THE CITY AND BOROUGH OF JUNEAU, ALASKA

JULY 20, 1998

MEETING NO. 98-26: The Regular meeting of the City and Borough of Juneau Assembly, held in the Assembly Chambers of the Municipal Building, was called to order at 7:02 p.m. by Deputy Mayor MacKinnon.

  1. FLAG SALUTE was led by Deputy Mayor MacKinnon
  2. INVOCATION was not offered.
  3. ROLL CALL

Assembly Present: Garrett, Kibby, MacKinnon, Perkins, Powell, Muñoz, and Koelsch

Assembly Absent: Egan (arrived at 7:29), and Hagevig (arrived at 7:29)

A quorum was present.

Staff Present: Marian Miller, Municipal Clerk; Dave Palmer, City Manager; John Corso, City Attorney; Craig Duncan, Finance Director; Dave Miller, Airport Manager; Kim Kiefer, Parks and Recreation.

  1. APPROVAL OF MINUTES - None
  2. SPECIAL ORDER OF BUSINESS - None

  3. MANAGER’S REQUEST FOR AGENDA CHANGES
  4. Mr. Palmer requested adding two items for Executive Session discussion at the end of the agenda: 1) Lundstrom vs. CBJ, and 2) Boone vs. CBJ.

  5. PUBLIC PARTICIPATION ON NON-AGENDA ITEMS - None
  6. CONSENT AGENDA

MOTION - by Garrett, to approve the Consent Agenda as presented, and he asked unanimous consent. There being no objection, it was so ordered.

A. Resolutions

1. Resolution No. 1944

A RESOLUTION RATIFYING THE LABOR AGREEMENT BETWEEN THE CITY AND BOROUGH OF JUNEAU AND THE ALASKA PUBLIC SAFETY EMPLOYEES ASSOCIATION.

Administrative Report: Attached. The Manager recommended that this resolution be adopted.

B. Transfer Request:

1. Transfer No. T-652

TRANSFERS $35,000 FROM SCHOOL PROJECT/LAND ACQUISITION (CIP F453) TO NEW HIGH SCHOOL/DIMOND PARK (CIP S454-66).

Administrative Report: Attached. The Manager recommended that this transfer be approved.

C. Bid Award:

1. Bid No. 98-511

4 X 4 INDUSTRIAL TRACTOR WITH ATTACHMENTS.

Administrative Report: Attached. The Manager recommended award to Yukon Equipment as having the lowest responsive bid price, for a total award of $84,080.00.

2. Contract No. E98-486

TWIN LAKES ACCESSIBLE DOCK.

Administrative Report: Attached. The Manager recommended award of this bid to Goertz Construction Company in the amount bid for the base bid, for a total award of $71,747.00.

  1. ORDINANCES FOR PUBLIC HEARING
  2. 1. Ordinance No. 98-27

    AN ORDINANCE AMENDING THE SALES TAX CODE TO CAP THE TAX IMPOSED ON SALES OF FUEL OIL IN EXCESS OF 50,000 GALLONS DELIVERED BY MARINE TRANSPORTATION TO A SINGLE CUSTOMER.

    Administrative Report: Attached. The Manager recommended that this ordinance be adopted.

    Public Participation:

    Dick Knapp, 300 Hermit Street, Sr. Vice President with Petro Marine Services. He testified that the ordinance was put in at his request in order to facilitate their competitive position in this market. Greens Creek was annexed into the CBJ in 1994 and at that point became subject to sales tax. Petro Marine had just put in a competitive bid with Greens Creek for roughly 4M gallons of fuel per year on a two-year contract. They have lost this bid to the competition in Ketchikan because with the 5% sales tax it would have resulted in increased costs to Greens Creek of over $100,000. Petro Marine Services has a commercial domicile in the city and they thought the situation should be corrected.

    Mr. MacKinnon said that previously, Delta Western was concerned about how the sales tax was done on fuel delivery because it was measured and sold by the gallon. When they delivered or sold $10,000 worth of fuel to a ship, they were taxed on the full $10,000 worth and were not subject to the $7,500 cap. He asked if the bulk sale was what caused the problem.

    Mr. Knapp said yes, and he complimented the staff and Assembly on its fast action with this matter. The 50,000 gallon is a good start at this problem and it will solve Petro Marine’s immediate problem. He did believe this would require fine tuning in the future because it could not only help businesses who are domiciled in the city but also result in increased tax revenue to the city. He said in looking at the tax code, there is a provision for an exception for bulk jet fuel to commercial airlines. The reason for that is to have commercial airliners come in and buy their fuel. He believes there is a lot of tug traffic in SE that is passing up Juneau in favor of other places where there is no tax, or the tax is handled differently, thereby causing his company to lose business, and, if it were done properly, causing the city to loose revenue. He added that right now the tax code reads a $7,500 cap on a unit sale. Petroleum products are measured on a per gallon basis and as long as it is measured that way, it will be hard to come up with a $7,500 gallon of gas.

