All right, good evening, everybody.

It is past six o'clock, so I guess it's time to do some things now.

Um welcome.

We'll call the special meeting of Thursday, February 26th, 2026 to order.

Please join me for a flag salute.

I pledge allegiance to the flag of the United States of America.

And to the public for which it stands one nation under God, indivisible with liberty and justice for all.

The Assembly of the City and Borough of Sitka would like to respectfully acknowledge the traditional first people of Sheetka.

With gratitude, we proceed on Clinkett Ani.

Sarah, roll call, please.

Mayor Isenbise.

Present.

Mr.

Pike.

Here.

Ms.

Carlson.

Here.

Ms.

Riley.

Here.

Mr.

Christensen.

Here.

Mr.

Mosier.

Here.

And Mr.

Selene.

Here.

Thank you.

That'll bring us two persons to be heard.

This is public participation on any item off the agenda, not to exceed three minutes for any individual.

Seeing none.

Our new business this evening, we're here to go over the fiscal year 27 municipal budget with a focus on enterprise funds.

The best part about these meetings is I get to turn it over to John who then turns it over to Brooke, and I don't have to talk.

So go ahead, John.

Thank you, Mayor and Assembly members.

Tonight, as you said, continuing on with our budget process.

So this is a focus tonight on enterprise funds and the ever popular uh rate setting.

Um, you know, we we took a lot of input from the assembly early on in the budget sessions about um minimizing rate increases as much as we can.

Uh so that was a big focus in the presentation.

So I think uh as we go through, Brooke will explain you know what things look like with a zero and then what things look like with a um a recommended rate rate increase and then why we're at those certain levels.

Um I do want to thank Brooke for the uh comprehensive uh presentation that she's put together.

Um but as we move forward, uh keep in mind that that we did try to offer those options for you all to consider and uh and kept the rates as low as we possibly could recommend.

So with that, Brooke.

Good evening.

Um before we move into the individual funds, I'm gonna um briefly review the framework that was used to develop the rate recommendations and and some of the assumptions built into the FY uh 2027 projections.

Um you'll notice that the presentation uh focuses on recommended adjustments rather than presenting multiple rate scenarios.

Um staff did evaluate alternative levels, including lower adjustments, um, but based on current projections and capital obligations, uh the recommendations that we've made do reflect the minimum uh levels necessary to maintain financial stability within each fund.

Um as we've seen over the last few years, construction infrastructure construction and infrastructure costs have escalated significantly, um, particularly in the small and and remote market like ours.

Uh while inflation has increased relatively modestly compared to recent peaks.

Uh the current CPIU is uh approximately 1.9%.

Um, but many of our capital and operating costs remain elevated.

Uh the packet did include some more detailed financial information than I'll cover during the presentation.

Um I'll kind of try and stay at a higher level this evening and and focus on the key drivers and recommendations.

Um while uh rates, uh the recommended rates are ultimately adopted as part of the budget process.

Uh the direction provided tonight will guide what's included in the proposed budget unless significant new information arises.

So I'll use this to guide my revenue uh projections that I include in the budget.

So uh the reason we do this kind of early is to make sure that I don't have to redo those because it is uh pretty considerable amount of work.

Uh much of what I present isn't gonna be news to any of you.

I did try and cover some contextual information for the benefit of new assembly members, um, staff, and for the community as well.

So, first thing is what is an enterprise fund?

Um, an enterprise fund is a self-supporting public service.

So it operates on a cost of service model, and it's primarily funded by user fees.

So that means that people who receive the service pay for the cost of providing it.

Uh each fund uh has to generate enough revenue to cover operations, debt service, and long time uh long-term infrastructure replacement.

If revenues fall short, uh the fund's financial health will decline.

So we do have kind of some unique things in SITCA as well with our utilities.

The municipality owns and operates water, electric, waste, water, solid waste, harbors, industrial park, and an airport.

In a lot of communities, some of these services are separate utilities or private entities, and here all of that responsibility, operational, regulatory, and financial stays local.

That does give us more control, but it also means that long-term capital and financial planning is entirely our responsibility.

And some of the kind of community conditions that impact utility costs.

So fixed costs are spread across fewer ratepayers.

At the same time, expectations for reliability are high, and our location affects transportation, materials, and contractor costs and availability.

And all of these factors are things that kind of shape the cost environment that we're working in.

So what kind of things drive utility utility rates?

This is not an exhaustive list, but this is kind of the these are kind of the key pieces.

So our rates reflect the cost of providing service over time.

That includes operating costs, inflation, debt service obligations, long-term capital investment, and then regulatory requirements too.

For utilities that have outstanding debt, whether those are bonds or DEC loans, we're required to meet financial covenants.

That typically means maintaining sufficient revenue and debt service coverage ratios and those requirements, requirements are conditions of borrowing.

Brooke, I have a question on that.

Which one of our all probably all, but of our enterprise funds have debt.

They all do.

Okay.

Different levels of it, not all of them have bond debt, but they all do.

Thank you.

So when we talk about managing rate impacts, um, we we do look at every tool we can to try and manage these impacts.

Um, that includes things like outside funding through grants and subsidized loans, uh, strategic capital planning, low interest financing options, operational efficiencies, and then strong billing and and collections practices.

Um I'm not going to be the first or last finance director to say this, but um while grants and outside funding are critical tools for reducing local costs, they also come with match requirements, reporting obligations, and um financial compliance standards that have to be maintained.

So it's like the age-old saying there's no such thing as free money.

That is true.

Um rate adjustments are not our uh first or only tool, they're just part of a broader financial strategy with a goal that um steady, predictable adjustments are what we're looking for and not sudden spikes.

So when we look at what it means to have a healthy enterprise fund, um, what a healthy enterprise fund does is maintains adequate working capital, um, it generates enough revenue to meet operating costs, and it covers its debt service requirements.

Um, it also supports ongoing capital replacement and allows for stable gradual rate adjustments over time.

Um, and maintaining that financial health is what helps us avoid larger and and more disruptive increases later.

So, with that, I'm gonna go through fund by fund, starting with the electric fund.

I think kind of how it worked last year, too, is we just kind of paused after each section and to see if there was any discussion that needed to take place.

So our electric fund does have a few electric service has a few characteristics that are important to understand before we even talk about rates.

Um we operate an isolated electric system, which means we can't purchase backup power from outside utilities.

Um, all our reliability has to be built and maintained locally.

Um, most of the system's costs are fixed.

So generation facilities, transmission and distribution infrastructure has to be maintained regardless of usage.

Um, however, the majority of electric revenue comes from consumption rather than fixed monthly fees.

That means that revenue fluctuates with usage, which varies based on weather, economic activity, and longer term changes like energy efficiency improvements.

So that is different than how most of our other enterprise funds collect the majority of their revenue.

Like levels also do affect how we generate power and whether supplemental diesel is required.

Because that revenue is variable and costs are largely fixed, the funds position can shift from a surplus to a deficit without any change in operations.

We do our best to mitigate that, but that's what happens with consumption based systems.

So this is true for electric and all of the utilities really, but our decisions require balancing uh reliability, affordability, and then long-term sustainability.

