ASSEMBLY AGENDA/MANAGER’S REPORT
THE CITY AND BOROUGH OF JUNEAU, ALASKA

Monday, November 21, 2005 7:00 – 11:00 PM
Assembly Chambers – Municipal Building
Regular Meeting No. 2005-34

Submitted by: Rod Swope, City & Borough Manager

I. FLAG SALUTE

II. ROLL CALL

III. SPECIAL ORDER OF BUSINESS

A. Proclamation – Willette Janes
B. Employee Recognition

IV. APPROVAL OF MINUTES

A. November 4, 2005 – Special Meeting 2005-32

V. MANAGER’S REQUEST FOR AGENDA CHANGES

VI. PUBLIC PARTICIPATION ON NON-AGENDA ITEMS.
(Not to exceed a total of 20 minutes nor more than 5 minutes for any individual).

VII. CONSENT AGENDA

A. Public Requests for Consent Agenda Changes, Other Than Ordinances for Introduction

B. Assembly Requests for Consent Agenda Changes

C. Assembly Action

1. Ordinances for Introduction

a. Ordinance 2005-49   Backup
An Ordinance Authorizing The Manager To Issue A Right-Of-Way Encroachment Permit To The State Of Alaska For The Purpose Of Installing And Maintaining An Above Ground Oil Storage Tank Partially In The Right-Of-Way, And Exempting The Permit From Certain Sections Of The CBJ Public Ways And Property Code.

The State of Alaska is replacing their oil tank at the State Office Building. The old buried tank is no longer useful, and because of other utility conflicts, a new tank cannot economically be placed in the same underground location. The State prefers to relocate their new tank to an above ground location, next to the State Office Building. During planning and design, it was discovered that the new tank would encroach into the Third Street Right-of-Way approximately three to four feet. The CBJ Code does not provide for Right-of-way encroachments. Thus, to accommodate their request, a non-code ordinance is required.

Typically, the CBJ would not allow oil tanks within the Right-of-way. However, in this case, the State owns the land on either side of Third Street. Another alternative considered, but not pursued, was to require the State to move the Right-of-way through a platting action, thereby sidestepping an encroachment. Because of the additional time needed to complete that re-platting process, the non-code ordinance approving the encroachment was pursued.

I recommend that this ordinance be introduced and set for public hearing at the next regular Assembly meeting.

b. Ordinance 2005-11(Q)   Economic Impact Statement
An Ordinance Appropriating To The Manager The Sum Of $100,000 For The Adair Kennedy Field Covered Bleachers, Funding Provided By The Alaska Department Of Commerce Community And Economic Development.

This ordinance appropriates $100,000 for design and construction to expand the existing seating at Adair-Kennedy Park, providing additional covered seating for approximately 120 spectators.

Funds for this project are being provided by the State of Alaska through a legislative grant being administered by the Department of Commerce, Community, and Economic Development.

I recommend that this ordinance be introduced and set for public hearing at the next regular Assembly meeting.

c. Ordinance 2005-11(R)    Economic Impact Statement
An Ordinance Appropriating To The Manager The Sum Of $400,000 As Funding For The School District Technology Upgrades, Funding Provided By The Alaska Department Of Commerce Community And Economic Development.

This ordinance appropriates $400,000 for the selection and procurement of technology materials and equipment for the Juneau School District.

The Juneau School District has ongoing needs for replacing and upgrading technology to maintain contemporary materials and equipment for teachers and students. Funds for this project are being provided by the State of Alaska through a legislative grant being administered by the Department of Commerce, Community, and Economic Development.

I recommend that this ordinance be introduced and set for public hearing at the next regular Assembly meeting.

2. Resolutions

a. Resolution 2327
A Resolution Authorizing The Manager To Apply For, And Enter Into, A Loan Agreement With The Alaska Department Of Environmental Conservation, Alaskan Revolving Loan Fund, For The Wastewater Utility Bayview Subdivision Force Main Project.

This resolution authorizes the City Manager to enter into a loan agreement with the Alaska Department of Environmental Conservation for a $1,200,000 loan as partial funding for a new pressure sewer main from Bayview Subdivision to the Mendenhall Wastewater Treatment Plant (MWWTP). The terms of the low interest loan under the Alaskan Revolving Loan Fund program are 20-years at 1.5-percent interest. The loan will be paid with Wastewater Utility customer revenues.

