Assembly Work Session of January 9, 2025

Lena, are you ready? Okay. All righty, we'll go ahead and call to order the Kodiak Island Borough Assembly work session of Thursday, January 9th, 2025 at 6:30 PM, and we are in the assembly chambers. First item is citizens' comments. Local number is 907-486-3231.

And the toll-free number is 1-855-492-9202. And ask you to sign in, state your name for the record, and go ahead and start. Push the button on. Yeah. Hello, assembly.

Sandra West from Island Trails Network and the Kodiak Shore Trail. So I just want to give you guys an update. We're doing well. We are very active and going forth. We have a new executive director.

Travis Cooper has gone on to full-time employment on the island. And our new executive director is Natura Richardson, who worked for Fish and Game for a long time, and now she's back. She and I went to Juneau, and we attended a DOT pedestrian safety class. We did 3 days of 8 hours a day, which was a little— it was a lot for this retiree. I missed my naps.

But we learned a lot about pedestrian safety and what DOT does. And this was the outside instructor that came. In fact, he— Joe Gilpin, he has helped with— some planning document that the borough has done. So we're doing well there. And also the cool part about being in Juneau is that we got to network with our DOT area planners and just talk to them about our trails, talk to them about their redoing Rezanov from East to downtown to make it ADA.

So it was good. It was good to chat with them. I'm not prepared tonight to give you a—. What do you call—. Presentation, but I would just like to tell you that I am a little amazed at some of the statistics that came out on where outdoor recreation in Alaska is like the number 4 industry in the state.

It's like— it's big, it's booming. I've got all these numbers that the U.S. Department of Economics presented, and so maybe I'll put it together and bring some slides or get them to your packet or something. But it's pretty impressive, and I just want to let you know that in Kodiak, if you have not yet heard of the Kodiak Mountain Series, they expect 100 runners to show up on this island in June and run 3 mountains in 3 days. That's gonna be a boom for our economy. Just 100 people showing up that wouldn't have otherwise.

Also, we just talked to the Alaska Outdoor Alliance. They are basically outdoor recreation tourism and recreation and they do lots of things, but it's a statewide organization and they put on a convention annually, and they've chosen Kodiak. So looks like in September, if we can organize things, there'll be another 100 people here. So we're moving in a grooving. Wanted to let you guys know.

Thank you, Sandra. Anyone else wishing to speak, please come forward.

Good evening. My name is Tom Lance. I'm the vice chair of Menasha Bay Road Service Area. And I was going to come tonight and say, got to get a contract situation resolved and we got to get it done now. But I just was updated that it looks like it's being taken care of.

We've had some issues with our contractor. Not understanding the terms of the agreement that he got involved with and us not understanding either. But it looks like it might be resolved. So I'm glad to hear that. And second of all, the trails project is— as a person, on a personal note, I'd like to let you know that this is something that needs to be followed through with if we can at all do it.

And also, too, extend it out beyond Abercrombie out Menasha Highway. That road is dangerous. People are riding their bikes on it. It's getting more popular. People are walking with dogs on the side of it.

And then you got a guardrail here and no place to bail off. So it's just an accident waiting to happen, not to mention the road's slowly deteriorating. So anyway, that's all I had to say. Thank you very much. Thank you, Tom.

Anyone else wishing to come forward and speak, please do so or call in.

Hi there, I am Seema Garut. I am your Kodiak Island Borough Assessor. I just want to remind all seniors and disabled vets that the exemption application is— the deadline's approaching fast, and please get your paperwork in by January 15th. We have, um, we're lucky that we had Assemblymember Whiteside, Ames, and Sherritt helping us make phone calls. We did not get through the whole entire list.

For some reason this year we had more people that didn't apply in the senior side than we did last year, but we're going to get through all of the phone calls by tomorrow and by But just please, we've been busy because people are coming in. We had 4 or 5 come in that Mr. Ames called on Tuesday, and we actually had some people come in right after Mr. Whiteside called. So we're rip-roaring ready to help you out, but please make sure you come in and apply. Thank you. Thank you, Seema.

Are there any phone calls?

We're now answering a call from the queue. Assembly meeting, please state your name for the record. Melissa Burns.

Go ahead, Melissa. Hi, uh, good evening, assembly members. Um, I am, uh, the owner of Nuniuk Downtown, and I am calling in regards to, um, the beverage permit, uh, number 3293 that you guys have later on your work desk. Session agenda. Um, I just wanted to let you know that, um, I have been working with Mrs. Kim probably over the past year and a half to transfer this permit over to Nunyuk.

Um, it's been a long process, um, working with AMCO, but, um, we, um, we're very happy that yesterday we received a letter from them, um, stating that, that our license has been deemed complete and that it would be sent to you for commenting and addressing or approving. And so I just wanted to let you know that that's in the works. In this letter, it does say that it was sent to you, so I just wanted to make you aware of that. It may not have gotten to you since it was only received by me yesterday via email, but We're very excited to add the offerings of beer and wine with our eatery, our restaurant, and it's been something that's been a part of our business plan from day one. And hopefully we can get this transfer complete in a speedy fashion.

It's already been going on, you know, a year and a half now, and It's a lot longer than I expected.

Thank you for calling in, Melissa. Thank you. Have a nice evening. Thank you. You too.

Anyone else?

No, no more calls. Last chance. We'll move on to agenda items. Next is discussion of short-term rentals. Amy, I'll let you go ahead and start that off.

Thank you, Mr. Mayor. This is a holdover from when we were supposed to discuss this in November. I believe at that time when we talked about short-term rentals, there were a lot of ideas that came up, but, um, we were in the ADU ordinance, and so we didn't want to talk about ADUs until we talked about short-term rentals, which brings us to tonight. In front of you, I have placed the maps that assessing prepared for the last time that we spoke about short-term rentals. Those will be updated for January 30th.

So those are the same ones that you saw before. They'll be updated for the January 30th, um, discussion on the ordinance that, that 3 assembly members have been working on. Uh, when we make those maps, we query, um, all the business personal property accounts, and those are all due January 15th. So after that date, we will have new updated maps for you to reference when you're talking about short-term rentals. I am not sure what topics the assembly plans on talking tonight, so we'll do our best to answer questions as they come up.

Who'd like to—. Anyone would like to go first? I'd like to talk for a little while. Go ahead. All right.

Mr.

Paul, do you mind? Take that. Okay. All right. No, mine isn't.

Thank you, Dr. Griffin. Okay. Short-term rentals. This is a lot of information. While I can't speak to the draft ordinance that is in the works, I can just point out options for the Assembly to consider as we move forward with this topic.

It's really complex, and I know there's been some concern about, you know, when we're thinking about how do we balance availability for lodging for tourism while also considering we're in a current housing shortage within the community, you know, how do we reconcile that? And some folks have had some great recommendations that we create a licensing program to better gauge how much— how much of housing inventory is actually going towards short-term rentals in the community. And so I do believe we should create a licensing program which is really, it's an all-encompassing process where you can create different levels of, for lack of a better word, different checks and balances that you have to ensure people meet in order to receive their license. One of them, It could be that they have to apply for— or have to register with the Borough as it is now for paying the short-term or the—. What is it—.

Transient accommodation tax as it's called now.

That would be one component of a licensing program. Could be. Let me back up real quick. I wanted to thank Mr. French, Director French, for his leadership with the Planning and Zoning Commission. And I want to thank those folks on the Commission as well for their efforts in updating our definition.

Definitions. So we're— they're looking to modernize our definitions and make them applicable to a hopefully newly imagined short-term rental definition that's all-encompassing for what we're trying to do here, which is for accommodations that are fewer than 30 days in duration. So I'll just refer to this as short-term rentals for discussion instead of transient accommodations. So back to a licensing program, if we were to create a licensing program, we could have requirements within that to— in order to receive it. One of them would be to— they have to register with the borough to pay the short-term rental tax, which is also known as the bed tax.

You could require that they— the owner or operator has to obtain insurance, commercial, commercial lodging insurance. That can range anywhere from typically $500,000 to $1 million. Per property. I'll go over what some of the municipalities in Alaska have done so far with some of these topics, but that seems to be the general consensus is they would have to obtain commercial lodging insurance, which is separate from or would be in addition to your standard property insurance that you would hold with your mortgage or any just property in general. And this would mostly be to cover liability.

So similar to hotels, motels, lodges, they have to— they're required to carry this insurance. So this would be leveraging that— I'm going as fast as I can, Lena. Continue.

And so it would be to make sure that if folks are going to have people staying there in a lodging fashion or capacity, that they have the proper insurance in case someone were to get injured or worse. So adding an insurance requirement would be one component, potential component of a licensing program. Others would be if we had— let's see. So let me go down a little bit. Obviously, they would— we would want to consider some language in meeting the licensing requirement that do they fall under current zoning compliance.

So that would be another box they could— we could have the applicant check when applying for a license. Do they meet current zoning requirements? To which we've mentioned, you know, when we're thinking about ADUs and how those fall out, this would be something that would be part of that requirement. Is it currently zoned for that use? Other approaches are if we thought about the owner occupancy requirements, if we wanted to go that route, that could be one stipulation for applying for a license if we wanted to do that.

Thinking about— I'm not suggesting we should, but we could. These are all just possibilities I'm putting before everyone to think about is, do we want to put a cap on the number of licenses if we were to adopt a licensing program, the number of licenses granted for the community in the borough? Do we want to put, put a limitation on that? So I checked how many were available as of a few days ago, there's 160 short-term rentals listed for Kodiak right now, and we haven't even approached peak season yet, which is typically the, you know, May through October season. So if we're already at 160 now, which I found just a quick search on Airbnb and VRBO, I imagine that number is going to increase.

So these are all houses that— or dwellings that are not available for long-term rental use for the community, for the workforce. So to me, that's concerning is how many we have now, and that number seems to be growing.

So these are considerations we could think about when creating a licensing program. Other— another thing that some municipalities do, we could consider adding a requirement that the applicant accept— I don't remember the exact term of it, and maybe it'll come to me before I'm done talking here, but having a safety inspection. For example, if we had required Bayside Fire, or if it's a city property, if we decided to go in with a joint— I guess a joint approach with the City of Kodiak, whether the City Fire Department or Bayside have a safety inspection conducted every time they apply for the license to make sure that the dwelling that they're going to have people staying in is safe for occupancy. That's another option that municipalities do add to their licensing requirements. There were several other items we could consider.

Those are the main ones that municipalities do add to requirements for a licensing program. And then thinking about compliance. So shifting towards, okay, we have— we add certain requirements to applying for and obtaining a license, say, business license to operate a short-term rental in our community, how do we enforce that? And so there's numerous mechanisms that we could consider when thinking about enforcement. So the one of the obvious that comes to mind is a fine structure.

So if you— some municipalities will charge a set fine, however, that will increase based on a tiered system. So as if someone were to receive a fine for non-compliance and then they don't comply again, then they move to the second tier of a fine structure, which grows in amount and could lead to a suspension or revocation of that license. So those are a couple approaches for compliance.

Let me sweep down to Other enforcement mechanisms— this has actually been adopted in several municipalities in Alaska— are a community reporting tool, which some people are going to have some feelings about that, but it seems to have had some success in that route where folks will report to, in our case, to— I don't know if it would be to Community Development or or the manager's office or the assessor's office, but set up a reporting mechanism that is anonymous where folks can inform the borough that someone is operating a short-term rental and they are not licensed. Other considerations for tracking these is there's actually software programs now that exist that some municipalities have used— begin using that will monitor monitor whichever website you wish them to. For, for example, Airbnb, VRBO are the two big ones. They can monitor those websites for listings and using georeferencing, send you a list of what addresses they feel are being listed, and you can cross-reference that with who we have registered for having that permit. So there are several ways we can consider how we enforce compliance.

So it doesn't do anyone any good if we create a licensing program without enforcement mechanisms that are achievable. And so these are all things we can consider. I think we're not necessarily behind the curve, but we do have precedent from other municipalities in Alaska. So I kept my search limited to the state, but I'm sure if we expanded beyond that, Advanced computing— accelerated computing could give us dozens of examples from the Lower 48 of how folks are enforcing these requirements. But anyhow, to recap, if we were to pursue a licensing program, this would be an expansion of what we already have in place, which is a registration for short-term rentals to register with the borough to pay in a short-term rental tax, which if I remember right, is 5% payable to the borough annually.

My goal would be to create, based on recommendations from the Community Development Department, would be to create an annual licensing program. That way, we have a snapshot every year of how many homes or dwellings in the community are being used as a short-term rental.

If there's any clarifications or questions on anything— that was a lot of talking. I jumped around a bit. But really what we could be considering again would be to require an additional insurance requirement for liability for lodging insurance. And we can consider— oh, one thing I didn't mention is if we felt the need to charge a license application fee to cover any additional administration— administrative costs associated with implementation and enforcement of this program, we could consider that.

And then, certainly, maintaining the registration requirement with the assessing office that they have to register for and pay the bed tax annually or the transient accommodation tax currently. And then, considering what types of enforcement mechanisms we would want to apply to that. Several options. Again, there's the fine structure. Do we want to have a single fine?

Or do we want to have a tiered approach to that, to where repeat offenders pay more each time there's an offense, to include potentially suspending or revoking their license to operate as a short-term rental? And then the community— community reporting tool is another option for folks to inform the borough that perhaps someone is operating as a short-term rental and we don't know about it. And then there's also some software programs that could also serve in a similar capacity where it could— they could use georeferencing to— and cross-referencing— georeferencing in relation to popular websites that advertise these short-term rentals to give the borough a list of what they feel are properties that are operating in that fashion. A lot of talking. Running out of breath.

Thank you, Bo. Scott, did you come across anything that would— well, municipalities finally forced Amazon to collect local sales tax, and is there any information about whether we can make VRBOs or Airbnbs do the same thing?

Go ahead, Bo.

So, so there is— I actually reached out to— there's— I don't remember the term for it, but I know certainly Airbnb does have a service that they do provide municipalities if it's requested to mandate reporting for all short-term rentals that use their service. Let's do that. I registered for that, or I submitted an inquiry for that weeks ago, and I haven't heard back. However, if that's something we wanted to pursue, I would recommend that multiple sources submit the request from the borough on behalf of the borough. So if they see multiple inquiries coming in, I think we would gather or gain attention quicker.

But that's certainly something I would be interested in. Me too. Thanks. I don't know if— I don't believe VRBO has started doing that yet. But I imagine if the right pressure was applied through either the state or federal— state legislature or through federal means, we could maybe ask, you know, through those means to make that a requirement for the state of Alaska.

But currently, I do know that Airbnb offers that if it's requested. But I haven't heard back, so I would imagine if we wanted to pursue that, we should have several different entities from the borough request it all at once. That way they know we're serious about it. Manager, Assembly, Mayor. Yep.

Larry, Steve, and then Dave.

Thank you for that presentation. I really appreciate that. There's a lot of good ideas there. Mr. Mayor, first off, we collect a bed tax of 5%. And is that dedicated— could that be dedicated to support the bureaucracy that this program would entail?

Yes. Amy.

That bed tax was— the accommodations tax was created to fund tourism. And the way that the code is written is that our Convention and Visitors Bureau would be eligible for up to 75% of those funds. And so we have used that both for the funding of that bureau and to pay for the attendant at the touch tank. So it's meant to go towards tourism activities. So—.

Thank you. Yeah. I suppose that could be a broad interpretation of that. So the purpose— because this is a lot of bureaucracy in terms of, as you mentioned, enforcement and monitoring and reporting and taxing. One, that's going to require significant personnel to do that kind of thing.

And I think you inferred basically you don't set an ordinance if you're not going to enforce it, which is the worst possible thing you could do because it tells the public the rules don't mean anything. We don't want that. But the whole purpose of this is to increase the availability of housing. That's what we're really going into this for is not to collect more money, increase bed tax, which would be nice, don't misunderstand me, but the real purpose is to, as people have said, these Airbnbs are using up housing that is contributing to our housing shortage. So the only way this would really work other than a focus on increasing taxes and bureaucracy, and I don't mean that as a negative or anything like that, is if we, uh, either place a moratorium on Airbnbs or we set a limit within our code, within Kodiak.

And that would have to happen or this wouldn't have any effect on increasing the availability of housing if we just go through a monitoring and taxation. So at some point in time, this ordinance has to make a decision. And one of the questions I would have, and I don't expect you to answer, but it wouldn't surprise me if you have researched it, The communities that have actually done this, you know, what are they spending to manage it? And most importantly, do they have any data to indicate that it's actually increased housing availability by doing this? Because anytime we expand bureaucracy as a community, it carries a burden both on the community who have to be a part of it and then the amount we have to enforce it.

And, uh, So that's my only concern is, you know, what are we going to do to increase housing? I really want to do that. But so far, unless again, I'm repeating myself, but unless we set a limit and it's been suggested by another assembly member, Mr. Johnson, to me, I don't want that. We do make such a decision on how many we allow and let it grandfather in. If that makes any sense.

Instead of saying, no, you can't do it, but we'd say we're going to have this many, and as time goes on, we reach that limit instead of telling someone you can't do what you're doing. The other thing finally I'll say is that Airbnbs in a community where the fisheries is declining and, you know, we're going through economic times, it would be interesting to note how much money these Airbnbs are bringing into Kodiak economically. You know, in terms of providing many of our citizens a way to survive bad economic times. You know, these Airbnbs are— some people are paying their bills with them. Um, what, what economic— we don't want to curb, you know, any kind of economic money coming into the Kodiak too.

