Kenai Peninsula Borough
TO: Pete Sprague, Assembly President
Members of the Kenai Peninsula Borough Assembly
THRU: Dale Bagley, Borough Mayor
FROM: Scott Holt, Finance Director
DATE: July 12, 2004
SUBJECT: Assembly Ordinance 2004-19-05 Tustumena Terrace Utility Special Assessment Fund
The assembly adopted the Resolution of Necessity 2004-063, establishing the Tustumena Terrace Utility Special Assessment District (USAD) during the July 6, 2004 meeting. With passage of the Resolution of Necessity, the next step in the USAD process is assembly consideration of a Resolution to Proceed. The resolution will be introduced for assembly action at the August 17, 2004 meeting. If approved, construction of the natural gas line may begin this summer, 2004. The attached ordinance appropriates the estimated project costs and authorizes an interfund loan from the General Fund to finance the USAD.
The total cost of the gas line project is estimated at $217,975.05. This includes direct cost of $204,485.00 and indirect administrative cost of $13,490.05. Funding for the project will be provided through an interfund loan from the Borough General Fund. The loan will be repaid through 10 annual assessments levied on property located within the USAD. Billings will include an interest charge equal to the published prime rate in effect at the time of the loan plus 2%. The prime rate is currently 4.25%. If it remains unchanged through project completion, residents of the USAD will be charged an interest rate of 6.25%(4.25% + 2%). This is the same formula used to determine the rate of interest on the interfund loans used to finance the other USAD projects. Early payments can be made without penalty.
If for any reason the USAD is not formed, the loan will not be made and the General Fund will absorb any administrative costs that exceed the $1,000 filing fee received with the petition.