So with that, our recommended um we are we aren't remain okay.

We are not recommending a change in the energy rate.

I talked too fast and then it I catch myself.

Okay.

So we'll we'll even try that again.

For FY27, we are recommending no change to the energy rate.

So based on current projections, the electric fund is stable in the near term and and does not require an energy adjustment this year to maintain its financial health.

Um this recommendation doesn't fully address long-term capital replacement needs.

Um continuing to hold energy rates flat indefinitely would road working capital and increase future rate pressure.

So this year's recommendation um it reflects current conditions, but it's not a long-term freeze or recommendation that that's what we do.

Um the recommended adjustment that we make is um completion of year three of the three-year customer charge phase in that was originally presented to the assembly uh during the FY 2025 budget process.

Um FY 2027 does represent the third and final year of that plan.

Uh for a typical residential customer, that that impact is about eight dollars a year.

Um it is important to note that there's a more significant um impact on other customer types.

I've just um in the interest of time, my my presentation is focused on your average residential customer.

So why do we adjust customer charges?

Um the customer charge is a fixed monthly fee that's separate from energy um usage, and it provides us with more revenue stability because it's not affected by weather or by seasonal use fluctuations, um, and it better aligns rates with the system's cost structure.

Um, like I mentioned before, many electric system costs are fixed, and so fixed fees ensure that all customers share in maintaining that system regardless of how much energy they use in a given month.

And this slide shows that full phase in schedule.

I'm not anticipating anybody's actually looking at it during my presentation, but it was in the packet.

Um you can see the progression through from FY 2024 through 2027.

Uh the increase was spread out over these three years to reduce the rate shock and allow customers to adjust gradually.

The last part for electric is just is talking about the implications of of not completing the flip of the phase in, since that's um the recommendation that we're making.

Um if that uh final year of the phase in isn't implemented, the immediate impact is modest.

The total additional revenue represents about one percent of total operating revenue.

Um, however, working capital would grow uh more slowly or slightly decline.

Longer term, the system would remain more reliant on usage-based revenue to cover fixed costs, and as operating expenses increase over time, even at modern uh modest inflation levels, um, unadjusted rates recover less of the underlying cost structure.

Um so this can result in larger adjustments later to maintain long-term balance.

Question on that.

About what's the breakdown between those two, kind of like that base rate and the usage rate?

Is it like 50-50 for income for electric department or like what with the revenue from consumption versus fees?

Oh, not even I don't know the exact percentage, but it's not even close to 50-50.

I mean, you look at what our customer fee is for residential in the ballpark of $20.

$20.

And you know, if you look at uh people's electric being, I don't know, around 300 for that portion, 253, the rest of that is all consumption.

So that kind of gives you a good idea of how much of that revenue is produced by consumption.

Thank you.

Yep.

It's nice to see uh boat service is maintaining the same.

So we'll talk about them later.

So this phase in um does this mean that the that base rate is not expected to increase next year.

You said this is like the final year of the phase in.

Um is that is that just gonna stay like that?

Does it get inflation adjusted at all or I don't have a great answer for you?

So this um phase in schedule was presented by Melissa Haley, the former finance director as part of her plan that she um presented.

Uh I think prior to that it had been at least 10 years since there was a customer charge change, maybe even more than that.

Yeah.

It had been a considerable amount of trap of time.

Probably not recommended that we go that long, but but I I don't I think it's too early to say whether for next year's process I would be recommending um another phased in schedule or not.

I think it does make sense that we might move more of our structure around fixed costs um depending on what happens with consumption over the next couple of years, but I don't have a great answer.

Thank you.

Uh since we will be moving on to uh you got one more slide, don't you?

I'll finish my question at the never mind, that is the end.

Um so our zero percent rate increase this year, great, thank you.

You did uh exactly what the assembly was looking for and asking for after years of pretty substantial increases.

Uh do we have an idea what the year after and the year after that are gonna look like?

Um and the reason I ask is because I'd rather have a one or two percent increase this year to stabilize a six percent the following year if that's what we're anticipating, or are we anticipating a more inflation adjusted increase for the the following seasons?

So I'll answer you, but I'll go backwards a little bit because how we come up with these rate recommendations and that model that we use um does model out for I think up to 30 years in some cases, it's less accurate the further out you go, but it is um intended to uh make sure that we're we're making rate decisions based on also what we predict to happen in the future.

So what's really important to these models is a long-term plan.

And for the electric fund, um, you know, some of the long-term uh hopefully far in the future, uh capital needs are are more significant, and that's kind of what larger rate increases would be structured around based on the way that the model's set up right now.

Um we have inflationary increases for the for the next I think five years is what was in there.

That doesn't mean I mean their projections, their estimates, it doesn't mean that what happens during FY 2026 can't change what that looks like, but this um doing uh 0% energy rate increase did not um impact the the future years.

I did not make any changes to those.

Great, thank you.

I'd rather phase this one in as well if we needed to, if 28-29 were looking at six percent both years or something similar.

So I appreciate that.

Follow up on that.

Um so if we're gonna be inflationary next year and we're not covering inflation this year, and I don't know.

According to the Fed at least, last right now the inflation rate in January was 2.6 to 2.7.

Um or actually 2.4, excuse me, that was last year.

Anyway, and so we would be looking at somewhere between two and three percent if we kept with inflation next year.

I'd rather have one percent this year and one point five percent next year.

I mean, in my mind that that gives us a little buffer, and uh, you know, it I'd rather I mean a one percent increase is gonna be hardly noticeable.

A three percent notice it a little more.

And and so if the end result is we build up, you know I I've talked about this a number of times.

I think at the harbors back when I was first on, and they basically came in and said we won't raise rates.

And somebody said well, we need to, and we didn't because we got yelled at, and we paid for it.

That's why harbors are six percent all the time now, because back in the late 90s when it was dirt cheap, we didn't raise them at all.

And so I'm a little gun shy on that.

So I mean, do we really want I mean, would it make sense to go like just a one percent?

It'd be it would be hardly you know, a three hundred dollar bill that's three dollars.

Uh so that next year it's it's a 1.5 instead of a three or two point five.

I don't know.

Well, if if I may I I think that's uh a good line of thought.

I it's my understanding um that this was kind of presented this way because we've had several years of increases.

It was to kind of give community a break, so to speak, for one year.

I mean, I'm not gonna go crazy over a 1% increase or anything like that, but I don't think it's gonna hurt us based on what Brooks told us to to not increase it this year, or I mean we actually are technically because we're gonna be doing the last year of the three-year phase in.

It's just budgeting for the following year.

So I'd prefer to keep it at at not because I don't, you know, this isn't the only increase or uh other only fund uh that that we need to consider um that we will be considering, but um those are just my thoughts.

Of our strategic plan, uh quality of life action 1.2, identify opportunities to relieve the burden of utility costs.

I think this is a great way um of doing that.

Um also I believe last year we dipped into reserves on the electric fund um to kind of cover that that budget ish.

So what ended up happening, one of the things that is kind of important to consider is that we did get some of those um hydroelectric incentive payments the last couple of years that were um unexpected and and due to the hard work of people in the electric department and and BRI, and that makes a huge difference for people as well.

