investment may lead to increased demand for the properties at SMIC,spurring development o Lenders are more likely to loan to land owners than those holding leases,without a strong business plan and financial capacity(although harbor businesses—such as True Value, Breeze Inn,etc. have demonstrated that banks are willing to loan to businesses with a good business plan and a long-term lease) • Arguments opposing the sale option are compelling. o the City will lose control over the land's future utilization o the opportunity for a single,contiguous land owner to operate a major industry/business may be compromised if parcels are sold piecemeal o construction of storage/warehouse facilities is a good use of properties at SMIC, but would be better suited for areas on the perimeter of the SMIC properties, rather than in the middle,where higher and better use opportunities may be lost o City-owned properties leased to taxable entities ARE on the property tax rolls and are taxed at a rate similar to the value of privately-owned land and improvements. There is no property tax benefit to the City from selling property. o Properties leased for 30+years are able to obtain bank financing at rates comparable to privately-owned properties o While it is definitely in the private interest to purchase land for the purpose of development,the City is charged with ensuring the highest and best use of its properties for the public good,and the lease of properties generates significantly higher revenues for the public, in the long-term. Over a 30-year period,the property is "sold" approximately three times over(an approximately 300% increase in revenues to the City). o The lease option provides a perpetual income stream to generations of Seward residents, helping to reduce the property tax burden on future generations, rather than a one-time payment from the sale of land. This synopsis considers only the direct cost/benefits of a lease versus sale of a particular property.The indirect and induced costs and benefits (economic stimulus, benefits to private interests relative to the public interest,etc.) are beyond the scope of this discussion and would be a part of a larger SMIC or City- wide development or Land Use Plan. Recommendation: Retain the parcel for lease as per the Municipal Land Use Plan adopted by Council through the public process. If a future LUP and/or SMIC upland development plan recommends SMIC lands for sale, consider crediting lease fees to date towards the negotiated purchase price. 1/2-041" Agenda Statement sof sew, Meeting Date: July 28, 2014 4 SSP Through: James Hunt, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Appropriation of Annual Surplus to Capital Acquisition Fund BACKGROUND & JUSTIFICATION: The City of Seward maintains a Capital Acquisition Fund budget policy, as follows: "The City will designate 50% of the previous years' annual surplus (defined as the difference between revenues and transfers-in, and expenditures and transfers-out)into the Capital Acquisition Fund for the purpose of financing major capital maintenance and repairs (defined as items in excess of$20,000), in any year where the General Fund fund balance is within the band of established policy levels. The allocation of surplus funds from the General Fund to the Capital Acquisition Fund should occur only when the General Fund undesignated fund balance will continue to exceed 3 months'reserves after the transfer is made. " The purpose of this policy is to provide a mechanism to fund replacement of the City's $58 Million in governmental fixed assets, since the City has no Major Repair and Replacement Fund in place for the General Fund. In more than a decade, the City's only source of funding for replacement of governmental fixed assets (excluding enterprise fund assets), has been periodic one-time revenues from the State of Alaska's revenue sharing program. Those one- time revenues have been used for capital needs such as repairs to the steps at city hall, repairs to the community center building, sidewalk ADA improvements, council chambers sound system, computer