    Mr. MacKinnon asked if he saw a loss of sales to marine customers subject to 5% tax. Mr. Knapp believed there were vessels bypassing fuel purchases in Juneau in favor of other places where the tax climate was more favorable.

    Mr. Powell said in the ordinance, it says fuel oil, which seems to take care of the immediate problem. He asked if there were other ways to change the ordinance before the Assembly. Mr. Knapp said this ordinance does solve the immediate problem, but he plans to come before the Assembly again with a more reasoned proposal for the Assembly to consider.

    Assembly Action:

    MOTION - by Garrett, to adopt Ordinance 98-27.

    Mr. MacKinnon asked Mr. Palmer if he had any idea what the effect would be if sub-section B were amended to read "a single delivery of fuel oil in excess of 10,000 gallons delivered by or to marine transportation". He said if a ship comes in to buy fuel in excess of 10,000, they are only paying sales tax up to the cap. Mr. Palmer said that would considerably expand the scope of the exemption. He said he would need to research how many sales of 10,000 or greater occur. He thought the tax structure should also be considered in the competing towns to see if they offer a similar price and tax for fuel. He agreed that Mr. Knapp had a good point and the data should be analyzed. Mr. MacKinnon said to not only look at what sales occur, but get an idea of what sales are not occurring because of the additional 4-5%.

    Mr. Kibby said one of the things that was very apparent was that it is not just fuel oil, there are a lot of things that have come to light with the increase to 5%. He thought the whole structure would need to be reviewed.

    Mr. MacKinnon thought more businesses should be taking advantage of the sale for resale card and not pay sales tax on the purchase of materials that are going into an item that is sold. Mr. Kibby said that certain items do not meet the sale for resale when the items are being used.

    Mr. Powell thought it would be good to look at this in more of a comprehensive manner. He asked if this would affect anybody other than Mr. Knapp. Mr. Palmer said it would affect anyone making a sale of this size. It is not directed at any one particular company although there are not that many companies selling large amounts of fuel.

    Mr. Perkins said there was a loss of 400,000 gallons of fuel that was a direct loss in sales to a company here in town. He encouraged the body to support the ordinance and look at it in a more comprehensive way in the future.

    There being no objection, it was so ordered.

    2. Ordinance No. 98-28

    AN ORDINANCE PROPOSING AN AMENDMENT TO THE CHARTER OF THE CITY AND BOROUGH TO PROVIDE FOR NONCOMPETITIVE PURCHASES OF SERVICES TO BE PROVIDED BY OFFICERS AND EMPLOYEES OF THE STATE OF ALASKA AND THE FEDERAL GOVERNMENT; FACULTY AND STUDENTS OF ACCREDITED HIGH SCHOOLS, COLLEGES, AND UNIVERSITIES; AND MEMBERS, SHAREHOLDERS, AND EMPLOYEES OF NONPROFIT ASSOCIATIONS; AND CALLING FOR AN ELECTION ON THE QUESTION OF WHETHER THE CHARTER SHOULD BE SO AMENDED.

    Administrative Report: Attached. The Manager recommended that this ordinance be adopted.

    Public Participation: None

    Assembly Action:

    MOTION - by Perkins, to adopt Ordinance No. 98-28, and he asked unanimous consent.

    Ms. Muñoz questioned the word shareholder in the title being included with non-profit associates. It was her opinion that that implies a profit organization and she would like to delete shareholders from the title. Mr. Corso noted that that was a mistake, it is not in the ordinance and should not be in the title.

    There being no objection, it was so ordered.

    3. Ordinance No. 98-29

    AN ORDINANCE OF THE CITY AND BOROUGH OF JUNEAU, ALASKA, AUTHORIZING THE ISSUANCE OF A REVENUE BOND (BARTLETT REGIONAL HOSPITAL FOUNDATION PROJECT), OF THE CITY AND BOROUGH IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $450,000; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT IN CONNECTION THEREWITH; AUTHORIZING THE PROPER OFFICIALS OF THE CITY AND BOROUGH TO DO ALL THINGS NECESSARY OR ADVISABLE TO CONSUMMATE THE ISSUANCE, SALE AND DELIVERY OF SUCH BONDS; PROVIDING THE FORM OF BOND AND MANNER OF SALE OF SAID BOND; AND PROVIDING THAT THE BOND BE PLACED WITH KEYBANK NATIONAL ASSOCIATION.