We did end up um it ended up being about the same as that um USDA loan that we um ended up paying off early, but that does have an impact on kind of the financial outlook of the fund too.

I mean, yes, it is a lot of money, that's not enough to make a huge difference long term, but it it is enough to help um you know support a year like this.

And we do intend, as far as I'm hearing, for this to be just a year like this.

Um is there any I know you're kind of growing into your shoes um here, any kind of three-year plan, anything you're looking at for rate studies going forward, or are we not yet?

We I have to do more work.

It doesn't mean that Ron hasn't done it, it just hasn't been incorporated into my stuff.

Um the long-term plan is kind of the most important part on on figuring out what your three, five, ten year recommendations are for um, and that definitely that area does definitely need a little bit more work.

Okay.

Because I do recall um you know, we did that that union negotiation, and you know, we just were increasing um so I know that there's and I've been looking at um financial report.

There's there's one blue circle on the electric fund.

Um there is a lot more things to be cautious about.

Uh so I think one year of a zero percent increase does see manageable, especially since it's the three year plan item to look at utility costs with PFAR people.

On our trip uh back to DC, uh we've requested to meet with DOE again to re uh to talk about the 249, 242 incentive plans, make sure that those are funded, and we'll continue to talk about those with our um senators as well.

Uh before I move on to water, I did also I meant to say earlier in my presentation, want to give like a little bit of a plug for the area of the city website that Bree and the electric department have worked on.

It's really really interesting.

Um, and I highly recommend anybody assembly community to take a look at it because um shockingly an interesting read for somebody who doesn't know anything about electric generation.

Was that an intended fund?

Yeah.

Oh no, it wasn't, but that's not bad.

Okay.

So we'll move on to the fund with a slightly less good news.

So the major driver in the water fund right now is critical secondary water.

So uh the project provides redundancy for our drinking water supply and allows us to maintain compliance service during pen stock outages.

Uh it helps protect us from service disruption and emergency treatment costs, and also stabilizes long-term offering rating requirements.

That's the good part.

The less um interesting or appealing part is the cost.

So we are anticipating that project to be cle completed this year and end up costing about 18 million dollars.

Uh most of which was financed through a 20-year low interest DEC loan.

Um you may have noticed it it's when we have these projects that we don't know exactly how long they're gonna take.

We have to anticipate when we might come into repayment.

So I believe larger debt service payments have been budgeted in the water fund for a couple of years, but they just the actual expenses haven't been that high because they that loan isn't in repayment yet.

Uh we're anticipating uh for that to change in 2027, FY27.

Um, and that will mean additional debt service of uh about a million dollars a year.

Um that increases the baseline revenue required before we even fund routine operations, maintenance, or capital replacement.

Um it does represent a structural increase in fixed costs, uh, which means that that debt service obligation exists regardless of of any rate adjustments.

Um so from a planning perspective, revenue should first cover debt service before supporting other capital needs.

I think I maybe did a bad job there.

I think I read half of one side and the other when it wasn't up.

So sorry, what I said, what I spoke was correct, but I did not have the correct visual up for the second half.

So leave that up for a second if anybody needs to see that.

Okay.

So moving on to the recommended rate adjustment, uh staff's recommending a six percent rate adjustment for a typical unmetered residential customer, that's an additional uh four dollars a month or about um 48 dollars a year for metered customers.

Um, the impact does vary depending on their usage and and meter size, but average impacts reflect the same six percent adjustment.

Um so this chart illustrates projected operating costs and debt service over the next five years.

Um, the green line shows revenue at current rates, the blue line reflects revenue, assuming a six percent annual adjustment for modeling purposes.

Um so you can see without adjustment, um, revenue remains relatively flat while debt service and operating costs increase with adjustment revenue keeps pace with structural costs and supports capital replacement over time.

Um that margin that you see there is really important because it supports capital replacement, grant match requirements, um, and does help reduce reliance on additional borrowing for smaller projects.

So for water, the implications of no rate increase um if we uh don't implement a rate increase, revenue growth would not keep up um pace with inflation or with debt service.

Um debt service would consume a larger share of revenue, reducing funding available for routine capital replacement.

Uh longer term, the fund would rely more heavily on borrowing and working capital will become less stable.

Uh, and that does increase the likelihood of of larger rate pressure in future years to restore balance.

We need a pun also before you move on to the next one.

I don't think I can do it on purpose.

I just wanted to make a quick comment about the water fund because I have a little different take on it than I think anybody else in the building here right now, and that I don't pay it.

I have my own water system.

Um I pay more significantly more than that.

Um if you figure amortizing the cost of my tanks, the cost of the power to run my pumps.

The stress in the summer when my tanks are starting to get low, uh, or if I've got them every once in a while move water, and I I I have over 6,000 gallons of of storage.

Um maintain the system and I had to buy all those tanks and put them in.

So this is a I mean, I know it seems like a lot of money, but it's not.

Um, I I don't know figuring out the tanks and everything, how much it costs, but it's probably well over $100 a month.

And it's definitely not as stable as here in the city.

I think it's better water.

I I do think that, but but so it's this always, I just think it sounds expensive until you think of how expensive it would be to not have it.

Well, that flowed well.

I guess we can move on, move on to the next one.

This one might have a blockage.

I did try to find a toilet, but um PowerPoint didn't have any in their stock images, so this is the closest I could get.

Um so the primary driver in the wastewater fund right now is regulatory.

Um the EPA renewed our wastewater discharge permit along with other Southeast communities, um, but the updated permit does require additional effluent disinfection.

Uh compliance is required by November 2030, which means construction would need to begin by mid-2029.

Um the estimated total project cost is about it's a little over 13 million, uh, making it the largest wastewater capital obligation in the current planning horizon.

Um, in addition to this project, the fund continues replacing aging infrastructure and coordinating improvement um with road projects.

I didn't mention that with water, but the same thing applies.

So the good news for wastewater is that in January we were notified um of a 10 million dollar congressionally directed spending award.

Um formal agreements are still pending, and I think it'll be quite a few months still.

But um the rule the award requires a 20% local match and and also does leave a bit of a funding gap.

Uh together that puts the local contribution at at around three million dollars.

Um the project has been identified as as high priority by DEC.

Um, and so I know um Public Works has been working on coordinating uh a potential some potential loan financing that would have up to a million dollars in loan forgiveness.

The the complication there is that um federal funds generally can't be used um to match other federal awards, and most of the DEC loans are uh a lot of them are federal funded or a blend of both.

Um, and unless state sourced financing is guaranteed, the match would need to be covered with working capital because we would not be able to use that DEC loan for our match.

John, here's a thought on that one.

Um is this state or federal uh DEC funding that we'd be looking at?

That's state funding, I believe.

Oh, okay.

I was thinking, oh, I wondered if we could somehow channel it through Denali Commission so that it could be used as match.

So just a thought.

The problem is the origin of the funding, and the reason I end up knowing a lot about this is because we um it ends up causing a problem for us during audit because a lot of times the state will tell us, oh, this is state funding, don't worry about it because if it's federal, it has a um I'm gonna use the old name for it.

