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HomeMy WebLinkAboutRES2023-022 Supporting AKRR Bond Sponsored by: Bower CITY OF SEWARD,ALASKA RESOLUTION 2023-022 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, SUPPORTING STATE LEGISLATIVE APPROVAL FOR ALASKA RAILROAD ADDITIONAL BONDING AUTHORITY FOR THE SEWARD CRUISE SHIP DOCK PROJECT WHEREAS, the Alaska Railroad Corporation ("ARRC") is a public corporation and instrumentality of the State of Alaska("State"), organized and established pursuant to the Alaska Railroad Corporation Act,AS 42.40(the "Act"),whose mission includes providing transportation for freight and passengers,operating critical industrial port facilities in Alaska, and promoting the long-term economic growth of the State; and WHEREAS, ARRC owns and operates a passenger dock in Seward, Alaska ("Existing Passenger Dock") and an associated intermodal terminal facility (the "Existing Passenger Terminal"), both constructed in 1966, which together serve cruise ships and other passenger and freight vessels as part of an ARRC owned and operated multi-dock port facility; and WHEREAS, the Existing Passenger Dock is nearing the end of its useful life and the cost of maintaining it in a usable state has become prohibitive,necessitating its replacement in the near future in order to continue to serve cruise ships and other vessels, as well as passengers and crew, in a safe manner; and WHEREAS, closure of the Existing Passenger Dock or curtailment of its use by cruise ships and other vessels would result in a loss of valuable and significant components of both ARRC's revenues and the transportation infrastructure in Southcentral Alaska and associated commercial activities, including but not limited to the flow of cruise ship passengers into and out of Alaska and the resulting loss of ARRC passenger ridership to and from its Seward railyard, visitor traffic and associated economic benefits to Seward and the rest of the Kenai Peninsula; and WHEREAS, ARRC has determined that the replacement of the Existing Passenger Dock and Existing Passenger Terminal with new dock and terminal facilities capable of safely serving cruise ships, including new, larger ships, and other vessels (collectively, the "New Passenger Terminal Facility") is critical to the ongoing viability of passenger operations at ARRC's Seward port; and WHEREAS, ARRC desires to construct, maintain and operate the New Passenger Terminal Facility and to finance all or a portion thereof through the issuance of its bonds (the "Project"); and WHEREAS, the Project furthers the purposes of both the State and ARRC by preserving and upgrading a component of critical port infrastructure in Southcentral Alaska, thus preserving and enhancing port and rail revenues for ARRC and protecting and improving critical port CITY OF SEWARD,ALASKA RESOLUTION 2023-022 infrastructure that will benefit the State and its citizens through maintaining and growing associated commercial activity in Seward, the Kenai Peninsula and throughout the State, and providing a potential back-up port in the event other port facilities should be damaged by natural disasters; and WHEREAS,at a special meeting held on January 13,2022,the ARRC Board of Directors approved Resolution No. 2022-01, which authorized its Chief Executive Officer, Chief Financial Officer, Chief Counsel, Bond Counsel, Financial Advisors, Architects, Engineers and any other officer or official of the ARRC(collectively,the"Authorized Persons")to take certain preliminary actions with respect to the Project and the issuance of one or more series of bonds or notes in an aggregate principal amount not to exceed $60,000,000 (collectively, the "Original Bonds"), in order to finance all or a portion of the Project; and WHEREAS, the Authorized Persons, in accordance with Subsection 42.40.285(s) of the Act, caused ARRC to request approval and authority from the legislature of the State for ARRC to issue the Original Bonds in connection with the Project; and WHEREAS,the legislature subsequently passed legislation approving and authorizing the issuance of the Original Bonds,which the Governor signed into law on July 3, 2022; and WHEREAS, subsequent to the issuance of the Original Bonds,ARRC determined that,in order for the New Passenger Terminal Facility to best fulfill its purpose in serving the cruise line industry and more generally in supporting the travel and tourism industry and infrastructure in the State,the scope of the Project would need to be expanded beyond that which was contemplated at the time the Original Bonds were approved and authorized by the legislature and the Governor; and WHEREAS,the resulting expanded scope of the Project will require additional financing to be obtained as compared with its original scope; and WHEREAS,ARRC desires to issue one or more series of bonds or notes in addition to the Original Bonds, with the additional bonds or notes being in an aggregate principal amount not to exceed $90,000,000 (collectively, the "Additional Bonds"), in order to finance all or a portion of the expanded-scope Project, thereby bringing the total authorized aggregate principal amount of the combined Original Bonds and Additional Bonds to an amount not to exceed$150,000,000. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The Seward City Council supports and urges the Alaska State Legislature to approve an additional $90 million in bonding authorization for the Alaska Railroad Corporation. CITY OF SEWARD,ALASKA RESOLUTION 2023-022 Section 2. Following Legislative approval, Council supports and urges Governor Dunleavy to sign the Bill. Section 3.This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska this 27th day of February, 2023. THE CITY OF SEWARD,ALASKA Sue McClure,Mayor AYES: DeMoss, Wells, Finch, Barnwell, Calhoon, Osenga, McClure NOES: None ABSENT: None ABSTAIN: None ATTEST: Brenda J. Ball , MMC City Clerk �w*wr'+�a,, OF S.�.•`4 4. (City Sea `C G4iPO�/.10. • SEAL • A1-PSss1l City Council Agenda Statement • Meeting Date: February 27, 2023 To: City Council From: Janette Bower, City Manager Subject: Resolution 2023-022: Supporting State Legislative Approval for Alaska Railroad Additional Bonding Authority for the Seward Cruise Ship Dock Project Background and justification: In 2022, ARRC was authorized to issue up to $60 million in bonds to replace its aging Seward passenger dock and terminal. ARRC seeks legislative authority to issue an additional $90 million in bonds to support an expanded version of this vital project. Combined with last year's bond authorization,ARRC can pursue $150 million for a generational port project(new pier and terminal facility) that will meet future visitor market demands and serve Alaska for decades to come. The project will be fully funded by ARRC through a multi-year berthing agreement with Royal Caribbean Group (RCG) that features an annual revenue guarantee. Per the railroad's statutes, these bonds are not a liability of the state and no state dollars will be used to repay them. Following last year's approval, ARRC and longtime partner and project user RCG continued to develop project design and engineering plans. The updated design expanded to better meet the needs of RCG and our other cruise industry customers, ensure operational safety, account for inflation, and best support Alaska's growing visitor industry for future generations to come. RCG currently has three brands calling in Alaska - Royal Caribbean International, Celebrity Cruises and Silversea Cruises - with plans to increase the class size of ships docking in Seward. To support RCG's commitment and associated economic growth, the project construction schedule is time sensitive. It calls for the dock to be operational for the 2025 season and the new cruise ship terminal to be operational in 2026. To meet this timeline, the funding will need to be secured by midyear, meaning this incremental bond authorization must be passed by the legislature this session. This is a true economic development project to both replace an existing asset and expand its capability for the future. The Legislature approved the 2022 bonding authorization knowing this dock is a critical connection for hundreds of thousands of cruise passengers and visitors arriving each summer, many of whom travel on to bring tourism dollars to Alaska businesses throughout the state. The dock is near the end of its useful life. Closure or curtailed use would severely impact the cruise industry and other vessels that rely on the dock. ARRC would lose an important revenue source, and more importantly, a diminished gateway would take a toll on Southcentral Alaska's broader transportation infrastructure. Comprehensive and Strategic Plan Consistency Information This legislation is consistent with (citation listed): Comprehensive Plan: 8.0 Transportation 9.0 Port and Harbor Strategic Plan: Other: Certification of Funds Total amount of funds listed in this legislation: $ 0 This legislation (✓): Creates revenue in the amount of: $ Creates expenditure in amount of: $ Creates a savings in the amount of: $ x Has no fiscal impact Funds are (✓): Budgeted Line item(s): Not budgeted x Not applicable Fund Balance Information Affected Fund (✓): General SMIC Electric Wastewater Boat Harbor Parking Water HHealthcare Motor Pool Other Note:amounts are unaudited Fund Balance/Net position — unrestricted/unassigned $ Restricted/Unavailable Cash Balance: $ Available Unrestricted Cash Balance: $ Total Cash Balance: $ Note:Unrestricted Net Position represents the total non-capital assets of the fund less anyliabilities while unrestricted cash represents the liquid spendable portion of these assets on a short-term basis. Finance Director Signature: ' * o, Attorney Review RxYes Attorney Signature: Not applicable Comments: Administration Recommendation eApprove Resolution Other: