Kodiak: October 20, 2026, Work Session

Hey, Tim, can you hear me?

Uh, I can't hear anybody.

Okay, how can I— okay, I can hear you now. Yeah, I think they got their microphones off. Okay, am I blurry or is it just my view? Yes, I think you fixed your— I fixed mine to be blurry also. No, no, my— I see my face being blurry.

Oh yeah, no, your face is fine.

Okay, now look at this, they have a. Nice October 20th, 2026 work session will now come to order. This work session is open to the public. For those who are listening, meeting agendas and packets are available online on the City of Kodiak's website. Public members are encouraged to web stream from the city's website portal.

Audience and council members, please silence your phones, and council members, please put your phones away for the duration of the meeting. First item on the agenda is public comments, which will be limited to 3 minutes each. If there is anyone who wishes to address the council as a whole, please approach the podium or call in at 907-486-8610.

And please note that this is the only opportunity to comment during this work session. And due to the slight delay in broadcasting, I will be pausing for a moment to allow some time for public members to call in.

Seems pretty quiet. No one is on the phone.

Hearing none, the next item on the agenda is Highmark Marine Fabrication LLC annual shipyard operations review and discussion. I'll turn it over to Acting City Manager Josie Bahnke to introduce shipyard manager Dee Monroe. Yeah, thank you. Good evening, Mayor and Council. The city and Highmark entered into an agreement to operate the marine travel lift in the shipyard in August 2020.

Highmark's performance during this last year continues to be highly acceptable, and the terms of the agreement remain in the public interest. Tonight we have a presentation from Manager Dee Monroe and on, on the past year's shipyard's operations. Also in your packet is an approved rate schedule effective July 1, 2026, and communication on terms of the renewal agreement effective September 1, 2025 through August 31, 2029. Thank you. And now I'll turn it over to Mr. Monroe.

And don't forget to push the button so the green light goes on. Can you. Hear me? Perfect. Um, Mr. Mayor, uh, council members, city staff members, uh, good evening.

Um, I am D. Monroe. Um, I'm actually now the, I guess I'm kind of a shipyard superintendent among other things, but I have our new shipyard operator, Alan Hines, with me tonight.

Okay, so we've sat through this quite a few times. I'm going to try my best to be succinct and just kind of focus on the nuanced information that's relevant to this year here. My skills as a writer far exceed my skills as a speaker, so if I end up reading verbatim from some of my headings here, just please bear with me. And then please stop me at any moment with any relevant questions.

Okay, all right, so first to our overview, let me just kind of read my little blurb here. So Highmark Marine Fabrication took over the operation of the shipyard on September 1st, 2020. Over the last few years, we focused on growing the shipyard facility towards its full potential as a lucrative, robust, and yet flexible utility for the community and users that depend on its services. We've implemented seasonal discounts in an attempt to relieve costs to the local user base when possible, work to bring new users from diverse marine backgrounds, and work with city management and engineering to begin upgrading and expanding utilities to the additional yard space gained over the last few years. However, as the primary user base remains by and large the local commercial fishing fleet, the acute global market volatilities and price pressures despite a recovery in harvest volumes they continue to experience continue to be reflected in decreased traffic in dry dock as vessel maintenance continues to be deferred as a cost.

The aforementioned economic hardships continue to be reflected in fewer vessels hauled per year, but the vessels who do dry dock tend to stay hauled out for longer periods for more laydays. Despite this, we are hopeful that as the relevant markets reach their inevitable stability and fish price conditions eventually improve, we will see that reflected proportionally in yard traffic. On to our improvements and repairs that we can see for this year. With the help and direct involvement of city management engineering, we now have 2 additional water spigots and 5 additional GFCI-protected shore power pedestals available for vessel use. We are now working with Chris Lynch and management towards preparing the new vessel laydown areas to meet compaction and drainage requirements.

So that the facility can fully benefit from these additional bays for vessels to perform their maintenance.

Let's see here.

Let's probably skip over to— Absolutely, yep, sure. Is that all right? Thank you, sir. Perform routine maintenance on all city-owned equipment. Yes.

How's that going? Um,. Especially the lift. So the lift, um, we've obviously uncovered some pretty unique findings this year from the inspection. Um, obviously the machine is more than halfway through its service life.

Um, so there are, um, while we've reduced a lot of, uh, acute catastrophic failures, um, emergency repairs, that kind of stuff, from the, uh, first half of the machine's life. There are a few long-term maintenance items that, um, you know, their, their time is up, um, and there are just these longer-term maintenance concerns that are starting to be brought up. And, um, we've been working with, again, the city management, Chris Lynch, uh, Monty, and, um, the, uh, the experts, the manufacturer experts on the machine to develop a structured long-term plan for acquiring these much-needed maintenance items to make sure that the machine can continue to perform through to the end of its intended service life. I think one very particular issue that was interesting to everybody was, of course, the tires, which are, are factory original. They're, if I'm not mistaken, they're probably 15+ years old and very dry rotted and So that's been one specific example of something that we're looking at trying to acquire, but in a way that makes sense with the, the maintenance needs of machine and also just makes it much more manageable bites to take in terms of slowly acquiring these parts.

All right, so how old is the travel lift? You say the tires are 15 years old and they're original. I, I think I might be slightly mistaken. I think it's more like 13, 14 years old, if I'm not mistaken. Thank you.

And, um, then just the fourth sentence down, uh, purchase sufficient inventory of HMF. I don't know what HMF is. Uh, sorry, that's Highmark Marine Fabrication, uh, short shorthand for our— well, I suppose I could just write that out. No, no, no, no, or explain it. Thank you so much.

And then I did have that downloaded, the last one, annual travel lift inspection and repair recommendations performed by Kendrick. That's already happened. Yeah, this is something— that's what you're talking about. Kendrick is the manufacturer experts I was referring to earlier. And yeah, we've been working with them on an annual basis to perform the third-party inspections as is standard.

And then of course, any recommendations that they pass on for short-term and long-term maintenance items, that's what we work off of. Thank you. Yep.

There's nothing else. I'll continue a little bit further along here.

Let's see, a lot of these other subheadings will be pretty similar to previous years. There's not a whole lot of nuance there. If we would like, we can probably just skip straight over to the numbers here on the performance metrics. In previous iterations of this report, I did have comparisons for every single fiscal year, but given we have 6 or so years of data here, the data was starting to become a little overwhelming, confusing. So if anyone's interested, all that information is, I believe, still publicly archived and can be retrieved at any point.

Anyways, so for this year here, we can just kind of go line by line here. That's interesting to us here. So total vessel service, as I previously mentioned, we have seen a small decrease in the total number of vessels serviced this year. However, as I did mention before, you can see there's a 49% increase in total number of days and average laydays for vessels up by 77%. As I mentioned before, fewer vessels are hauling out, but the few that do haul out.

In my estimation, you know, they're— while a lot of maintenance items are being deferred just because of the economic hardships that are experienced by the local fleet, I— the way I kind of see it is they're kind of getting more bang for their buck. If they're gonna stay hauled out, might as well take care of, you know, a bunch of maintenance items at the same time and then get the vessels back to work is kind of how I interpret that. And kind of my experience in being in the facility.

Let's see here. Average length of vessel hasn't changed very much. I think we kind of have a very similar size range demographic that is serviceable by the lift. So that's really— I don't think that's— that number is never really going to change that much year to year.

Paw block and launch revenue obviously is been— it's gone down a little bit for the aforementioned factors.