I think they're not called this anymore, but I think it's CFDA number.

Um they have federal uh structural numbers that tell you where the funding comes from, right?

And it's very important to us whether or not the origin of those funds is federal because it has to be reported differently in our audit.

And we've had years where the beginning of the year DEC told us no, none of this is federal, and then we got to the end of it, and our auditors request, and they're like, just kidding, actually, this is all federal.

So then if we had used that as the match for any of our federal awards, we would have had a big problem.

I don't know why it works that way, but I know that the public works director has expressed that piece to DEC and and there must be a way for them to try and make sure that it's it's concentrated to state funding.

Right.

That doesn't mean we can't ask the question to the Denali Commission.

I mean, I'm I'm happy to follow up with them.

I think with that organization, we're able to change the spending timelines, things like that, but I I'm not sure if they're gonna be able to change the color of the money.

Um, but I I can follow up and ask.

And I don't know if state can pump into it like feds can.

I thought it was potentially federal money.

So the question for you about that, I mean, and I thought Denali was was federal, but anyway, is there any other projects that we could apply for DEC loans for that aren't that then we could then take that money and you push it over to this?

In other words, so if we have I don't know, a new pump we're doing and we're applying to DEC for this new pump, and so we take the money we had budgeted for that pump and we push it over to this.

Is that something we can do?

In theory, yes, that is what we do a lot of the time.

Um kind of the interesting component there is that it takes a very, very long time to get DEC loans.

It's a really exhaustive process that it often begins years before we actually see a loan, and so we can't like decide at the last minute necessarily to do that.

But what's been happening is that CDS that we got, um we were hopeful we were gonna get it, but we were not confident, and so how we've been planning with wastewater has been our worst case scenario that we may have to get loan funding to cover the entire thing because it's not an optional project.

And so we do actually need to restructure our once we are once we have the signed loan, the award documents, and we're very very confident that the the money is secure.

We do actually need to update our our plans, and then that's where we would do something like that and then figure out where we might be able to shift other things around.

But we haven't focused there because we pretty much it's like don't even think about too many capital things until we figured this piece out.

I think you kind of uh hit upon my question to a certain extent.

Um so we've been working on this problem for the last few years, like this isn't a new problem.

Uh, and we increased rates and we've been saving money.

And so well, how much have we saved and how much are we ready?

I mean, do we have some of this three million in this fund already that we've identified for this project?

Oh, yes.

There's an there's enough working capital for it.

It would deplete a huge chunk of it.

So it's not that there isn't money, it's just that that working capital also needs to go to other projects that are happening or that that will happen.

Thank you.

I think it's 375,000.

That's my guess that's been set aside already for that project.

If I can read a spreadsheet correctly, the appro the appropriations for it.

I think there's a little chunk.

I think it was probably it's probably designed.

Okay, moving on to the next piece, uh, which is our recommended rate adjustment.

So for 2027 FY 2027 staff is recommending a two percent uh rate adjustment for a typical unmetered residential customer.

Uh this would increase their bill by about $2 a month or um about $24 a year.

I have no idea why when I did this slide, I decided to put a dollar ninety and twenty-three instead of just dealing with the rounding, but there we go.

Um this adjustment does support continued accumulation of working capital in preparation for the required match and some near-term capital needs.

So that um little table that I included in the packet that shows kind of our our five-year capital plan for water wastewater, it was also to show that there's some other projects that also are are gonna need some funding, a couple that we're trying to finish up and a couple that costs a little bit more than than we were hoping they would.

So the chart, just like the one with water, it does um illustrate projected operating costs and anticipated debt service over the next five years.

Um the good news about it is that we were concerned that this would look drastically different on the debt service side because we were concerned that we're gonna end up needing a $10 million loan instead of a instead of a grant.

Um so the two percent adjustment does allow the fund to maintain an operating margin and and gradually build some more working capital while while planning for the the affluent disinfection project.

Um it doesn't fund uh larger unfunded projects, it's not necessarily meant to, um, but it maintains stability under the the current assumptions that we have.

So for the first time in a while, uh assuming CDS comes through, uh, this fund is actually fairly healthy.

Yes, that's uh that's refreshing.

Um I don't know that I've ever said that in my last 10 years.

So that's that's really good news.

So for wastewater, the implications uh of not doing a rate increase.

Uh if no rate adjustment is implemented, uh working capital accumulation slows, uh, reducing flexibility to cover you know other projects and and potentially required match because you know it's always important to say that the 13 million that we have was the are the initial estimates for the project, but um you know we'll know more as that kind of as we make more progress there.

Um flat rates in this case would not keep up with inflation, um, effectively reducing purchasing power when we know we're gonna have to expend some some cash on projects.

Um longer term the fund would face greater reliance on borrowing, um, higher debt service obligations, reduced capacity for capital replacement, um, kind of the the same thing that's uh across many of the utility funds.

Can you remind me last year?

What was the rate increase we did?

I think it was six or eight percent.

I believe it was six.

I think both water and wastewater were six percent last year.

Okay, yeah.

So we did good work last year to be healthy this year.

I think we have two percent years ago.

Wow, wow.

I honestly can't remember if I included it anywhere in my presentation, so I guess I'll just talk about it now.

Um something that people don't really think about with taking on debt is a lot of times that debt requires revenue at a certain level before they'll even allow you to take on the debt.

So in some cases, and I I believe this happened with um water, and I'm sure it's happened with the other funds various points of the year, revenue has to be increased to a certain minimum level just so that we were allowed to take on that debt in the first place.

And that describes why there is those significant rate increases in the past at certain times.

Okay, thank you.

That's my last one on wastewater.

So if anyone has anything else.

Okay, also no trash can picture and stock images, so it's best I could do.

Um so some important context about solid waste and sitca.

Uh SICA, we do have to ship all our garbage recycling off the island, and that does shape the financial structure of the solid waste fund.

Um so our costs are heavily influenced by transportation, fuel, and then contract and disposal agreements.

Um those contracts do include CPI adjustments and shipping costs fluctuate with broader market conditions.

So that's a that's a little bit different than some of the others as well.

Um at the same time, the fund carries significant fixed costs that have to be supported year-round, even though disposal volumes do fluctuate quite a bit seasonally.

Um, and the community programs that we have that household hazardous waste and the and the spring cleanup, they do create periodic um cost spikes because that does cost us something that the fund has to absorb.

Um so this isn't really a capital-driven fund as much as water and wastewater are um, but it's pretty sensitive to contract terms to to fuel prices and to inflation.

Um so I don't think it's it's news to most of the people here, but has uh historically the solid waste fund operated at a at a loss um through all the way through FY 2020.

Uh the revenues were insufficient to cover operating um costs and and debt service.

Um since then, some corrective rate adjustments and operational improvements um have brought the fund into uh better alignment.

There was a utility service policy update in 2021 that John did that improved compliance and and billing consistency, which actually makes a huge difference.

Um and we've improved monitoring of service levels and and occupancy.

Um today the fund is a lot more stable, but that stability does depend on on continuing to keep revenues aligned with rising contract um and market costs.