The Bayview sewer system was constructed as a private utility in the early 1980’s, and was transferred to the CBJ in 1993. The Bayview sewer system is being connected to the MWWTP due to the systems inability to meet State Water Quality Standards. The project will involve design, inspection, and construction of a new sewer pump station, approximately 7,500 feet of pressure main, and collection system improvements to reduce groundwater infiltration and stormwater inflow.

The estimated total project cost is $1,900,000. This loan will be used to provide the Wastewater Utility’s 50/50 match for an existing ADEC grant offer for the Bayview/North Douglas Sewer System project. The project is scheduled for completion by spring 2007.

I recommend this resolution be adopted.

VIII. PUBLIC HEARING

A. Ordinance 2005-33      Map
An Ordinance Prohibiting The Discharge Of Firearms Within One-Quarter Mile Of The Mount Roberts Trail, And Providing For A Penalty.

This ordinance is sponsored by Mayor Botelho at the request of local author Robert H. Armstrong. It would prohibit the discharge of firearms within one-quarter mile of the Mount Roberts Trail, from April 15, through October 15. The purpose is to reduce danger from the discharge of firearms near the trail during the times of year when the trail has significant use by tourists and users of the Mount Roberts Tram. Mr. Armstrong reports having observed many occasions when hunting use and tour use of the trail conflict.

The Lands Committee considered this ordinance at its meeting of October 10, and forwarded it to the Assembly for approval.

I recommend this ordinance be adopted.

B. Ordinance 2005-35    Map     Backup
An Ordinance Amending The Official Zoning Map Of The City And Borough To Change The Zoning Of USS 1939, Tract C, Lots 1, 2, And 3; USS 2909, Lots 1, 2, 3 And 4; Fr. USS 3812; ATS 478; And ATS 741, Located Along The North Shore Of Auke Bay, Currently Zoned D-5, Residential, To WC, Waterfront Commercial.

This ordinance would change the zoning of the above listed properties located on the north shore of Auke Bay from D-5 single-family residential to WC, Waterfront Commercial, in conformance with the Comprehensive Plan.

The properties are located between Fisherman’s Bend Marina and Spaulding Beach Condominiums. Well-attended neighborhood meetings were held by Community Development staff on July 20 and August 17, 2005 to discuss this item with local residents. The Planning Commission held a public hearing on September 27, 2005 and voted 7 to 1 to change the zoning to Waterfront Commercial subject to the following condition:

1) A 20-foot buffer of natural vegetation shall be retained along the western property line of USS 1939, Tract C, Lot 3.

I recommend this ordinance be adopted.

C. Ordinance 2005-36     Map      Backup
An Ordinance Amending The Official Zoning Map Of The City And Borough To Change The Zoning Of USS 2391, Lot X, Located In The Auke Lake Area, Currently Zoned D-3, Single-Family Residential, To D5(T)D10, D5 Single Family Residential, Transitional To D10, Multifamily Residential.

This ordinance would change the zoning of Lot X USS 2391, from D-3 single-family residential to D-5single-family residential and to D-10 multifamily if access improvements are provided.

The lot is bordered by Lee Street and the Back Loop Road. The applicant requested zoning be changed to D-15 multifamily. A well-attended neighborhood meeting was held by Community Development staff on August 17, 2005 to discuss this item with local residents. Safe access to the parcel was a significant concern raised by those who attended the neighborhood meeting. The Planning Commission held a public hearing on September 27, 2005 and unanimously approved changing the lot’s zoning to D-5 with the option of increasing the density to D-10 multifamily residential if access to the lot is improved. Transition to D-10 zoning would be subject to the following condition:

1) Prior to a zone change to D-10 Multifamily, Lee Street shall be improved to standards required for streets within the Urban Service Boundary as required in CBJ49.35 PUBLIC IMPROVEMENTS and CBJ49.40 ACCESS, PARKING AND TRAFFIC, unless safe access is provided from an alternative location equivalent or superior to that provided by Lee Street.

I recommend this ordinance be adopted.

D. Ordinance 2005-38
An Ordinance Increasing The Business Personal Property Tax Exemption For Property Not Otherwise Exempt.