    Administrative Report: Attached. The Manager recommended that this ordinance be adopted with recommended amendments from staff and Bond Council.

    Public Participation: Mr. Simpson was present to answer questions if needed.

    Assembly Action:

    MOTION - by Kibby, to adopt Ordinance No. 98-29 with staff’s recommendation for amendment, and he asked unanimous consent.

    Mr. Corso clarified the amendment was for the adoption of ordinance 98-29 (AM), also included in the packet.

    Mr. Koelsch asked if it was unusual for the city to issue a revenue bond for a foundation. Mr. Palmer did not believe it had been done before. He said the facility is situated on city property and is associated with a hospital. Mr. MacKinnon thought a similar thing may have been done with SEARHC when the city helped them underwrite their sale of bonds in order to build their facility.

    Mr. Duncan said it was not unusual, although the city had not done it very often. The proper term is conduit financing and it is a relatively common method of financing around the country. St. Ann’s will be coming to the Assembly with a similar item but it will be significantly larger. He went on to say that the reason that these normally don’t get reported is that once these items are done, the payment of the debt is totally secured from the revenue stream that they were issued for. It is not a debt or liability to the CBJ and as such, once they are issued, the city no longer financially reports them.

    Mr. Perkins said there had been a previous question about collateral and how this would be paid off. He clarified the reserves of the hospital would be on the hook for this. Mr. Palmer said that the project was a $650,000 project: $100,000 came through JEDC, $100,000 from money the foundation raised itself. The revenue bond raised the remaining $450,000. The bank will have security on the building but they will not have security on hospital or city revenues. They do have the security of the cash flow for the income from the facility. The income and the building itself are the bank's security. Mr. Perkins thought if the financial institutions were comfortable, the Assembly should be also.

    Mr. Garrett said that this was based on a performer of 70% occupancy. He asked that if those occupancy figures are not achieved, what happens the year that they cannot make the payments.

    Mr. Budd Simpson, President of the Board of Trustees of the Hospital Foundation, came forward to answer questions. He said that number is an estimate, which was their best guess based on the level of need. If that were not met, the foundation’s own credit and endowment funds would be available. The financing is to acquire the funds at a better rate of interest than a conventional loan. Saving a few thousand dollars a year in interest payments would mean a few thousand dollars a year they would not have to raise through private contributions.

    Mayor Egan and Ms. Hagevig arrived.

    There being no objection, it was so ordered.

    Mayor Egan took over control of the meeting.

    4. Ordinance No. 98-17 (A)

    AN ORDINANCE APPROPRIATING TO THE MANAGER THE SUM OF $65,000 FOR INSTALLATION OF A CULVERT ON CESSNA DRIVE AND CONSTRUCTION OF A FISH WEIR ON DUCK CREEK. SUCH FUNDS, $20,000 EACH, PROVIDED BY THE U.S. FISH AND WILDLIFE SERVICE AND THE NATIONAL MARINE FISHERIES SERVICE; $5,000, PROVIDED BY TROUT UNLIMITED, INC.; AND $20,000, PROVIDED BY PARTNERS FOR FISH AND WILDLIFE.

    Administrative Report: Attached. The Manager recommended that this ordinance be adopted.

    Public Participation: None

    Assembly Action:

    MOTION – by Powell, to adopt Ordinance No. 98-17 (A), and he asked unanimous consent. There being no objection, it was so ordered.

  3. UNFINISHED BUSINESS - None
  4. NEW BUSINESS - None
  5. ADMINISTRATIVE REPORTS ON NON-AGENDA ITEMS

A. Manager’s Report - Action Items

1. KTOO request for funding to cover 2nd Special Session of Legislature.

Administrative Report: Attached. Since this was a policy decision by the Assembly, the Manager had no recommendation.

Assembly Action:

MOTION - by Hagevig, to approve authorization of the request of KTOO to fund coverage of the second special session, including the $4,000. There being no objection, it was so ordered.

B. Manager’s Report - Information Items - None

    1. Attorney’s Report -

Mr. Corso reported that the city had executed a contract with the Municipal Code Corporation for a revision of the municipal code. A representative would be here in August to meet with Department heads, identifying area in the code that need revisions. These revisions would only be for housekeeping. He added that they would be switching over to electronic distribution with limited paper copies.