So the recommended rate adjustment for the solid waste fund um is two percent uh for a typical residential customer with a 96 gallon can with and once a week pickup.

This is uh about an extra two dollars a month or 24 dollars a year.

And uh worth mentioning, I wrote a a little bit about it in the packet is that the roll-off uh structure is under separate review, um, and it's not included in this recommendation, but it is something that's being worked on.

And that was for the um discussion that happened around Indian River subdivision or bear prevalent, no different.

I mean, I think that helped draw some more attention to it, but largely it was because um we get too far into it.

Uh I think there were a lot of uh roll-offs discovered within the community, and those are typically put together by the person that wants them directly with Alaska waste.

Um, and then the only revenue we receive off of that is just the tonnage of the um of the solid waste when it goes to the waste stream.

So uh after some discussions with them, we said, hey, let's get let's get a hold of this, uh, and now they essentially come to us for for permission for who gets roll-offs and who doesn't.

And there's a it's actually pretty set in our code when it talks about alternative pickup methods for solid waste, and um I'm I'm way summarizing it, but it says it needs to be for a public good for uh for them to be off of this type of structure and onto uh an alternative roll-off structure.

So Alaska Waste distributes those roll-offs, we do not, and so some communication pieces have been improved to kind of figure that out.

But um, yeah, there were some things discovered in the last couple of years.

That we're looking at for dealing with uh bear issues not at this point.

Um I I know that there's been some discussions about um an organization or two potentially donating some of the I'll call them bear resistant cans, and then us doing a pilot project to see what that looks like.

Um, but I think the first data point we want is whether or not they're effective, and then uh and then try to nail down a cost on that and if certain areas need them, but uh we don't have an estimate on it yet.

So that would be paid by the individual, or is this supposed to be collective?

I guess that's the question.

You want to Scotty or you want me to do we need more of a rate increase to cover this down the road?

It it's at this juncture.

We've got a couple organizations talking about buying some uh portraits of the bear and Biha.

And the nice thing about that is we don't have if they buy them and they show up, they work with the same thing, and we don't have to go through our purchasing process.

So it saves money, and it so it's revenue neutral to the city now.

Uh and once we see how they work, well, then we'll say go.

But I mean, there's some pretty good questions about whether or not they're gonna work.

So the the thing, Tim, is uh the fortress of the bears, they got 23 grand, and they're working with uh another wildlife outfit to try to help it.

So we're trying to guilt or I'm trying to guilt BHA into picking up the other half, and then the data can start.

There'll be other neighborhoods also that will do it, but the biggest hassle right now is if people are not conscientious in the first place about their garbage, they're probably gonna be stuffing the bear resistant mechanisms too much, and then when you pick them up and then they jam, and then the guy hercs on it once, then the bear resistant guts fall out and go in the garbage can and then it's gone, and then that's what they're trying to hash out now about the replacement to keep the data collecting what was fiscal year 26's increase in solid waste two percent.

Um rate increase for solid waste.

It is kind of important for us to make sure that the fund stays healthy.

Um CPI and and market-driven contract costs will continue to rise.

Um, either way, operation operating margins would narrow, um, working capital growth would slow over time.

This would lead to um declining working capital and and greater risk of of needing larger future rate adjustments.

I will say it was if it's my first budget, so I haven't I didn't have time to look at it in the way that I would have liked to, but um, I think probably what we more likely to recommend is more targeted rate increases than flat ones over the next few years, and that's part of that roll-off piece too, is making sure that um all of the users are are paying the appropriate share.

We kind of got ahead of it a little bit, but I'll go through it anyway.

So roll off containers, they're those large metal containers that are intended for temporary high volume needs, um, and the supply of them is limited.

Currently, there isn't a specific roll-off rate established in code.

The rental and hauling are paid directly to Alaska waste, and the solid waste fund receives only the disposal revenue from those drops.

Um like I said, um, administration is working on reviewing that rate structure to better align cost recovery and clarify eligibility and terms of use.

Any proposed changes that we have to that would come back separately.

That that's where the bulk of the longer conversation would take place that would would need to happen around that.

So that would be ordinance stuff.

Okay.

But I just I it's probably not gonna be possible.

It's want to do it right, so that was the last thing for solid waste.

If anybody else has anything.

Okay, almost to the end.

So uh harbor fund, it's it's not news to anybody, but um we're we're facing a lot of issues with uh infrastructure replacement needs and and funding gaps there.

Um several major dock and and float systems are approaching already beyond their original replacement cycle, um, and at the same time, marine construction costs have increased significantly in recent years, um, particularly in remote markets like ours.

So I wanted to make sure to put these in there to um make sure everybody understands the scale of these.

Our estimates that we received for Eliason Harbor were roughly 54 million dollars.

Um, Thompson Harbor about 22 million, and Sealing Cove about 27 million.

Um those are long-term numbers, they're not immediate obligations, but it just kind of shows the magnitude of the of the system that we've been responsible for maintaining.

Uh we're currently reviewing and reprioritizing the capital plan to focus some near-term efforts on achievable fundable projects, but um I was um did make note of of Steven's comments from the assembly meeting this week about the 50-50 grant and the likelihood that they won't be contributing anything next year, which does sort of even change what we had had hoped to see happen for FY27.

So the uh funding reality and in Harbor is that the really the primary external opportunity that we we have is the state of Alaska Harbor Facility Grant program, uh which can provide up to a 50-50 um construction match.

It is a pretty competitive source, um and lots of lots of um areas in the city are very interested in it.

Uh it does mean that the city would still be responsible for design costs and then the remaining local share.

Um so some of the other things, bonding is an option, but it does it requires voter approval and it also needs sufficient um revenue to support debt service.

And I'm sure you can tell from the size of those estimates that that would be quite a challenge.

Um in the near term, the funding priority is is Crescent Harbor phase two, so floats five through seven.

Now, phase one was completed, I think around FY 2019, but those those floats were not included.

Um, and the current estimated cost of that phase two is about 10 million dollars.

We were anticipating hopefully getting a grant in 27 to help us out with that.

Does not sound like that's likely, but we will still try.

Um we are anticipating seeking tier one status under that program and then funding the local portion through a combination of of working capital and then reallocating some of the funding from the Elias and Electrical Project that the assembly had approved.

Crescent Harbor Phase 2 ended up moving higher up on the priority list because of of some of the uh conditions over the last couple of years.

And so you'll see that come through later on in the 27 budget process where we have a request to move funding between those two.

So our recommended um harbor rate increase is is 4%, which is the same as it was last year.

For permanent mortgage, that does translate to about $7 a month for a 32-foot vessel, about 9% for a 42-foot vessel, and about $12 per month for a 58-foot vessel.

But we did send this proposal to the Portsmouth Harbors Commission, and they have not yet made a recommendation.

So I know ideally we would come to this meeting with one from them, but that has not come yet.

So this recommendation is generally consistent with the 2024 harbor rate study guidance that we got that suggested annual increases of inflation plus another 1.5%.

It's intended to kind of maintain the harbor funds current financial position, but it does not fund any of those long-term replacement needs.

Probably.

Okay, thank you.

