Council approves internal loan of $300,000 to harbor building

In a bit of internal accounting, the Homer City Council at its regular Monday meeting approved in a 6-0 vote a transfer of $300,000 from the general fund to the Port and Harbor Enterprise Fund. The transfer was part of completing a financing package to build a new Port and Harbor Building estimated to cost $2.3 million. A legislative grant of $1.5 million will pay for most of the building.

Also on Monday, the council approved an appropriation of $500,000 from the Port and Harbor Enterprise Fund depreciation reserves to pay a state-required 25 percent match.

The $300,000 transfer came with some strings attached, however: it’s a loan, and the Port and Harbor fund would have to pay 2 percent annually over five years to the general fund.

Homer City Manager Walt Wrede compared the plan to what the Kenai Peninsula Borough Assembly did when it approved a construction loan to build the city’s natural gas distribution line. The borough made the loan to help the city out while at the same time earning income. The transfer from the general fund wouldn’t come out of operating funds, but from a $6 million reserve auditors require the city to set aside. Normally, the city would invest it in secure bonds that earn about 1.5 percent.

“The thought here is ‘Why not invest it in our own port and harbor fund and make some return?’” Wrede said.

“Sometimes I think we need to have a little bridge financing,” said council member Barbara Howard, who attended telephonically. “I view the general fund as the bank and the harbor as the customer, and the customer goes to the bank and the bank says ‘yes.’”

Howard also echoed a common complaint of fishermen and mariners about the city’s tax and financing structure.

“There doesn’t seem to be any problem with the city taking the sales tax the port and harbor collects,” Howard said. “It seems like the door needs to swing both ways.”

When the ordinance was introduced last month, council member Gus VanDyke had been critical of the need for an additional $300,000. He said the building should be done within its budget and features cut if needed, like a conference room. Council member Francie Roberts noted that a recent harbormaster’s report said the existing conference room in the old building had been used 16 times for meetings.

“Why can’t we build it for the money we have there?” VanDyke asked. “It can be done.”

Wrede said that harbor officials, architects and engineers, and the Port and Harbor Building Task Force were looking at ways to save money, but he couldn’t promise the $300,000 wouldn’t be needed.

Council member David Lewis noted the original estimate was at $3.9 million and the design already changed.

“It has been cut down to the bare bones as far as we can go,” Lewis said. “This has to be a building that can grow and be usable.”

“As long as we don’t cut that gold plated wet bar, I’m cool,” council member Beau Burgess said, joking.

Mayor Beth Wythe admonished Burgess for the joke, just as she had earlier chided VanDyke for saying “hell.” VanDyke later apologized for saying “h-e double hockey sticks,” as he put it.

“Please be careful what you say on the radio,” Wythe said, reminding the council that its meetings are broadcast live on KBBI Public Radio.

Despite his misgivings, when it came time for a roll call vote, VanDyke joined the other council members in voting to approve the $300,000 loan and transfer.

The council also set a timetable for the next step in the Charter Commission election process. In a memorandum in the council packet, City Clerk Jo Johnson affirmed that the number of signatures was sufficient for a citizen initiative led by Ken Castner to create a Charter Commission and potentially make Homer a home rule city. The 15 petition booklets received had 196 valid signatures, Johnson wrote, above the threshold of 15 percent of the votes cast at the last city election, or 185. Johnson certified the petition.

The next step in the process is for prospective commissioners wanting to serve on a Charter Commission to begin collecting petition signatures. To be on the ballot, each candidate would need to collect 15 signatures. The council agreed to a time period of from March 1 to July 15 for commissioner candidates to solicit signatures. Castner supported starting the petition period soon to keep the dialogue on home rule going.

The council also set the election date for the Charter Commission as the same as the next regular city election, Oct. 7. Citizens would vote on the issue of approving a Charter Commission and on a slate of commissioners. If a commission is approved, the commissioners would have a year to write a city charter, which would then go to the voters for consideration.

In other action, the council:

• Approved a resolution expressing support for the Kachemak Bay Research Reserve and requesting continued financial and administrative support from the state of Alaska;

• Approved a resolution and ordinance making the executive director of the Homer Chamber of Commerce and a representative of the Homer Marine Trades Association ex-officio or nonvoting members of the Economic Development Commission;

• Approved an ordinance appropriating $34,089 from the Airport Reserve Fund to replace boilers at the Airport Terminal;

• Introduced on first reading an ordinance expanding permitted uses in the Rural Residential zoning district to include a detached dwelling unit as an accessory to a single-family home on a lot serviced by city water and sewer;

• Defeated and did not introduce an ordinance and resolution changing the number of successive unexcused absences for a Homer Advisory Planning Commission member from two to three; and

• Introduced on first reading an ordinance and resolution changing the number of votes required by the planning commission to approve a conditional use permit from five to four.

The Homer City Council next meets at 6 p.m. Feb. 24 in the Cowles Council Chambers. Ordinances introduced at Monday’s meeting will come up for second reading and a public hearing then.

Michael Armstrong can be reached at