City of Seward. 2012/2013 Budget Worksession #7 Harbor, SMIC, Electric, Debt, CIP

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1 City of Seward 2012/2013 Budget Worksession #7 Harbor, SMIC, Electric, Debt, CIP

2 Harbor Enterprise Fund

3 Harbor-related cash, p. 53 Harbor Enterprise Fund = $505,871 (9/11) versus assets of $32.3M HC; $22.3M BV Harbor MRRF = $1.4M ($1.2M state cruise ship tax restricted to State-authorized purposes; $63K local passenger fee; $144K fish tax) Harbor Capital (grant) Projects = $568,867 Harbor Passenger Fee fund = $439,432; estimated $66,873 at end of 2011 Projected ending cash is $1.385M 2012/2013 HC = historic cost BV = book value

4 Harbor Cash History

5 Harbor Cash History # months cash

6 Harbor-related debt, p E-Float and Fish Cleaning Station Bonds= $1.935M 2005 Float Extension Bond = $1.21M 2006 South Harbor Bond = $3.74M 50-ton Boatlift loan= $125K Total: $7,004,783

7 Harbor Projects funded with no debt $2.2M T-Dock and Bulkhead $2.0M - Z-Float and upland improvements $300K - USCG relocation $4.5M - Cruise ship dock dredging $1.0M - E. Harbor expansion $1.5M - ARRV mooring dolphins $61,250 Fish ditch upgrades Total > $11.5 million Next two years: $739K - SMIC washdown pad ( project) $130K - Harbor restroom improvements(2012 project) $25K - Boardwalk extension (2012 project) $400K - CDQ fishing fleet relocation (2012 project)

8 Highlights, p. 1 CPI rate increase 2012 (2.8%) CPI rate increase 2013 (2.6%) Proposed 10% increase to transient rates Passenger fees proposed $555K/ $560K Annual debt payments $812K / $816K, assumes no new debt

9 Highlights, p. 2 Assumes fish tax transferred from General Fund to Harbor ($320K) Assumes portion of fish tax is not used for capital, since needed for debt service ($218K / $182K) Portion of fish tax transferred to MRRF ($102K / $138K) 100% of capital renewal & replacement fee to MRRF ($100K)

10 Highlights, p. 3 Approx. 51% of harbor assets paid for with grants Transfers administration of land leases to GF; $38K cost Includes assumed higher costs for electric, water, sewer based on proposed rate increases Revenues higher overall by $43.5K Expenses higher overall by $303K; 100% related to $333K higher depreciation

11 Highlights, p. 4 Assumes credit card fees passed on to customers (saves $40K) Does not include requested funding to survey cathodic protection system; moved out of operating budget to capital

12 Passenger Fee History 250,000 # of Passengers 200, , ,000 50, Note: 2011 data is through August, 2011

13 Passenger Fee History Revenues versus Debt Service 1,000, , , , , , , , , , Budget 2012 Budget 2013 Budget Annual Debt Service Totals Annual Revenues: Note: Assumes all Harbor debt service is paid with passenger fees, which is not proposed in 2012 and 2013.

14 Passenger Fee History Revenues versus Debt Service $800,000 $600,000 $400,000 $200,000 $ Budget 2012 Budget 2013 Budget $200,000 $400,000 Annual Surplus (Deficit): Cumulative Passenger Fee Status $600,000 Note: Budget reflects what balance in Passenger Fee Fund would be if only Passenger fees were used to make harbor debt payments in 2012 and 2013.

15 Debt Service If 2012 generates $555,000 in Passenger Fees (budget) the Harbor will need to utilize $148,459 from moorage revenues to pay this debt service. Previously this difference has been covered by passenger fee reserves, however these reserves will be insufficient to cover this difference by the end of 2011.

