North Harbor funding options considered
The $2 million dollar deficit for the North Harbor Project causes issues with Petersburg's city council members.
Petersburg City Manager Steve Giesbrecht, made a funding proposal for the council to consider that provides funding for the shortfall in the cost of reconstruction for that project.
“We tried to do the same thing with this that was potentially done for the Reid Marine Property,” Giesbrecht said.
The plan is to take $600,000 from the harbor fund, coming from the raw fish tax that the harbor will receive this year; $350,000 from property development; $200,000 from the economic fund and the balance of $850,000 would come from a loan or grant from either the power and light reserves or the general fund, or a combination of both.
“We estimated that a loan with an interest rate of 2.5 percent for 15 years for $850,000 would be $68,700 to be paid back,” Giesbrecht stated. “There is also an $88,000 deficit in operations and about $7,000 needed for a position upgrade that would bring the total to $165,000 that the harbor would need to repay.”
Giesbrecht explained that if too much is taken from power and light in either a grant or loan format that an understanding needs to be that the rate study for power and light has not been completed at this time.
“There are limitations to moving too much money from the general fund as well,” he stated. “We have some covenants that say we will keep four to six months of operating funds in that fund at all times.”
Between $3.2 million and $4.8 million must remain in the general fund per covenants set previously.
“Unrestricted fund balance in the general fund is $3.6 million,” Petersburg City Finance Director Jody Tow said. “That only leaves $400,000, and if that was taken it would leave the city at the very minimum and I would not recommend doing that.”
When asked by Council member John Hoag of her recommendation, Tow said she would like to see the $600,000 taken from the harbor fund; $350,000 from the property development fund; $200,000 from the economic fund and the remainder be paid by power and light for the $1.2 million in electrical costs.
This recommendation was met with some resistance from Petersburg Municipal Power and Light Superintendent Joe Nelson.
“I know that the $8 million reserve that power and light is showing looks like a lot of money,” Nelson said. “But a prior city council decided that they would build that fund in order to move the plant and headquarters of the power and light to Scow Bay.”
“I have been given a goal to accomplish,” he stated. “If you take this money away it makes it very difficult to reach that goal.”
No matter the decision made, harbor users will be facing a rate increase in moorage rates to repay that money as well as an old loan for prior projects.
The council decided with a six to zero vote to postpone this decision until the Nov. 19 meeting when more information could be garnered and they can make a more informed decision.