So it's complicated. I appreciate your presentation. It made a lot of sense to me, and I'm generally supportive of the things that you're saying. Thank you. Steve.

Um, a couple of things.

Having them licensed, does the— excuse me for my ignorance— I know in the city if you have any type of rental, you need to have a business license. Does the borough require that too? No. Okay, then you know, my stuff's in the city, so I don't understand all the borough per se. So some sort of licensing form I could be in favor of.

I don't know if there are any in the borough or not. I have a little 600-square-foot house in the city. It's just a single one that might be a good short-term rental. So I don't see how, if there's only one structure on a small lot, you could require owner occupancy as being an additional thing, either an ADU or separate building. Then I can understand that.

Then I'm going to open a can of worms that is really for a later discussion, but no matter what we put in as ordinance and requirements, We do not have a good mechanism at the moment for enforcing all our ordinances we have. Uh, we can't issue fine tickets the way it is set up at the moment. Whether we want to change that or not is a completely separate discussion, and this is not the time because it's going to be a discussion.

It's going to be part of the discussion on this. Okay, but continue, Steve. Um, that's really about it. I mean, looking at these maps, most of them are within city limits, and that's under their control from what I understand. So when we discuss ADUs, is this a borough code that pertains to the city too, or do they have to adopt it?

If you can answer it, yes, please. Go ahead, Amy. So just to fill in a little of a gap there, um, you're right, Mr. Ames, they do have a business license program for all businesses inside of the city limits. I did reach out and talk to the acting manager, and she told me there were 58 active in the city right now that we're paying the accommodations tax. So as Assemblymember Weitz said, suggested this is not a good season to try to count what's actually listed on the website because this is the time they go from being short-term rentals to a longer term.

Why? We're outside of tourism season.

We are not allowed to do anything in specific areas. We're borough-wide. So if we make a licensing program that would apply to the villages, that would apply to the city, that would, that would apply everywhere. And so if you did live inside the city, you would have to register for your accommodations tax. You would have to get a business license, and then you would have to go through the borough requirements as well.

So, you know, just outside of that city bubble. So that's— we would be adding more steps. But yeah, if we were going to put a limit on it, then we're definitely going to have to include the city because they're going to have a say on what happens inside of the city limits. And and what they want to allow. But the, the rules would apply to everyone across the archipelago.

And thank you. Go ahead, Steve. The only other thing is I would even go as far as to consider making them get a conditional use permit so their neighbors know what they're doing. I mean, if you're planning to turn this into a place that has several rentals, do we have anything— how many cars? I mean, what control do we have?

And so you turn it into a bed and breakfast, BBOB, whatever you want to call it, and you have two sections of your house you're doing it with plus you, do you have adequate parking? Do you— I mean, these are all questions that I think need to be dealt with. Along with what you were thinking. And if there's that much money in it, the time and process of going through a conditional use permit, I don't think is unreasonable so that this can be looked at thoroughly and your neighbors can be informed upon what's going on.

That's about all I got to say for now. Bo, Dave's next, and then I'll let you—. And yeah, I do really appreciate that, though. That was a lot of Good information. And I think one of the things you've really pointed— made clear to everybody is that there are so many ideas and so many things that are going to be tackled in this effort.

I think it's going to be a full year or more before we're ready to say, here are the rules for operating a short-term rental in Kodiak. I think the heads nodding probably say that's probably a pretty fair assessment. I don't see this as an issue that we've got a year or two to address because every time a house goes on the market and gets snapped up and gets flipped into a short-term rental, that's one less family home in Kodiak. So I would really like to strongly recommend we start with a registration and moratorium, give people till the end of March to register their current Airbnbs. Must be, you know, have been in operation or currently in operation.

And then we say no more. And while we're under that cap, that gives the assembly time to set rules, to set these policies, to agree on all these different intricacies. Because we're gonna have different types, you know, somebody subletting a bedroom, it looks a lot different than somebody who owns 14 houses, doesn't live in this state, and they're all Airbnbs in our community. Both are happening. So I would really like to take our time and get the code right.

But before we do that, I'd like— I really think that a moratorium on them so we don't keep losing housing inventory to these short-term rentals would also benefit the community.

Bo, I think I'll try to address some of the similar questions that I can. So to Dr. Ledoux's questions about how, how are municipalities leveraging this, these licenses. And to clarify, this would be creating a business license, a short-term business license would be the goal here. So by creating this licensing requirement, business license requirement, we— and with enforcement mechanisms mechanisms that are tangible, we could get a better idea of the true number of short-term rentals operating. Currently, we don't know that.

We can, we can speculate based on how many we can find in a search and reference that to how many are registered, but I would be shocked if there aren't numerous dwellings here in the community that are operating in this manner that we don't know about because they haven't registered, because we don't have a more robust enforcement mechanism and licensing program, or licensing program with enforcement mechanisms that actually work. As far as the, you know, I, I didn't mean to, and if I did, I wasn't suggesting we increase the accommodations tax. I was referring to more, do we, do we require a license or application fee with the license to accommodate any increases in staffing needs. However, when we think about some of these potential licensing requirements, it would really require minimal effort from staff. For example, if we require the applicant provide commercial lodging insurance, that's just simply showing whichever department we direct them to a copy or sufficient evidence that they that they have obtained and will have continued coverage for that application period for logging insurance.

Some platforms, I know Airbnb for example, do offer that as part of a package with their— with the owners or operators of these residences that they do provide that form so they can simply print that out which explains the coverage and provide that time of applying. So really, as far as that requirement is concerned, it would be minimal effort for our staff, seemingly, to accept that when they're looking at someone applying for the license. Thinking about other requirements, if we— I would think the most time-intensive one would potentially be if we required safety inspections from, from Bayside require, for example. If we had folks have to schedule an inspection, then they have to go out there and inform, you know, is this dwelling safe. I'm not suggesting we go that route, this is just an option to consider that we just probably have required for obtaining a license.

So that wouldn't cost— it would not cost staff time. It would certainly require Bayside to spend a considerable amount of their time in inspecting 160+ dwellings if we went that route. The—. Bo, it wouldn't be Bayside. We have an agreement.

The city is the fire marshal and inspections are done by the fire marshal. Okay, so that would then— it would, you know, whichever. So in this case, if this, you know, City of Kodiak Fire Department, they will have to conduct the inspections if that's something we wanted to do. And then, how have municipalities who have implemented this business license requirement used it in mitigating their, I guess, lack of inventory for residential housing? And currently, most are using this in a manner that suggested we do, is to gather accurate information and then go from there.

I don't know of any specific examples of municipalities in Alaska who have taken those data gained from creating the business license programs to then make decisions on either limiting or completely eliminating new licenses until a certain amount come through, or establishing thresholds for communities based on percentages. I don't have any information information as far as that goes. My goal would be to implement this. There would be several benefits we could gain, potentially gain more accurate information on the amount of housing inventory that is going towards short-term rentals instead of supporting our local workforce. We could also ensure that the community who is— who members of the community and who are taking their dwelling and operating in this manner are doing it in a manner that's safe, right?

So adding that commercial insurance requirement to me makes sense. All of our other short-term lodgings are required to do that— hotels, motels, lodges have to have this insurance, and it's for good reason, it's for liability. So it makes sense to me to add that requirement to keep people safe, especially if we're going to look at this through the lens of tourism and the impact, positive impacts tourism has for the local economy. We don't want people getting hurt in these short-term rentals and saying, hey, if you go to Kodiak and get hurt in a short-term rental, they don't have insurance for that. That's not a good look for us as a community.

So I think it'd be responsible to add that requirement. I certainly would be in favor of it. But again, that would add little to the seemingly little to the workload for staff there. And then on the enforcement side, if we leverage some software, potential software that could help us with identifying short-term rentals, I'm not sure how much staff time would go into the fine structure and how we— to Mr. Ames's point, when we impose fines, how do we do that? How do we reflect fines.

I'm not sure how that would look, so to me that would be the most— probably lead towards the most impact as far as staff workloads are concerned, is when we think about the fine structure and how we enforce and apply those fines to— for non-compliance. Um, I think that was the questions folks had. As far as, while I still have the mic on here, as far as the moratorium, I'm receptive personally to two different approaches. Someone mentioned, Grant, if we were to do that, I agree that folks should be grandfathered in. There are a lot of members of the community who do operate these dwellings for their income.

I certainly wouldn't be supportive of pulling the rug out from under them. This is income that they are relying on to live here in the community. But I, I ran on and still think we do need to get this under control. I don't think this is going to go away organically. I don't think we've saturated the short-term rental market yet.

I don't think we've come close to it yet. Hopefully with the hotel expansion that's happening now, a new hotel opening very recently. This can take up some of that, absorb some of that demand, but I don't feel that if we wait and just let things happen over time that this is going to lessen. We have problems with housing now. I'm encouraged by discussions from the Lands Committee that we're looking at opening up, potentially opening up some land for development, but these are long-term scenarios we're thinking about.

Even if we acted on those now, that doesn't mean houses are available this summer. So I strongly feel we should create some form of business licensing program that will better inform us as to the number of dwellings that are being used in this manner. I think I would support adding the commercial lodging insurance requirement to obtain a license because it's just a responsible thing to do. And then as far as other items, you know, safety inspections, things of that matter, um, that would be up for discussion. But I do think we need to— we need to get on this topic here.

We've all discussed it. I know the community has mixed feelings. However, the reality is the housing shortage continues and it's not going to stop. I don't feel that short-term rentals are going to fade away anytime soon. It's such a lucrative prospect for people, and it can— in most cases, as I understand it, people are covering their— covering their mortgages in months.

And then we have a house that's available as a long-term rental for 6 months out of the year, which doesn't do folks good who want to settle in Kodiak, start a family, or start a business and contribute to our economy. To me, that has far more value than the short-term benefits of having dozens upon dozens of short-term rentals that are catered only to tourism. Okay, next would be Larry, then Dave, and then Scott. Thank you, Bo. Once again, thank you.

Um, a couple of things, you know, one of the things we'll have to take into account are businesses that operate short-term rentals. The hospital has a number of houses that they lease that they do short-term. The borough is currently using our own apartments on Near Island as short-term rentals. Other organizations I think are too. The Coast Guard sometimes leases out houses for employees, and those would all fall within the valley wick of what we're talking about.

But I'm really only interested in an ordinance that would first off identify who has these. I think we need to know that. And I think we have to somehow put a limit on it because we're having to balance the housing for our workforce. Versus the economic vitality of our community that these Airbnbs are bringing into Kodiak. They bring in tourism, so we have to balance.

And to that, we have to know how many there are. Personally, I'm not interested in whether they have insurance or not because that's between them and the people, you know, that's— I don't want the bureaucracy to expand. I'm— but I do believe that, um, I think most important, so I'm only again interested in trying to use this as part of a way to increase the availability of reasonably cost housing and rent in Kodiak. That's why I'm interested. But equally, I'm interested in, as I think other assembly members are, with ADUs, which, you know, are part of the solution and part of the borough releasing land and developing policies like tax policies that encourage developers to to come in and start developing land.

We haven't done that. There's so many things that we can do that I don't want us to move forward on this— and I am supportive of moving forward, don't misunderstand me— without building an overall plan to increase housing and land availability in Kodiak. I mean, I don't know how much P&Z is looking at developing micro lots because people aren't building large houses anymore, they're building small or at least a new generation. And there are so many things that we should be doing that I don't want to assume that, you know, identifying these, who's doing it, and putting a limit on it— and I support that— but it's going to solve our problem. It's going to solve it if we really develop a comprehensive plan to make housing available in Kodiak.

In fact, I was going to fill out a yellow slip if I could find somebody to say, let's start selling our Chiniak land. It's surveyed, it's open, and the previous assembly decided not to. Let's do it. You know, let's make it available. It increased taxes, it's available, and we don't need a Lands Committee to tell us to do that.

If we have lots that are available, let's sell it. And I'd like to get that on the agenda, but I'll do a yellow slip in the near future. Thank you.

Dave, then Scott, then Ryan. Thank you, Mr. Mayor. Um, thank you, Larry. Said most of the things I wanted to say in terms of not terribly interested in increasing the bureaucracy around it so much as getting our arms around it. And I think, you know, the point I've been trying to make is we don't know what the number is, but I guarantee it's something over that 160 that you found, right?

Because we know everybody— we know there's people operating them that aren't registered, that aren't using certain websites, that are— I know of ones that aren't even legal. For a fact. So that's why I'm pushing this concept of that moratorium, because as we then finalize a policy, from my perspective, if I own— if somebody owns a house and they use their basement as a short-term rental, I really couldn't care because they are occupying their home. It's the gentleman who owns 14 of them that is killing our local market. And so what I would envision eventually, you know, as we develop this, is that, you know, we don't necessarily need a limit on— over an overall limit.

We need a limit on unoccupied units, units that aren't owner-occupied. Those are the ones that I would I would really like to eventually target. But like I said, I think just to reiterate, I think the first step is to stop the madness before it gets any worse.

Thank you. Next is Scott, then Ryan, then Steve. Well, I'm supportive of the moratorium. I'm supportive of getting more information information about each of these places. And unfortunately, the best way to get that information is with a bureau— with a bureaucracy.

And it's maybe not the best way to do things. It's the only way to do things, really. And it's going to cost money. And some of the things we can deal with— the insurance part I tend to agree with. I don't know how much the premiums are for that kind of insurance, but I bet you it's a pain.

Um, and, uh, the other part was the safety inspection. I think they should pay the fire marshal to do that. Um, I, I think it would be a privilege for people to be able to use their facility to rent to people, and I think that if they're making a living off it or, or having that as something for the tourists in the summer, that's fine. But let's regulate it in a way that's meaningful. And unfortunately, the borough doesn't do things that are meaningful in terms of holding people to account with code violations.

We've got to fix that part, and we just have to. And it's going to cost some money, but if we don't do it, all the rules that we set up are just paper and nobody pays any attention to them. And that accounts for people dumping stuff outside the dumpsters that doesn't belong there, etc. So I'm in favor of moving forward with this. I think that dealing with the short-term rental means, as, as Larry pointed out, that we have other short-term rentals that aren't really VRBOs Airbnb type situations where the borough is renting the apartments over on Near Island and things like that.

And we have to accommodate that with a different structure in the code that we write for this. So I'm in favor of it. Ryan, thank you. So I am a co-sponsor of this with Beau, and There conceptually, the concept of governing VRBOs is twofold. One, to help assist with housing crisis here in Kodiak, and two, to have a better handle and understanding on the quantity.

So I want to go over a couple things. From my perspective. Number 1, we've talked about insurance. So in order to get a commercial insurance policy, you actually have to have either an Employer Identification Number or a Taxpayer Identification Number. Billy Bob can't just go get a commercial insurance policy without having a business license and without having some form of tax identity.

If you choose to do that on your— using your Social Security number as a sole proprietor, as a sole proprietor, you can do that. You're going to file on your 1040s under Schedule C. If you want separation from liability, you're going to file and get an EIN or Taxpayer Identification Number, and you're going to file your Form 1120 with the IRS. The way around that is you can get what's called an umbrella policy, which increases your base coverages. So I think that you could still meet insurance requirements if you wanted to run it as a business. You could run it as a business at additional cost.

If you wanted to get an umbrella policy, you could probably meet insurance requirements that way. But I want to point out that in order to do this business license correctly, you're going to have to file for the State of Alaska to get a business license. $100 A year. You're going to have to file for the Kodiak Island Borough business license at X dollars. If you're in the city, you're going to have to pay the city of Kodiak business license fee.

Then you have the transient accommodation tax. Then you have— if again, if you're in the city, you have a city sales tax. My suggestion to this, to capture some of the concerns that we've heard tonight, is that this would be a duration-based activity. Activity. So, transient accommodation tax would be captured on rentals that are 31 days and less, 50%— at 100%— 50% at those that are 90 days and less, 25% at those that are at 180 days and less, and zero for over 180 days.

What that would essentially do is that would identify those that are renting out their houses to long-term residents of Kodiak would not be subject to the transient accommodation tax. I believe that that captures the intent of why I support this, is to help support the housing or help alleviate the housing crisis.

We've also heard about we lack the authority, that you would have to create a mechanism mechanism to conduct audits, and you would have to create a mechanism for authority. If we modeled this after the city of Kodiak sales tax, which is a faith-based system, uh, there are no audits that are conducted there. And we've seen firsthand in the last couple meetings what that actually does when we don't audit taxes. We can get information unvetted given to us. The last thing I want to talk about is, is I do agree with the moratorium, but I don't agree with the timing of March.

I think that that doesn't give people enough time to decide what they want to do. I think that, you know, whatever that other number is— unfortunately, I don't have it— I think March is too soon. I think people need time to respond and decide what they want to do. And there is still the outline issue of the ADUs and how this would qualify. And if somebody wanted to put an ADU on their property and do a VRBO-type system out of that.

The last thing that I wanted to talk about is— yeah, I'm going to save it for later. So thanks. Okay. Thank you. Steve, and then Jared.

I am— does anyone have an idea of the 150 we're talking about are actually in the borough, and how many are under city ordinance? I saw, I saw the map, and you can kind of look at the stars and stuff, but I just wondered. Hi, Amy. Hi. The city has 58 registered accommodations taxpayers right now that they've had.

I have— I'm not allowed to tell you the numbers in public, but I have like the names of all 58 that they have registered that have a business license with them and are paying accommodations tax, and then how much money they're making from accommodation tax. Okay. The number 150-plus, which probably is bigger, was that based on what you saw available online?