Layday revenue is up by a little bit. Average revenue per vessel is up marginally. Again, I think just due to the longer laydays experienced by the few vessels that do haul out.

And then obviously for comparison, we can see the previous fiscal year, which that data is pulled from.

Okay, as far as our operating budget, um, so this is kind of, um, a unique year in terms of, um, some of our costs as an operator. This is our first year, um, being on a full fixed payment model, um, in our reimbursements to the city. Previously, I believe the arrangement was, um, On the first iteration of the contract, I believe it was 15% rendered from all invoices, and then slowly we changed the contract so that we could start offering the city fixed payments at a greater amount. So this is going to be the first year where it is 100% fixed monthly payments. Previously, we were, you know, in the transition year period, we were experiencing— in the beginning, it was the percentage-based payments, and then we slowly swapped over fixed payments, so that's going to be different there.

As far as our other expenses, really not a lot different from previous years. We've kind of— absolutely, yeah, go ahead. That monthly payment's a typo, right? That's like yearly. It's not $232,000 a month to the city.

No, sorry, correct. Yeah, yeah, I suppose I could have formatted that better. The total annual payment rendered Uh, would have been that amount, it would have been rendered, and I can't remember what that breaks down to in monthly payments, but yes, you're correct,. Mr. Mayor. Council Member West.

Thank you. Uh, I do want to note, because it was brought up, um, earlier, that the sales tax that you paid was, uh, $10,290. Yes. And I'm assuming that's because most boats reach the cap. Yes, absolutely.

Yeah, a lot of these. Yeah. So you go back to the number. I have not done the math, but I will later, you know, number of boats pulled out and then that tax payment. It's, it's good concrete.

Absolutely. For us to, to look at. Yeah. Yeah. So I tried to do some of this work, some of the math with the numbers.

And I couldn't get it to play right, but let's see what you can do for me.

We just raised the cap. There we go.

All right. Anyway, so the— let's go back to the top of the page there. Gross income. Yes. That's how much Highmark was paid.

Received. Let's see here. So that, yeah, that is our, that is the gross revenue generated by the facility. And then obviously everything, everything pretty much below that is all expenses or costs or payments rendered to city. And then obviously our net is going to be at the very bottom.

Yeah, I just, oh, in the hole. That's why I couldn't make the math happen.

Kind of.

Thank you. Absolutely.

Yep. Anything else we can touch on concerning that, or?

No, go ahead, D. Thanks. Perfect. Absolutely. Yep. Um, okay, so let's see.

Um, a lot of our other costs are going to be very similar. We're talking percentage changes barely in the double digits, if that. Um, obviously our insurance costs, our utilities, um, all of our other— or advertising costs— none of that has really changed. Um, it's— if it has, it's been pretty negligible changes. Um, We were able to save some costs this year, and there are these additional costs at the bottom that just kind of demonstrated some additional costs that we, we put forth that kind of fell outside of our— they kind of went above and beyond our contractual obligations and showed other costs we were putting into facility to sort of ensure that it fully operates to its potential.

We can service as many users as possible, that kind of stuff. We've kind of been able to mitigate mitigate a lot of that this year. With the increase in the number of shore power pedestals, that's helped a lot where we're not having to provide our own private assets to provide shore power to these additional vessels. Now we can provide that with the amenities in the facility, which is a huge cost savings for everybody, honestly, and that's awesome. More questions?

Absolutely. Sandra. West. Thank you. I just, I should have probably asked some of these questions, but earlier.

So the waste, let's just go to the waste. That is for dumpsters, or do you guys deal with the big pieces of metal left behind, or what? So the waste line item here would specifically just be the commercial dumpster, dumpsters that are provided to the vessels. As part of the— pretty much all these costs here are going to be specifically tied to facility and not necessarily reflective of anything that Highmark as a business is offering. This is all inclusive of amenities that belong to and are relevant to the shipyard.

These are all city-owned assets unless I'm— obviously insurance, that's our company insurance that we put down for pollution and that kind of stuff. The labor hours, obviously, but all those other line items below that are going to be directly tied to city-owned assets or amenities that directly belong to the—. Okay, so I just have a question on how the restroom supplies work. Do you have a contract with someone that cleans those? No, we just— this is in-house.

This is the toilet paper and the soap and brush? Yeah, toilet paper, soap, cleaning, all that kind of stuff. Do you want to ask about labor? Yeah, I mean, I—. Mr. Mayor, that's Member Mangini.

Thank you. I just had a couple questions revolving around the labor, just because I'm trying to understand. Sure, sure. How this is all laid out. Um, so when you say gross income lift launch block, um, that's outside of all the work you guys do in the yard, correct?

Correct. Okay, so is the labor reflected here the same? It's just the labor that's for lift launch and block? Correct. So 11 hours a day for 365 days a year is dedicated to lift, launch, and block.

I mean, how many people? Well, that is— so this is a crew of 3 to 4 people at any given time. And these— those labor hours also, those kind of reflect every man-hour that we put into, yes, running the operation of the lift, block, launch, but also just maintaining the facility, maintaining the equipment. The amenities, kind of everything that is exclusive to our contractual obligations to the yard. That's what that labor number would—.

And so then both administrative and laborers all make $85 an hour based on these numbers? It's kind of a weighted average. That's kind of like our very close estimation as to what all those costs are. Those numbers are obviously um, hyper-accurate pro forma data. But anyways, that's kind of what that means.

I mean, that's— those are my questions. Sure. Anything else on that?

Thanks, Dean. Go ahead. Absolutely. Um, okay, so, um, all right, so yeah, at the very bottom here, obviously we're in the hole this year. This is the first time that's happened since we started running this yard.

Um, really it's due to just this, um, kind of all these other factors I've been talking about before. Obviously, we've been, we've been working with city management to kind of make sure we fully maximize on our strengths in this public-private partnership and kind of make this, give this shipyard just enough flexibility to work and kind of bob and weave with how the economy is doing and all this stuff. Make sure it's a robust service that is maximally useful to the local community and the user base, but also so that it can be a self-sustaining, financially self-sustaining facility for the long term, right? So obviously we would like to move towards making sure we're not in the hole again, but as far as— I don't have any specific recommendations for tonight. However, I would very much like to, as always, work with city management and look what the data says, come up with a solution that makes sense, and then give you an informed— or informed recommendation on what to do going forward about that.

So I guess that's all I have. And is there anything else we want to say about numbers before we move on, or— Absolutely. Okay. Yep. Let's get right into that.

Okay, so as far as our major improvements, as far as, as query work continues, many infrastructural projects progress into fruition, such as the modernization of the overhead stadium lighting that is in the yard, the resurfacing of the travel lift pier for increased safety, and the compaction of the new vessel laydown area to receive new additional vessel traffic. As I was kind of talking about before, you know, we're, the shipyard is very close to reaching its fully intended sized footprint that it, it was intended to be. Obviously, Brecken is doing a great job slowly chipping away at that rock, getting us closer to that final intended shape and size. The next step, which I've been working very closely with Chris Lynch in, is obviously now that we've blasted all the rock away, now we need to go back, look at what changes we need to make to the drainage plan, make any changes to compaction, and make sure that the ground that is left behind is actually capable of supporting the weight of a boat being cribbed on blocks. That's kind of the next step, which we are working on.

So we're looking forward to that. As I mentioned before, we have 2 new water spigots out there. We have 5 new shore power hookups, so we're slowly moving closer towards having really every square inch of this yard be, you know, a useful serviceable bay to where vessels can actually hook up to power, stay on power, perform their maintenance items that they came out to do. So, we're very excited about that.

As far as our economic impact of HIMARC's 50 full-time employees, 85% are year-round residents. In addition to the 44 HIMARC families, the families of many local welding, hydraulic, electrical, and construction outfits still greatly benefit from the work directly offered by dry dock operations. With HIMARS growing relations within the towing vessel industry, we doubled the number of towing vessel service in the shipyard. That's slightly old news. I'd say those numbers have kind of stabilized, but— I mean, that's— really tugboats, absolutely.

Yeah, that's precisely what I'm referring to. Yeah, which is— pretty cool. I like working on tugboats, they're cool. So that's something we've been— obviously our main priority always will be the local commercial fishing fleet because, you know, they're the home team and we're really here to support them. But as part of kind of our zeitgeist of, you know, making this facility into kind of a robust facility that's capable of being resilient despite of economic hardships, we're obviously trying to diversify a little bit, trying to bring new business into here and our most successful version of that so far.

In addition to working with the Coast Guard a lot more in recent history, we've been really proud to bring a lot of tugboats here, which has been really cool. Tug, you know, boats that previously have never hauled out here before, so that's been pretty cool to do. Absolutely. Let's see here. I guess to kind of go off on the Coast Guard tangent a little bit more, you know, that's obviously a huge thing that I think all of us kind of have our eyes on is the imminent increased Coast Guard presence in Kodiak.

We're very excited to try to keep as much of that work and business that will come with that locally instead of outsourcing to non-local entities. We continue to bid on Coast Guard jobs. We have performed a lot of non-dry dock work for a lot of the FRCs that are kind of coming this way and related to that. We are registered in the Coast Guard system. We're working more with cementing our relationship with the Coast Guard.

We're very excited to kind of increase and help all these puzzle pieces lay down so that hopefully we can keep a lot of that FRC-related work local in Kodiak. So that's something we really look forward to.

In summary, kind of looking forward here, we're very proud of the ongoing hard work and dedication that continues to be devoted to this partnership. Through the ongoing contributions of our local workforce in the harbor department and the continued support of City Management Council and the public, we continue to shape the shipyard to its full potential as an invaluable community service, a competitive and lucrative destination for marine industry, and as a long-term generator of economic growth to Kodiak as a whole. Although the ongoing challenges of the commercial seafood market are sure to continue the local fishing communities like Kodiak for the immediate future, it is our hope that through continuing to develop competitive and adaptable strategies, our partnership can continue to mold the shipyard into a resilient service capable of bringing invaluable benefits to Kodiak through peak and through trough along into the future.

I suppose that sort of concludes that. Was there any other questions we had brought up in the course of that there? Any more questions for D? Council Member Davidson, Do you have anything?

Uh, no, thank you. Thank you, Mr. Wilson. Uh, the, uh, Travelith Pier. Yes. Has it been resurfaced?

Um,. Because I saw it, uh, earlier this year and, uh, noted its condition. Uh, not yet. It has— it has been put into the paving plan, I've been told, for this year. Uh, We'll see if it happens this year, but it is on the radar and we are working with engineering to make it that.

Yeah. Any other questions from the council? Well, I can personally vouch for the tugboat work. A friend of mine is a tugboat skipper and they've been coming here multiple years now. They were just in town recently and they're very satisfied with the the work they get done at our shipyard.

And they were all at Henry's having, having dinner too. There's a whole— he brought his whole crew with him. So thank you, Dee. Absolutely. Thank you very much.

The next agenda item is update on harbor billing processes, processes from TA Accounting and Consulting Incorporated. And I'll turn it over to Acting City Manager Josie Bahnke to provide a review. Yeah, thank you, Mr. Mayor. This agenda item is presented for TA Accounting and Consulting and Lunev Advisory Services to provide the council with an update on the fiscal year '25 audit finding on harbor billing. We have Mr. Tim Altman and Slava Lunev here tonight to provide tonight's update.

I will turn this over to them at this time. They're both on Zoom. And, um, unless our finance director has any comments, but Mr. Mayor, you have a handout in front of you. It's also been posted online under additional handouts on this meeting, but it looks like it's a 3-page handout, and that's what we'll be using tonight for the presentation. So thank you for joining us.

So, uh, Mayor and members of the council, thanks for having us on the meeting tonight. Um, briefly, just a little bit of background into the project. Um, probably most of you recall there were some findings in the audits for FY24 and FY25 that dealt with, um, the billing over at the harbor. And when the FY25 audit became available to management, why Chris called me— there was probably an early February— and talked with me a bit about what could be done to try to make this finding go away for FY26. But of course, that year was already well in place, and so there had been 6 or 7 months of billing that had gone out.

But so when we sat down and talked with Julie and with Chris about what potentially could happen and then sat down with the harbormaster at the same time. We, we found out that there was a new software package that had been implemented in FY24, and, um, and when that billing software was put into place, there was probably some implementation errors that had taken place. So we went through and we reviewed the processes that are used by members over at the Harbor and at the office, and we went through— their process was mostly hand and paper oriented, and so we talked with everybody about potentially converting that into something that was electronic, and that process has taken place. They have converted now to primarily 100% electronic filing. And with that electronic filing and with that data, we started doing an analysis then of the bills that went out for FY24 and FY25, or FY25, and then the bills that went out in FY26.

So in doing that, we ran a bunch of different evaluations off of the data that was available, data being information that's provided by the boat owners, information that's in the ordinances, and trying to evaluate how the auditors have come across these findings and these billing errors. Well, as this process continued, part of our evaluation, it became evident that there was differences in the data that was being used because the vessel agreements were being updated at various different times. But for example, there would be differences, say, in the length of the boat. Um, and so this would appear then to be part of the problem that was causing some of these billing errors. So We went ahead and we have now completed an analysis of all the billings for FY26 and have actually completed the last bill that went out, I think was in mid-October, and that was for September, and we've evaluated that one also.

Now that billing was also evaluated with the folks in the office using some I enhanced review processes so that they could catch the billing errors and that they would be aware of those billing errors. And I'm going kind of quick here, going kind of fast because I know you guys have a lot of stuff on your agenda. So, but that's kind of the background into what we've done so far. We have, and as you can see there in your report, and Slava is going to address this in a second, is the specifics of what we actually found as we were doing our evaluation, and we did it on a month-by-month basis. And so as, as things have progressed now, the number of errors is down to a minimum.

But Slava, if you want to go ahead and address the specifics of what we were doing. Thank you, Jim, and thank you, Council, for allowing us to talk. Just a small correction. The fiscal year '27, uh, for the— we did the 100% of the fiscal year '27 analysis and then majority of the fiscal year '26. Um, and the reason why we did majority of the '26 is because the analysis was ongoing together with, um, the scanning.

So as we were evaluating, uh, once we identified potential root cause, um, It was like Tim said, it was evident that we needed to have specific support from the files that we can benchmark against. And the underlying core of the concerns that we came across, which end up being the findings in fiscal year '25, were related to the lengths of the boats, mismatches to the mortgage agreements, and then therefore also miscalculating the taxes related to some of the services that were offered to them. So we were able to— so after probably about, I don't know, 4 or 5 runs, it was— we basically started organizing a mechanism tool, I call it, where we knew that these issues more likely would be continuing until we identify all the different parameters. One of the first issues that came up were the, the outdated rates in the system that were still back from fiscal year '25, '24 that were used in fiscal year '26 billing. So once we knew that that was the case, then the staff went ahead and modified the rates within the the system.

