A routine bit of business in front of the assembly this week (8-11-15) prompted some thoughtful discussion. Namely, how much debt can a community of 9,000 people bear?
The item could not have been more mundane: Authorizing the administration to apply for a variety of low-interest government loans for water system improvements, including the replacement of a sewage lift station at Crescent Harbor.
The problem was the total amount of debt — $8.3 -million.
Hugh Bevan is a former municipal administrator and former director of public works. Speaking as a member of the public, he read directly from the resolution:
“It says that the funds — the two enterprise funds (Water and Wastewater) — will have sufficient cash flow from operations to pay the additional debt service, provided that sustained annual increases are implemented.”
Bevan suspected that Sitka might already be near the maximum debt a town this size should carry — and he was part right. Sitka’s utilities operate as independent businesses — or “enterprise funds” — and the water and wastewater funds both carry big loans.
City administrative officer Jay Sweeney confirmed this fact.
“I would tell you in terms of water and wastewater we’re right out on the ragged edge of how much debt — especially the Water Fund — can sustain.”
And Sweeney also confirmed that sustained rate increases were in store for Sitkans — for at least the next 40 years.
He said Sitkans have three choices: Pay the increases and maintain the existing level of water service; do nothing and try and repair the system as it fails; or build a time machine and go into the past and raise rates to appropriate levels in the first place.
The assembly authorized the loan requests 5-2, with Aaron Swanson and Steven Eisenbeisz opposed.
The assembly also voted to dissolve the Sitka Community Hospital Board, and start from scratch with a new, smaller board which includes one member of the city administration.
Tuesday’s vote lacked the emotional testimony that dominated previous discussions of the issue. Some on the assembly expressed regret over how the process had been perceived. Michelle Putz thought the hospital board should have been given the opportunity to right its own ship.
Member Matt Hunter agreed, in part. He co-sponsored the ordinance — not
because the current board had done anything wrong, but because he felt it was time for change.
“A lot of people had their feelings hurt, and felt disrespected. And misunderstood even where Mayor McConnell and I were coming from when we proposed this. This is not terminating the board for cause, which is one of the options in the existing ordinance. This is saying that the past assemblies who set up this board set up a system that may have worked for a while, but has a pattern of financial catastrophes happening at the hospital regardless of how strong the board is.”
On a motion from member Steven Eisenbeisz, the assembly agreed to add one more voting member to the new hospital board — for a total of five at-large seats — and to make the city staffer on the board a non-voting seat.
The changes will require one more hearing before the assembly on August 25th in order to take effect.
And the assembly heard from several members of the public concerned about the future of the Sitka Convention and Visitors Bureau, as its functions are absorbed by some as-yet determined 3rd party contractor.
Suzan Hess chairs the Sitka Chamber of Commerce, the likely candidate to take over the SCVB. The Bureau has historically been funded by Sitka’s bed tax. Hess read from a Chamber resolution urging the practice to continue.
“And now therefore be it resolved that the Greater Sitka Chamber of Commerce does hereby request that the City and Borough of Sitka utilize the bed tax dollars for the express purpose of marketing Sitka.”
Similar thoughts about preserving the marketing functions of the SCVB were expressed by Evy Kinnear, the current president of the SCVB board, and representatives of the Westmark Sitka and Totem Square Inn.
Administrator Mark Gorman told the assembly that he has been in negotiations with the Chamber about its interest in absorbing the SCVB. He expected to have a contract ready by the assembly’s next regular meeting.
And finally, the assembly agreed — in concept — to include an additional 20 acres of city land to the Gary Paxton Industrial Park. According to park director Garry White, there are more suitors — especially in the water bottling business — than available land. The assembly agreed in principle to transferring some undeveloped adjacent city land to the park, with one caveat: They wanted assurance that the property wasn’t worth more than $500,000. Under municipal statute, land disposals worth over $500,000 are subject to voter approval — except within the industrial park, which has special rules.
Assembly member Steven Eisenbeisz didn’t want residents to think that the assembly was circumventing public process.
White assured the assembly that, based on recent sales of similar-sized undeveloped land on the benchlands, the city property in question fell far below the $500,000 threshold.