Go ahead, Bobak. That was just an area-wide total. I didn't split that out based on any boundaries between city and borough. Yeah. Okay.

No, I'm just— that's interesting because I would be surprised if the borough has 100 and city only has 50-something. I think there's a lot of unregistered or something going on. But that's another story altogether. Thank you. Jared, and then Beau.

Thank you. I really appreciate the conversation and support much of what we've been talking about.

The STR market has always operated as some kind of You know, it's the caveat emptor kind of philosophy. And once you start licensing it, then it really does decrease the number of STRs in a community. I was looking at a Harvard Business Review from a couple years ago. After STR regulations are set in, those listings fall by around 20%, like automatically.

The downside in a way, but it's, I guess it's a mixed downside because most of us got some sticker shock at our assessments. And recently, But when you— according to this study of over 40 million instances or STRs in all of their communities, they found that when you start regulating STRs— STRs are actually tied to property values. As STRs increase, property values increase typically. And we saw that. So when you start regulating STRs, there seems to be a correlation between a decrease in assessed value, which means a decrease in tax revenue, and it also leads to a decrease in new residential permits, they found, by 10%.

So there's a really interesting economic web that STRs over the past you know, 8, 7, 8 years have really found themselves in communities. And I think many of us wouldn't mind to see a property value decrease, but again, right, that leads to less tax revenue.

So just so something to think about there. I was looking at the the housing needs assessment that McKinley did with the housing authority just a couple of years ago. And there was a slight decrease in STRs. STRs are actually going down in Kodiak until, and then right after, I guess a year after COVID. They, they started spiking up again, it seems.

But what they found— and this just a couple years ago, and maybe sentiments have changed— but according to their polling and their, and their focus group studies, 50% of the Kodiak residents that they talked to opposed short-term rental regulations, regulating that. Again, like I said, after everybody saw their assessments, they might be changing, they're going to change their mind. About that. But so this may not be, you know, I don't think we are assuming that this is a public slam dunk. But I think, yeah, there is still concern on that other side.

I too am concerned about the— I think my biggest comment in some of our discussions has been about the bureaucratic load that it's always bigger than you think it is. Because stuff happens.

And code is language. And there's always something in the language that we miss.

So I think we should really be mindful of that and maybe let Amy talk. At some point, if you're not prepared today to talk about what you and your staff are thinking this kind of bureaucratic load might look like with some of the ideas that have been thrown out.

There was one other thing.

Oh, this is just, I guess, a practical question. If we are thinking about licensing and monitoring How does a rollout like that work? Because I can imagine what somebody's office will look like come, you know, July 1st, and they've got 100, you know, licensing applications that they have to look through and make sure and get done and process all of those. And if this is a yearly thing, you know, how do we build that into a budget that, This is a thing during this month that they have to do, or if it's for a 3-year period, then we have to think about every 3 years there's going to be this huge influx of renewal applications. But just something to think about on the process side that came up as you were talking.

But thank you. Thank you, Beau. And then Larry. This one will be much brief. Thank you.

So just real quick, I compiled the municipalities that do require commercial liability insurance for short-term rentals. Anchorage, Fairbanks, Juneau, Sitka, Ketchikan, and Seward all require commercial liability insurance as a requirement for an applicant to operate a short-term rental in their municipality. Thank you. Larry. Well, you know, if we require that, it may— so what I was going to say is that if we set a limit of, say, $160,000, just throwing it out, and I'm a homeowner and I'm thinking, boy, my neighbor just made $50,000, I'm going to apply for one of those just in case I need it.

So we could enter into a situation where a lot of people are saying they're doing it because they want to get in on the bandwagon if they want to do that. So you would almost have to have some kind of bureaucratic— where it costs you $200 a year to maintain that whether you have somebody or not, you know, some kind of— because some of these Airbnbs are going like $500 a night, you know, $1,000 in some cases depending on where you are. And so just something to think about is once we set a limit, what does that mean? Otherwise it could be sort of like alcohol licensing, you know, where somebody might have it, but they never use it, but they don't want to give up the potential of using it. So as you move forward to discuss, it might be— have something that requires people to be responsible if they have a license.

Amy, and then Steve. Thank you, Mr. Mayor. As far as anything to do with implementation this year. I just wanted to remind the assembly, and I don't know if everyone knows what it means, but we're in a huge transfer from Harris to Tyler for our tax implementation, implementation software, which means every property, every sketch of every property, and how it all gets calculated and all those bills go out through finance is happening now. We're only 21% done as of now, and that is a huge push for staff because we have to run everything through Harris just as we normally do, which if you talk to either Sima or Dora, you'll find out that we spend many, many hours with Harris techs trying to push the stuff through their old system because it's no longer supported.

And then we're trying to run a parallel system with Tyler. That's not due to be done until the end of June, and that's if everything goes right. So IT, finance, and assessing are all wrapped up in that transition. We're paying an extra $85,000 a month for Tyler software, just like, and we can't even use it yet. So I wouldn't want to do anything that delays that implementation.

So whoever said not March, thank you. Yeah, I'm, I just think that's a big concern that we consider as we roll it out. Like, I would hope that it would be for fiscal year '26-'27. All right. Thank you, Amy, for that.

Steve?

Kind of along what Larry was saying, I do have a fear of what is the story— would these things be transferable or anything? Are we going to create something like a limited entry fishing? And I think we have to make sure we don't.

So people don't buy them as an investment.

I am—. It should not—. The limited entry fishery has enough of a problem. We don't need to get it on land too.

Jared, did you have your hand up again? No, no, I was just twiddling my fingers. Okay. I was just checking there. Any further discussion at this point here?

I think we've gone over. Quite a bit here. So, Amy, go ahead. Uh, so the next time we have short-term rentals on the agenda is January 30th, where we'll be discussing a proposed ordinance from the assembly. Is there anything else, any other information that the assembly would like prepared for that meeting?

We will have updated maps like you have in front of you with the newer information. Is there anything else that you would like for that meeting, Jared? And then Dave, um, if you can, I was trying to find it and I couldn't, but hotel— our hotel occupancy rates, I think, would be helpful, or in a tangential way.

Dave, sorry, I was a little unclear. You said there's going to be an ordinance presented? Yes, there are 3 assembly members working on an ordinance, and then we'll discuss that on January 30th. Thank you. The ordinance as a discussion item or introduction?

As a discussion item. Okay, thank you, because I'm not in favor of introduction without discussion. Um, Dave, did you have anything else, or you're not? Bo? Yeah, no, I just clarify, uh, we're still firmly in the discussion Good.

Thank you. Thank you. Any other discussion? We're going to take a 7-minute break.

Gotta be different. Thank you.

Testing. Can you hear me, Lena?

We'll go ahead and reconvene the work session, and the next item for discussion is draft ordinance modifying Kodiak Island Borough Code 3.30.100 to remove language pertaining to the allowance equal to 10% as project contingency. Amy, I'd ask you for a staff report. I know Ryan has introduced this. Do you have something you'd like to say first? Thank you, Mr. Mayor.

Assemblymember Sherritt submitted an agenda item request form on November 26th and has requested that the assembly discuss a modification to KIBC 3.30.10 2000, which removes the language that pertains to project contingency equal to 10%. He requested that after discussion of the possible modification, the assembly direct the clerk's office to, to draft an ordinance that would indicate the amendment that he suggested. If you have questions tonight, of course I'm here to help you, but also our engineering facilities director Dave Conrad and our project manager is here, Cody Allen. If you haven't met Cody, Cody is the one in the plaid shirt right there. He's been with us for a little over 6 months now, and he has been doing a fantastic job with the borough, so we're really lucky to have him.

Ryan.

Well, Amy stole all my thunder.

Um, so in the Kodiak Island Borough Code, we are allowing a 10% contingency I'm going to try and keep this very, very short. So I believe that if we remove the 10% contingency that's written into code, this will help tighten our procurement process, which may come as a shock to some of you, I'm not a big fan of. So this is yet another, I believe, ambiguous effort to allow scope creep, to allow less than adequate documented change orders. I think that as we are looking at financial difficulties as a community, I think we need to shift our focus from financial, which is concerned about the dollars, to more of an accounting, which is concerned about the cents. And all of these small things add up.

So, uh, I'm requesting a discussion from the assembly to remove the 10% contingency from our code And I'm willing to answer questions or defend that position however you guys see fit. Okay, Dave. I guess I'm confused by the recommendations. You're saying we decide to rehab the mental health buildings and the quote comes in at $2 million. And our code says we set aside 2.2.

You want to get rid of that? No, this would be a change— this is under the change order contract. So this means that a contract's already been issued. So in your example, we issued a contract for $2.2 million.

That means that the staff has the ability to issue another $220,000 through various change orders. To that $2.2 million, and they can do it in increments. We've asked that they not spend more than $50,000 or within the manager's spending authority, but what this means is that that $2.2 million could go to $2.46 million. Gotcha. Okay.

I think just from being a municipal project manager, um, it sounds great, but, you know, I just had a project, we had a very strong feeling that we were going to get a change order as soon as the project started because we didn't know what we were going to be looking at once we pulled up the floor.

I guess I appreciate the thought, I just, I don't know that it's, in alignment with what project managers are taught.

I mean, there's a Project Management Institute that teaches this for a reason. Yeah, so, so, okay. Bo. Thank you. I, I'm not confused about the purpose of this.

I'm more curious about how often this happens. I don't know who would be best suited to answer that, but I'd be curious to know how much it happens and the frequency of change order creep, to put it in that term. And so the frequency and the amount of this happening If so, are we looking for a solution to a problem or are we creating a solution to a problem that doesn't exist yet but we're concerned about? So that's where I'm at, is I'm tentatively supportive of this if this is something that's occurring often, but I'd be curious to know how often it happens and what amounts typically are we adding to that cost for whatever the project is or procurement action.

I'm not sure. Steve and then Ryan.

I think I understand the concept and agree. Um, I think though there'd need to be some way to put some leeway on certain projects because I feel as Dave mentioned there may be some projects that to do full research on would even cost more than the change order, and you can't really know what you have till you get into it.

And I don't know how we can deal with those scenarios.

Sometimes getting the proper engineering ahead of time to take care of all scenarios is exceedingly expensive. And might well cost more than just doing modifications when you find problems. And that's where my concern comes in, especially on remodel-type situations. New construction, it should be able to be planned out enough to pretty much take care of those, I feel.

Scott, Ryan, then Larry. Madam Manager, is this a problem for our staff?

Assemblymember Smiley, so, um, when I brought this to the assembly for you guys to look at to approve, uh, an amount that was clearly lower than my signing approval, it was because of the aggregate nature of the change orders, and that's what I wanted us to look at. Is once we can— if I approve something once and then the second one goes over $50,000, there's these weird rules in there. And I'm talking about in 3.30.100, the sentence before A, B, and C and the sentence after A, B, and C. And the lawyer agrees that they're in conflict with each other. And so sometimes the mayor and the DPO can, sometimes the mayor and assembly member, the and an assembly member, but then the sentence after it messes that whole statement up. And I had Assemblymember Griffin look at it because he's my language expert, right?

And he was just as confused as I was. It just— it does not— it does not flow well. And so can I speak to how many times do we go beyond the contingency that's built into the actual contract, I don't know. Um, but we do, we do try to add contingency into every contract because of the reasons you've said. There's just sometimes there are projects that things come up.

I'm not allowed to sign anything over $50,000, and in the code it says I specifically, when we do change orders, have to report them to the assembly. So we have some guidelines built in. The only thing that has me, um, kind of on edge is if we have a team here and we are in the middle of a contract and it has to go to the assembly for approval, um, we're gonna get hit with charges, either remobilization or extension of time or whatever it is. But I also know that there needs to be guidelines on that stuff too, so that staff doesn't, uh, go crazy on that kind of stuff. So I think there's, um, a need for an a proper approval process But the code here does not align.

It does not make sense from those one sentence to another because it just requires different things. So when I contacted Scott Brunt Erickson specifically to the sentence after the A, B, and C, he said it would seem like every change order would need to be approved by the assembly. And I don't believe that was the intent. So we're just looking for clarification on how the assembly wants us to handle that.

Okay, Scott, go ahead. Thank you. Well, there's several different things here. There's this 10% thing, and then there's the $50 grand, and then the mess after C. I mean, I think you delete the mess after C, it'd be my first suggestion. Do we need the— do we need the line that says includes a contingency line item of 10%.

Is that what you're saying we put into every contract? Because that seems to be Mr. Ryan— Mr. Sherrod's concern. Well, I— and we'll let Mr. Sherrod speak for himself, but I think the way that reads is if we have a contract that we've set, whether or not it has contingency line item in it or not, this suggests that we have another 10% on top of what's approved. So if we have a $2 million contract and that includes a contingency in it, then I think this suggests we have an additional 10%. So I— and we'll, we'll let him explain that himself.

But I think that's how that's being read. Okay. Thank you, Ryan. Then Larry. Thanks.

First thing, Assemblymember Johnson, I'm sorry, that was inappropriate of me and I owe you better than that. That. So I apologize.

Next is— [FOREIGN LANGUAGE] So just like we talked about with the contingency, so the example was the mental health building. In the architect's estimate, there was a very conservative contingency number built into that. I'm just going to use round numbers. I made a I made a vow that while I was on the Assembly, I would not bid on borough work. But I did want— I was curious where my pricing would come in.

My price for that exact project would have been about $87,000, which was less than what the architect's estimate was, including their—. Put a zero on that. I'm sorry, $870,000. Sorry. And it was less than what the architect's estimate was, including the contingency and all.

And so another example, what we talked about with the tank at the Red Cross building, even if I treated that through my business as a regulated tank, that would be on the top side of maybe $35,000 to $38,000. So I don't want contingency funds to be utilized as not— yeah, as, as this slush fund, milk money. And I don't want the lack of qualified contractors in town that can do the work to look at— I guess it's really hard to say. I guess let me put it into different perspective. So I actually came prepared today to defend my position with my own statistics.

So in the last 10 years, I've conducted 42,731 contracts across 7 states. Out of those contracts, 17 had change orders.

The onus in the rest of the world is that the contractor is responsible for conducting the intent of the owner. So I don't believe that the Kodiak Island Borough conducts their contracting or their procurement congruent to the rest of the world, especially with my own statistics. I could back those up if you guys need those. But that's— those are substantial numbers. So— and that probably yielded my giggle about the project management.

So I know that the bureau staff is going to weigh in on this, but we need to do a better job estimating. We need to do a better job holding our contractors accountable. We need to do a better job preventing scope creep. We need to do a better job maintaining integrity, getting our quality assurance program in place, our contractors' quality control in place. This further strengthens my argument to have a professional project management office.

I don't view the 10% contingency within the change orders an efficient mechanism, and I see it as failing to do our fiduciary responsibility, especially when we already bid higher— estimate higher during our planning process. Hopefully that answers those questions. And again, Mr. Johnson, I do apologize. Larry. Do you mind if I ask Ryan a few questions just for clarification?

Go right ahead. Ryan, so we eliminate the 10%— is that what you're saying— contingency. So when somebody bids a contract, if they discover an oil tank in the middle of a parking lot that they didn't know was there that has to now be removed, that would be what a contingency would be used for, an unknown unexpected problem with the contract. Is that correct? Clarify, please.

Sure. The— so what you're describing would be a change of conditions. That would be an added feature that was not previously identified. Contingency would be Supplier A didn't have my material, so I had to go to Supplier B. That would be a contingency fund or a contingency line item.

So what I believe is happening My perspective is I am— I believe that we are allowing scope creep or change of conditions to be absorbed into contingency funds, which facilitates the lack of proper identification of the magnitude or the entirety of a scope. [Speaker:CHAIRMAN BRYANT] So what that would mean then if we followed through, Bureau Management or Contract Project managers would not have the ability to utilize those funds without going to the Assembly. To an approval process. And if I can just expand on that one extra time, we also have an approval process already in place for some of our procurement items called the Architectural Review Board. The ARB signs off on certain aspects of projects and they are never notified when a change order happens or change of condition happens.

I shouldn't say never, they rarely. That's one of the complaints from the ARB. And so I think that in doing this, it gets more transparency pushed out there. Just— so you talked about the change of conditions.

In my experiences with schools, almost any project that we do with the schools has a certain predictive value. We don't know what's up there until they actually do it. Do it. So you issue a contract and you get up there and you find out that it's not what you thought, and then that would be a change of conditions that the manager would have $50,000 capability to adjust to at this point. And what you're suggesting wouldn't change that.

I need to make sure I understand what you're saying first before I respond. So you're saying We created a project and we're going to call it an RFP, a request for proposal, meaning we don't know the exact boundaries of our project. Peterson Elementary rough. Let's go to Peterson. So we, we know we need a rough, but we don't exactly, for whatever reason, know how.

So we push it out as an RFP, or did that go as an ITB? So when is an RFP, Request for Proposal, to put a roof on this? What that is, is that's a— RFP is a performance-based contract, meaning I don't care how you get there, get there. An ITB is a specification-based contract. We intermix those two routinely at the Bureau, and so I think that we've got some semantics or some definition issues within our contract.

So let me just take what I know about the Peterson roof. The Peterson roof comes in at X number of dollars. We open up the roof and we see, oh well, we didn't realize that we didn't have all the right foam in this area. That would be a change of conditions, right? So I believe that in the What I know of the Peterson roof, those would all be change of condition scenarios, not contingency scenarios.