Yeah, because in the shapes and colors from the Meteor Financial, it's in the worst shape of our enterprise funds.

So our implications of no rate increase for the harbor.

I mean, the primary one really is just that those long-term needs are so substantial that even a 4% rate increase doesn't do much to get us closer there.

But working capital would decline more rapidly.

Our capacity to provide local match for grant funded projects also would be reduced.

And the debt capacity for major projects would narrow because if and when we are able to get debt, it it's large, it's more than likely going to result in more substantial increases.

And so keeping these smaller phased ones helps increase the chances that by the time we get there, we might actually see revenue at better rates that that might mean it meets those conditions or gets closer to it.

And any future rate adjustments would would likely uh need to be larger to restore working capital and borrowing capacity.

So kind of the last piece for harbors is just that we are working hard on an updated long-term capital improvement plan and getting some revised cost estimates, priorities, um, maybe ways of phasing those projects, like kind of creative solutions to see what we can figure out in the near term.

I I think this has been the messaging for the harbor for quite a few years, but um we're kind of focusing on extending the life of the assets we have through maintenance and targeted repairs, and then advancing high priority projects as funding allows and aligning um project timing with realistic funding capacity.

Maybe I should have started with this one since it's a bit my last slide on the harbors, if anybody has anything.

Okay, so um moving on to closing.

Um this was it's the same illustration that's in the packet as well, but I wanted to kind of give a look at the combined impact of the recommended rate adjustments on a an untypical, I say typical single family household, but it's all over the place.

It's it's kind of difficult to come up with what is is standard.

But my example does assume average electric usage and one 96 gallon um solid waste container with weekly service, and it does include sales tax too.

But as always, my little disclaimer the actual bills for customers will um vary based on their usage and their their service level.

So under the recommended adjustments, um the total monthly change, and it's blended because we have different sales tax rates at at different times in the year, and we also have different um electric energy rate.

Energy rate rates.

I don't know.

Um so that's just the average.

It's not necessarily what you'd see every single month, but it's about eight dollars a month.

Um I should have just put about a hundred dollars a year, but I went with ninety-nine.

Um and yeah, that's true.

That's probably where it came from.

Um and I I do want to emphasize that these recommendations were um developed with the assemblies direction to kind of keep them as low as we as we possibly can.

So if unless new um significant new information uh comes up, the direction provided tonight will guide what's incorporated into the 2027 budget.

It they're not formal and finalized until that budget is actually approved.

I just have a question on the harbor.

So if the harbor comes back with a different number, what's the process?

Are you gonna go with their number, this number?

I don't know how that works.

That'd be up to us to put that in there.

Um if it's lower, I would hesitate if it's higher and that's what they want.

I'm happy to do a higher rate.

Well, I think all your uh your rounding was because of uh we're or worlds uh where pennies still existed.

So you'll have to get used to rounding up, browing down here uh very very soon.

But we appreciate it.

Kevin, I think you have something else.

Yeah, I was just gonna say I may agree with everything that's presented.

I think pretty much everybody does does.

Thank you so much for all your hard work on this, you and your team.

Very, very much appreciated.

And I think the community will appreciate this.

Uh it's a lot, not a lot of uh people see it, but you alluded to the um the monies that we get from the feds to that have helped reduce the rate of the increases.

It's not something that's very exciting to hear about.

People we just see the increases, but they through the hard work of people on the staff uh and obviously help from the feds.

The rates are actually less than they should have been.

So uh we're very grateful for that.

And for you guys, thank you.

Yeah, so I'm gonna come back to something we were just kind of talking before the meeting.

Yeah, we you sent this out and the letter.

I read it, and it was so clear.

I was like, why?

I mean, this is I mean, we we ask some clarifying questions, but honestly, it's all here, and it's nice and clear and easy to read.

And like a lot of other people said the rate changes are minimal.

We should put this on the website, honestly.

I mean, because people say, Why are my rates going up?

Well, they didn't go up very much, and this is why.

And this is really easy to follow, and it's nice.

So um again, like I would say this is hard to say enough nice things about it.

It I've been through some of these where we had By this point we didn't really know what was going on, and we do now, and it's nice.

I appreciate it.

Yeah, very accessible.

I I mean this is fantastic.

I agree with Tor and Kevin and Steve and I like this is a good easily accessible for people to understand how we got where we're going and what's and what's driving it.

Um I just have one thing for I maybe it's the electric departments thing.

Um I've had several conversations over the last few days because this with people, because this is you know, they say what's your meeting about and they say the utility rates, and so they're like, wow, you know, I don't think a lot of people are tracking that.

There are two different electrical rates anymore, right?

Like it's just happens and it's not really that big of a thing, and so that you know they're surprised by it or they're happy about it or whatever.

So I think maybe a little more advertising of that as it happens so that people have a better sense of why things are changing or what they could do about it, and you know, could they be more to conserve more when it's cost more or whatever?

So just something.

I'm not saying that we haven't tried to do that.

I'm just saying that we've done it for long enough now that people have forgotten that we do that.

So I'll make a plug for it right now if I can.

Um I've been on the radio about it a few times, and there's a great infographic that was put together by Bree and the folks in the electric department, and it's on our website, Cityofsitka.com forward slash scress, right?

S C R E S.

Damn it right, Ron.

Okay.

And there's a there's an infographic there that explains our rate structure.

It shows what the national average is, it shows what Sitka is, um, and it talks about our uh our usage versus other communities.

So there's a great graphic on there, but head to the website um city of SICA.com forward slash S C R E Speaker 1.

Yeah, Brooke, again, thank you for a very detailed but very easy to understand presentation.

Uh I can easily put this out to the public and they can read through it and have a very high level understanding too, because it it gave us the information we needed without financial speak.

Um so if if this body can um understand it and we can get our public to understand it, that is going to help these uh rate in these necessary rate increases as we go forward.

Uh I came into this meeting fully expecting to advocate for a half to a one percent rate cut on most of the funds.

Uh we don't have to.

Uh there is there's nothing that we can really cut on any of these.

So, John, thank you for listening to the guidance of the assembly to do everything you could to minimize these.

And I think that is a necessity due to the cumulative effect of our high rate increases over the previous years.

Um it might only be six percent a year, but when you do that for five years, the the if the total effect uh brings us to you know an almost six hundred dollar a month utility bill, which is not inexpensive.

Um so I think we found a as fair as possible rate increases while balancing the high level of service that sitkins demand.

Uh we had a couple blips of our power, which is unusual here, and sitkins weren't very happy with that.

So we we have to maintain a high level of service.

We have to make sure that toilets flush, that faucets turn on, that lights turn on when we flip the switches.

And this budget gets us there for the next little bit.

Um I'm sure Ron will have some really big rate increases in like 10 years when he's no longer with us.

He's just pushing that off to the next guy.

But uh, you know, I don't know, I don't know if any of us will be sitting here either.

So um, but yeah, thank you, John, and uh to department heads for hearing the guidance of what we've heard from the community and and implementing that in this budget cycle.

It did make it very easy tonight.

Anything else from the assembly on our enterprise funds and rate setting.

Great, thank you, Brooke.