There's some technical still difficulty within one of those rate parameters because the software, the way it interprets the rates that were set up to Link, is still not— it's not as easy to fix. But having the tool and having the sporadic scans, those transactions would get flagged and subsequently reviewed and adjusted manually if they needed to. So the one thing that we want to kind of make sure that we, we like communicate across is that the flags that we call it flags, not errors, because the system is designed, the algorithm is designed to essentially take everything that we have in digital form, which are the files, and there are about 1,300 files that the harbor staff scanned. So those digital files, are now benchmarked against about roughly 800 invoices that are run monthly. Historically, that would have been done manually, and people, you know, the harbor staff would catch some errors manually.

But obviously, with the volume of activity that takes place at the harbor office and the volume of the invoices and the pretty quick turnaround between the actual bill runs to sending them out for payment, there were just not enough man hours to handle that process. So that's why the automation would seem to be the most logical approach to not just evaluate what was done, but also to look into what can be done to avoid those errors in the future. And that's kind of been the focus where once we came across, you know, a couple of runs for the couple of months, It was pretty obvious that we need to have something that the, one, the staff can use regularly on their own with the information that's available to them without having to involve IT too much so that it can be done regularly.

And so that's been the focus and shift and focus. And just to give you, in the handout, there's some outlines and the findings, or not necessarily findings, but the the volume. So the system, if you think about it, it was about 800 months, 800 invoices or statements per month times 12 months is about 10,000 statements that were reviewed or so. And each statement will have multiple lines and the system essentially evaluated those rules. And it shows that we have about roughly about 25%, 24, 25% error within the analysis.

Keep in mind that we're only looking at the merge, the linked agreements, because even though there are processes in place to take, to capture the electricity usage and to capture other items that go on the statement, some of those processes are still manual. And because they're manual, they are handwritten, and automating that was would just take a lot more time. So we couldn't find too many discrepancies between tracing back the manual reads to the system. And the more common ones would be when the, you know, same slip was used twice in the day. So that transition sometimes would be slightly off.

Or we have some people that have exclusive use, but then they were out and somebody was parked in their spot, and then so electricity reading during that time, even though it takes place, but sometimes it just, it doesn't quite make it to the system the right way. So all these things were flagged as far as potential, so something to be considered in the future. There are other options we have for automation or somehow digitizing those services, but the focus has been primarily on comparing the lengths that were within the mortgage agreements to the what's in the system. And making sure that each boat is charged the right length and the right rate.

So that's kind of the overview. I mean, I don't know if you want— if you guys have any questions, then we can maybe go into those specifically. Just— but that's the big picture of what was done. Any questions from the council? Council Member West?

Yeah, not a question, but thank you so much. It's It's nice to know that things are getting straightened out. It's just so hard for everybody and the time. And anyway, thank you so much.

Well, the one thing that I know Jim and I bring to this endeavor is the fact that we both were— I mean, we're both auditors and we both worked on the other side where we were the accountants.

So the approach has been not necessarily just, you know, it's pretty— it was fairly obvious to see what the error was or could be. The problem is that you guys don't need to know what the problem is, you need to know how to fix it. And the approach has been from the beginning is that, you know, we only have so many people that can come and help out. It's hard enough to get qualified people in down in the lower 48. I'm sure it's just as difficult to get it in Kodiak.

So, so we knew that whatever we come up with, with the recommendation, it has to be somewhat simple to use, somewhat independent of a particular person, but yet anybody can step in and, you know, do this. The other factor I wanted to kind of bring up is that the finding was on the internal controls, okay? So it was not the, you know, the The fact that there were errors, that's one thing, but because there was nothing to help the staff to identify those errors, that's where the core problem was for the auditors. And what we were trying to accomplish is we were trying to provide some mechanism where the finance office can say, well, we do have controls, we do have an additional review that takes place. And even though, like I said, it's not an error, but at least it's a lot easier to look over 60, 70, which will, you know, statements or invoices versus 800 every month.

So, and over time, we do believe that as things get corrected within the TMP system, as things get updated through the new agreements and the lanes get verified and the process becomes more and more robust as far as capturing, the number of those flags should go down. It's just this, that's kind of the, so obviously at the beginning we had a lot more to look over. So as the number of flags will go down, then the frequency of evaluating those process, I mean those measurements and whatever is in the system now can be increased because the tool is open, you know, it's available 24/7. If there's a slow time or if there's a temp available, if there's a summer intern, all those things can be run fairly independently. And, you know, it doesn't require too much of manpower to really evaluate and provide that extra layer of review, which is what we were focused on.

And I think we should add also is that based upon the reviews that we've done, all the corrections have now been made to the general ledger for all of the items that we found and that we've discussed with management. And I believe that the general ledger has been updated for all of the, the modifications that were necessary for the fiscal year. And you're right, I was off a whole year on fiscal years, but for the year ended June 30th, 2027. So, uh, so,. Well, okay, so that's to clarify, um, we had this cover once we identified the, the ballpark of what the correction should be, then the conversation with management was, do we go out and bill?

Because we have— if you look in the handout there, it's spelled out, but the errors go both ways. The city has missed out on the billing, and the city overbilled the customer. So to go back and try to collect on old underbillings was— would be slightly difficult. I mean, once again, it's management's decision, but The decision, I guess, or the kind of understanding was that it's easier to make it whole for those that were overbilled by issuing credits for that overbilling, and that has been done. But as far as trying to go and collect from those that were underbilled, that's, once again, that's in the management's decisions.

I mean, we ran the data for fiscal year '26 around July, June, July, right when the auditors were coming in. And that's where was the focus as well, to make sure that we have the information available before the auditors stepped on the, on the ground. But during that time, we were also still going through all the scanning, all the processing. And just to give you an idea on the scanning side, the, the 1,300 files that were scanned were also put in a format where the city's internal approved digital storage method was considered. So each file essentially now is a single PDF file which bookmarked and VMA agreements are all put up front and they're machine readable.

So their way to where now the staff can actually search for that information versus having to pull out the manila folder and trying to get that data, find the right agreement. So now it's a lot more accessible as well. That was also when we were evaluating fiscal year '26, that process was still ongoing. So that's why not everything was evaluated because we just— information wasn't there and we didn't get that till probably about end of August, early September. So that's kind of just to give you an idea where we are.

Any further council questions? Councilmember Mangini. It's more of a comment, just because I was in the meeting when these guys were here, just so everybody understands. A lot of, a lot of these things that were digitally uploaded had inconsistencies on lengths of vessels, and it was picking one number or the other. So going forward, we need to come up with a very good method at which we know what the length of a vessel is.

And I think that because we're adding this insurance clause, to our harbor agreements, it's a good opportunity to get everybody on a level playing field where we're going to have access to actual vessel lengths. We're not calling somebody and saying, what, how long is your boat? You're going to be able to see, you know, what they're reporting to their insurance, which you would hope would be the proper vessel length. And it's very important to our finances because if we're only charging a 100-foot boat that's actually 120 feet, it's a big inconsistency. In '26 alone, this cost us $131,000.

So it's something that we need to fix.

And to add to that, on our recommendation, uh, I mean, on our— on the list of where can we go from here, um, there obviously, you know, we're, we're like, we're accountants, but we're also operators. So we know that this is just the beginning as far as what the city needs. We know that there are things that can be further improved, and one of the recommendations we had was related to the VMA agreement because of the multiple versions that are still in the files.