Excuse me, so they have a change of condition that we need to adjust to. The contractor did not know it was there. It's a change of condition, so there's going to be more work, more money. And would that be within the manager's $50,000 limit to adjust through the building program? Yes.

Okay, so that wouldn't— what you're suggesting wouldn't limit change of conditions? No. Okay.

Do you think— excuse me. Go ahead. Do you think the change you've recommended would clarify that or would the differentiation that you have— okay, I'm not going to try it. I'll say RFP, but the other one. ITB.

ITB. Is that something I've heard of before? Invitation to bid.

Ordinance or the— indicate that or clarify that? Or would we— are we trying to fix something without the clarity that we need to know it's going to accomplish what we want? That's a good point. I don't have that answer because what we're talking about are, I believe, semantics. But semantics are extremely important in contracts.

Yes, Jared said that words are fake.

Wow. So, I mean, I don't have that answer. I can just tell you through other municipalities' procurement processes, we just don't have these problems that create a project that's— and I'm just going to use fictitious numbers— they don't create a project that they say is going to be $1 million and it ends up being $1.7 million. $1 Million. If it says it's going to be $1 million, if there's all of a sudden this creep to where it's going to $1.2 million, there's an all-stop.

What is going on here? How did this happen? And we don't do that. We don't have a mechanism to do an all-stop. There's no trigger point.

So I'm looking at trying to dissect the procurement process and I fix the things that I see in my perspective need to be fixed.

Thank you. Thank you, Ryan. The— okay, Jared and then Bo.

Thanks, Ryan, for bringing this up. I believe in where you are going is right. I think if I remember right, a lot of the changes to this specific code— and the mayor could probably help us as the assembly historian— is that a lot of these changes that are really confusing were enacted in 2013-ish when the new high school— when the high school was being built and huge massive bond project. Maybe required some language for the leadership at the time to be able to handle and manage such a huge project.

And I mean, we do have some really big projects that we need to be thinking about in the future, but I think that's a lot of the reason why this is really confusing in the first place.

The removing the language about the 10% contingency, I'm fine with. There's a sentence in there that says that the Assembly can request and approve a contingency if they feel they need to.

So I don't— and so because we're not really in the middle of these huge, you know, $70, $80, $90, $100 million projects right now, I think we may not— we know maybe just that language doesn't really matter so much.

I am curious, I couldn't find this, but I guess I'll look for this. How did this code read before those changes were made in 2013, 12 years ago? But, and that might help because if it was clear then, Maybe you could help us out a little bit with that language. Amy? So the cool thing about all of these pieces of code is at the bottom it tells you when the last time they were changed.

So this one was changed in fiscal year '19, and then the time before that was fiscal year '13. So we can absolutely provide those ordinances so you can get the history of how we got to where we're at. Yeah, I think that'd be helpful as we go back and kind of do what Ryan is suggesting.

Let's see.

I think that's it for now. Okay. Beau.

Thank you. I agree with Mr. Sherrod in that the amount of projects I am responsible for managing, the effort going into the process of issuing the ITB, Invitation to Bid, or RFQ for request for quotation or an RFP request for proposal involves several layers of scrutiny to make sure your project is going to meet its objectives within the budgetary limitations you have identified. I do also agree that we should, as a borough, we should create maybe not necessarily a project management office but identify a a position, whether it's a procurement officer or project manager. I do feel that we need to have someone wrap their arms around these. I understand that comes with a fiscal note, but I do feel it's unreasonable to expect our current staff to provide that service on top of what they're already responsible for.

Now, back to the fiscal note, that would certainly add to our liabilities for our annual budget. However, I think the efficiencies that would come through having a dedicated procurement officer would far outweigh the cost for staffing that position. And in addition to that, streamlining our other positions to where they don't have to focus on that, they can spend the time in informing the initial stage of the pro— those processes whatever ones they are, ITB, RFQ, RFP, they're there to help inform to make sure the objectives are clear and the funding mechanisms are in place. However, when it comes to project implementation and deliverables, you lean on that project manager, procurement officer to make sure that project happens as outlined in that document. And that requires a lot of work and a lot of time and a a lot of scrutiny, which I don't feel would be fair to expect our current staff to accomplish.

But I, I completely agree with Mr. Sherrod. I think we're long overdue to identify this position and get it funded. Um, that's, that's a challenging thing to do, but I am confident that the efficiency and savings that would result from that, from these contracts, which I do have quite a bit of discomfort in how we handle these, um, would outweigh the fiscal note associated with that position. I'm going to say a couple things here too, and then we got Larry and then Steve.

When this was written in '19, I was on the assembly, had just gotten appointed on there, and there had been problems with the project, and one of those main projects was the high school. The assembly was not being kept informed at all change orders, as much as a quarter of a million dollars were being signed. It was just running rampant, and it was a quick stop, and others wrote this. You know, when I— so when I first saw this and it talked about the 10% on there, my problem is, is There's a couple things in here. I think the whole thing needs to be rewritten, and it's not a simple fix because in the first paragraph you have plus project contingency equal to 10% of the approved contract amount.

We haven't always done that because if you go down 3 more lines, it says project approval should include a budget for the project that includes a contingency line item of 10%. It hasn't always been that many times. So we, we need to look at, at that. And we've, we've changed— the manager was 25, it's now 50. It says 50 in here.

That's been changed on there. But Ryan is correct, when you have change of conditions and contingencies, and what is the difference. And when we approve a contract, you'll notice the motion has not to exceed, and we are exceeding that when you do the change orders.

To a degree, I think you are in it on there. You— we can, we can argue just like we can argue about all these different things. But you—. We—. The idea that we have progressed over the years that I've been involved in the borough is to make— get architects and engineers to make our plans and the Architects Review Board to review those to make them as accurate as possible.

We get typically more accurate bids. We have had some architects in in the past that we have had plenty of problems with. And I can say that one of those was Architects Alaska with the North Star School. When the contractor brings problems to you and the borough project manager and the architect say build it according to the plans, and we have stuff fail. So There's problems both at the staff level, architectural levels, and we've done a poor job.

But the one thing that we always have to do is fix it and pay the bill. So I think that you're going to find that we need to look at rewriting this whole thing and incorporating a good part of what Ryan is saying and others are saying here tonight. And get staff's input too. But it's not a simple thing of just eliminating the 10%. So with that, Larry and then Steve.

Well, I was going to say before you talked that I agree with what Bo was saying, that I do think we need a project manager and it certainly will have a fiscal note. But in a multimillion-dollar contract, one mistake is going to cost us a lot more than that. And we have multimillion-dollar projects that we're looking at and considering, and it's not going to get any easier as we go on. I also believe— and I was intrigued by some of the comments that Assemblymember Sherrod said— that I think we need to take a look at. And so I echo, uh, the mayor's comments that probably it would be a good idea for Amy and someone like Ryan who has that experience and our staff and Jarrod, of course, who now is the word czar of every meeting, to take a look at this so that we have clarity because we don't want to generate something that is, you know, bureaucracies create language like it is in there right now.

I mean, that was created by an assembly and approved by an assembly and reviewed by assembly, and it doesn't make any sense. And so I think as we look at something like this that we probably should sit down and have people that do contracts all the time come back with a proposal that perhaps has more clarity from what— it incorporates everything that you're saying, but it gives more clarity to the whole process. So I would really support that. Steve.

I agree that we need to be careful about change orders and Unfortunately, I have worked with general contractors and their goal is to see how many change orders they can get. They really count on their profit margin being around change orders. So even as they see flaws in prints at bid time, they don't ask questions. They count on, okay, we see this, hopefully the other person doesn't. We see this, but we can get a change, we they can get more money, or various reasons.

But their goal is to see how many change orders they can get and how much they can increase their profit with them. And I know this happens because I have worked with them. And when we see, oh, do that as a change order, not this— no, no, no, because the electrical contractor brings it up, then the general does their markup on it. Every bureau along the way does markup. So it ends up costing a lot.

How to get that under control, I'm not positive. But I, as I said, I know for a fact there are several contractors in this state who that is their regular practice. How many change orders can we get? How much more money can we get out of the contract? Contract.

Ryan. Thank you. And really what this boils down to is identification of the correct procurement mechanism in the infancy stages. Mr. Whiteside referenced, you know, an RFQ. Do you guys know what an RFQ is used for?

It is used for an item, like a request for quotation for a specified good, right? Like, every contracting mechanism has a single purpose. IDIQs, MATOCs— Dave, you, you know all of these as well. And so we, we just need to identify the correct mechanism which would help mitigate the allowance of, of creep as well. And so that, again, I, I I appreciate the support for a project manager.

I think that our staff does really good with what they have, but they have a lot going on. So I'm not faulting anybody for anything. I'm not accusing anyone. I just know we can do better. So that's all.

Thanks. Amy. I think as we look at this one little section of code, that's just one problem. Like, we have 99 problems, this is just one of them. So we do have a project manager, Cody, but I think the idea of a procurement officer is a really good idea because I can't lose Cody to procurement because I need him to do projects.

But he has been very helpful in working with the lawyer and creating the new templates for the bids that we do have going on. Crazy talk perhaps, but I think that we should consider a subcommittee to work on our procurement code. I don't— because as we make one change in one part, it often affects how we interpret the other parts. And so instead of making the singular changes when we find a problem, it would be more wise to look at procurement code and fix it all at once. So far, when we've brought in like big changes to this assembly, whether it was the ADU chapter or the solid waste contract, we really haven't had an appetite for taking that all in at once.

And so, but maybe that's something we could look at on creating something that our code is in line. Ryan has so much experience. And then if we had code that is good, if we hired a procurement officer, we have a guideline for them to follow. So I love the idea of a procurement officer. If we brought them in, I don't want them to do what we have.

I want them to do what we should be doing. Ryan. I appreciate that. I agree with that. If it is the desire to do that, I would love to be on that subcommittee.

But I also want to recognize that we have Cody and Dave and want to ask through the mayor, afford them an opportunity if they want to talk about what we are talking about. If they don't, they can just— OK, thanks. Go for it. Bo, do you have a comment or a question? Just a quick comment before these folks ramp up here.

So that's an important distinction between a procurement officer and a project manager. So the procurement officer is what ultimately what we are looking to add to our staff. So the procurement officer is the person who is going to help these different departments identify the proper— as Mr. Sharrett put it, which is the proper mechanism to seek a quote or a proposal or an invitation to bid. That person is going to help you identify the proper, the proper method, the proper funding mechanisms, identifying objectives and equally important deliverables. And then once that is identified and implemented, and let's say you receive your bid, that's when the project managers come in, right?

They're the ones who are monitoring expenditures. They're the pseudo or literal boots on the ground monitoring progress of the project. Are we on track with our timeline? Are we within budget? Are there any constraints that could affect the outcome of this project?

So that, to me, is the— the clear line between what a procurement officer would provide us versus what we do have, which are our project managers who are going to make sure that they take whatever document that is, they are going to digest that information and make sure it is seen through from award to completion. And so I do think that that is what we are missing is the procurement officer, the person who is going to guide the process from A to Z. But really, once that award— once that bid or quote or proposal, once the ink dries on that, that leaves the procurement office, and then that is now in the project manager's hands to see through the end. And any concerns that come up during that time, the project manager is going to bring that to the procurement officer to make sure that they're following it to the letter. And that's to Mr. Sherrod's point, and I completely agree.

If we had that capacity, we wouldn't— I agree that we would not be realizing as much creep for change orders on the back end because the work would have been front-loaded to where we were very specific and clear in what our objectives and deliverables were. But anyhow, that's my interpretation of the difference between the procurement officer and then the subsequent project managers. One of the things for everybody's information too that we— currently do, and this falls into that too, is the cost related to a project. So the procurement, the inspection, the staff time is charged against the project. There's a line item there and an estimate of what that might be, but it's based upon what the cost is and based upon the time associated with those different projects.

So there's a mechanism to recoup part of it because of the work that we're taking on, the projects we're doing. It's not— it comes under the general fund, but it ends up getting reimbursed. Engineering and Facilities typically has a lot of reimbursement that comes through there. So with that, Cody, you have a little presentation, even has your name on it. Yeah, so my name is Cody Allen.

I am the new project manager here, been here for 6 months. Thank you so much for this opportunity to introduce myself and speak. The Peterson roof was brought up. I came into that project after it had been bid. It was an RFP.

I've worked in municipal government before in this capacity. I understand kind of where the where your concerns are coming from because I shared them. We have worked really hard in our department collectively as a team to work with the Attorney and create templates to make sure we are using the right syntax and language for individual procurements because the term proposal is often thrown around when we should be bidding a project. And that is important not only for staff and the Assembly and the community, but it confuses the contractors too, right? And so we already start off on that bad foot.

And I don't want to take up too much of your time with this presentation because you have a copy, you can read it at your leisure. But it kind of— to Assemblymember Sherrod's point, it starts with the estimating portion, right? Like if you flip through to the different types of estimating sections, there are 5 levels of cost estimation in any kind of construction project that you are doing and Level 1 being, of course, the most stringent estimate. A third-party service, you've paid a very high fee to get that really tight quality estimate and projection of what your total project costs are going to be and things like that. That usually requires destructive testing, sampling if it's an abatement project, et cetera.

However, that's ideal, right? But we don't always have time to do that. Certain projects like the mental health project, we didn't— we've had historical testing done. And so conditions can change, leaks can occur, there could be mold in the building, etc. And so now that kind of changes things.

And the contingency, as I see it, is directly proportional from how I've learned things. I went to school, I understand the PMI quite well. The way that I see that contingency is not only a cost line item, but it's directly proportional to your risk exposure on the project, and the accuracy or inaccuracy of your estimate. So as those go up, you'll see on that relationship diagram there that as uncertainty increases, your cost's going to go up, right? Because not only do we not know what we're getting into if we're not doing a destructive test on, like, Peterson roof, and we're not actually ripping up a section of the roof prior to bidding it during the design phase, case, we also— the contractor won't know because we only can provide them the documents that we have at that point in time.

And so from my position, it's looking at like how can we make sure that the project continues to move forward in a successful manner, but as those things come up, not only reduce cost to the taxpayers and reduce that burden to the taxpayer, but make sure that we meet the timeline that we've kind of proposed to the Assembly collectively, like, this is what we're doing and we're already rolling into the next project, right? And I have a unique position as the inspector and project manager at the Kodiak Island Borough. So I'm like boots on the ground seeing it in real time. And when those changes come up, I have to get that to Dave Conrad, the ENF director, who then has to get it to the meta manager Amy, and then we have to get it in front of you to make sure those things things happen sequentially. So that is relying a lot on the contractor to provide us with that information in a timely manner.

If not, it could be 2 weeks, 4 weeks, 6 weeks, however long it takes for the Assembly to review it. And that is a demobe charge from the contractor having to leave Island, a potential remobe charge, and/or stop work for their staff to be housed here on the Island. And that is what I want to avoid because I have seen that happen in the past in past employment. And then so focusing on like putting the contingency to use section of this, I'm learning with the finance director our parent-child relationships in our software system, and there's actually a line item for the contingency reserve, for example. And so the way that I would envision this is then when we propose a project to you, that contingency is actually already rolled up into that budget.

And so I heard the term like not to exceed got passed around earlier. That contingency reserve would be that line item that's in addition to the contract amount that is in the budget. So as the project manager, as I'm watching the cost tracking come through, if there is a change order and it doesn't exceed the current code, which is the 5% aggregate question and then the 10% overall, we can roll— we can have or the $50,000, I believe there's 3 things, that's the confusion why we're here, but we can have that approved to keep that work progressing. Does that make sense? And so from our end, it's the software is already allowing us to do it.

We're just— we're doing it in a kind of a different way than I'm used to. And so I'm kind of seeking clarification and guidance on what that means because the code is very confusing for me.

Are you done there, Ryan? Or Cody? The last thing I wanted to bring up is there was questions about what other folks are doing. Instead of Alaska, the City of Valdez, you know, did my hiring report for them. They have change order information in their code.

I copied this in here. Sitka Borough, I added the change order language in there as well. Ketchikan Borough and then Kenai Borough, they have a very interesting way of describing those change orders. But I wanted you to see kind of from that code section, and those references are all in the back if you want to go to the website. They have their own language for it, but it seems like each entity has its own ability to manage change while still under that general contract without pausing the work and incurring additional costs.

Thank you, Cody. That lends well to what I was saying on our rewrite. So thank you for having that information there. Ryan, you had your hand up. Yeah, I was going to respond, Cody, your statement of essentially the efficacy or flow of command and control of the change order getting executed through ENF, then manager, then assembly, and that's stemming into, you know, MOBE and de-MOBE charges, there's also an inverse to that that the borough does not pursue, which is liquidated damage charge.

That's the inverse of if, if we make a mistake, we pay MOBE and de-MOBE. If the contractor makes a mistake, they pay liquidated damages.

Go ahead, go ahead, Cody. So I can't speak to past projects. I've only been involved with 3 so far. There was the Peterson roof, the Sergeant Creek playground, and the Baylor floor. And so all I can say is that I agree for what you're saying is that liquidated damages is a tool that we have in our toolbox, but we also have like deductive change orders that we have in our toolbox as well, which I understand is something that a lot of contractors are not familiar with, and I have implemented those here.

So like on the Peterson roof, we had a total cumulative of 3 change orders, um, on a— I think it was a little over $2.5 million project with a 0.97% change percentage, which the industry standard is 10%. On the Sergeant Creek playground, we had a 0% cost change particular to the project itself. There was an item that was left out of the bid that did not get installed. And then the Baylor floor, we had 2 change orders for a 4.9% total cumulative change order cost. And those costs were negotiated with the contractor to get a deductive price, right?