system upgrades, etc. The City has a list of unmet additional needs, including the cost of relocating the city shop, repairs/replacement of the parks warehouse, grant match for the federal earmark for road improvements, relocation of the animal shelter, repairs to the city hall roof and electrical system, etc. In 2013, the General Fund's fund balance policy goal (band) is between $3,087,023 and $6,174,047 representing between three months' and six months' of General Fund expenditures and transfers-out. The General Fund's Unassigned Fund Balance is $5,948,459, equal to 5.78 months of reserves, and the proposed transfer of $1,321,335 will reduce reserve levels to $4,627,124 3.9 379-Millien, equal to 4.5 3.8 months' reserves. INTENT: To appropriate 50% of annual General Fund surplus into the Capital Acquisition Fund to address Governmental capital infrastructure needs. The periodic transfer of annual surplus for capital purposes is intended to encourage conservative annual spending by departments, in order to providing funding for major infrastructure repair and replacement needs. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan : Continue to Improve the quality of public facilities and services made available to the residents of Seward(p.13); Identify alternative location for city shop (p. 14); Identify an 1. appropriate site for a new site for the animal shelter(p. 20); Support X adequate funding to maintain safe roads year-round and Support forward funding for major road repairs and upgrades (p. 23); Construct heated sidewalks along major pedestrian routes (p. 23); etc. Strategic Plan : Create a financial plan for new services and infrastructure and Revise the Comprehensive Plan to include 2. infrastructure and growth plans (p. 11);Expand and maintain existing X sidewalks and Determine Long-Term sidewalk installation plans (p. 18);etc. 3. Other (list): X FISCAL NOTE: The City's 2013 annual surplus is $1,265,724 (50% of that surplus is $632,862) and the 2012 annual surplus is $1,376,945 (50% of that surplus is $688,473), for a combined total transfer of $1,321,335 to the Capital Acquisition Fund. This transfer will reduce the General Fund Unassigned Fund Balance to a budgeted balance of $4,627,1243,950,321, reflecting 4.5 3.8 months' of reserves. This transfer will still be within the established goal of three to six months' reserves. Approved by Finance Department: ATTORNEY REVIEW: Yes No X RECOMMENDATION: Seward City Council adopt Resolution 2014- ,appropriating$1,321,335 from the General Fund to the Capital Acquisition Fund, for repair and replacement of governmental fixed assets. 1/ //° t h 1r 2012-2015 STIP Amendment 11 Proposed Project Funding Summary Need irffID:212186 Name:Wood River BM:e Central Region v 2013 Election District •. Fund After 2015 AHS �� ew Primary Work Ph FFY14 FFY15 De trip n:Construct a two lane bridge#2130 and 61 mi.of road between Aleknaglk(North Shore)with the Dill ngham Age nagik Access 2130 Project to be constructed 2 ACL '318,39 2 SM -318,395 'u phases. _ 2130 2 STP 318,395 0 2 SM 18,06. 0 0 4 ACC -15,919,750 0 2 STP 500,335 4 SIP 15,919,750 0 0 7 ACC 4 ACC -15,919,750 0 -50,175 0 4 STP 7 STP 50,175 15,950,175 0 0 7 ACC -50,175 0 Totals: 0 0 7,825,000 7 STP 50,175 0 Need ID:2231 Name:Tundra Ridge Road Totals: 200,000 0 8,400,000 Program I Region i 2013 Election District r Ph Fund FFY14 CTP Place Name I Highway F512, After 2015 Ph Fund FFY14 I C 38 Bethel Primary Work I Bridge#s SM FX FFY15 After 2015 Description:Resurface Tundra Ridge Road,a distance of about 1.04 mi.,with asphalt.Project does not Include separated pathwaysorillumination. 4 0 3,512,352 Totals: 0 0 348,648 0 3,873,000 7 EMFX 0 10,916 7 SM 0 1,084 Need ID:2386 Name:lliamna to Nondalton Road Completion Totals: 0 3,873,000 0 Pro:4 am R•:Ion 2013 Election District Ph Fund FFY14 FFY15 25,400,000After 2015— Ph Fund FFY14 FFY15 After 2015 AHS Place Name Hi:hwa C 37 lliamna Pri Work &Id;eAs Totals: p Description:Construct a bridge across the Newhalen River and connecting road link to Nondalton. New Bridge Access 0 Totals: 0 0 0 Need ID:2617 Name:MP 17-225 Rehabilitation-Snow River to Levying4 Program Region 2013 Election District Place Name Ph Fund FFY14FFY15 After 2015 Ph Fund FFY34 Highway Primary Work Bridge#s 3 NHPP 454,850 FFY15 After 2015 0 3 NHPP 0 454,850 603 3 SM 45,150 0 3 SM 0 45,150 605 Totals: 500,000 0 31,000,000 Totals: 0 500,000 31,000,000 607 608 609 610 2071 ghway NMS C 29 Central Re Ian 2072 Description:Project has been developed In phases.