CBJ currently exempts the first $2,000 of business personal property (BPP) value for all filers. The Juneau Chamber of Commerce requested further exemption, and the Tax Policy Subcommittee determined that there was justification for increasing the BPP exemption to provide additional tax relief. Increasing the exemption to $20,000 in value per merchant per year would reduce CBJ property tax revenues by approximately $176,000 per year. The increased exemption would also fully exempt approximately 1,070 additional merchants from the BPP tax levy.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

E. Ordinance 2005-39
An Ordinance Repealing The Community Purpose Property Tax Exemption.

State Statutes govern the manner in which CBJ assesses and levies property tax. State statute provides for both mandatory exemptions and optional exemptions. Under the statutes, a municipality may, by ordinance, classify and exempt from taxation the property of an organization "not organized for business or profit-making purposes and used exclusively for community purposes."

In implementing the Community Purpose exemption, the Assessor is charged with making the determination that the property meets the community purpose use, and benefits a significant portion of the public. Over time, the number of parcels granted this exemption has grown. After reviewing the exempted parcels, the Tax Policy Subcommittee has determined that a number of the parcels probably do not meet the State requirements of being used “exclusively for community purpose.” In addition, the Assessor has determined that approximately half of these parcels should be exempted under State mandatory exemptions, e.g., the charitable purposes exemption, not the Community Purpose optional exemption.

CBJ is currently providing $21.7 million in Community Purpose exemptions to 26 real parcels of property and 10 business personal property accounts. Optional exempted property is included in the State’s Full and True Value calculation while mandatory exemptions are excluded. Under the State’s education funding formula, we are required to contribute 4 mills of “Full and True Value” to education support and the State then reduces their contribution on a dollar for dollar basis. Providing optional exemptions results in a cost to the remaining taxpayers equal to 4-mills of the property optionally exempted. Accordingly, it is more efficient to use the mandatory exemptions where applicable.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

F. Ordinance 2005-40
An Ordinance Repealing The Non-Resident Sales Tax Exemption.

In 1985, CBJ adopted a sales tax exemption for nonresidents if the items purchased would be consumed outside of Juneau. To qualify, the nonresident must acquire, by mail, a $20 exemption card from the Sales Tax Office. The purpose for this exemption was to promote Juneau as a shopping destination. However, most communities in Alaska do not provide for nonresident exemption from sales tax. CBJ is currently selling about 1,100 to 1,200 non-resident exemption cards per year and exempting approximately $240,000 in sales tax each year.

The Tax Policy Subcommittee recognized that nonresidents have access to community services while visiting Juneau, and therefore, should have an obligation to pay tax to support these services. In addition, the Subcommittee noted that keeping track of nonresident sales places a workload burden on merchants and staff. After reviewing the issues, the Subcommittee determined that with the small number of individuals purchasing nonresident sales tax exemption cards, the CBJ merchants would not be materially impacted if this exemption were eliminated, and the great majority of nonresidents shopping in Juneau would continue to do so with or without this exemption.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

G. Ordinance 2005-41
An Ordinance Repealing The Sales Tax Exemption For Direct Sales Of Newspapers By Carriers.

This ordinance would repeal the sales tax exemption for direct sales of newspapers by carriers. It is a housekeeping measure. Merchants have not claimed this exemption for a number of years. Newspaper carriers no longer collect fees at the time of delivery; there is no need to retain this sales tax exemption.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

H. Ordinance 2005-42
An Ordinance Related To Video Gaming Devices, Repealing The Sales Tax Exemption For Plays On Coin Operated Video Gaming Devices, And Repealing The City And Borough Licensing Of Video Gaming Devices.

This ordinance would repeal the exemption for the sale of plays on video game devices, and repeal the related video gaming-licensing requirement.

The video gaming license fee in CBJ 20.20 was adopted in lieu of sales taxes on video game plays. The sales tax exemption was adopted when the sales tax rate was increased from 4% to 5%. The video gaming merchants indicated that they could not add the additional 1% to their (at the time) 25-cent selling price without increasing the play cost to 50-cents. The licensing ordinance includes a $12 per year fee in lieu of the sales tax levy. The Clerk’s Office currently issues about 100 gaming licenses a year. The merchants are reporting to the Sales Tax Office approximately $270,000 in exempt sales ($13,500 in sales tax) per year. This works out to approximately $100 in sales tax exempted for each $12 video gaming permit issued.