So like as they don't do work on something else or we have work that's done, that's negotiated in-house internally to get us the best possible product at the best possible time and price.

Ryan, do you have a follow-up? I'm just elated to hear that we're doing that because that's news. So I appreciate that. [SPEAKING SPANISH] Thank you, Mr. Allen.

So— and this might be a difficult question for you to answer now, but I would certainly lean on your expertise for how we move forward. Are you aware of many instances or are there municipalities municipalities or state or federal agencies— certainly not federal, I guess municipalities or state agencies that operate a project management offices without having a procurement office or a procurement officer in place. Is this something we can overcome as a municipality and achieve those cost savings but also modify code to reduce waste? Or in your opinion, should we pursue a procurement officer to reduce the amount of waste, which would also hopefully create capacity for you to perform your duties. And I certainly don't want to overburden other staff as far as having to handle the duties that a procurement officer would entail.

I do not want to overspeak because I enjoy my position here and I am sitting by my Upper boss. Uh, so all I can speak to is my past experiences, right? I, I worked at the City of Valdez as a project manager. I did not have a procurement officer. We had our director and we had our manager, our finance department, and, uh, our comptrollers.

We leaned heavily on them, but contract generation, everything like that came through me. And then the last city I worked for was the City of Newport there as an engineering technician, but it's the same thing. I was doing contract generation and staffing for every project that came across my desk from the lead and senior engineers. So that would be a new step for me. It sounds nice because I wouldn't have to do it.

May I follow up? Go ahead, Bo. Thank you. So again, I would personally rely heavily on your guidance for navigating these topics. I wouldn't want to pursue a position If Madam Manager and yourself and Mr. Conrad and other members of the staff felt we could achieve efficiency without that, that would be the ideal scenario, but I would certainly lean on your expertise to guide the Assembly through these discussions, and we certainly have some experience here up on the panel as well.

Curious, Newport, Oregon? That's where I was for 8 years before coming here. So, I already like you. Thank you very much. We really appreciate having you here and your expertise.

Ryan. Thank you. I do want to, again, bring up how important words are, because you mentioned comptrollers, you're mentioning procurement, and those are defined as the same. So, procurement and the Office of Comptrolling, are two in the same. So to answer your question, he did have procurement if you had a comptroller.

Go ahead, Cody. So for clarification, um, the comptroller's process, they were the payment process and things like that. We would get the invoices, but they would actually pay the fees. So accounting, so not comptrolling. They were labeled comptrollers.

Oh, don't disagree. See why words matter though, because as an office of a comptroller through procurement and through PMI, comptroller is absolutely the same as what we would know as a COR, contract officer representative, or a contract— or a KO, contracting officer. So that's— words definitely matter here. So—. Yep.

Jared.

Coming back to the ordinance. No, no, this is not— the conversation is great. So I just, I feel like we're, we've, we're kind of coming down a little bit. So what I hear is we would like to change 3.3, 3.30.100.

Which, uh, I know Assemblymember Sharrett brought this up, but I'm, I'm like, I'm like ready to draft something like tonight, um, draft some revisions to this, um, and I can work with the clerks on that. Or I also like the manager's suggestion of putting a subcommittee to look at, look at the whole code. And so I'd hate to work on drafting this bit if it's going to be, you know, just looked at again by a group, which is fine. Amy, is this something that, wow, we really need to fix this thing right now? I'm going to win there.

Well, we do have the— so we had our first onsite visit for the mental health buildings today. And so that's— we're looking at kicking off that project probably mid-February, end of February. So that is coming. I don't know what to expect for change orders. That was a— that's hard to guess on all of the fun things that we might find in those old buildings.

So I think that as long as we're not in that time of year where we don't have consistent meetings, we should be fine bringing stuff to the ARB or the assembly or whatever steps we currently have going because we don't have any large gaps in meetings. So yeah, we've gone through the holidays. Yeah, as long as we can keep things flowing. And then we do have the option, even though I don't totally understand it, for A, B, and C of when that would be used. So we do have some, some backup plans for if something fit in those guidelines that we could have it signed without the assembly, but we certainly will continue to keep the Assembly advised of change orders that are happening with our projects.

[SPEAKING SPANISH] [Speaker:COMMISSIONER BURKE] Thank you. I would be curious, and please no pressure, to respond to this. If Mr. Sherrod was willing to, through the Mayor, would you be comfortable with a— not necessarily postponing indefinitely, but are you receptive to the idea of hitting pause on this until we can maybe tease out how extensive the modifications to code could be through some guidance through yourself and through our project manager, Mr. Allen. And the manager. Of course.

Quick question. Go ahead, Bo. I mean— I'm Ryan. Go ahead, Ryan. But Dave does have a question, but I'd like to go right after Dave if that's okay.

Okay.

Well, I don't have a question.

So please understand that since I've been in the office, we have not gone over any large amounts in this. The high school— some of this language has changed because of personalities rather than actual financial issues. So you have to realize in the past there were some personality conflicts that drove some of this as well, and I believe that should not be a portion of this discussion because it has been effective that way before.

I believe that we enter into a project with the best knowledge we have. However, in the past, you know, let's take the mental health buildings, perfect example, or let's take the the baler facility. We did destructive testing for the engineer. We did core samples, all of this stuff. We get into this floor.

Not a bit of our as-builts showed what was actually there. And our sampling somehow missed it. When we were on a large project that I started on and was the project manager, was the lateral expansion. There were 37 test holes dug by the contract— by the— by an excavation company to verify what was under subsurface, and we missed an entire section that was gray clay that had to be removed. And there was a huge change order on that job because we didn't do enough due diligence at the front end.

So as long as we realize that perhaps with older facilities, we do mostly remodels, that you have to realize that you are not going to have 100% definition. You know, if we can't operate with the trust or the staff can't be trusted or isn't trusted, then we're not going to move forward here. So I don't have a problem with any of these changes. Process improvement is something that should continually be looked at, but please let's avoid, you know, let's keep this on a professional level because I've seen it go otherwise where it was personality-driven and not professionally related to what was going on.

I'm thinking that basically Ryan, I'd like to see us look at a rewrite. We'll talk about— Amy and I will talk about the committee idea here and see whether that's an option to do the whole thing or whether we try and fix this now. So get back to the assembly here in the not too distant future as to which way to go. So Cody, thank you very much for your presentation, and thank you all for the discussion that we had here tonight. And Ryan, thanks for bringing it up, and it got much larger, and— but that's what happens.

We try to— ever since Amy became the manager, as she finds things, we try to address them. And fix them for the future. So with that, is there a preference for a little bit of a break or are we ready to go into the packet review? I think I'm going to need more tea. Okay.

7-Minute break.

We'll go ahead and reconvene the work session and we will start the packet review. Let me just Get that quickly sorted here. First item on the packet review is public hearing. This is on ordinance number FY2025-9, amending Kodiak Island Borough Code, Title 17, Zoning, Chapter 205, Amendments and Changes, Section 17.205.055, submission to the Assembly to require submission of all rezone requests to the Assembly for review. Staff report, Amy.

Thank you, Mr. Mayor. Given the time that we're starting packet review, I'm going to try to give you the shortened version of what's going on. Our Planning and Zoning Commission, in its regular operations, tells folks that if they deny, that they should appeal to the Assembly. Our attorney lawyer said that that is not an appropriate use of denials, and what we should do is request all zoning changes go to the Assembly. So this change is— of code is to make, um, what the Planning and Zoning Commission does a recommendation to the Assembly, and the Assembly being the final say on zoning recommendations.

So on, um, what you have before you is literally striking out the code that says our current practices of only denials that people could appeal to the assembly. And it all— every zoning change would go to the assembly. There's also a change from 30 days to 60 days. Our current code says that members only have 30 days if they want to appeal to the assembly. The new portion of the code would give 60 days for that to happen, and that's to accommodate for those gaps breaks in the year when we don't have meetings, just one right on top of another, especially over the holidays, or if it's AML, or whenever we have those breaks.

So the 60 days would make sure that we have time to get those on the record and into an agenda.

Okay, Larry, you have a question? Just so I understand it, currently if the PNZ approves a rezone, does that go to the assembly? It does not. No. So what we're doing to somebody who's gone through all of the work of getting a rezone, which is probably several months, I'm guessing, as it seems to be telling me how long it takes, we're now adding up to 60 days before they could get approval of that zoning.

Is that correct?

Yes, it would give the Assembly up to 60 days to approve it. So from a citizen who's trying to do a rezoning request, we've just made it so that they have to wait another 60 days potentially before—. No. Assembly could do it. Is that correct?

No, I'm going to answer that question because I'm the one to change on there. Right, right now with this, let's go back 10 years. This issue came up. I'm very much in favor of this change because it came up 10 years ago and the Assembly wasn't interested in changing. Now 10 years later, we're here.

I was on the Planning and Zoning Commission at that time. So what this is going to do is it's like most any other things we're planning on rezones. Planning and Zoning is making a recommendation. They are not the final say. It's only a recommendation.

The current code, they are the final say. No, no, no, they are not. It still comes to the assembly. Amy, thank you. Sima has informed me that I misspoke.

So we're opposite right now. Only recommendation of approval go to the assembly, and then if the planning and zoning says no, we don't approve, then you have to file an appeal to the assembly to look at— sorry, thank you. Good thing. So yes, so this is—. So, so we're not changing, so that's— but we are increasing that from 30 days to 60 days.

So yes, from your citizens' point of view, we are— we had 30 days before, and it could now be an additional 30 days to get your approval with the timeline. Right now it isn't going from 30 to 60, the 60 days. The 30 doesn't work. We automatically have more time than that, and it's not written in there from when the recommendation comes from the Planning and Zoning Commission to the Assembly. It's now putting a time timeframe in there.

I'm the one who said I can't get it scheduled in 30 days from a scheduling standpoint. So that's why the 60 days there to make it work. And this is— this is long overdue. And basically, it's— it's because they are advisory on rezone and it just automatically comes forward instead of the applicant having to appeal it, so it's good. Steve, did you have a question or comment?

I had you, okay. Not at this point. Oh, you were pointing at the mic. Jared. Yes.

Thank you. Amy, you mentioned that the lawyer had an opinion on it supporting the changes. Yes, he did. He said that the use of an appeal for a denial is not an appropriate use of an appeal. So if the denials also automatically go to the Assembly, the Assembly will have the final say on either an approval or denial because the Planning and Zoning Commission is just supposed to be an advisory board and the action is supposed to actually come at the Assembly level.

Um, I 100% believe you. Do you mind forwarding? Usually when the attorney is consulted on stuff, we we get a copy of his response. And did we ever get one? No.

I'm sorry, would you like to be copied on all of the responses that we get from the lawyer? Because, uh, yeah, um, there are so many that I think you're going to be shocked. Oh, I mean, personally, I mean, yes, but, but only if it's something that's, that's applicable to coming to a meeting, you know, or something on the agenda. Um, Yes, so we can absolutely provide those via the pink confidential paper if there's something that we wouldn't want released to the public for whatever reason. But yes, we can absolutely get that.

And I'm sure that Mr. French has that and we can include that for next week.

Okay, Steve, did you have your hand up? [FOREIGN LANGUAGE] Okay, because it's been stated a couple ways. Right now, when Planning and Zoning recommends something, we vote on it? Yes, it still comes to the Assembly. But if they deny it, we don't necessarily hear about it?

The member who was denied would have to put in an appeal in order for it to come to the Assembly. Okay. And this would change that whether it comes We are at least told about it whether it's approved or denied. Automatic. This would make it so both approvals and denials come to the Assembly so that the Assembly is the body that has the action, approves or denies.

Okay, thank you for the clarification. Larry. This clarification gives me a question.

So if the P&C makes a denial recommendation, They don't— it goes to us anyway. No, right now, no, right now it does not automatically come to you. The citizen would have to put in an appeal for it to come to the assembly automatically, right? With the change, either approvals or denials, all the zoning requests would come to the assembly. No need for appeal anymore.

No need for an appeal. Thank you.

Anyone else? Jerry, I'll just toss in that I'm supportive of this too. The P&Z is an unelected body, and usually unelected bodies, you know, do serve in an advisory capacity. So I think that makes sense. They also serve as a quasi-judicial.

They are quasi on subdivisions, right? So, so it's not as simple as you're stating it, Jerry, on Planning and Zoning. Well, but Those do not come before us unless somebody wishes to appeal it. Oh, right. No, I understand that.

So, yeah, so they're, they're not just advisory on that. So I just wanted to clarify that because they're that one board, each of the members there also have to fill out the APOC, right, filing, and they are the only board I think that does that. So correct, Lena? I'm sorry, Mr. Mayor, I didn't hear the question.

Well, basically my understanding is— I remember the Planning and Zoning Board has to fill out the APOC filing. Yes, the assembly, the manager, and then Planning and Zoning Commissioners. That's the only ones of our different boards. So Any other discussion or questions? Then we'll move on to the borough manager's report.

Amy?

Shit. Yeah, no, I've got the— we did the, um, resolution number one, resolution number two. Scott owes $5. Oh, I'm looking. Okay, the problem is I'm looking at Because it just gets together.

Yeah, so the next thing on mine is the manager's report, so I will change that back to the other. Resolution number 2025-12, authorizing the borough to issue a general obligation school refunding bond to refund certain principal installments of an outstanding general obligation school bond of the borough and to pay costs of issuing the bond, fixing certain details of such bond, authorizing its sale, and providing for related matters. Staff report. Amy. Thank you, Mr. Mayor.

The borough received notification from the Alaska Municipal Bond Bank Authority that the borough's 2015 series bonds were eligible for refunding. Due to the cost of refunding refunding, which doesn't include attorney fees, which is paid directly by the municipality. The AMBBA sets the minimum aggregate savings criteria necessary for refunding at 3%. If the aggregate savings percentage is less than 3% at pricing, which is expected to be early February 2025, the bond bank will not present the series for refunding. The savings rate is dependent on the interest rate and investment environment and will change daily until the day of pricing.

At the November valuation date, 10 of the segments qualified with the potential savings of $420,000. At the December valuation date, 9 segments qualified with— as with savings greater than 3%, and 2 other segments showed positive savings of less than 3%. At total, that potential at that point was $382,000. As of December, the potential savings of $382,000 $382,000, and assuming the state of Alaska continues to reimburse school bond construction debt payments at 70%, direct savings to local taxpayers would be $94,000, which is 30% of the $382,000. The borough has contracted with the Alaska firm of Germaine Dunnigan and Owens, who are also the attorney for 3 other municipalities participating in the refund.

This is complicated, so our finance director Dora Cross is here to answer any questions. Some of the questions that I had immediately is what happens in February if we aren't making enough money to cover the attorney's costs? It automatically gets shut off. Also, at the valuation in February, if there's not segments that would bring back at least 3%, then we don't even move forward and it costs us nothing. We only pay the attorney fees if we do the refinance.

Funding. So we cannot— like, the borough is not going to go backwards by doing this. There is a— we set limits to— we had to come ahead over the lawyers' fees. So Dora can answer any questions beyond that. The only other things I wanted to add at this point is I have a meeting Tuesday with the raters, the underwriters, the bond attorney, and the bond Bank, who's be issuing, and they're going to talk about setting our rating.

And that's important for us to get good pricing on our bonds if we have— if we're rated well versus if we're not rated well. So pricing is expected to be February 25th, and final closing is expected to be March 11th. I've already been in contact with DEED. Their only requirement is that the new principal and interest payment payments are not any more than our current interest and principal payments would be. That really isn't a problem unless you're doing advance refunding or tax-exempt to taxable refunding, which we're not doing this time.

So—. [Speaker:JAY] I have a question for you. If I remember right, and to get it out there, there's a certain period where some of these bonds come up for refinancing. So could you explain that window to the assembly? So if we issue 20-year bonds, which is what most of these are— some of the high school bonds are in segment— are 10 years.

That's the difference between A and B series. A is 10 years, B— or A is 20 years, B is 10 years. In the middle of that, they have a— all of them are non-callable except in the middle where they interject some callable ones so that you can gain this kind of savings on your bonds because you can't anticipate what the interest rate environment is going to be for the whole 20 years of the bond. So each one of ours have in the midpoint this non— this callable feature, and that's what we're trying to enact now. So the next time will be late 2026, early 2027 for the next call feature of the 2016 bonds that we issued.

So thank you for that. So there's a window there, and unfortunately the bond market hasn't been paying much attention to the Fed discount rate being lowered. Bond rates are actually going up, not down. So, and I appreciate the clarification because by the time we get to February, it's anybody's guess, and there's a good chance there may not be any savings and we, we don't exercise it. So I just wanted to get that out there on there.

Any Any further questions of Amy or Dora? Thank you. We'll move on to the next resolution, number FY2025-13, adopting an alternative allocation method for the FY25 Shared Fisheries Business Tax Program and certifying that this allocation method fairly represents the distribution of significant effects of the fisheries business activity in FMA 13 Kodiak area. Staff report, Amy. Thank you, Mr. Mayor.

The State of Alaska Department of Commerce, Community and Economic Development Shared Fisheries Business Tax Program was created in 1990 to help municipalities impacted by the effects effects of the rapidly expanding offshore fish processing industry by collecting a tax from fish processors and sharing the collected taxes with affected municipalities. Applications must be submitted annually by municipalities to receive an allocation for the program. This year, the deadline is February 15th. Kodiak Island Borough, along with the other municipalities in FMA 13 Kodiak Area, have agreed to use an the alternative allocation method instead of the standard allocation method. For the fiscal year 2025 shared business fisheries tax application, the agreed-to alternative allocation method calculation for FMA 13 Kodiak is 50% of the allocation is shared equally between all municipalities in the area.