16 Harbor Capital Improvement Plan

17 Harbor Critical, High Risk Needs Priority No. Status Year Total Capital Outlays CRITICAL NEEDS: Highly likely to fail within the next five years Floats & Docks 1 Replace D Float Replace $0 $2,363,500 $0 $0 $0 $2,363,500 Maintenance Harbor Dredging Maint $0 $0 $255,000 $0 $0 $255,000 Total Critical Needs: $0 $2,363,500 $255,000 $0 $0 $2,618,500 HIGH RISK: Highly likely to fail within the next 5-10 years. Floats & Docks 2 Replace A,B,C,S Floats Replace $0 $0 $0 $6,100,000 $0 $6,100,000 3 Replace S Launch Ramp Replace $0 $0 $0 $1,000,000 $0 $1,000,000 Replace K & L floats Replace $0 $0 $0 $0 $2,250,000 $2,250,000 Replace N Launch Ramp Replace $0 $0 $0 $0 $0 $0 Equipment Fish Waste Barges Replace $0 $50,000 $20,000 $0 $0 $70,000 Total High Risk Needs: $0 $50,000 $20,000 $7,100,000 $2,250,000 $9,420,000 MODERATE RISK: Continuously increasing cost to maintain and operate Structures Harbormaster Restrooms Maint $100,000 $0 $0 $0 $0 $100,000 Uplands Trash Dumpsters (4) Replace $0 $40,000 $0 $0 $40,000 Used Oil Stations Maint $20,000 $20,000 $20,000 $0 $0 $60,000 Total Moderate Risk Needs: $120,000 $20,000 $60,000 $0 $0 $200,000 Total Capital Outlay $120,000 $2,433,500 $335,000 $7,100,000 $2,250,000 $12,238,500

18 Harbor Capital Improvements (new) Capital Outlays Floats & Docks Status Year 2012 Year 2013 Year 2014 Year 2015 Year Year Total T,U,V Floats (off Z Float) New $0 $0 $0 $4,000,000 $0 $4,000,000 Power to X float New $0 $0 $200,000 $0 $0 $200,000 NE Fish Cleaning Station New $775,000 $0 $0 $0 $0 $775,000 N Harbor Sheetpile/Dock New $0 $0 $0 $0 $9,000,000 $9,000,000 Uplands $0 $0 $0 $0 $0 $0 Pave TraveLift Runway New $15,000 $0 $0 $0 $0 $30,000 Boardwalk S Harbor Uplands New $200,000 $0 $0 $0 $0 $200,000 NE Harbor Parking Improve New $0 $0 $0 $0 $0 $0 Equipment 5-Ton Crane New $0 $100,000 $0 $0 $0 $100,000 Total Capital Outlay $990,000 $100,000 $200,000 $4,000,000 $9,000,000 $14,305,000

19 Critical Capital Needs Highly Likely to Fail in the Next 5 years, must be accomplished Replace D Float- $2.363 million Pilings = $353,200 Mob/De-Mobilization/Salvage = $370,000 Floats & Connections = $783,370 Water/Fire System = $133,750 Electric System = $231,625 Engineering/Permitting/Safety Equipment/Contingency = $491,055

20 If we do not fund critical capital needs: In the next 5 years D float will be taken out of service- affecting 40 foot vessels. Currently we have 79 individuals waiting for this size of slip, the longest has been on the wait list since Nov D float has a total of 58 vessels, 13 of these are passenger vessels. Annual revenue for D float (moorage only) is $101, Other revenues from this float includes: passenger fees, electrical use, and CRR fees

21 High Risk Capital Needs Likely to fail within 5-10 years Replace A, B, C & S Floats = $6.1 million Maintenance Dredging = $225K Replace K & L floats = $2.25 million Replace N & S Launch ramps = $2.0 million Replace Fish Waste Barges = $70K Total = $10,645,000.00

22 Moderate Risk Capital Needs Continuous Increasing Cost to Maintain & Operate Harbormaster Restrooms- $100,000 Trash Dumpsters Replace- $40,000 Used Oil Stations Maintain- $60,000 Total $200,000

23 Summary of All Capital Needs Between : $2,553,500 Replace D Float Restroom & Used Oil Station Improvements Replace Fish Waste Barges, Dumpsters Between : $10,685,000 Replace A, B, C & S Floats Replace N & S Launch Ramps Replace K & L Floats Maintenance Dredging

24 This Budget: Increases the Transient/Guest Moorage Rates by 10% Generates $40,000-$50,000 Rates less than Homer, Whittier,Kodiak, Valdez, Cordova Formal Rate Study needed Links rates to the CPI 2012 = 2.86% 2013 = 2.6% Continue CRR Fee Continue to Transfer Fish Tax to Harbor Does not provide funding to meet Critical or High Risk Needs