The licensing fee charged is no longer equivalent to the actual sales tax exempted. In addition, this exemption does not apply to non-video coin-operated gaming devices (pool tables, machines that sell merchandise, washer/dryers, and public telephones).

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption. A copy of the draft ordinance was mailed to all licensees of video game devices in 2005.

I recommend this ordinance be adopted.

I. Ordinance 2005-43
An Ordinance Relating To Sales Taxes On Commissions.

This ordinance would clarify the present Sales Tax Code regarding collection of Sales Tax on commissions; for example, it would clearly provide that the full selling price of the sales are taxable, as has been the longstanding practice.

Merchant sales where commissions are paid contain two different legal transactions: the sale by the owner or service provider (through the merchant agent) to the customer, and the commission paid to the agent (the merchant) by the owner or service provider. Exemption #24 exempts the commissions charged on travel related services, and Exemption #40 exempts the commissions charged for negotiating the sale or lease of tangible personal property. These commission exemptions eliminate the perception of double taxation on these transactions.

In practice, agents sometimes withhold the commissions from the amounts remitted to the sellers (owners or service providers). In some instances, the sellers are reporting and remitting only the sales tax on the net amount that they receive. After reviewing these code sections, the Tax Policy Subcommittee has recommended that these two code sections be modified to clearly state that the full selling price of these transactions are taxable, and that the exemption only applies to the second part of the transaction, the commissions paid by the provider of the service.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

J. Ordinance 2005-44
An Ordinance Providing An Exemption From Sales Taxes For Rural Education Attendance Areas.

This ordinance would expand the sales tax exemption for sales to or by the State of Alaska, and municipalities, to include unincorporated school district operations (Rural Education Attendance Areas, or REAAs).

The Sales Tax Code currently exempts retail sales, services, and rentals of real or tangible personal property to or by the State or a municipality. This ordinance would add REAAs, which are school districts in unincorporated areas. The CBJ currently has two REAAs operating correspondence programs within the borough. It recently came to the Sales Tax Office’s attention that these organizations are not exempt from the sales tax under the current sales tax code. The exemption in the Sales Tax Code is narrowly written and the exemption for government entities, CBJ 69.05.040(13), does not include school districts. After reviewing the purposes of this exemption, the Tax Policy Subcommittee recommended that the sales tax exemption be expanded to include REAAs.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

K. Ordinance 2005-46
An Ordinance Providing For Variable Interest Rates On Sales Tax Delinquencies.

This ordinance would set the interest rate on delinquent sales tax to an index to allow it to adjust up and down with the financial market.

The sales tax code imposes a 5% per month penalty, up to a maximum of 25%, and an interest rate of 15% per year on delinquent sales tax remittances, as allowed by state statute. The penalties are intended as a punitive measure to encourage delinquent merchants to comply with the law. The interest, on the other hand, is intended to keep the CBJ whole for interest losses; it is set somewhat high to avoid merchants using the CBJ for financing. The sales tax code does provide staff with the authority to compromise and abate penalties and interest. It is reasonably common, for just cause, for staff to waive the 5% penalties. However, for consistency, the interest charges are seldom waived. The 15% rate was placed into the code many years ago. At the time, commercial lending rates were much higher than now and the 15% rate was reasonable. For the past few years, interest rates have dropped significantly. The 15% rate appears higher than necessary to accomplish the intended enforcement objectives.

After reviewing this issue, the Tax Policy Subcommittee determined that, under the current market rates, the sales tax interest rate is higher than necessary. As such, the sales tax interest rate is also acting as a punitive measure. The Subcommittee determined that this is inappropriate. The Subcommittee recommended that the sales tax interest rate be modified to allow it to float within a specified range. The recommendation is to modify the sales tax code to set the interest on January 2 of each year to a rate of 5% higher than the prime rate with a floor of 10% and a ceiling to the maximum amount allowed under State statute.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

L. Ordinance 2005-47
An Ordinance Combining Sales Tax Exemptions For Construction Services And Materials, And Repealing The Exemption For Design Professional Services.

This ordinance would combine the construction services exemption (#4) with the construction materials exemption (#5), and eliminate the exemption for professional design services.