The remaining 50% of the allocation is shared on a per capita basis. Kodiak Island Borough's population is reduced by the populations of the cities of Akiak, Kodiak, Larsen Bay, Old Harbor, Uzinki, and Port Lyons. The total calculated allocation to the Kodiak area is $41,115. The borough's calculated share of business taxes is $11,489, and the landing tax is $2,366, for a total of $13,855. In fiscal year '24, the borough received a total of $39,361.

This resolution indicating the assembly has approved the alternate allocation method is a required attachment for the fiscal year '25 Shared Fisheries Business Tax Program application. This is a resolution that we do every year to authorize this alternate allocation method.

Any discussion or questions? Seeing none, we'll move on. Next is ordinances for introduction. First being Ordinance Number FY2025-12, an ordinance of the Assembly of the Kodiak Island Borough accepting and appropriating grant funds for the 2021-22 and 2022-23 Bristol Bay Red Crab, Red King Crab, and Bering Sea Snow Crab Fisheries disasters declaration in the amount of $53,182.40.

Staff report, Amy. Thank you, Mr. Mayor. A fisheries disaster determination was made for the 2021-22 and 2022-23 Britzel Bay king crab, Bering Sea snow crab— I feel like that's a Sally at the Seashore, sorry— fisheries resulting from an unpredictable predicted crab die-off. Disaster funds were subsequently determined and made available for distribution to eligible communities based on each community's proportion of the estimated gross revenue value. Kodiak Island Borough is eligible for these funds due to the history of Bristol Bay and Bering Sea crab landings made in Kodiak and the associated severance taxes collected on those landings.

The borough manager received notification that Kodiak Island Borough is eligible to receive $53,100. $1,882.40 Of the disaster funds to help mitigate losses in fish tax revenue, which is our severance tax. Kodiak Island Borough 3.25 authorizes the assembly to accept grant funds. It requires that grant funds not designated for a specific purpose be appropriated via ordinance. Much like our last, um, disaster funds that we received, this is scheduled to go into the Fisheries Economic Development Project budget, and so the fiscal impact will be $53,000 plus more to go into that fund that hopefully we'll find something to do through our fisheries work group.

Discussion?

Seeing none, we'll move on. Next is, uh, um, introduction of ordinance number FY 2025-13, writing off the personal property delinquent taxes penalties, interest, and fees of those non-decollectible accounts in the amount of $15,190.98. Staff report, Amy. Thank you, Mr. Mayor. Staff has compiled 9 personal tax accounts that have been determined uncollectible for various reasons.

All legal resources have been exhausted by staff in pursuing collections. It is the staff's desire for borough accounts to be current and properly reflect the financial status of receivables, receivables, in accordance with the generally accepted accounting principles. KIB code does not identify a specific method of writing off delinquent accounts. Therefore, this ordinance requests the approval to write off these uncollectible accounts. You'll see in your packet that there is an ordinance, and then it is followed by a list of the 9 accounts that staff is requesting to write off.

Okay, if you have any Comments regarding this on any particular account, I suggest you talk with staff and not bring up any names here on the dais.

Any discussion? Seeing none, we'll move on. Next is, uh, ordinance number FY 2025-14, amending and Redirecting funds from the previously authorized American Rescue Plan Act, ARPA, state and local fiscal recovery funds, SLFRF, for the benefit of the residents of the borough. Staff report, Amy. Thank you, Mr. Mayor.

The borough received $2,524,709 of ARPA funds through the State and Local Fiscal Recovery Funds, which we call SLFR, in half, um, half in October 2021 and the other half in October 2022, and has allocated those funds and resolutions fiscal year '22-'16, '22-'19, '23-'09, '23-'09A. To date, $778,150,000 $1,257,000 of this money has been spent, leaving $1,746,553 unspent. And I should probably thank some elementary school teacher for teaching me how to read numbers. Staff has compiled a list of items and projects that could be funded using the unspent money. It is staff's desire that the assembly prioritize the list of 12 items below, or any other items that they wish to be added, so staff can accurately report the use and obligation of grant funds appropriately.

As you remember, before the end of the year, by December 31st, funds had to either be already expended or under contract to classify as obligated in accordance with the grant. What we're doing now is to meet an April 30th deadline where the borough has to report which of the 1231 expenses and obligations that we did by that date will be locked in— yes, and then once we do that by April 30th, those will be locked in for the next 2 years. There is something in this list that we didn't talk about before the end of the year, and that's number 9, health insurance, a 6-month premium that would benefit the general fund, the landfill enterprise fund, Bayside, and KFRC. Um, when we were looking at the projects that we have listed and the ones that you can choose from, there is a spreadsheet in the back, um, that has which expenses are eligible to be listed for that $1.7 million. The addition of the health insurance premiums were to make sure that if that mental health project did not, um, go to fruition and did— we did not spend $1.3 million on that, that we still have those funds expended.

So if lightning hits a building and it burns to the ground, if the contractor leaves and we don't have a contract in place, whatever might happen, it's just a backup plan to the backup plan. So if we would add the health insurance in there and we would direct those funds to be used by those ARPA funds, then as that project proceeded, we would just take the money out of the general fund to pay for the project. Assemblymember Dues said, what? Um, because that's, that's not how we use grant money. So we had finance staff, um, research the use of that money and if that was legal.

If you saw your assembly member email today, there's an explanation of why we can do that and why this grant fund is a little bit different, because this was specifically given to us for revenue replacement, um, and health services is specifically listed in usable things. So we can proceed how we did before and just obligate that $1.3 million plus whatever projects, pluses up to $1.7, or we can kind of put a backup plan in there for ourselves. And that's up to you. And again, Dora is here to explain anything that you don't understand. The important part is we only can put in eligible expenses from that list or money we have set spent on other eligible items.

And basically, the way I'm interpreting it, we're just covering our ass. And I would like to say it's a backup plan to our backup plan, Mr. Mayor. Yeah, and I stated what I thought. So I thank you for adding that to it to make sure that regardless what happens, we're covered. Any questions of Dora?

Aimee. Scott? You're asking us to prioritize these? Yes. So at the end of the year, in that last meeting, we had a lot of different things that you could pick.

We had the TimeClock Plus software, we had the firefighter turnouts, and we had that heavy machinery that we got. Bobcat. Thank you. I knew it was one of those things. And so those things we all got under contract.

The We actually got an invoice for the Bobcat, so that's there, and we have the full invoice for the PFAS-free firefighter turnouts, which is amazing. I think you probably heard enough, but to be the fourth municipality in North America to have PFAS-free turnouts is, is pretty amazing. So what we need to do is come up with $1.7 million of expenditures that we're going to want to go on that April 30th report, and then that will be locked into those things for the next 2 years, why we spend that money. Well, $1.7 is what— my screen just went dark. Yes, it is.

One more. Thank you for that. That's really helpful. It's $700,000 less than the total that you've got here, $2.4 million. I really don't want to give the money back.

I know. So if lightning strikes, I want some other options in there to use and pay for. We just need to list them in the order. I just need you to prioritize them so that at the end I can account for the money because the projects will go forward. I just need to know on the back end how to make the funding for the accounting go for those.

That aren't expended with the ARPA funds. I think alphabetical is just fine. Jared and then Dave. Oh, I thought you had—. I was just gonna say, so this $2.427 listed, this is all money that's going to be spent regardless, right?

Yes. And what does it matter how it's prioritized? Well, the $778,157 has already been spent, so what's left to spend— oh, you're talking about the total on expenses? Yeah, the SLRF eligible fund, total value $2.4 million. The Baylor floor design, the Baylor floor overlay, that that's money that's already been spent.

So it's either already been spent or we will spend it. So I guess my point is I don't really care what the prioritization is if it's all getting spent. Well, there's, there's a difference there. There is— there, it does need to be prioritized. And the reason being in.

Let's look at the firefighting turnouts. If it's further down the list, they don't have the money for that. It was coming out of here. That's why I asked if it was getting spent either way. It is being spent because it's been authorized and approved, but it determines where it comes from is part of the issue.

So, so it needs to be listed before the insurance. Mr. Johnson, I think that would be the one thing that has to go on the top of the list because that was the only Finance could cover the time clock. The landfill enterprise fund could cover the Bobcat purchase. For the firefighter turnouts, they were on a slow introduction and they have bought some, but they do not have the funds in their current budget to get them all covered at one time. Larry.

Theoretically, you could dump all the money in health insurance and you could draw it out at any time you want, including next year. Yes, we could. Correct. Okay, thank you. Okay.

So any other discussion on there? Amy, I think you feel comfortable with the discussion that we had before that was very lengthy as far as which project— which items to put on there. Priority between you and Dora. Come up with that. Yes, the only thing that I will say about the health insurance is we can only add things that are in this fiscal year.

So if it's already been in audit, I can't go back 18 months of healthcare. I can only since July 1st to now. Correct.

But Dora, go ahead. The manager and I can put a what we think— believe your priorities are for this to come up next time, and you can, you know, shift next week 4 to 6 or 9 to 2. And once we have them, it's easier to change something than to create it from scratch. Yeah, thank you. Any other discussion?

We'll go ahead and move on to the next item, which is the under other items It's State of Alaska Alcohol and Marijuana Control Office restaurant or eating place license renewal application for Second Floor Restaurant, license number 3293, combined renewal notice. Staff report from Clerk's Office, Selena. Thank you, Mr. Mayor. So before I go into the discussion of this item, I just I just wanted to speak to the call that we received earlier in regards to the transfer of ownership application for our EPL-3293, which is the Second Floor Restaurant. So the Clerk's Office received the application yesterday.

It is currently being distributed to staff for review, and depending on the results and the responses from staff, it would come to you for approval, or you could possibly protest the transfer of ownership. Either way, it's going to come to you because it's a transfer of ownership. It will need to go before a public hearing, and we'll need to send notices out to the owners 1,500-mile— 1,500-mile radius. So we have to go through that process before it comes before you. So I don't foresee it coming before the assembly for public hearing until maybe February 20th, depending on agenda setting and how quickly we can get the notices out and responses from staff.

We've given staff a week to respond and then we have to move forward with our process. But as far as this transfer— sorry, the renewal application, it's a little bit confusing, and I did reach out to AMCO prior to the meeting today, and I did not get a response. I was anticipating that you'd have questions about the transfer and the renewal. Because it is a bit confusing on whether if we protest the renewal, if it affects the transfer, so on and so forth. And I unfortunately was not able to get those answers for you before the meeting today, but I'm hoping that I get a response from AMCO tomorrow and I can forward that information over to you guys so that you have that information readily available.

So back to the item on the agenda for the January 16th meeting. So this is a matter that presents to an additional— presents the Assembly an additional opportunity to protest the renewal of our EPL-3293. So pertaining to Second Floor Restaurant, the Assembly previously addressed this license along with the license 2611 on multiple occasions. And I won't go brief— too in-depth with the dates. They're all provided in your agenda report here.

And then you have copies of all relevant correspondence that we've sent to AMCO. So on multiple occasions, September 5th, we sent letters, and then December 19th, the assembly decided to to protest the biannual, um, the biannual license term for those 2611 and 3293. So on December 31, 2024, the clerk's office received the renewal notice for license 3293. Following KIBC 5.01.020, an investigation was conducted revealing several concerns that warrant the assembly's objection to the renewal of the license. These concerns specifically involve the accuracy of the application and the status of the business operations.

The following issues have been identified. Concerns from Community Development— sorry, it's not coming down here. So they had an issue with the business address, manager's department, protest the renewal based on the fact that the business has been closed for several years. Fire Marshal has not been able to conduct an inspection because, again, the business has not been in operation for approximately 10 years. Building Official opposed the renewal application on the grounds that the business is not currently active at the location.

Location. So all very similar objections. And given those concerns raised by the departments, and in light of the Assembly's previous actions, the Clerk's Office, with the assistance of the Borough Attorney, drafted a formal letter to protest the renewal of this application based on the issues identified in the investigation, including the inaccurate business address and the inactivity of the business. Uh, the consideration of the renewal by the Alcoholic Beverage Control Board, ABC, scheduled for February 4, 2025, with the deadline of January 17, 2025. Previously, the deadline date that they had given the clerk's office was January 15th.

I reached out to AMCO— that email is also provided in your attachments— and they clarified that we do have until January 17th, which is helpful since our meeting is on the 16th. Um, so that letter will go before the ABC Board at the same time as the biannual protest letters. So they will have all that correspondence, which will be helpful in determining whether or not they would approve this license for the next 2 years of licensing. Um, the Clerk's Office has provided notice to the applicant of the intent to protest, and this notification allows the applicant applicant the opportunity to respond under 3 AAC 305.085. And the following documents are included in your packet, as I mentioned: the draft protest letter, notice to the applicant of intended protest.

In light of these concerns, it's recommended that the Kodiak Island Borough Assembly consider protest to the renewal license number 3293, Second Floor Restaurant. The Assembly should direct the Clerk to formally communicate this objection to the Alcohol Beverage Control Board in accordance with the findings from the Clerk's investigation and the concerns raised by various departments. And as I mentioned, this agenda item report was put together prior to receiving the transfer of ownership application and prior to getting a response from AMCO on whether or not this protest would affect the transfer of ownership application. Application. And I'm happy to answer any questions except questions about the transfer.

We got Ryan and then Bo. Thank you very much. I'm just going to make my position very clear and I'll try not to mince my words. So I will only support the renewal of this if the transfer can be conducted of this license from the existing licensee to our caller that we had tonight. If this transfer— I'm sorry, if this renewal cannot be transferred, I will protest this renewal.

If, if I, I want to make sure that I'm, I'm explicit with my words. I am not in support of the current holder of this license maintaining this license unless it can be transferred to our caller that we had tonight. So I would just ask the assembly, make it explicit so that the staff has direction on which way they need to go to prepare that for our meeting, and we can be expeditious in this. Thank you. Okay, we have, uh, both Steve and then Dave.

Thank you. This is, this is a challenging one for me in that I agree with Mr. Sherrod. I, I would continue to protest the renewal for the current holder of this license. However, given information as of yesterday, I did read the email and digested that information as quickly as I could. I'm also curious, and I don't know if we'd get this answer before the next meeting or not, is, is what that process normally looks like.

I mean, it seems like this ownership this transfer of ownership happened privately. Is this typically a private process, or is this something that's public in nature where other business owners have a fair shot at it? So that's, that's something I'm, I guess, ignorant to. But I agree with Mr. Sherrod, I want to see this put into use as soon as possible for, for the economic benefit of new entrepreneurs and business owners and the community and tourism. It's kind of a a snowball economic impact that benefits everyone in the community.

But I'm seeing heads shake already. I think I have the answer to my question is that this is how this typically takes place. I'm just sensitive to other business owners who do want to obtain one of these licenses and how do they gain access when one does come up. Steven and Dave.

So at this point, you do not have a response of how this affects the transportation Correct? No, I reached out to AMCO and I specified if I can get information to better understand the Assembly's position if we do protest the renewal, which we received the renewal application on December 31st, and then yesterday we received the transfer ownership. So it is a little bit confusing, and we are also trying to understand how that process works for AMCO, which I appreciated Christina putting that email together and explaining their process a little bit better. She had a couple typos in there with the dates, but it was, you know, it was a— it gave us a little bit more clarity on why the process sometimes comes— the applications sometimes come to us and we have 2, 3 weeks, which is similar to what happened with with the Sizzler Burger application. It came before us for renewal, and then it went before the board before we had the opportunity to protest because the deadline dates.

So based on my understanding of what Christina explained from AMCO is that they can put something on the agenda for the ABC board as long as they've completed the process on their side. So they can put it on the agenda as long as they, they're within the 10 business days. So just because we have 60 days doesn't mean they can't add it to the ABC board. The board will be able to approve it with conditions, which means, hey, we still haven't heard from the local governing bodies, but when we do, if they don't have any protests, it'll stay, it'll be renewed without any any issues. But if they have a protest, then they can take it into consideration again at their next meeting, so on and so forth.

Which, you know, from, from their perspective, she said, you know, this helps the licensees better move forward with getting renewals or new applications and processing them. So, you know, from their perspective, they think that it's helpful to the licensee and local governing bodies. And I said I disagree that it's not helpful to local governing bodies because similar to this one, it came to us on December 31st. I send it out to the departments for review. I give them a week to, you know, review the application and send a response.

And I also send it to local law enforcement and the troopers and wait for their response. So I have about a week that before I even bring it to the assembly, because this one has been getting a lot of attention, these two licenses, you know, I spoke with the mayor during agenda setting and I said, hey, like, I think this is important to put it on the agenda for January 16th. And that's part of the reason why it got on the agenda for January 16th. Otherwise we would have missed our deadline for that February 4th ABC board meeting. Yeah, especially—.

So it makes it a little bit—. January 15th. Yeah, so it makes it a little bit tight for the local governing body. It's very misleading in their representation. Sure, go ahead.

Just a quick follow-up. So if, if just thinking about just, just our, our business owners as a whole in the community and, and through the lens of fairness Do we know if we were to protest this renewal, I assume it that we don't lose this license in the community, we still retain this license. Would that create a process to where all interested business owners would have a crack at it? That's my question to AMCO as well, is so if we protest this license renewal, does it go does it just free up one REPL, right? So does that give the opportunity for other businesses to apply for an REPL?