You answered all of our questions there.

Um item B tonight is just a general wrap-up.

If anybody has anything else they want to talk about on the budget as a whole, this would now be the time to do that.

JJ, please.

Since that last item was mostly about rates, um, I didn't seem quite appropriate, but I wanted to kind of ask um staff about our other three enterprise funds.

That being the airport, marine services center, and in GPIP.

That's kind of the theme of the night is enterprise funds.

Um we do, you know, Marine Services Center pretty much strictly through like lease agreements, um, and that fund looks healthy.

Um airports mostly lease, but kind of a mix, and then GPIP.

Um there's a separate board there that kind of gives us their budget and we incorporate it.

So just in general, can you touch on those three funds um and give us an update on where they're at and yeah, if there's any work that we need to be thinking about for the next coming years about uh the health of those funds.

I don't think I'm gonna be able to give a satisfactory answer really at this point either, because it's it's a little bit too early in the process for me because I have to buy off little chunks of this thing.

So I'm what's what's kind of interesting about this job is I I don't really get to live in the fiscal year we're actually in.

I'm either living in the one from last year or the one in the future.

So um while I am monitoring what happens in FY um 2026, uh not as I haven't monitored as much as I will in the in the coming months.

Um we know that airport has its its share of challenges.

The majority of the revenue does come through um those leases and and pieces of the the leases, so that's still in development.

We still don't have a super clear picture of what those um operating expenses are gonna end up looking like because phase two isn't complete yet.

So um we have a good idea that they're gonna be pretty high, but we don't have a very um specific picture yet.

I did do some work on um on the GPIP fund earlier so that um Gary could take something to the board to look at before they made their proposals.

And um it's it's kind of just what we expected where the level of revenue that's in there um can support operations, but it's not enough for capital investment or capital reinvestment.

So the biggest issue that we have is um you know we have the lift, we we have that working, but there's not a good plan right now for how we're saved towards replacement of that asset.

Um and I think the other one was just marine service there.

It's not particularly interesting for good reason.

It's one of my favorite funds because there's not a lot to it.

Start the meetings with that one every year.

Um thank you.

Thank you.

I think it just seemed like a semi quasi-appropriate time to mention those three.

Yeah, so this is one that I've been thinking about for a little while, and I should have come to you before the meeting.

So it concerns this building.

Uh one of the issues that I've seen happen here at the Centennial Building is when conventions and other convention type things come want to come to town, it's expensive.

And we don't have any way to say, hey, this big convention is gonna come in, we're gonna see bucko sales tax and and bed tax from it.

But that doesn't help the Centennial building that has to actually put it on.

So I was gonna hoping to find a co-sponsor and talk to them about possibly taking some of the visitor enhancement fund, which comes from bed tax, and setting it aside to subsidize conventions and like things in the Centennial building.

So uh and and I ran into this because where I work, we used to put on an EMS symposium.

We've stopped having it in Sitka because of this.

So now we're in June of next year, and we're gonna be spending as a group, everybody there, you know, 75 hundred thousand dollars, everybody all those hotel rooms.

And Juno's getting it, because they subsidized our time at the centenary building.

Last year we were in Ketchikan.

They made the Ted Ferry completely free for us.

So and again, we've spent a lot of money in Ketchukan between us and everybody who attended.

And and we're far from and and every there's there's a number of organizations that have talked about that.

And then again, the problem is well, we would say, yes, this makes sense.

The city's gonna come out ahead in sales tax and bed tax, but that doesn't help the centennial.

So um what I would like to see is if we see if we can not a huge amount uh at least at first to say, okay, we'll take some of the visit enhancement fund the bed tax money, set it aside for subsidizing events in the centennial building so that they because otherwise, if we just say we're oh, we'll waive the fees, and we have done that a couple times, that just puts a real strain on the centennial building budget.

So um it's kind of floating that out there to see if anybody thinks that that might be a worthwhile thing to pursue before I go try and bug to are you referring to using doing that and then reducing the fees for outside entities to use the Centennial, thus to encourage more people to come to Sitka and Exactly.

I mean the same like I don't know, like you have a group of dentists, let's say it's pick on dentists.

I had to go to the dentist this morning, and they're gonna have a convention or time where they do get CMEs and all that, and they're looking for cities to go to.

And we say, come to Sitka, we won't charge you for the use in the Centennial building.

So let's say it's a three-day convention that probably equals around five grand.

And then we take five grand from the visitor enhancements fund or this fence off that we do, and we give it to the Centennial building.

Now we've got a bunch of dentists in town spending money at restaurants getting bed tax, paying bed tax and all those things.

And so that what I find what I like about this is the entities that will directly benefit from it are the ones who pay have been paying the tax, the hotels and the and the short-term rentals.

They're the ones who bring in the money from the bed tax.

And those entities will directly benefit from something happening in March or April, you know, before the season.

Because I mean the whole point of buying this this would concentrate on off season stuff.

And so I like the idea of figuring out a way to that's always been an impediment to bringing in some of these organizations.

I mean, my my opinion is it's a worthwhile thought, something to think about it.

We'd have to kind of drill down and look at um like examine the rates for people to come here and uh decide if that was those we feel those are a dissentive to come here.

Um and I don't know what those are on top of my head.

So it's I'll think about it.

I'd have to get more we'd have to get more information.

Thor, did you was it say it's five grand for three days to have a convention here?

Is that what you said?

Roughly, I think that's my recall, yeah.

So having that be for free, that'd be a tipping point for your organization to come here big time.

I mean, it's a huge I mean the a lot of these things are nonprofits.

And you know the dentists probably aren't the best because they probably do charge a lot and can afford it, but the uh, you know, the it's expensive to put uh and the cost of the facility is a is one of the largest expenses.

Um and I would I would probably want to have the uh visit sitca administer, you know, arrange it and have it then it would get approved by probably the administrator, you know.

I don't think it needs to come up to the assembly every time, but maybe but the idea is that we would use visitor enhancement funds from the bed tax for things that add to the bed tax.

I I like the synergy there.

Um and I and I'm not 100% sure on the five grand, it might be more, but it it's it's it's at least that.

Sounds like you modeling after the utility subsidization program.

Would you model that after the utility subsidy program?

Not so much that it would be I I guess I would see it they would make a pitch to the visit to the visit sitca.

This is why you should give us the Centennial building at a reduced or but that's using tax dollars through a third party approval.

That seems well no, they wouldn't necessarily approve it.

They would put the package together and put it in front of either one of the board or whatever board of commission or or us.

It could be a but then it would need to come to the assembly as a supplemental appropriation.

That sounds like not necessarily not if it's set up as a fund ahead of the special revenue fund.

So if we're adding a special revenue fund, we've got to take away a special revenue fund.

Well, I mean I I would finance.

I would talk to finance about how to make it the least painful for everybody.

But uh I I don't think it's something that I mean we we wouldn't have to necessarily do a special or uh budget review every time if we budget it for this purpose at the beginning.

Um and so again that's one of the barriers to having more conventions here in the winter and fall, early spring, and this is something where we could encourage economic activity during the time when it's generally not a lot going on.