25 SMIC Enterprise Fund

26 SMIC Highlights North SMIC Dock bonds paid off in 2011 Requires $81K subsidy from GF in 2012 Requires $38K subsidy from GF in 2013 Estimates cash balance $0 end 2012/2013 Does not cover any costs of depreciation 80% of assets were purchased with grants Revenues increased due to lease appraisal adjustments, and power sales p. 77 Expenses lower by $52K due to pay off of debt

27 Electric Enterprise Fund

28 Electric-related cash, p. 53 Electric Enterprise Fund = $684,466 (9/11) versus assets of $56.4M HC; $41M nearing end of useful life Electric MRRF = $423,889 Transmission Line = $566,136 (ROW clearing?) Standby Generator Project = $66,976 Projected ending cash is -$300,572 (2012) and $0 (2013); could improve depending on 2011 outcome and potential cost savings HC = historic cost

29 Electric Cash History Electric Enterprise Fund - Cash Balance Balance at December 31, 200X Electric Fund MRRF # months' c Cash Cash Cash Total ,862, , $ 3,539, ,729, , $ 3,650, ,072, , $ 3,912, ,825, , $ 4,665, ,260,064 1,340, $ 4,600, ,647, , $ 4,292, ,394,025 1,377, $ 3,771, ,706,708 1,317, $ 4,024, ,103, , $ 3,941, $ 1,334,884 $ 874, $ 2,209, $ (233,894) $ 387, $ 153,867

30 Electric Cash History # months' cash

31 Electric-related debt, p Refunding of 1995 transmission line bonds = $1.015M 2008 Replacement generators bond = $5.8M Total: $6.8 million

32 Electric Highlights, p. 1 Budget includes rate increases: 2012 (10%); CPI is 2.8% 2013 (5%); CPI is 2.6% Rate increase is not added onto fuel costs Fuel costs directly passed from Chugach to customers based on kwh usage City outage costs pass thru to customers based on kwh usage as part of fuel costs

33 Rate Increase Examples Bills (based on July 2011 Rates) Residential (600 kwh) 2012: From $ To $ = $7.59/mo. 2013: From $ To $ = $4.18/mo. Small General (1500 kwh) 2012: From $ To $ = $20.44/mo. 2013: From $ To $ = $11.24/mo. Railroad (Special contract to Large General 100,000 kwh & 750KW) 2012: From $19,102 To $24, : From $24,324 To $25,210 33

34 Electric Highlights, p. 2 Budget includes loan repay from GF $111K for previous contributions to SMIC debt Debt payments = $713K per year Budget eliminates temporary summer position Adds full-time mechanic/operator to replace retiring employee; to be paid for two years with generator grant Assumes ROW clearing costs partially covered by transmission line fund; recent quote from Chugach $776K

35 Electric Highlights, p. 3 Next two years managing $4 million generator project (completion) Allow Railroad special contract to expire placing the service into Large General Finance (LGS) Does not remove subsidies to Icicle Seafoods and Sealife Center, but does propose to increase special contracts the same % as other customer classes

36 Electric Capital Improvement Plan

37 Summary of All Capital Improvement Needs (No Funding to New Projects) Why do we need rate increases? Critical Risk - $2,385,000 High Risk - $ 5,610,000 Moderate Risk - $2,108,000 Note: Last two outages located in areas identified here as critical/high risk/moderate risk capital need areas 37

38 Critical Capital Needs Likely to Fail in the Next 5 years, must be accomplished Going underground by Lagoon - $450,000 Right of Way Clearing - $750,000 Jesse Lee Underground - $30,000 Camelot Underground - $150,000 Transformer Renovation Fort Raymond - $200,000 Paint Transformers and Substation Equipment - $120,000 38

39 Critical Capital Needs Likely to Fail in the Next 5 years, must be accomplished Exhaust Stack and Roof Generator 3 - $360,000 Meter Relay and View Screen - $20,000 SMIC underground - $105,000 Transformer Renovation Spring Creek - $200,000 Sectionalized Pole Replacement Price Varies, Generally $17,000 per pole TOTAL = $2,385,000 39

40 If we do not fund Critical needs: Expect multiple failures and/or running generators more frequently Long outage times for residents and businesses Risks to out-of-town personal water infrastructure (wells and septics) Higher fuel costs for running the backup generators 40