I don't have those answers right now, but I did ask because I anticipated that that was a question that was going to be asked, and unfortunately, I wasn't able to get a response for you today. Okay, thank you. Steve, go ahead, and then Dave. So— Enough dates have been said. I'm a little confused.

How long do we have to say whether we protested or not? Do we have time to get answers to the questions you asked? So the local governing body has 60 days. AMCO can put a renewal application on the ABC board's meeting agenda as long as they have processed everything on their side. Within 10 days before the meeting packet is due.

So this application specifically, they processed it well before the 10 business days. So that agenda packet, they have to have everything by January 17th, and they had it by December 31st. So on their side, they've met that deadline. We still have 60 days, right? That was my— yeah.

That's part of the reason why I asked her to put it in writing, and the email with her attempt to explain it as clear as possible on how their process works and how that we have 60 days but they can add it to ABC board agenda with conditions, so on and so forth, is included in your packet. And I think if you just take a couple minutes, you, you might understand it a little bit better. It is really confusing because we do have the 60 days, but we also want to make sure we get it to that board— specific board meeting. So we technically don't have 60 days if we want it to appear before the ABC board. So basically, basically, Steve, we received it on December 31st.

We were supposed to have it in by January 15th. We got a 2-day extension to that. To January 17th. So we have 17 days, not 60 days, on their bottom line, on there. So that's why with Lena been all of last week back and forth, back and forth, because we need to also let Mrs. Kim and Stephanie know, yes, that they have the right to please, you know, we'll have take testimony here on the 16th for it.

And so they need to know that they have the opportunity there. So it's— I can attest that Alina has spent a lot of time researching this, and because it was so conflicting, you know, when I— first time I read it, I go, we got till the 15th, but it says we got 60 days. We got it on December 31st. It doesn't make any sense. So, Dave, you—.

Yes, I read AMCO's regulations. On that. And yeah, it takes a little bit of digesting, but you're— yeah, and I— once you read it, you kind of understand what they're trying to do, which is to keep their process flowing. They have a presumption that there won't be protests, so they essentially say, yeah, it's approved, and then we'll just hold it until we get this 60-day window, and presuming no protest, then it goes, right? The other thing, to answer Bo's question, I did happen to read in there, there's a whole process very clearly outlined for how they evaluate all the different— so once, if the license would be revoked, then yes, it becomes eligible, and then any restaurant in the city could apply.

And then there's a whole process that they go through for how they would award and choose. What I wanted to mention though specifically was that I, I think there's been a lot of difficult lessons learned in this process. And to Mr. Sherrod's earlier point, um, we have no idea what eligibilities are required for transfers and potential conflicts coming out of that. So my Um, my position on this will be that if asked, I'm going to vote in favor of a protest regardless because we don't know how a transfer may or may not happen. So based off the idea that there's a transfer that may happen, we should just kind of hold off and let them— I, I just, I can't get on board with that.

I feel like that, you know, give a little bit of of leeway has bitten some bodies already. And so I would just say we are— we know we have a solid case for a protest here. That seems like enough to move forward with to me. Ryan, I'm going to forward a letter to Lena for distribution, but it is a letter from the state of Alaska. And it is from our pre— our earlier caller in pass-through with somebody that has given countless public testimony regarding license number 3293 and the transfer of restaurant or eating place license application to Núñez with the license number 3293, which is the same, has been approved.

And the application is scheduled for the February 4th hearing. Uh, so this letter is per Alaska Statute 04-11-480. Uh, so this is essentially, uh, the same license that we're looking at right now on the agenda item 3293, and this is, uh, an approval letter of the transfer of that license. So I'm going to send this to Lena. She can get some further information from this, and if you can get it out to the rest of the Assembly members, that would be great.

Any other questions? Bo? [SPEAKING SPANISH] I suppose just my thoughts on this now. You know, I don't want to— and I did review the information in the email. It was a lot.

So how I interpret that. You know, we can take this next statement pretty loosely, but it does seem that there was a— there was clearly a fiscal note attached to the application process. The prospective new owner of this permit did spend some substantial funds to obtain this license. If they are going to get awarded this license, I am sensitive to time and money spent. I would— I'm going to lean on public input on this one, on whether or not I'm going to protest this.

I don't want to have someone reverse course with effort that's already been done, but I also want to make sure that we're thinking about this. I'm certainly thinking about this, again, through the lens of fairness to the community and new business owners, and I would prefer everyone have an equal crack at it. There's a chance another license may come up. I don't know if they can be applied in the same way. That's very confusing to me.

So I'm going to rely on public input on whether or not I'm going to protest this.

Any other discussion at this time? Larry. Just, Bo, what did you mean they spent a lot of money? Is there money going on between the previous— current owner versus the new one? Are they selling this permit to somebody?

So I would be— it would be too loose of me to throw out figures right now. I encourage you to review the email that we received yesterday. There's multiple documents, several of which contain information about money that was exchanged for the applicant to— the transfer, the new applicant to initiate the transfer costs them money through the process. I didn't mean to imply that it exchanged hands between the current and prospective holder of the license, but it did incur— the prospective licensee did have to spend money through the application process, if I understood the email correctly. So just clarify, because there's been a lot of inferences here.

If I own a license and I could develop— excuse me, I could find somebody that wants it and transfer it. It doesn't go public and become a license that anybody can apply for. So the reason somebody would want to keep a license that they don't have a building or operation is so that it has a financial value to them to sell to someone else. Correct. I think, you know, during the process, we're going to have to clarify this because otherwise it will look really bad in terms of how we do business, if that makes any sense.

And although I certainly respect the people involved, you know, in terms of the people that are wanting to purchase it, and that's the process that works, but, you know, it just doesn't seem like a good process. It's sort of like selling taxicab medallions, I suppose, but it does preclude the community from participating in the process of a new restaurant or somebody that wants to serve. It doesn't seem a fair process, but it is one that's in the statutes apparently and in the regulations and is allowed. So there it is. Steve.

You are correct that they can sell it without telling anyone else to someone. Um, when the Owls River Inn got their liquor license, they had to buy an existing one. It's been a standard practice in this state, and like it or not, that is the standard for liquor licenses of various types.

I feel The license should be not— should not be renewed for the present owner. But I feel that if they have an agreement and it was done in time, we have no right to stop that. Whether you want it available to more businesses or not, this is how licenses have been dealt with in the past for a long time in this state. And for us to try to stick our nose in someone's already made deal that the state has already recognized is not our place. Um, if this deal does not go through for some reason, then I feel it should go back on the open market because it shouldn't be renewed.

But so I think we need to find out the status of this transfer and what our recommendation does to it, if anything. Um, it seems to me if they've already accepted it, then our recommendation means very little on the license, but we need that confirmed. And then it's not right for us to get in the middle of a business in this deal that's been arranged and the state has recognized.

As for their other one, what will happen to it? Hopefully it will go on the open market. Thank you. Lena. So the letter that Mr.

Chair shared does have the February 4th ABC board meeting date on it. For the approval of this transfer. However, the application information that we received yesterday does not have that date on it. So there's some misleading miscommunication happening between AMCO and the local governing bodies because the application does not reflect that same February 4th date. So if that is the case, that definitely does not give us enough time to add it and have a protest or non-protest response to AMCO before the February 4th date because this has to go before public hearing.

And any deal between parties is subjected to approval by AMCO. It is not automatic. So we have Scott and then Larry.

I guess I am concerned that it doesn't seemed that everybody was straightforward and honest about the status of their businesses several years ago, and that they were— the businesses were actually closed, and they were not telling anybody about that, or at least not saying that to EMCO. And given that, I'm questioning whether they have the authority to pass it on. It seems to me that fairness would say if you fibbed, you don't get to pass it on. So I'm pretty strongly supportive of sending a protest about the original owners and let AMCO figure out whether or not there was enough of an offense to prevent the transfer of ownership.

Larry, and then Jared. You know, I'm gonna— I want to do everything I can to support the applicant. You know, they have a business, they've done what they're supposed to do, they're following the protocols that are developed. I don't like what appears to have happened, although I'm not sure about the process that another assembly member has described, so that causes stress. But I don't want to hold a business person system in Kodiak who's trying to do the right thing and following the procedures to be hung up, you know, by a process that apparently is sanctioned and supported by the state of Alaska.

So, but it's a hard one. But I don't want to do anything to hurt our local business who is operating and working and trying to make their business go. And I don't want them to get lost in the bureaucracy of Jared. If I think if the transfer is approved, then I mean everything we're talking about is moot.

Yeah, though that's hypothetical.

So I think we write the letter of protest. And let the other process work itself out. This is a different process. I don't think it's going to jeopardize anything.

And because we're just protesting this particular owner of the license. So—. At this time. Yeah. I don't suppose it's possible to write a letter of protest of the original owner and then that same letter a letter of support for transfer.

I don't know if that's appropriate, but any other—. [FOREIGN LANGUAGE] That's kind of hard. Basically, Lena has requested more information, and we'll get that this forthcoming before our meeting. So Lena, anything? I did want to add that back to when Stephanie came in and spoke on the license transfer.

Um, she— they did apply for this transfer. It looks like the stamp date for this application transfer of ownership for AMCO was on February 23rd of— February 27th of 2023. So it's been almost 2 years that they've held on to this application or process before they've processed it. So I'm not saying that it justifies everything else that has come to light with the investigation. I, I just did want to add that note that, you know, the owner or the owner's daughter did speak to the transfer of ownership, and she said it happened a couple years ago, and that is the case.

We just never received it until now. So again, I don't know if that helps to clarify anything without any other questions being answered from AMCO, but I will definitely email them again tomorrow to follow up and see if I can get a little bit more information for you guys. Steve.

Along with it, The transfer in '23 application was the light— even though they weren't using it, was this license still legally usable? Okay, then by the—. By the current owner? Correct. So at the time the application was applied, they were legal owners, so they should have had legal rights to do it.

We're only talking about renewing it. And therefore, I would think the application would have to refer back to whether they owned it or not on the date of application, not today. Possibly. So I think we can go ahead and send a protest. Right.

And let the system work it out. Yeah. Any further comments? Seeing none, we'll move on to the next item. To the next thing under other items.

It's Merrill veto on contract number FY 2025-36, authorization for the design of needed pool repairs with Water Technologies Incorporated in the amount of $88,900. After our last meeting, in December. I vetoed that on Friday, meeting was on Thursday, and this is the first meeting that we'll have since that. And so this is the opportunity to override the veto, and we'll go from there at the meeting, see what your thoughts are. Ryan, um, would you elaborate on why you chose to veto this so that it might stem maybe just a couple minutes of discussion?

Okay, um, basically I didn't get, um, what I consider to be an adequate answer to my question, which main question was, were we going to do investigation which is basically X-ray of the pool to identify all areas where the rebar does not have appropriate cover. And that wasn't there. Ryan, do you want—. Yeah, and I appreciate that. And I asked that question because I had already asked you that question one-on-one.

I wanted everyone else to understand, and perhaps add just a little more context to a previous discussion we had this evening about understanding scope. And so I, I support this veto. I, uh, I did not vote for this pool repair initially because there's so much more that needs to be done, uh, and piecemealing these things out will create a tremendous amount of opportunity opportunity for scope creep and project magnification. And so with this veto, I would actually ask the Manager to have Cody take a look and start preparing a holistic picture of what needs to happen at the pool starting with identification and scope— identification investigation and scope modification. So yeah, to elaborate a little bit here though, you asked me, you know, what were my reasons.

The rebar was only part of it. I don't feel that we're, as you use the term, holistically looking at the repair. I only want to go through the repair on this one time, not piecemeal. We've already done a piecemeal on this pool, and we're looking at doing it again. And so we need to get that laid out and all the things taken care of at one time.

We also need to come up with how we're going to maintain and operate it so that we don't have this problem again, where when you get the pH off, it starts eating the grout and, and that. So there's just a bunch of things that I felt we needed to do, and it wasn't ready. It was kind of hurried in the sense that, um, we were trying to get it under the ARPA funding, and I felt we had plenty of items under the ARPA funding expense category that we did not need this, and we needed to back off. And do this right. Because we need to have those discussions because it's kind of a 3-party deal: the school district, the borough, and the city parks, which kind of operates part of it.

But then when things go wrong, we become the deep pocket. So, so, and I feel we're going to get there, but it just wasn't ready. So that's why. Bo? [Speaker:DR_BOLL] Okay, I think I appreciate that information.

You know, my support for it was, you know, based on the time-sensitive nature with identifying how we were going to spend down the ARPA funds. But that said, I'm also curious, you know, I suppose I would need to rely on input from Director Conrad and Mr. Allen as far as how they feel about this. They are, in my opinion, our subject matter experts in these areas as far as the staff we have available. My concern is— I guess question, which is my concern, is if we have— what timeline are we thinking about? And I'm thinking about that through deferred maintenance concerns.

If we wait, is it going to get worse? That's my concern. Are we going to lead to big problems by kicking it down the road? Kicking this down the road. Do we have a roadmap?

Do we have any sort of timeline in place on how we're going to attack this? If the answer to that is yes, I'm willing to hold off. However, if we're not— we don't have a roadmap in place and this could create more problems in the near term that are going to become more expensive, then I would like to keep this moving forward. But I am going to rely on folks who know far more about this than I do, but I would like to hear some sort of roadmap or timeline for getting this done because I have heard assembly members comment in the past that they would consider— we should consider shutting the pool, closing the pool down, filling it in, which to me is a non-starter. I will never entertain that.

We have to have this resource. Resource for the community, but I'm more concerned about time sensitivity with getting this repair done. I'm absolutely receptive to delaying that, but I want to know what our plan is. Let's let Amy respond to that, please. Thank you, Mr. Mayor.

So the design that came in front of you to spend down ARPA money— ARPA money— was, um, the old project that we had before that we just had WTI update the prices for. So it didn't pass before when we looked at it, and it shouldn't have passed again when you looked at it, because as they've said, that wasn't— we're not fixing the actual problem. We have fixed several times where the rebar came through and we went in and we patched it and we painted it and we painted the gutters to make it look all pretty, but we haven't actually fixed the problem of what's causing it. We've looked at different ideas about liners and we're so close close on how long that pool has to be for competition that putting in a liner is extremely questionable for those people to be able to use it for actual records and stuff. It's so, it's so close.

So I think moving forward we need to design an entire new process in which we ask people to not just do a proposal, we'll want to do a bid where we specify exactly what needs to be done and what those parameters are. And then we need to re-put that out on the market. That WTI quote is from a really long time ago. And so— he's distracting. So yeah, so I think that having the project— we didn't have a project manager for this, or Cody wasn't here for this.

And so if we involve him and use our new templates and have a direction that we want to fix it all at once and then get our funding partners together. I think that's the better model. So the only question I would have is, is that the assembly's direction? Do you want us to start doing that despite having—. Yes.

—An unidentified funding source for paying for it? We need to holistically know what we need to do and not— Right. We do want the pool. Right. The—.

Yeah, well, luckily we're still making payments. Suggested with is no longer Larry, and then Bo.

Well, I remember watching the pool get built, and it was a $20 million bond issue. It's about, what, 20 years old? No, it's only about— it's about 15. Yeah, our previous pool had to be— spent a lot of money fixing that, replacing it. This is our third pool.

Yeah, well, only the second in the same place. But I, you know, the first thing I— my first contract authorization was superintendent to spend $48,000 to patch up the pool because it started coming through, and it immediately fixed it. And if you want to see some good pictures, start at— go to Great Alaska Flooring, who did the repair work, and it's pretty scary. But I really believe that we've got to look toward the next 20 years on maintaining that pool, because it is an incredible quality of life component of our community. And so I really think we need to do a long-term evaluation.

So what will the pool look like if we don't do anything in 20 years? How can we make that pool last 25 years? And et cetera. So that needs a thorough examination, and it has to be a real open process to the community because whatever we do, it's not going to be cheap. You know.

To fix the problem when you really see what's going on there. And I think we really need to have that information, and if we do anything else other than that, we're just throwing money down the drain. And if we don't do it quickly, there could be a catastrophic failure which will shut down the pool for a long time because that rebar is rusting and it is corroding and the concrete behind it becomes not as strong. I mean, there's things that could happen which would shut the pool immediately if we don't get busy. So this isn't a can that we can kick down the road.

We just need to do a thorough examination for not just to fix it for a year or two, but for 20, 25 years down the road. And that was my intent. Go ahead, Bo. Thank you. I'm— if I'm understanding Our borough manager correctly, it sounds like this wasn't something that we were comfortable with to begin with.

I'm going to rely on guidance from Mr. Allen. He has experience in this area, and along with Mr. Conrad, and of course through the manager, I would prefer to be guided from Mr. Allen. He will likely nudge me in one direction or another. Again, we're a year later. I bet it was about a year ago when someone mentioned filling that thing in.

How long are we going to wait before we have a plan in place? If— I don't want to create too much work for folks, but I do think we need to have a plan in place sooner than later or else we're going to look at larger expenditures if we— if it results in deferred maintenance result in a catastrophic failure, then we are having a totally different conversation. So I think we do need to act soon. If I receive an indication from the assembly that that is something we are willing to do, I will certainly support delaying or not approving this contract. But again, I am going to rely on input from staff on how I am going to vote on that.