And then maybe it's you know, a few of the stores downtown might open up during these times and things like that.

But I mean, if you I suspect if you went over to one of the bars and looked at the bill during when you have a something like that in town, there's a lot of money moving through.

Well, I'll I'll think about it and get with you offline.

Uh yeah, thank you.

I have nothing to compare this to, so it's great.

Good job.

Um but was really uh yeah, really well put together and very easy to understand.

Um I just had a comment in regards to what JJ was talking about with the airport enterprise fund and you know the theory of enterprise funds being that users pay for the use.

Um that there's a special room in our airport, I believe, for fish boxes, and I would love to see the people shipping out fish boxes pay for that room and any kind of cooling.

I don't know if there was special cooling for it.

No, it's just a special space.

Okay.

Well, that's uh space that is gonna have operating costs, and so um yeah, just as as you guys are figuring out that budget, I'll mention that.

Yeah, one one reason why I I was thinking about it, but it the thought wasn't fully formed was um you know, we're looking at a six percent increase in the water fund because that debt service is coming online from the building we built.

And you know, I think it was last year, maybe the year before we had to hire a new person to operate that building.

So we're seeing you know this new thing we need, and then we have to staff it and then we have to pay for it.

Um so some earlier conversations to talk about like what are these true impacts?

Um like do we need to hire a new person to operate the airport?

I don't know, but we should start talking about this kind of stuff.

And it's and there's not really a time, it's uh you know discussion direction item or here is a nice little catch-all, but there's aspects of operation aspects of finance.

Um it's such an adhesive conversation, it never really fits anywhere.

And this is important when we build things to understand the lasting implications of it, and if that's maintenance and we're we're building a seaplane base that may or may not be in that enterprise fund for the airport.

Um so if there's any insight, I don't know if John that's you or or or Brooke, um, but what what is this gonna look like?

How do we know, or is this why specific reason today why we are looking at a port director to kind of bring all of this together?

I'm not sure I understand the question.

Um asking me if we need a staff.

Specific question does the seaplane base go into the airport enterprise fund.

That's our plan right now is to put the seaplane base into the airport.

I think we've already moved it into the airport fund.

It has been moved.

It was horrible to move.

I would not like to move it anywhere else ever again.

And that was poor Melissa that did that, but we are still seeing the lingering echoes of how complicated that was so a better time to talk about it or stuff need to settle before we can talk about that enterprise fund.

I I do think some more things need to settle.

Um first one, as Brooke already said, we need to understand what the true operating costs look like.

Um we need to look what uh what the uh operations rhythm looks like over there too.

We need to get the leases finalized with the uh with the tenants and then all the other subleases for the um concessions within the airport too to see what what the revenue picture clearly looks like.

Okay, so there's nothing that the assembly can do at the front end of this.

There'll be more.

I mean, the the airport fund because there's been less activity in it over the last few years or hasn't been particularly interesting.

I would venture to guess it has not been a big part of the budget discussions.

It will be a larger part this year and and for I'm sure many of the years following.

So I think you'll see more of that discussion take place when we're actually presenting the budget packet, and I think that piece will require a lot more explanation because it's in kind of a weird halfway spot where eat you know, over the last couple of years we've gone a little bit closer to understanding what it's gonna cost, but we can't get there until um we you know the thing's fully built and and operational.

Does that help?

Yes.

Yes, that does.

And then same thing with GPIC, we did a thing, um we're and now we're starting to operate it.

Um, but we're s when will we be talking about that or seeing that part of the budget?

And when it's in the full form.

Okay.

Okay.

So in future years, will those funds be part of this kind of enterprise fund, or is this specifically like a rates discussion evening?

It's meant to be rates, so I it doesn't mean that it couldn't, but it wouldn't fit under the rate category.

It would just mean that we're taking like a preliminary look at enterprise funds in general.

Anything else from the assembly on the budget as a whole, any part of it.

Uh thank you to staff that has shown up uh tonight, even though you weren't directly called on.

I think it's uh important for you to hear some of the guidelines and uh will of the assembly.

So I thank you for taking your time away from shoveling your driveways or whatever else you could have been doing.

I think the uh the fire chief has a four-wheeler, he'll come to your house and come plow for you if you talk to him real nice.

Uh Katie, please.

Yeah, thanks.

Sorry.

Um I was uh two two questions.

Did we find out they announced the SRS pay secure rural schools payments?

Do we find out how much we were getting?

We haven't received any preliminary information on our amount.

Okay.

This this wouldn't be this would be a little early, so I don't know if it's just gonna line up with our normal time of year that we get it, but we don't normally know by now.

I didn't see the amount, so I don't know.

It wasn't they only tell the specific receiver of how like recipient.

That's a terrible receiver, but um they don't have a listing of how much each entity is getting.

I looked for that.

The school has been emailing me.

And then the second thing is um I don't know if we uh can do anything about the school budget or if we wanted to address that at all, just knowing that we got that update on Tuesday.

That was uh a little different than the picture that we were having, and maybe that's just um a future work session.

It sounds like we're we're constrained anyways in what we can do, but just wanted to bring that up in case anyone had any thoughts.

I think at this point, um school district and school board is still gathering information.

Um I have reached out to Phil personally as well to see, you know, to told him to let me know when they know, right?

Um, and I know John has had the same conversations with Deedry.

So if we need to, um, we'll see what's going on, and I'm sure we'll be filled in on the full picture once they fully understand as well.

The good news is uh we just saw that Ketchukan is in a much worse situation than us with their schools.

They're about five and a half million dollars uh in debt, and it sounds as if they will not be making payroll at the end of this month.

Um while it's bad here, it uh it could be worse.

And their harbors went up to eight percent next year for increase.

Tim?

Oh, I was just sharing with Steven uh earlier that you know the legislature is mulling a hundred million dollar one-time funding for education because of the concerns.

I mean, Anchorage is looking at laying off 200 teachers or something, so like this is a statewide issue of people struggling.

Um, and so you know I think that I don't know what that number would look like for Sitka if that number survives that process.

I mean, but but the legislature's not inactive, but I will put another pitch out for everyone to get involved and advocate because this is this is a real serious issue, not just here but all over the state.

So you know, I think but for us this is an issue because the state could step in and solve a lot of our problems.

So um, and they certainly have resources.

Anything else from the assembly this evening?

Question go ahead and put the yeah, just question.

This is um budget meeting number three of our six year cycle, six months where where are we at in this process?

Just help me scope this.

I can tell you how many we have left.

How many do we have left?

Yes, two meetings.

Well, the next meetings will be presenting the general fund um draft budget and then the enterprise and special revenue fund um budgets.

It feels like more than three, but I don't know.

Yeah, that is a budget meeting.

I always think of that as a yeah, so I'll have to look at the schedule Sarah sent out, make sure I'm out of town on that date.

Anything else from the assembly on the budget as a whole?

Great, thank you.

That would bring us two persons to be heard.

This is public participation for any item on or off tonight's agenda, not to exceed three minutes for any individual.

And adjournment.

Motion to adjourn.

All those in favor say aye.

Aye.

Any opposed?

Uh thank you, everybody.

We are