  1. MAYOR’S REPORT ON NON-AGENDA ITEMS
  2. A. Revised Pending Items

    B. Unappropriated General Fund Unreserved Fund Balance

    C. Assembly Contingency Fund Balance

  3. COMMITTEE REPORTS ON NON-AGENDA ITEMS
  4. A. Committee Reports

    1. Committee of the Whole

    Mr. MacKinnon said there would be a meeting on Monday at noon, not 5:00, to get a report on the Mendenhall Treatment Plant.

    2. Finance Committee

    Mr. Perkins said there would be a meeting on August 19, at 5:00. The items of discussion would be the TAC request on staffing; TV coverage for Assembly meetings; and discussion about funds that may need to be deappropriated and put back into the JEDC.

    3. Committee on Committees

    Mr. Powell presented the following names for confirmation:

    MOTION – by Powell, to confirm the appointments of Mary Jefferson and Robert Thibodeau to the Commission on Aging. There being no objection, it was so ordered.

    MOTION – by Powell, to confirm the appointments of Romer Derr, Robert J. Hurley and Annette Smith to the Docks and Harbors Board. There being no objection, it was so ordered.

    MOTION – by Powell, to confirm the appointments of Susan E. Sutton, Lisa D. Sullivan, and Eleanor Vinson to the Juneau Women’s Council. There being no objection, it was so ordered.

    MOTION – by Powell, to confirm the appointment of Virginia Blaisdell to the Youth Activities Board. There being no objection, it was so ordered.

    MOTION – by Powell, to confirm the appointment of Jegger T. Arsua, Shanna Glallazzo, and Alexis T. Janowiec to the Juneau Youth Commission. There being no objection, it was so ordered.

    4. Human Resources Committee

    Ms. Muñoz said there was a meeting scheduled for August 3rd at noon to review the drafted commercial vehicle ordinance and approximately one dozen liquor licenses.

    5. Lands & Resources Committee – no report

    6. Public Works & Facilities Committee

    Mr. Garrett said there would be a joint meeting with Lands on Wednesday at noon in Chambers. The primary reason is to meet with the areawide Transportation Consultants. They will also be discussing the issue with regards to the Valley Blvd. construction project and their request that the city waive some of the costs associated with inspection of that project. There will also be an update on the Mendenhall River pedestrian bridge project.

    7. Strategic Policy Committee – no report

    B. Board Liaison Reports

    Mayor Egan said the Alaska Committee would not meet this Wednesday but the following Wednesday, the 29th. He said they normally do not meet on the 29th but they need to conclude the constituent fare proposal of Alaska Airlines and the Tanana Valley assignments. Mr. Perkins has agreed to represent the Assembly for a few days during his vacation at the fair.

  5. ASSEMBLY COMMENTS AND QUESTIONS
  6. Mr. Koelsch thanked staff for having the van and trailer moved in the lower High School parking lot. He asked what plans there were for the security of CBJ employees and offices. Mr. Palmer said there was not much of a plan, the building is a wide-open public building most of the day. Mr. Koelsch asked if he saw a need for security. Mr. Palmer said occasionally yes, there are times when it would be nice to have things not as open and accessible as they are.

    Ms. Muñoz thanked Mr. Palmer for organizing the clean up of the Montana Creek trail. It involved SAGA, Trail Mix, and CBJ employees. The old bus was removed along with other rusted out cars and junk. She asked the city or state policy with regard to camping along the stretch of road from False Outer Point to the Boat Launch. Ms. Smith’s previous response had been that DOT was going to post no-camping signs along that very public stretch of ROW. She asked Mr. Palmer to follow up on that.

    Ms. Hagevig said she attended the meeting that was sponsored by the Mt. Roberts Stewardship group. It was very well attended and the dialog was excellent. The outcome was that there was a great deal of interest in looking at a planning process to protect the alpine area. Trial Mix will take the lead on that.

    Mr. Garrett thanked Darcy Wert for providing detailed data of all the complaints to the Tourism hotline. He said he was hopeful that the tour companies were diligent to follow up with residents of the community. He noted that a number of people who move next to a certain noise, say an airport, complain about the noise. He pointed out that if a person lives next to the airport, it will be noisy. The city will try to mitigate but can only do so much. Other activities are out of the ordinary and will temporarily make noise

    Mr. Powell thanked all the organizations that participated in the Safety Fair over the weekend. He hoped that next year there could be more advertisement and more fun events. Mayor Egan said he got $50 worth of pie in his face and he encouraged other Assembly members to work with Lt. Fletcher on devising another fund raising opportunity.