The purpose for these sales tax exemptions is to exempt improvements to real property that increase assessed property values, and accordingly, increase CBJ property tax revenues. In addition, the exemption provides a financial incentive for builders to obtain a building permit. The Tax Policy Subcommittee found that combining and retaining these exemptions would be appropriate, with one exception. The one exception is to eliminate the exemption for professional design services. The elimination of professional services recognizes that many construction designs are never completed and do not add to the real property assessment base.

Combining the two exemptions, materials and services, should assist contractors in understanding and complying with the exemption requirements, and reduce confusion for merchants' reporting.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

M. Ordinance 2005-48
An Ordinance Providing A Temporary Sales Tax Exemption For The Sale Of Fuel Oil.

This ordinance would enact a temporary sales tax exemption for residential and commercial heating fuel oil. It would be effective January 1, 2006, and repealed March 31, 2006. The purpose is to provide some financial relief for the winter months in light of high oil prices. The fiscal impact of the temporary exemption is estimated at $440,000 for the quarter.

The Assembly Finance Committee considered this ordinance at its meeting of October 26, 2005, and recommended adoption.

I recommend this ordinance be adopted.

N. Ordinance 2005-11(O)   Economic Impact Statement
An Ordinance Appropriating To The Manager The Sum Of $337,843 As Partial Funding For The Purchase Of Four Capital Transit Buses, Funding Provided By The United States Department Of Transportation, Federal Transit Administration.

This ordinance appropriates the remaining $337,843 United States Department of Transportation, Federal Transit Administration grant for the purchase of four Capital Transit buses.

The first portion of the grant was appropriated by Ordinance 2005-11(D) on August 8, 2005. These buses will be 35 foot, low-floor accessible buses similar in design to the buses purchased since 2000.

The funds require a 20% match of local funds, which are provided by the Fleet Replacement Reserve and a part of the current Capital Transit Fiscal Year 2006 Budget.

I recommend this ordinance be adopted.

IX. UNFINISHED BUSINESS

X. NEW BUSINESS

A. Regulations - Eaglecrest Ski Area

These regulations govern the commercial activity of third parties at Eaglecrest. Under the authority of CBJ 01.60.200 and CBJ 67.01.045 Eaglecrest Board of Directors proposes to amend Title 11, Chapter 07 to allow the contract period for commercial operations to be extended from 1 year to up to 5 years. This will allow third parties to make significant private investment in commercial operations. The five-year period will allow these business adequate time to recapture their investment. All commercial operations will be approved by the Board of Directors and comply with the commercial regulations.

The board provided public notice through the 21 day posting process, which closed on November 4, 2005. Two comments were received and will be addressed through the contract negotiations with the commercial operators.

The Board of Directors expects to be able to attract viable businesses to make investment is summer activities, which will provide summer income to Eaglecrest. The Assembly has requested Eaglecrest to pursue summer operations and this is the most cost effective method to reach those goals.

I recommend the Assembly allow regulations to take effect.

XI. STAFF REPORTS

A. Alaska Trails Initiative

Juneau will benefit from a new federal program, Alaska Trails Initiative, designed to provide funding to organizations for developing and reconstructing Alaska trails. Last month the State Division of Parks and Outdoor Recreation announced that Trailmix would receive $654,289 for improvements to Perseverance Trail, $88,000 for Under Thunder development, and Eaglecrest would receive $87,734 for trail improvements within the lower loop of the Nordic ski area.

XII. ASSEMBLY REPORTS

A. Mayor’s Report
B. Committee Reports
C. Liaison Reports
D. Presiding Officer Reports

XIII. ASSEMBLY COMMENTS AND QUESTIONS

XIV. CONTINUATION OF PUBLIC PARTICIPATION ON NON-AGENDA ITEMS

XV. EXECUTIVE SESSION

XVI. ADJOURNMENT

Note: Agenda packets are available for review at the Juneau Municipal Libraries

ADA Accommodations Available Upon Request: Please contact the Clerk’s office 72 hours prior to any meeting so arrangements can be made to have a sign language interpreter present or an audiotape containing the Assembly’s agenda made available. The Clerk’s office telephone number is 586-5278, TDD 586-5351, e-mail: city_clerk@ci.juneau.ak.us.

 

 

Office of the City Clerk, 155 South Seward Street, Juneau, Alaska 99801
 
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