-his remaining final phase from MP 17 to H'225 will replace the bridge at Victor CBridge Rehat4001 re k(bridge no.0607),rehabilitate both bridges over Snow River(bridge nos.0605&0603),rehabilitate the roadway and may include widening shoulders and the construction of passing lanes where feasible. irt tk PP - N tai tku y 6)0? C 1 srq.Tff /►'mak'N Page 1 of 26 / • 2012-2015 STIP Amendment 11 Proposed Project Funding Summary Need ID:16030 Name:Downtown Streets Reconstruction&Rehab Ph Fund FFY14 FFY15 After 2015 Ph Fund FFY14 FFY15 After 2015 Program Region 2013 Election District Place Name Highway Primary Work Bridge as 3 SM 237,065 0 3 SM 144,480 0 CTP C 37 Dillingham Reconstruction 3 STP 2,388,235 0 3 STP 1,455,520 0 Description:Realign,reconstruct and rehabilitate approximately 0 6 miles of major collector that includes three streets forming a loop in the downtown area ofDilli -ng-am-Main Street-from C ty Ha I to the Intersection with"0"Street"0"Street north to 2nd Street back to City Hall. Totals: Totals: 2,625,300 0 8,225,000 1600,000 0 8,225,000 Need ID:16057 Name:Portage Glacier Road Embankment Stabilization Ph Fund FFY14 FFY15 After 2015 Ph Fund FFY14 _ FFY15 After 2015 Program Region 2013 Election District Place Name Highway Primary Work Bridge as 4 PH 1,480,000 04 FLAP 1,480,000 0 AHS C 28 Anchorage Reconstruction 7 FH 107,000 0 - 7 FLAP 107,000 0 Description:Project will stabilize the Portage Creek stream bank at three locations along Portage Glacier Road. - Totals: 1,587,000 0 0 Totals: 1,587,000 0 0 ..7ki. Need ID:18240 Name:Seward Road improvements Ph Fund FFY14 FFY15 After 2015 Ph Fund FFY14 18,060 FFY15 After 2015 0 18,060 Program Region 2013 Election District Place Name Highway Primary Work Bridge as 2 3PF 0 2 3PF CTP C 29 Seward Reconstruction 2 HPRL 181,940 0 2 HPRL 0 181,940 Description:Rehabilitate or improve various City Streets or roads.May include widening,paving,resurfacing,drainage Improvements,and ditching. 4 3PF 0 270,900 Totals: 0 200,000 3,010,000 4 HPRL 0 2,729,100 7 3PF 0 903 7 HPRL 0 9,097 Totals: 200,000 3,010,000 0 Need ID:18755 Name:Point MacKenzie Road improvement:MP 21.8 to 23 Ph Fund FFY14 FFY15 After 2015 Ph Fund FFY14 FFY15 After 2015 Program Region 2013 Election District Place Name Highway Primary Work Bridge es 4_ACC -133,473 0 2 3PF 5,834 0 AHS C Reconstruction 4 E330 1,175,559 0 2 E330 58,778 0 Description:improvements to the road leading Into Port MacKenzie area. 4 SM - 116,690 0 4 3PF 0 110,856 4 STP 133,473 0 4 ACC -133,473 0 Totals: 1,292,249 0 0 4 E330 0 1,116,781 4 STP 133,473 0 Totals: 64,612 1,227,637 0 Need ID:22758 Name:Off-System Bridge Replacements Ph Fund FFY14 FFY15 After 2015 Ph I Fund FFY14 FFY15 After 2015 Program Region 2013 Election District Place Name Highway Primary Work Bridge as 2 HPRM _ 100,000 0 Totals: 0 0 0 NHS C 92 Central Region Bridge Replacement 4 HPRM 900,000 0 Description:Repair or replace Shirley Town Drive bridge near Willow Fishhook Road. Totals: 1,000,000 0 0 Need ID:23120 Name:Funny River Road Improvements Ph Fund _ FFY14 FFY15 After 2015 Ph Fund FFY14 FFY15 After 2015 Program Region 2013 Election District Place Name Highway Primary Work Bridge as 3_SM 0 25,374 3 SM 0 2,537 CTP C 30 Soldotna System Preservation 3 STP 0 255,626 3 STP 0 25,563 Description:Rehabilitate Funny River Road from the Sterling Highway to the Soldotna Municipal Airport,about 6,500 ft.This project may include realigning sections of the road-due to minor shifting of the mad bed-within the ROW. Totals: Totals: 0 281,000 2,900,000 0 28,100 2,900,000 ii 310F = Akzo FvA,ts CMAlcti 1+ftL ;c 1.4 Pg, vg C « i ' o -r SA-Felin-FS �z.0 y 5 nnti 1'20.P., N rviRKs ;Frvo S 9o.Q0Y Page 4 of 26