    Mayor Egan reported that the employee compensation committee met, and as discussed briefly at the COW, Mr. Palmer was offered a 3% raise retroactive to April 1st. There being no objection, it was so ordered.

    Mayor Egan appreciated the hearing being scheduled on the Sewage Treatment Plant. He wanted to make sure the City Manager and Public Works Director invite neighbors in the area to attend the COW to get the latest update. Mayor Egan continued by saying that he received a fax today from the Governor’s Office regarding subsistence. The City and Borough of Sitka passed a resolution endorsing the compromise. Ms. Miller would make copies of the compromise for distribution.

    Ms. Hagevig asked if it would be possible to do an addendum to the previous resolution. Mr. Corso said the Assembly would have to reconsider. Discussion ensued about the timing and public hearing. Mr. Perkins asked if it would be possible to have a special meeting prior to Wednesday’s joint meeting at noon. Mr. Corso said one days notice would be adequate.

    Mr. Powell said the annual conference to put together the legislative platform is August 30-31st in Seward. He said he would like to attend as he had for the past two years. Ms. Hagevig and Mayor Egan said they were both also thinking about attending. There was no objection to Mr. Powell attending. Mr. Hagevig asked for conditional approval for her and Mayor Egan to attend. There was no objection.

  7. CONTINUATION OF PUBLIC PARTICIPATION ON NON-AGENDA ITEMS
  8. Shane Williams, Chairman of the Juneau Independent Drivers Association, P.O. Box 211245, Auke Bay. He thanked the individual members within the city government for the time and aggravation that has gone on within the city. He appealed to the Assembly to address this from a concern of people who live in Juneau year round. At issue was the fact that there are currently 68 cabs operating in town. There is in excess of 165 tour vans, charters, shuttles and courtesy vans also operating in the Juneau area. During the winter that drops to 12-15 vans. The cabs are not the problem. He said they would like the Assembly to take a look at it from the point of funding; there is a cost allotted and they are not unwilling to pay but do not want to pay all of it. He suggested possibly through a permitting process or a fee distribution among the drivers. The issues are directly relative to how the community will be serviced if the industry cannot pay for itself, survive, when winter hits. During the summer months, most of the drivers make enough to replace their car if they have to, but when there are such stringent requirements, such as the tone of white on the car removing the individual from driving for 3-5 days, that is a loss in pay. Other operators are allowed to operate looking the same as ours, but with rusted out bumpers or dings or dents, which would remove a cab from the road for visual inspection. It is a big concern when those requirements are not applied industry wide. The enforcement issue could be someone who is schooled and intimately involved in the industry; it does not have to be a year round individual – just for the summer months. He understands it is political and economic and goes both ways. The drivers will defend their main points of interest and will attempt to do it with objectivity that is responsive to both sides, not just one.

    Mr. Powell asked what he meant when he referred to it requiring funds. Mr. Williams said that something would need to be put together similar to the TAC, but in a sense the Transportation Industry. They have looked at a number of other areas and a lot of the smaller areas do it through the general public, not the Assembly or Business. They meet with the users and asked for help making decisions. They have found a 3-5 person groups that operates on that basis and then reports to the Assembly with their findings. The transportation specialists would then take the decisions made by the Assembly and place them into an ordinance to be applied as far as enforcement goes. The Police Department has said it is approximately $68,000 a year for a standard officer. There would be other costs on top of that. They were looking at about ½ that figure, maybe less, depending on if it would be a regular police officer of community service officer.

    Ms. Hagevig asked if he was looking for someone to do an adjudication role or an enforcement person. Mr. Williams said he thought it might be a dual roll as adjudication may not be fair to be placed on one person. The transportation Commission should be able to make recommendations to the Assembly that could be brought back through an administrator appointed through the City Manager’s office. Ms. Hagevig clarified it would be a staff person rather than an advisory board or a board empowered to do something. Mr. Williams said that would be his hope.

    MOTION - by MacKinnon, to recess into Executive Session, after a five minute break, to discuss two items of litigation which may affect the finances of the CBJ..

    R E C E S S

    7:55 p.m. - 8:05 p.m.

    E X E C U T I V E S E S S I O N

    8:05 p.m. - 8:30 p.m.

    Mr. MacKinnon reported that the Assembly heard on two items of pending litigation for the city: Lundstrom vs. CBJ and Boone vs. CBJ. The Assembly gave the City Manager and Attorney direction on both cases.

  9. ADJOURNMENT - There being no further business to come before the Assembly, and no objection, the meeting adjourned at 8:32 p.m.

Signed:

 

 

________________________________

Mayor Egan

 

Countersigned: ________________________________

Marian Miller, Clerk