And also, now that there is a web-based tool, there are mechanisms we can put in place to where those agreements can be done digitally. And that's once again for the city attorney and for the council to decide, but the technology is out there to where if we— if the city would decide to go into the digital format, then those checks and those verifications can be done at the time of input. And the captains that would be essentially taking on the load of the record-keeping side of the— at least initiating that form would get the feedback as well as the harbor staff of any discrepancies that perhaps don't align with what's already in the file. Because, you know, obviously, you know, a foot here, a foot there doesn't ring a bell too obviously— I mean, too often. But at the same time, if there's a mechanism that checks that at the entry point, then that just improves the quality of the data and overall processes down the road.

But we have yet to implement a system like that. Is that true? We— that's still down the road? Correct. This is something just, you know, once the initial analysis was to how do we make sure that we were able to catch those discrepancies, and I think the system is there, it's being improved.

I had a conversation with the Harbor staff about, you know, is it slow, is it quick, is it, you know, what would you like to see better, and I have their notes. Some of the things like obviously the The digitizing process is ongoing because, you know, constantly the agreements get signed. So we do have mechanism to where we'd have to rescan the entire file. It just gets uploaded. The city, I worked with the IT, with Lee from the IT department, and he essentially dedicated an access point for us to be able to both bring the folder that's already been scanned and put the folder back.

So essentially the city continues to retain all the folders. But as the process of updating that information goes on, the system is there to do it. The difficulty is that the obviously digitizing process has some components of AI. I mean, this is actually all— it's an AI build, but there's a lot— the idea was not to put too much reliance on AI because of one, of the cost, and two, because of the sensitivity of the records. But there are some components to where we have to take a small screenshot of a handwritten document to interpret whether it's an I or an L or a 1.

And those are the things that the, you know, machine just can't see it because it looks like a dash. But overall, if we come— if the city decides to convert the entire documentation process related to the VMA agreements to a digital format, then a lot of those a lot of those hard to— difficult items to interpret become a little easier because you're already using a text that's already machine recognizable. So there are things already in place to look into that direction. But yes, that hasn't been looked at. It hasn't been developed yet.

It hasn't been really looked beyond of just this is something that can be done if that's the direction you guys decide to go.

Well, we certainly want people to trust in the city, and when it does business with us, I think that's really the point here. That's why we do an audit every year. Um, how do you think our next audit for the fiscal— next fiscal year will come up with findings in the billing for the harbor, or are we going to possibly have this problem fixed enough so that we won't show up again on the next audit?

And would you like to take that one? You're the experienced one.

Well, then you're on mute. You're on mute. There we go. Am I, am I back now?

Okay, so The decision related to findings and so on, that does belong to the auditors. None of these processes that we're doing is really audit-related. If you, you know, it's not an audit. Primarily what we were trying to do is try to build in enough internal controls for the finding to go away. And the question would be, can we get the finding to go away for the 6/30/26 audit, I don't know.

That'll have to be something that they decide, but the corrections for, for that fiscal year actually pretty much have all been made. So the billings were evaluated. If you continue this process and this review process, I would say in this current fiscal year, you should alleviate any opportunity for, for there to be errors so that, you know, so there won't be more findings. So I don't know if we can get it to go away for last fiscal year. We would hope so.

But for this current fiscal year that we're operating in right now, I think that the process is in place to where there's adequate review now that's taken place on the invoices so that their comment was on the internal controls over billing and you now built in a secondary level of Internal Control with the review process using, uh, the system that's been developed. All right, thank you. Any further comments? Council Member Mangini. Well, I just, I just wanted to say thank you to Monty and the whole team down there.

I know how much this transition has been as an extra added, you know, pressure on your guys' shoulders, digitizing everything, switching the way everything's done. So make sure that your office knows that We appreciate all that work. In no way was my comment like pointing fingers at you or your office. I was just saying this is our chance to get this right. So I really hope that the council emphasizes that and we give him clear— give them clear direction.

That was something that was made very clear to us, that the harbor staff really buckled down and got the work done when they were asked to scan a million documents. So thank you.

Any further questions or comments? Well, thank you very much, gentlemen. If I can, can I make one more comment? Yes, of course. Just, yes, the guys at the office and LKF, the girls, they were tremendous as far as helping us understand how things work because they understand the limitation.

They were looking for someone to essentially help them with, you know, narrow it down because they're so busy with day-to-day things that sometimes it takes, you know, it does take time to step back and see, you know, where, where's the issue is because they're so busy with everything else that they have to do. So that's one of the reasons what that, that the whole thing kind of got to this point because it's just, there's just a lot of things to do and there's just not enough, not enough people.

They were great. Yeah, they were really helpful.

Well, thank you, gentlemen, for that work, for that work and that report. It's very much appreciated. Okay, thank you. Thank.

You. Um, the next agenda item is review and discuss agreement with Kodiak Economic Development Corporation, and again, I'll turn it over to Acting City Manager Josie Bahnke to provide a review.

All right, um, thank you, Mr. Mayor. This agenda item is presented to get input from council on the draft KEDC agreement. As written, the agreement reflects priorities of the KEDC but is, um, not real reflective of the city's strategic plan. For example, in its current draft, there's no mention of Gibson Cove. Industrial Park, which is a task, uh, we have KEDC working on, uh, with a deliverable scheduled for December 2026.

Um, once complete, uh, this proposal will be something we can share with potential funders, investors, and tenants on active use of the site for bringing jobs to the marine economy that Kodiak depends on. So that's missing from this current draft agreement. Um, and, uh, otherwise, uh, we are also, um, looking at— so we're recommending and including that in, in the next, um, draft iteration. Um, it's also silent on a few other things. Um, one, um, the Storefront Improvement Program, that was a pretty successful program.

Don't know if council wants to move forward on that or continue that. Um, and also the city's readiness posture for the Coast Guard expansion and addition of the Arctic cutters. Um, there, there is a section in there that talks about economic forums, but nothing specific about Coast Guard expansion, addition of Arctic cutters. So, um, some of the other potential items we've discussed is the old fire station, use of the old fire station. So the goal of tonight is to get some feedback from council.

On items that council would like included in on pages 35 to 40 in your packet. Um, that's where the draft agreement is. So to get a few, um, feedback in addition to Gibson Cove, um, and so to that end, we'll postpone this agenda item for Thursday night until we have a more acceptable agreement to present to council for approval. Um, so looking for feedback from council to make it more city, um, um, you know, I mean, it has a lot of KEDC, the housing and the workforce, but have more city-centered goals included in the agreement. Thank you.

Any council discussion or questions? Councilmember Walker. Thank you, Mayor. Uh, I agree with you there. You know, we, we got to start And there's a lot of stuff that we've been saying this needs and this has this need and working with them.

It's always been a pleasure working with them. You know, once you get everybody on the same page, but there's still a lot of stuff that we've talked about over years, probably over the last 5 years that we need to get back on track and, and then use some of the the newer people around town. And we know we've got the Coast Guard coming in and, uh, in a big way, and, uh, let people know what's available out there and what the city can do to help with any projects that they, they have going on. And what we want to do is to be, uh, you know, to be an economic engine for everybody around town. I mean, we got a lot of, uh a lot of good, uh, you know, background on a lot of different projects that kind of started and just never made it to the finish line.

And we need to really try to get better at that.