41 High Risk Capital Needs Likely to fail within 5-10 years Old Mill #3 - $120,000 Gateway (Upper) - $180,000 Gateway (Lower) - $80,000 Woodland Hills - $120,000 Lost Lake Underground - $55,000 Software for inventory - $50,000 41

42 High Risk Capital Needs Likely to fail within 5-10 years Downtown Alley 2 nd and 3 rd install underground - $1,000,000 (install overhead - $500,000) Downtown Alley 3 rd and 4 th install underground - $2,000,000 (install overhead - $1,000,000) Downtown Alley 4 th and 5 th install underground - $2,000,000 (install overhead - $1,000,000) TOTAL = $5,610,000 42

43 Moderate Risk Needs Nearing or Past Previously Estimated Life Expectancy Lawing Poles - $25,000 Victor Creek Poles - $110,000 Lake Drive (Stony Creek) - $140,000 Questa Woods - $80,000 AVTEC Underground - $15,000 Southwest Boat Ramp - $33,000 Lawing to Victor Creek Overhead - $75,000 43

44 Moderate Risk Needs Nearing or Past Previously Estimated Life Expectancy Update Fort Raymond Controls - $450,000 Security Upgrades to Substations - $130,000 Automatic Meter Reading (AMR) - $950,000 Switch at Nash Road - $100,000 TOTAL = $2,108,000 44

45 Summary of All Capital Improvement Needs (No Funding to New Projects) Critical Risk - $2,385,000 High Risk - $ 5,610,000 Moderate Risk - $2,108,000 GRAND TOTAL: $10.1 million 45

46 Summary of ARCTEC $4M grant PT phase protection Generator 3 silencer and roof Move generator 4 into the new building Move generator 5 into the new building Update and modernize controls to allow more flexibility in starting and running generators Office/Warehouse 46

47 Projects Requiring Funding to Complete Converting Fort Raymond substation to 115kV from 69kV $12,000,000 This must be done to sync with the rest of the Railbelt system Currently steps down at Lawing Substation A higher voltage transmission line would mean less losses in transit 47

48 Projects Requiring Funding to Complete Complete Transmission Line Into Substation $1,500,000 Sixteen structures to complete (past life expectancy) Potentially funded through ARCTEC When substation ready will give us the ability to receive 115kV 48

49 Projects Requiring Funding to Complete Pole Barn $200,000 Allows us to cover equipment and materials During Winter Months makes response time faster Saves money for electric department 30 year at $200,000 = $6,700 per year Average pole price $1,000 / Newest Bucket Truck $450,000 / Backhoe $90,000 49

50 Hospital Debt Service Fund

51 Hospital Debt Service Fund, p. 173 Estimated revenues $975K vs. debt $879K Transfers ¼ general fund sales tax to healthcare purposes Bonds mature in 2013; balance $1.55M Sales tax revenue source is pledged to cover LTC bonds Pays $135K / yr. funding to GF for SGH PERS, which is repaid to Motor Pool and Electric MRRF

52 Hospital Debt Service Fund, p. 173 Cash does not cover 1 years debt payments Will fund hospital capital needs beginning in 2013

53 Seward Mountain Haven Debt Service Fund

54 SMH Debt Service Fund, p. 177 Budgeted revenues equal annual debt payments of $1.95M Actual revenues in 2010 were $2.6M Current cash balance $954K Bonds paid with service revenue from Seward Mountain Haven Bond balance $26.3M Bonds mature 2033 Researching refinance to taxable (4.0% to 5.1% currently)

55 Capital Improvement Plan

56 General Fund CIP Items (most critical needs) Revenue Sharing: $228K / $220K is sole revenue source for funding General Fund infrastructure/asset replacement GF assets valued at $127M including healthcare/aslc; $36M excluding healthcare/aslc City Council chambers recording/sound system: $40,000 Fire station re-siding: $70,000 City Hall carpet replacement/abatement: $75,000 Finance general ledger software/hardware: $100,000 New diesel fuel dispensing system: $75,000

57 General Fund CIP Items (most critical needs) City Hall electrical upgrades: $65,000 City Shop fence repair and reconfigure, ADA access: $40,000 Municipal Building ADA improvements: $50,000 Paving at various locations: $75,000 Fire Station electrical and plumbing repairs ($27K - $91K depending on scope); lighting $6K, plumbing and interior electric $25K; electric relocate/upgrade $60K

58 The End