Scott. Do we have an agreement that would extend with the city and the school district about the funding for this thing? And would it extend into looking into developing a fuller understanding of the problems with the pool? We do have a signed contract. Um, it was that three-way agreement between the school district and the city and us on how we will take take care of maintenance.

Um, the borough's responsibility inside of that contract is to assist where necessary. So we will have to really get together with the city and the school district to find out what they're capable of as far as help. With the school district being in budget talks and closing an elementary school and starting out with an $8 million deficit I don't think this is probably a good time for them to say that they have money for this project. But the city, both when Manager Twenge and Acting Manager Benke, when we've talked about it, they said there's definitely a possibility that they would want to help. So I don't think Kingfishers there has the, the ability to raise money like they did for the hockey rink.

And so it'd be a lot of car washes. But I think that we still start talking about that. That would be a really good subject for the joint work session with the city coming up. Yeah. Thank you.

Why don't we sell it to the city? Give it to them. Well, we will— sure, we are actually still paying on it, so giving it to them does not help really unless they want to take over the payments. No. Right.

So from this conversation, what I've got is that I will talk to engineering facilities and get our project manager started on what that's going to look like to get a comprehensive plan to fix it once. Yep, through a bid. Next item is the confirmation of the Merrill appointment to the Solid Waste Advisory Board of Mr. Dennis Irwin on there. So we'll have that on the agenda for next Thursday night. Next item is the manager's comments.

Amy. Thank you, Mr. Mayor. I think everyone's read it, but I just, I wanted to let you know that you do have the handout, the presentation that was given at the school board meeting on Tuesday night. Several people from the borough were there. At that moment, Maine looked like it was the one that was on the chopping block, so there's a lot of support for for Maine and teachers and students.

Now that those recommend— and parents, uh, those recommendations have changed to either Peterson or North Star. So I would expect at the upcoming meetings we'll get the same from those schools as well. Um, in— they kind of did an awkward order at the meeting, and they let school board members do summary comments kind of in the middle. And I think the one that stood out the most was they were still considering all options. And so just because those were the options given at that moment, that doesn't make anywhere— they're not pointing in any one direction.

So I think there's a lot of that conversation still coming up. I've been working with the Natural Resources Conservation Service and the Alaska Division of the Army Corps of Engineers to see what we can do to help those families whose houses are in danger along the Russian River.

We thought it was going to be as simple as doing a memorandum of agreement with those folks to be able to access land that abuts their property that the Kodiak Island Borough owns. It is not that simple. It's not even close to that simple. So I'm working with our federal lobbyist, Sebastian O'Kelley. He's getting us a virtual meeting with the higher-ups in the Army Corps of Engineers.

They have worked on projects just like this with Kenai, which is a really big project, and Seward, which is a similar size project. So the first step will be a shared cost feasibility study. So that'll be in front of the assembly to look at to see if we want to do something like that. If it's under $50,000 and I can identify a funding source, we're going to go for it as soon as possible because normally in the winter, these folks get a break because the river is frozen right in front of their property. With all the rain we've had this year, it's just continuing to erode.

So we're doing— we're trying to stay on top of it. I can't promise them an outcome, but I can promise them that we're going to stay on top of it and try. Um, we— I have told you before that I want new service district contracts in place by July 1st this year to start the new fiscal year. So I've worked with Engineering Facilities to come up with a timeline. It's there in the report.

Um, we will be— those contracts will be in front of the assembly on May 1st for permission to sign. So those folks will have 2 months to get ready for the contract to start on July 1st. There was a small, uh, landslide overnight, um, right across from the Coast Guard base. It caused a little bit of debris out in the road, and the state was really fast in cleaning it up. Our new emergency manager that we are co-paying for has started work, and he's gonna do weekly sitreps us on all things emergency around the borough.

One of the things that he's going to keep us informed of, especially through this rainy season, is any landslides. So his name is Rich Gonzalez. He's been, um, through the borough harassing me daily, so I think he's going to get along at the borough just fine. Um, the school district funding window has been figured out. Our minimum is $6.7 million and our Maximum is $13.9 million.

It's not a formula that everyone is familiar with, so I like infographics, so I'm going to make you an infographic to explain how we got there. Um, the reason I'm really concerned about that maximum window is not because we know that's what the school district is going to ask, but if they did ask for that, our MAPDR has us, um, in like the $16.5 million range. So a $13.9 million and a $16.5 million are too close to run the borough government. So we really want to pay attention to that, and we'll explain how that affects moving forward when it comes to budget. Each year our federal lobbyist writes a draft for the borough to consider.

It's a resolution of the federal CIP list that's at the end of your packet tonight. We will be talking about that on January 30th to be approved on February 6th. Senator Murkowski's window for congressionally delegated spending is only open until February 14th, so we need to identify projects that we might want to ask for. Because we are kind of in limbo with the hospital, I don't— last year we asked for money to— for design for a hospital change. Because we don't know what direction we're going with that yet, that project is probably not the best idea.

So we're looking for stuff in that Russian River riverbank to save people's homes might be a project that we could ask for and would be appropriate. But we need to— if there are any projects that you are thinking of that I'm not thinking of, we absolutely need to talk about that. In finance, Dora had an email forwarded to everyone with our 2024 audit, our popular report that is to the printer and will be getting mailed to all of you at your homes. We have started the 2024 foreclosure process. If you do not want to be included in our foreclosure list to avoid that first step, you need to have your tax payments received by January 31st, 2025.

So the end of the month, we've talked a little about the Harris to Tyler project already. You're going to see updates in that for finance and assessing and community Development, the Planning and Zoning Commission held a work session on the 8th. The work session included training on zoning regulations, and then they went over 3 possible code amendments. They are listed in the report for you. No cases have been submitted, so the regular meeting for January 15th was canceled.

Uh, the election of the chairman and vice chairman for the upcoming year is scheduled for February 19th at their regular meeting. Parks and Recs is scheduled to meet on January 14th at 11:00 AM in the Borough Conference Room. Our multi-jurisdiction, multi-hazard mitigation plan update is complete. There's a website address if you'd like to go see it. After the planning committee reviews that one more time, it'll be in front of the assembly to approve.

It is 300 pages long, so we'll get that to you sooner than later so that you have a chance to look through it. Once the assembly approves it, it will go to FEMA for final review and approval. That's really important for the borough because we are not eligible for grant money from FEMA if that's not in place. In assessing, all the field work is done, and the senior and disabled veteran exemptions for this past year wrapped up on December 27th. We only had 2 left that we were waiting for answers for.

One applicant had an undetermined status and was denied the exemption, and the second applicant reported that they protested not getting their PFD, but as of the 27th, they were still denied the PFD, so they were denied the exemption. For this year, seniors and disabled veterans have until January 15th to get their forms turned in. As Sima mentioned, there's several assembly members that are making calls. I also posted it on all the popular Facebook social media sites today, try to reach as many people as possible, and we'll continue those phone calls. We have told you about CIMA's travel with CANA to the villages to get seniors and disabled veterans signed up.

That was a very successful program. They're going to be giving you a presentation about that on February 13th. And while we're talking about exemptions, business personal property forms, where you file to say how much business personal property you have, are also due by January 15th. 16Th. If you fail to file that, there is an automatic $300 fine.

So if you're hearing this and you don't know what that is and you own a business, please get a hold of assessing so that we can get that taken care of for you. And the $300 fine is in addition to the tax? Yes. And you, um, thank you, Mr. Mayor. So the business personal property tax does have the first $20,000 of value exempt.

If you do not file, you have a $300 fine and you don't get exemption, so you pay the full value. So it's definitely worthwhile to get a hold of Assessing and ask questions. We wanted to start talking early about notice of values. Everyone tonight was mentioning you had sticker shock on your notice of values. There has not been a leveling or decrease in values for properties.

Sales continue to increase compared to assessed values. So I just want to talk about it early so it's not a shock for everyone The state mandates that we're above 80% of the sell value. So the— what a willing buyer and a willing seller come together on, we need to be within 80% of that for our notice of value. So as those prices climb in Kodiak, so will your values. In assessing, we have an opening for appraiser tech.

We have 2 applications. One interview is done, one interview will be scheduled. So it looks like we're going to be able to fill that. In engineering facilities, our lift station issues here at the borough have been solved. We're just trying to fix how noisy those pumps are when they get in.

At the mental health buildings, water shutdown was very successful for one building and less successful for the other. The city does not have the ability to shut the water off to one of those buildings because everything is so old that the, the parts need to be replaced in order to shut it off. But the city is working on that. As I mentioned earlier, we had our onsite meeting today with the contractor. We anticipate that to start mid-February.

We have ACS and GCI coming in regarding the communication lines so that they can get marked for removal, and staff is going to take care of all the trees and small vegetation around the buildings before they start. For KFRC, we had a meeting on January 8th to discuss the new If we have too big of a payment for utilities or too little of a payment for utilities, we get to every once in a while even that out, and either they owe us more money or they owe us less money to make up for it. So that was done already. And in their carpet replacement project, they did not want us to do the library, but we paid for all the carpet. If you've ever been in their library, it is metal shelves to a very high ceiling full of books, and no one wanted to move those.

But we're gonna ask for that carpet money that we spent to be returned to us. There was some faulty seawater pumps and a loss of experiments at the facility. NOAA lost a lot of money and a lot of time and a lot of salary money because the saltwater pumps didn't work correctly for a while. That has been fixed, the saltwater tanks are staying full and the saltwater flow is back. We have not had, like, very regular meetings with NOAA, so I met with Mike— or talked to Mike Litzau, and we're starting those up quarterly so we have better communication between the borough and NOAA.

We have a new elevator maintenance contract out for the KFRC, so that is gonna happen yet again. Hopefully we'll get bidders. At the landfill, the baler building tipper floor still requires caulk to be applied to the cuts, but the project has been delayed. But despite that, we're using the floor and the baler is— it's so no more loose fill. We're doing it the way that we should be.

We're having some issues with the Caterpillar trackhoe and the dump truck that we use for rock. We have sensors and replacement treatment plants en route to get those fixed again. The Leachate Treatment Plant, the— because of how much rain we are having, that lagoon is overflowing, and every time it overflows, we need to report it. And we have been. I got to sit in a part of a meeting with them.

There's— it's a huge pond, and usually it's very low, but with this much rain, we just can't control how much is in it. So we're talking about ways to fix that. Uh, for the school district, the Peterson School roof, um, we're still waiting for that repair flashing that failed. The contractor is going to do that, but we expect it won't be done until spring. The roof hasn't had any additional leaks.

At Chiniak, the well, uh, failed because someone went in there and stole the step-down transformer. That should be on island on Friday, and then very nice electrician are going to go out and help us install that early next week. Uh, with the potential closure, we're just awaiting the decision, um, to figure out how we're going to deal with that. One concern with Northstar is that is our emergency shelter for the Monashka area, and so we need to figure out how we would deal with that if that school was closed and who's going to maintain the, the building and the fire sprinklers and all the things that are necessary for an emergency shelter. Um, in IT, We have a lot of stuff going on for that Harris to Tyler conversion.

Lots of meetings with— between IT assessing and finance about what steps need to be taken. They are past their initial part of their cybersecurity grants, and so we are all learning how to do quarterly progress reports for— at the federal level, which is different when we do them at at the state level. They are working on two RFPs to spend that $220,000+ that we got. We had another phishing attempt from a Russian domain to try to get into our email system. It went through our permit tech this time.

Our staff has been doing an excellent job at identifying fraud and then tracing where it comes from. And then we are working on, continue to work on hardware work improvements. Those are slowly getting phased in as our IT director identifies stuff that is just bringing us up to industry standards. That's all we're going to talk about tonight on this, but please take time sometime before the 30th, and it'll be in your packet before the 30th, to look over that federal CIP list so we can talk about that on the 30th and get it approved on February 6th. That is all I have for tonight.

Whew. If you have any questions, I'm happy to answer. Thank you, Amy. Larry. Just a couple of quick questions.

With regard to the federal CIP list, you know, I'm just thinking of lands all the time. And I've heard some rumor that the natives of Kodiak have been looking at Swampy Acres and trying— because apparently there's contamination there and they were looking at developing some kind of sewer system out there that that we connect either to the base or town. And I'm wondering sometimes if when we do our federal CIP, if we could partner with, like, Natives of Kodiak to try to release funding to develop that area because it is an area that could be developed. And I think at one point they were thinking of that. But if they're waiting for federal funds to try to put in some kind of system— water system and sewer system based on World War II type contamination, that we could be a part of that request as a borough.

And I think Corey Grahn is the president of Native Sif Kodiak. And if we developed a CIP list and we had a partnership with a corporation that benefits us and certainly them, that that might be something that we could add to the list. So it's not just a Native corporation asking for it. It would be— have the weight of the borough of exempt it too. And maybe it would be good at some point in time for the mayor or yourself or assembly members to talk to Corey about that and see if they do have any plans that we can be a part of and maybe add that to our federal CIP list as a partnership instead of by ourselves.

The, the other question I had, and it regards— it's regard to the senior and veterans exemption. AML is actively lobbying against that exemption. And we're a member of AML. They've written an editorial before the Anchorage— in the newspaper, and—. They are actually campaigning against a mandatory $350,000 exemption.

They're not—. They're not against the existing one. They are not. There's no policy against the $150,000. At the end of the session last year, there were a couple of folks in the state legislature who came in and tried to push through a mandatory $350,000 exemption without really knowing the impact what that would be to local municipalities.

So there is a property tax working group through AML that I'm a part of. So that's— it was just asking the state to consider what would happen to municipalities if they made that mandatory. I appreciate that because in the past, well before what you've described, they have been against it and have lobbied against it because when you The state allowed that exemption, they were compensating boroughs and, you know, for that, and then state quit compensating them. So there's been a disagreement that the state should back away from it if they're not going to fund it. And I just wanted to— I don't know who our AML representative is, but I think it's important that our community at least says we want them to keep that and not lobby against it because the state has backed away.

And that's a discussion that we had, and that's what I presented. And also about the native— natives of Kodiak land at Swapee Acres, I think Assemblymember Sherritt has been the most successful in developing that thus far, and he has a relationship with them. So I think that would be a good resource. As far as the lift station from the city, I know the city of Kodiak looked at the expenditures of what it would cost to run a new lift station from down around Matt's Watson and get the stuff from Swappy Acres all the way into our sewage or their sewage processing plant and it was cost prohibitive. Except for the feds.

Perhaps.

Jared. Yeah. According to Code of Maryland Borough Code 2.30.030.1, D, I would like to move that we extend the meeting time an additional 20 minutes. 15. 15.

I would like to amend my motion to like 15 minutes. It's a work session. We don't really have a work session. So in the code it says that There is— we have to agree. It's just to the regular meeting.

No, actually work sessions. This applies to work sessions. They are to adjourn at 10:30 unless extended by a majority of the members. Well, we don't get to vote in a work session is the problem. So 15 minutes?

Here we go. You take consensus all the time. Another one of those. 15 Minutes. It would be 10:45.

So any other questions? Of Amy. Bo. Just a quick statement. I was helping with the phone calls for the senior exemptions, and I overheard a senior citizen that came in and that was struggling to see the form, and Director Garoutte not only offered assistance to help with that form, but she provided a pair of reading glasses for the senior citizen to not only fill out their form correctly, but they could use them and sent them home with them.

So I thought that was a very admirable thing and generous and just shows the character and caring nature of Director Garoutte. That was really nice to see. Thank you for doing that. Any other comments? Seeing none, Clerk's comments.

Selena. Um, thank you, Mr. Mayor. Uh, I have provided my Clerk's Report for you Um, I don't really have anything to report. We spoke on the liquor license application, uh, for renewal and then the transfer of ownership that we just received. Um, I don't have anything else, uh, specifically to speak on at this time.

Okay, Assemblymember comments. And Mr. Sherrod, I'll start with you. No comment. Scott? No comment.

Larry? Very quickly, prior to my absence, I attended a Parks and Rec meeting and we were trying to facilitate more input for their survey and— but I know that they are looking at what they have and they will be discussing that at the next meeting. I also attended a Kodiak College monthly meeting and everything seems to be going well with them. They are concerned about budget, of course. Seemed to be on a direct course to serve the students in Kodiak.

And finally, I attended— and I assumed the whole assembly would be there— but I attended Nova's presentation on Robert's Rules, and it was well attended. There were a lot of people there, and she did an incredibly great job, and it was certainly worthwhile and probably would benefit perhaps the assembly to go through something similar to that. Thank you, Steve.

Mine is kind of a question, and because I probably haven't researched it well enough, what are the details in our lease agreement with the school borough if they close the school? Are they still required to maintain it in mothball status, or we come back to our budget? There is no lease agreement with the school district for our schools, so there is no— there's nothing. So that would be completely the borough's responsibility to take care of if they—. For what happened at Larson Bay and Carlock.

That's kind of what I thought. So that goes into that whole consideration process that we have no control over. All right, David, no comment.

Jared. I would just like to, uh, just going off of Steve here, I'm sure we all have a lot of comments and thoughts and ideas about the school board budget and decisions they have to make. So I hope that we can put together a special meeting or emergency work session to give the assembly some time to deliberate on on that also and how it might affect us. Have a good night. Bo.

Just a quick comment. It's nice to see Dr. Ledoux back in the saddle. Welcome back, sir.

No further comments on the mayor.

Double dip. Go for it. That's double dip. Last year, last year we had a meeting with the school board about budgets. I thought that was very productive.

I think we might want to do that again. We do, we do, we will. It's already in the works. Mayor's comments? No further comments.

We are adjourning at 10:31.