So, Council Member West,. Um, let's see, how do we approach this? Lovely. I, I think I would— I just be honest with you and be right up front that I'm not looking forward to doing another agreement. So I'm just gonna throw that out there.

And still, again, when I read it, just as Rich said and Josie said, it's lacking. So I asked some people about the history, and I know that I did look this up on the city website. I just Googled Economic development. There was once upon a time a committee, Economic Development Committee, before there became a corporation. And I keep saying this, we can do better together.

And I think that as a city, as a group of people, city and borough, we got enough smart people. That we can probably put together. Well, we can also get, you know, all the, the reports that come from the university and different people. So I— that's where I'm at. I'm also, as I ask a lot of questions, and Josie can, can back me on this and tell me if I'm saying it incorrectly, but The corporation, the KEDC Corporation, was established in order to, um, not just manage the COVID CARES Act but to help protect people a little bit because there was a part of that where people had to give your, um, federal tax income.

You had to bring your taxes in, and people were hesitant to give it to the city. Once on the city, it's public record. So that was my understanding, is that they started this nonprofit, not-for-profit corporation— I see your head nodding there, Rich— to help protect people's private information. That's no longer the case. We're not getting CARES money that we're handing out.

We don't need people's tax information. So I could go through, like you said, you know, discuss the changes. I got lots of things I marked here.

I'm just going to start with my general like that. Thanks, Mr. Mayor. Josie. So On page 39, um, is what the annual work plan is kind of presenting. It talks about, um, the additional dwelling units, economic study planning, city career and government learning, economic forum.

Would you consider replacing economic forum with economic committee, a development committee?

Well, sorry, not if you're talking about KEDC putting together a committee. So I had questions on that whole economic forum. Like, what are the specifics? Hold one economic forum. I don't know what that means.

Um, and then, you know, they— so they have a forum. I don't, I don't know what that means. What are the specifics? An economic forum, you know, it's not very— maybe I've never been to one. I've tried to attend many of the KEDC, uh, events, but so I don't know what that means.

So that's why I'm like, you know what, so, um, I think that the city can make a committee. But anyway, that's my response. Council Member Walker. Thank you. Uh, what I re— re— remember is, uh, with KEDC and the city and other entities, there's a lot of good talk about it.

It was trying to find people that have come up with money to staff a you know, an office that would keep this rolling. But nobody would do that. Nobody. They all had ideas, uh, a lot of good things. Let's, you know, let's get together and work together, you know, in the community.

And it was going pretty good there for a while, and then just couldn't find enough people that wanted to stay on board. Yeah, and I appreciate that, Rich, because what I'm not keen for is that the city keeps funding this,. Right? So I love that idea that was there once upon a time that we have other people come in and fund that. I'm not keen for having the city at $150,000 a year do this.

Councilmember Mangini,. I'm a little bit in the same boat. Just seeing what we get out of funding this organization when we're giving the same amount of funding to, like, the Chamber and Discover Kodiak and the results we see from them.

I would like to see a lot more to this in order to, like, fund it at this level.

And I'm kind of in the same boat. I don't know that this was ever intended to be something that we funded year over year, if it was kind of means to an end originally. So, um, before we signed anything, I think I'd just like to dig a lot more into, like, what we're receiving and how we judge those metrics, um, as far as, um, successfulness and impact to the community.

Councilmember Walker. Well, you know, I think that what we should do— I know Terry and me and some others that, you know, been with the city for quite a while, even when this got stood up— sorry. And it's just like, unless more people wanted to do something, but they didn't want to do anything unless the city or the borough or somebody, you know, paid people to do it. And it just kind of went away. And it would— and to be able to do something like that, you bet you have to have the money to push it, to be able to keep it going.

And it just, it just kind of hit a plateau and that was it.

Well, to be fair, it was set up to distribute COVID funds and did a great job. Actually, they were, they were copied around all over the state. And other places too, because they were— ended up being good. And when that job was done, here we have this structure. Yeah.

And we thought, well, what can we do with this structure that's already in place and set up? And we've seen other communities have a great deal of success with these kind of economic development entities. And so I don't know that we provided a heck of a lot of guidance to KEDC though that wasn't just already in existence on their board early on. And so they kind of, they've kind of been guiding themselves, and I think we see the result of that here. And honestly, I'm a little bit, I would be a little hesitant to throw out the baby with the bathwater, but I'm not too fond of the bathwater.

Um, there are, there are studies and, and, and, and forums and this kind of thing and, uh, focus on ADUs, which is not bad in itself, but I, I really did track along, along with the acting city manager's remarks. I think maybe that we should give them a chance to focus on our own strategic plan and things that can advance that. And I think the, the acting city manager did a good job of sketching out what those kind of things could be. You know, try to figure out what, you know, give us some information about what the kind of challenges to our power grid, the oncoming expansions are going to result in. That's information we can use.

Gibson Cove is something we've been talking about for a long time, and, and Mr. Shackler provided us with a very nice template about the kind of sort of early planning that we could look at for a multi-use facility down there. That's something that I think could be very, very easily demonstrated when you receive— when you get somewhere on these kind of benchmarks.

So I'm not sure I would throw the baby out with the bathwater, but I think I do like the idea of Nick taking an effort of maybe providing some guidance and saying, look, this is— these were our priorities. You know, they're along— they're in our strategic plan. And maybe if we just got a few of these done, and I agree, the storefront development worked well. We got many, many more dollars invested by private companies. We helped get going on that.

Than we had to put in by a long ways. That was a successful program. And, you know, these kind of programs, I think, are the kind of things that we should keep going. Councilmember West. Thank you, Mayor.

Can I make my note? Okay, thank you. Yeah, I am looking at the ADU. I have it marked and noted on my work session here.

So the ADU education, that's what it says here, ADU education. To me, that means I'm thinking about ADU, I go to the permit office here, right? And say, what are the restrictions? What, you know, I can learn that here. I can find out what does it take to make it build an ADU?

What, what do I need? And then, um, to evaluate the existing designs for potential use in Kodiak Station. I mean, I stumbled on all of that, um, because like, again, I think that we can do this as a community. Um, and then, uh, I stumbled on some of the other things, the annual work plans and reports and reports, reports. Um, So anyway, I also stumble on 3-year agreement.

I want to see if we can pull that back to show us what you can do in a year. If we don't want to throw everything out and you want to make some more specifics and do something clear, then maybe we could pull it back a bit. Thank you. I see Djuna's up there. Councilmember Davidson.

Um, thank you, Mr. Mayor. Uh, I agree with the comments that have been made that I'd like to see a little bit more actionable deliverables. Um, I, um, I appreciate what Acting City Manager, um, Miss Spanky said about, you know, incorporating some more specifics related to, um, like that the Storefront Program was so successful and did so much economic stimulation. And if we're gonna be providing funding for Kodiak Station's Economic Development Corporation, we want to see direct results of economic impact. And I love a conference, I love a forum, I love going and sitting and learning and talking and coming up with ideas.

But like, I'm not seeing in this plan what those yearly tangible deliverables are that are essential to Kodiak's operations. Gathering more information is awesome, and KADC is good at that, but I don't see, you know, concretely where that's going to benefit the people of Kodiak, the information that they've gathered. Thank you. Thank you, Councilmember. Any further council discussion?

Councilmember West. Thank you, Terry. Uh, just one more time. I hope so.

I, I did— I do appreciate, uh, y'all bringing up the storefront improvements because that was, that was awesome. If I remember my numbers correctly, and, and You know, feel free to give me a $10,000, um, plus or minus. But KEDC pitched in $15,000, PANA pitched in $15,000, and then the business owners kicked in like $70,000. So, um, they were, they were getting a discount. They were still, you know, I liked it.

