New port/harbor building receives balance needed as loan from city

By Hannah Heimbuch
Homer Tribune

Homer’s City Council unanimously approved a $300,000 loan to the Port and Harbor Enterprise Fund Monday night, rounding out the funding needed to complete the new Port and Harbor Building.
Those dollars will come out of the General Fund, and come back to the City at a 2 percent interest rate.
Much of the discussion around the new building came up during the ordinance’s first reading at the Jan. 27 meeting, when public testimony fell in favor of the City granting the money, rather than loaning it, or perhaps loaning it at zero interest.
“I think it’s important to understand that Port and Harbor generates a considerable amount of sales tax that goes back to the general fund,” said Deputy Harbormaster Matt Clark. “So there is some reciprocity here. So when you consider a grant, or a low-interest loan, or a no-interest loan, it should be taken into consideration the activity that goes on down there.”
While the City and Port function as separate entities, money does flow between them. The tension rises, however, over the discussion of how much, and which way.
Public testimony noted that Port facilities bring money to the city on a regular basis — such as fees for oil rig docking, cruise ship head taxes (which paid for the downtown restrooms), or property taxes from Homer Spit businesses.
Mayor Beth Wythe stated at the January meeting that the city does put money into the Port, as well as the other areas that Homer businesses occupy, and she supported a low-interest loan.
“The City has already put $1.5 million dollars from general fund capital projects to harbor capital projects,” she said. “Having the 2 percent on there is not a bad choice. We would make more than that if the money sat in the general fund investments.”
Councilman Beau Burgess also supported a low-interest loan, calling the 2 percent “generous,” while Councilwoman Francie Roberts supported no interest.
“It’s the least we can do to keep this building on track and get it built,” Roberts said.
Also unanimously approved Monday night was an ordinance that did come in grant form, the $500,000 that makes up the City’s 25 percent local match for the Port and Harbor Building. The first $1.5 million came from a Legislative grant.
According to the Port and Harbor Building Task Force, they’ve managed to tighten the budget on the design and construction costs over the last several years — particularly compared to last year’s numbers.
Beyond the $2 million granted from state and City funds, they are currently estimating over-budget costs to be $296,772 — hence the loan — though that is down significantly from the $1.9 million over-budget projection reported last year. Some of those cost savings from 2013 now include a $105,000 cut in design costs, a $1.2 million construction cost cut, and a contingency budget that dropped more than $200,000.
“The new 2014 budget reflects a decrease in square footage from the original 2012 project,” reported Harbormaster Bryan Hawkins and Project Manager Dan Nelsen in a recent memorandum. “The current project includes over-slope development, but the second floor has been removed, the maintenance shop size was reduced, and the administrative areas were decreased.”
During the previous meeting, and again on Monday, Councilman Gus Van Dyke expressed concern regarding the overall building cost, and whether there were yet ways to find savings that hadn’t been explored. Those concerns included the expense of the building’s design complexity — including a rounded front wall.
“Looking at the design of the building, I see a few things in there that I think there’s still some cost cutting (to do),” Van Dyke said. “It’s got a conference room in it half the size of my house.”
While Roberts said Monday night that she appreciated her fellow council member’s continued interest in curtailing excessive spending, once she reviewed the harbormaster’s November report of conducted business she felt the structure was incorporating the requirements of the office.
“(There were) 16 different meetings that they had there in that month alone,” she said. “I was really satisfied that the conference room was well needed.”
The ordinance language earmarks “up to” $300,000, and project leaders hope it won’t end up being that much.
Councilman David Lewis spoke favorably of the cost cutting the task force has been able to achieve, while producing a building that will be useful to Port business for years to come.
“It has been cut down to the bare bones, as far as I think we can go, and still have a building that is going to be usable for the Port and Harbor for the next 20 to 30 years,” Lewis said. “This has to be a building that can grow and be usable throughout those years, or we are going to cost the Port and City more by having to do it all over again.”
While Van Dyke eventually voted a “reluctant yes” when it came time to approve the loan, he voiced worry regarding any planning that can’t stay within the means available to it — in this case the $1.5 million allocated by the Legislative grant and matching City grant of $500,000. It is not a pattern that bodes well for financial longevity, he said.
“Does that mean that this new public safety building that we want to build that’s supposed to be $15 million, is it going to be $20 (million)?” Van Dyke said.

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Posted by on Feb 12th, 2014 and filed under Headline News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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