They were making an investment. But they got, you know, 2 gallons of paint for the price of 1. And it just seems like a nice, good, easy system. I don't know that we need to pay for a whole year for someone to manage that system, is all I'm thinking. So it's a great plan.

Maybe we can do it ourselves. That's all. Thanks.

Any further council discussion or questions? Uh, Josie, did you have something? Just so for clarification, um, so our acting city manager went to his first board meeting, KEDC board meeting, last weekend. It was announced they're hiring 4 interns, high school interns. So easily they could manage this type of program.

But I did want to just reiterate some of the ideas. Impacts on the power grid to the community, storefront improvement, Gibson Cove, impact on the Coast Guard expansion, maybe in an economic— a topic of the economic forum could be that. Any of those things. Um, economic committee, I did hear that. I, I don't know if that's what we want to include.

Um, do we want to include something about diversifying their funding in as a goal in the work plan? I think so. Council Member Mangini. Yeah, I think, um, a real big push into, uh, self-funding, you know. I mean, a nonprofit has access to a ton of grant funding.

So trying to find funding going forward to fund themselves would be in their best interest, because right now we're just in a really tough spot. I mean, obviously. And we're— but so I think that should probably be part of their mission. I mean, is trying to find some programs that could help run the day-to-day and put on programs. Mr. Mayor.

Having served as ex officio on their board for the past couple years, I know sustainability is a goal of the board's, so that would be in line with the city's strategic plan and also KEDC's board plans. So that would make sense to include as a goal. Right. I'd say maybe long-term sustainability financially, and even the possibility to grow into bigger projects by finding that kind of funding.

That would allow you to take on bigger, bigger bites.

I, I hear you. Tangible deliverables, um, actionable deliverables. I hear that. Thank you. That— this is very helpful.

Thank you. Any further questions or discussion? Council Member West? Uh, thank you. I don't know if we want to, um, discuss the— I know that, uh, Josie brought it up the use of the fire, police, and library old spots.

We also talked about doing land use conversation then, or at least that's what interim mayor— interim manager was talking about. When we talk about all the different pieces of land, what do we own? What do we want to do with it? So I don't know if we want to do that with council or put that on their list to consider.

So,. So maybe replace that with the ADUs.

Disposition of available land, especially the interesting city land we do have downtown.

Is that— is there consensus for that among the council?

Council Member Walker. Oh, probably about 20 years ago, the state had programs out for business development, and basically they had one guy for this borough that did the borough and the city and worked as kind of the in-between on funding. Because it's just like we've been talking about, the state and other communities have started, and it's— they got so much funding each year from the legislature, and they work together. They got one person in one office up at, you know, up the hill, on the Hill, and that was their idea then, was to move forward and have at least one person and have them busy all the time seeing what the state's coming out with, what's the borough doing. You know, we still need to work better together.

But you'd think all this talk about, you know, especially in elections cycles and everything else, there would be more of that popping back up, especially for Alaska, you know, and our communities. You know, for the most part, the borough and the city had actually at times worked real well together, and that was one of the good ones, and it lasted for quite a while. So I mean, that type of thing is something to look at.

Any further discussion?

And look, I think we have enough for staff to move forward.

The next item on the agenda is review and discuss the draft sales tax ordinance.

I'll turn it over to ethnic city manager—. Deputy city manager. Deputy. City. Manager, thank you, Mr. Mayor.

Uh, the purpose of adding this agenda item tonight is to share the draft ordinance and provide council and the public a few weeks to review before having a meaningful discussion in a dedicated work session after the next council is seated. Uh, there is a lot in the ordinance. Um, with the hard work of our city attorney and finance director, we've reworked several administrative provisions, made clarifications to exemptions and how they function, as well as a few changes to the current code. Uh, our acting city manager Tim Putney and city attorney are proposing a dedicated work session on the ordinance, uh, in November with council, and a second session with council changes, uh, before introducing the ordinance for first reading. So tonight, um, not going through the ordinance, but more as an introduction to put it out there.

It's a very large piece of legislation, um, according to our city attorney, the largest piece of legislation he's ever worked on. So just wanted to put it out there. It's in its final draft. Yeah, yeah. So,.

So I think our, our job here tonight is to see— we've reviewed this, you know, what jumps out at you? What are your thoughts? It's a pretty well-baked piece of legislation already. It's pretty smoothed over. It pretty much gets to a lot of specifics.

What, what is the council's pleasure and thoughts? Council Member Mangini. I, I just want to thank staff for giving it to us in this manner because I think it's really important. We continue to hear that we need to be more forthcoming with things instead of seeming like we're making decisions on the spot. And, um, I encourage us, especially in things of this magnitude, to continue to take like this kind of approach.

Um, it's very important that the overall public gets to read through this, um, as long and in-depth as it is. Um, I'm still wrapping my own head around it. So, um, I don't, I don't have a lot of things that jump out at me other than there's a lot of changes here. So, um, I, I do, uh, commend staff in the policy surrounding how we collect sales tax and what happens when we don't, and, um, getting businesses in line and getting everybody on a fresh starting point so that we can move forward with the new plan, as obviously we're seeing a number of difficulties from our past code. So that's my comments.

Any further questions or comments? Councilmember West? Yeah, I don't know if, uh, too late to add to, um, KEDC. But from what I've seen, if they would offer some accounting and bookkeeping to our businesses on how to pay your taxes, I'd be all for supporting that. And I, I did a brief look, you know, just Google up classes, the small, small business people in Anchorage.

University for $35, you can take a, a class, and for $15, you can take another class on bookkeeping, paying your taxes. And I think that those are the things that can do economic development really well in this town. So, um, I just want to bring that up. And there's a lot in this. I made lots of, um, multicolored, um, comments, but we're not really ready for comments.

Is that right? We're gonna sit there and chew on this, or we're picking it apart yet? We're ready for comments.

Well, one of the comments I heard, someone was talking about how— let's see, how can I— this was someone else, so I'm not sure if I get what their drift is, but we wanted to have a breakdown a little bit more of different, of different taxes versus like the cap. So what are the sales, what are the exemptions before we go to the cap? You know, it's like, what is the difference that the exemptions are going to make? I know, but I also thought that that was a very difficult determination because we don't really know what— I mean, people like the store, I don't know, I just heard this stuff, so you guys can straighten me out on this. But some of the businesses just make a guess on how much they, you know, how many nonprofit how many senior citizen, how many, uh, contractor exemptions they give in the month or in the quarter, that they don't actually keep track of each one.

But do they— do we— are we able to nail that down and find out exactly, or is that a loose number?

Sorry, Mr. Mayor. Yes,. So, um, so I think when we roll this out for a full discussion in a dedicated work session. The plan is to have a, a memo, a written memo that outlines the changes in the code. Um, and so I think that might be helpful, um, to give some context to the draft changes that you're looking at right now.

Right now, there's nothing to accompany that. Um, and so I would say it's probably best to have that discussion. When we have our new council seated. We're in a weird transition right now, um, and, and so I, I think for that purpose, I would, I would say. I, I would tend to agree with that.

It's good to have this in our lap now so we can look at it and, and be— but we really are going to have to have it in the lap of the new council members coming in too, because they're going to have to make these decisions as well. So I guess we don't want to get too far ahead of our new council. Council Member Mangini. Yeah, I agree with that. I also kind of understood our last work session that was dedicated towards this as being more that we were going to discuss exemptions before we were going to discuss raising the tax cap.

So I thought the point of that was maybe we wouldn't have to. So I don't know, I'm just— I also heard that. Well, I'm sure the memo will have a guess at what the results might be of some of these changes and exemptions, but I mean, it might not be a lot. Yeah. I mean, the subcontractors are taken out, I saw, and some things like— we don't really— again, we don't want to get too far ahead.

But Julie, do you have something to add?

Well, thank goodness.

Through the mayor, the changes, the draft, the draft changes to the sales tax code mainly addresses The— I believe the consensus at the last work session the council had, I think there was consensus to increase the cap from $3,000 to $5,000. There was also consensus to have a different cap for commercial rent— commercial property, with the cap for The residential property remaining at $750. So commercial, the cap was $1,000. I believe there was also consensus that the cap— there were two views to that. One was to have the cap increased by, you know, CPI, and believe After discussion with the city attorney, he had recommended it to be a dollar amount then, because when you have percentage, um, it creates a— places more administrative burden on businesses to find out what is the CPI for you know, year 1, what the CPI is for year 2.

So those were the changes. The rest are mainly to clarify the existing code where, you know, where there are areas for that's a little bit, make it easier for businesses to interpret the code.

So changing, I believe there was just one change to the exemptions and That was the last bullet, I think Z, that talks about the cap for residential property. So it's, it's really in the code, but so it doesn't really need to be part of an exemption. So that's what we're doing in terms of reviewing the code and see area where it needs to be clarified, that it's clarified, and also to avoid duplication.

So most of the changes are just better language, really, and, and probably pretty non-controversial. With regard to what kind of changes it'll make in our revenue, I mean, I think our— the memo that we'll get later will maybe go somewhere towards answering that question.

Any further council discussion?

The next item on the agenda, understanding items, is discuss city revenue and finance. And again, I'll turn it to Deputy City Manager Josie Bahnke to provide a review. Thank you. So in your packet tonight, uh, You have investment bank accounts, uh, for fiscal year '27 as of September 30th, 2026. You have our cash vest September 2026 condensed report.

Um, our score did improve. We went from a 91 to a 92. Yes. Yeah. And, um, our investment committee will be meeting tomorrow at 3 o'clock.

And so more on that. And then also included is the draft budget calendar for fiscal year '28, looking for feedback from council on preference for work sessions. We've got— looks like Tuesdays is the preference, Tuesdays evenings or Saturdays.

Looking for some direction there. It was honestly both probably would work for me,. But, um, again, we can—. But yeah, we can get back on that too. Correct.

I don't know what page it's on. Let's see, 6679.

79, Page 79. Oh, I'm sorry, uh, go ahead, um, Mr. Warnecke. I was just going to read the comment that Djuna just put in the chat. She prefers, um, Tuesdays, as sometimes she works Saturdays. She prefers Tuesdays.

Okay.

It looks like Tuesdays might be a good day. Okay. All right. That's all I have, Mr. Mayor. Thank you.

Well, it was great to see our CASB score go up, and they're pretty— they like us a lot. They say we've been doing all kinds of great things. They still want us to have apparently kind of an overarching investment strategy. Working on it,. Man.

But we are chipping away at it, and they did, uh, they did take note of the progress that we have made recently. Let me guess, so we got a better score. But there again is work for the Investment Committee, and we're going to have to restock the Investment Committee too, I guess. So is there any— are there any further questions or comments? That brings us to elected official travel.

Are there any requests to travel on behalf of the city?

Well, I recently found out that we are going to have our Southwest Alaska Municipal Conference board retreat on November 17th, so I guess I need to travel on the 17th. Swamsee, they're so swamsee.

And, and hopefully we won't at the end, so, but I did, I did speak to the City Clerk already, so there are no further requests for travel. The next item on the agenda, understanding items, is update on city manager recruitment, and I'll turn it over to City Clerk Brandy Warnecke to provide an update. Thank you very much. So in your, um, work session packet, you have the, um, an additional application received Thursday night we will have an executive session with the city attorney to discuss how council wants to move forward with this item.

Great.

It's always good to have the attorney in the room when you're making decisions.

Next item on the agenda is packet review for the October 22nd, 2026 regular meeting. And I'll just go through the items in the packet.

First, approval of meeting minutes for October 8th, 2026 regular council meeting. Next, persons to be heard, including for proclaiming and declaring the Extra Mile Day. Does anyone want to, uh, read the proclamation for the Extra Mile Day?

Junah does. Junah wants to go the extra mile. Councilmember Davidson, would you like to read that proclamation? I'm going to say it. I would.

I believe in the extra mile. It is a good one. All right, thank you. That will bring us to reports of boards, commissions, and committees, then unfinished business, the first of which is the second reading and public hearing of Ordinance Number 1477, authorizing the city manager to sign a loan agreement borrowing from the Alaska Clean Water Fund in an amount not to exceed $3,400,000 to pay the cost of the Aleutian Homes Phase 7 project, PN 20-05/700047. That will be followed by the second reading and public hearing of Ordinance Number 1478, authorizing the city manager to sign a loan agreement borrowing from the Alaska Drinking Water Fund in an amount not to exceed $2,200,000 to pay the cost of Aleutian Homes Phase 7 Project PN 20-05/700047.

That would bring us to new business, first of which is Resolution Number 2026-36, supporting the Community Transportation Program in the State of Alaska Department of Transportation and Public Facilities 2027 through 2030 State Transportation Improvement Program, or STIP, after which we will consider the authorization of a Kodiak Economic Development Agreement in the amount of $150,000 annually. That will bring us to the certification of the election.

Followed by staff reports from the city manager and city clerk.

I don't know what that is, but we postponing dealing with the KEDC. We're. Not going to have that on our plan right now. Yes. Okay, but what did you have?

A— it's right there, it's in the, um, so in the STIP is the resolution.

I mean, not in the STIP as a resolution, but it's, um, that's the item.

So that item, it says, uh, well, he, he, what he read, the resolution in STIP, as you go down, it says adopt resolution, and it says Resolution 2026-36, which is a resolution for City Council, City of Kodiak, supporting community transportation. And then it says, um, listen to all this, but it's on here. Whereas the draft 2027-2030 STIP includes CTP Project 34921 Kodiak Short Trail Project to design and construct.

Okay, I see one here. Because the other resolution was quite more extensive of all about the short trail. This one is just adding it on to the CTP.

Thanks, team. Yeah, just a note that the comment period for this project ends the 29th. It's the last day you can make comments. So we are trying to get a council comment. And it's on our, it's on our CIP.

So. We did add it to our Southwest Alaska Municipal Conference, uh, comment about the STIP. We specifically referenced the Kodiak Station,. Right? And does that go into the— does someone submit that to the comment period for the—.

They give it to everyone who will take it, basically. Okay.

Okay, thank you. Thank you. I will not— we'll have a motion for you on Thursday night to postpone. Great, thanks.

And then that will bring us to staff reports from the city manager and city clerk, mayor's comments, council comments, and then the oath of office for the newly elected officials. And the presentation to the outgoing elected officials, which in this case I understand will be Annika Woods, and then audience comments, and then an executive session during which we will discuss with the city attorney the hiring process for the city manager position.

Council Member West, you have for that outgoing. That's my understanding. Yes, I think so. I hope so.

After which we will adjourn.

Hey, you have the votes.