A small group of residents raised questions Tuesday night regarding the Kenai Peninsula Borough's authority to enter the agreement it signed April 16 with the Arctic Winter Games International Committee, committing the borough to host the games in 2006.
According to the group, the borough may have violated its own code, specifically Chapter 19.30 requiring specific criteria for any project to qualify under borough economic development powers.
Those criteria include having bank-ready business plans, that the project be situated outside the cities, and that the development increase the borough tax base by at least $10 million or provide a minimum of 25 permanent full-time jobs outside the borough. Those criteria, group members said, have not been met.
Further, questions were raised regarding the preliminary budget for the games and whether the agreement could stick borough taxpayers with any debt incurred by the games.
During Tuesday's Kenai Peninsula Borough Assembly meeting, borough attorney Colette Thompson attempted to answer some of the questions raised by the group.
She told the assembly the borough had the authority under current borough code to do what has been done so far. Under Alaska's Title 29, which lists the powers of second-class boroughs, the Kenai Peninsula Borough can provide for economic development.
She also said the chapter cited by the group did not apply to the games.
"The confusion has arisen here because there is an ordinance on the books which was intended to apply to applications from external people and organizations seeking borough support for an economic development project," she said.
An ordinance formally funding the games' effort will be before the assembly soon, Thompson said. That ordinance, she added, will include a clause saying specifically that Chapter 19.30 does not apply to the borough's involvement in the games.
Thompson also said that as far as the games agreement is concerned, the only danger from defaulting would be loss of the games and the loss of the right to use the games' logo. The games, should the borough have to back out, would simply find a new host, she said.
Others, including a parade of Arctic Winter Games supporters who came to testify, said efforts to raise funds to put on the games have only just begun, and that in any case, the payoff from the games could not be measured entirely in dollars.
The inquiry into the games' agreement began several weeks ago, according to Nikiski resident Mike McBride, a member of a group called Alaska Voters Organization.
"One of our members contacted us questioning the numbers because he didn't think they worked out right," McBride said in an interview Wednesday.
Borough data acquired by Alaska Voters was given what McBride called a cursory audit. What was found was disturbing, he said, including that the agreement appeared to commit the borough and its municipalities to certain capital projects, but that no municipal governments joined the borough in signing the agreement.
Several projects, including enclosing the Kenai Ice Rink, a possible ice rink in Homer, a biathlon range and various other facilities to accommodate athletes are mentioned in the agreement. Borough officials have estimated costs at about $5 million, some of which would come from the borough, other portions through grants and such.
But critics said the capital costs could amount to much more. One figure that has floated about put those costs perhaps as high as $25 million, but no one associated with the Arctic Winter Games committee seemed to know where that figure originated
McBride, however, is more concerned that the current agreement has not committed other communities to participate because they are not signatories.
"Where is the money going to come from?" he asked.
The agreement suggests revenues would come from state, federal, borough, municipal and private sources, but to date, no such commitments exist. The only revenue so far predicted is some $198,000 in ticket and merchandise sales, he said.
James Price, added his voice to those questioning the legal basis for the games agreement Tuesday night. He said the games are a wonderful idea, but that it is confusing trying to understand how the funding mechanism for the games is going to work.
"I want to see other municipalities and private enterprise come on line to make sure borough taxpayers aren't going to be stuck holding the bill," he said Wednesday.
Others who voiced concern included Nikiski residents Lauri Churchill and Vicki Pate, as well as Fred Sturman of Soldotna and Gary Cadd of Kenai.
While formal commitments to funding beyond those of the borough may not yet exist, there are indicators funds are forthcoming, others said.
Former Assembly President Tim Navarre recently returned from Washington, D.C., where he said Alaska's congressional delegation would to try to find federal funding for the games.
"The delegation was very positive and said they would find ways to work with the borough and communities involved to bring the games to the Kenai," Navarre said Wednesday.
Stephanie Carroll of Kasilof represented Alaska Communications Systems. She called the games "life-changing and community-changing events" and said her company had agreed to provide the communications network and gear for the games, an in-kind donation worth tens of thousands of dollars, including 150 cell phones with free in-state calls, 50 voice-mail boxes, 100 stations of telephone service and perhaps more, if necessary.
"As a communications provider and a technology company, we're delighted to be part of these games," she said.
Dena Cunningham, a McDon-ald's franchise owner and member of the games bid committee, said she already has committed her company to cash and in-kind support for the games.
The peninsula won the competition to host the games, beating efforts by Juneau and Fairbanks. But it is still early in the process. Tuesday, the assembly formally adopted a resolution retroactively authorizing the signing of the agreement with the international committee.
The backward procedure was required because back in April members of the assembly had not had time to digest the contents of the agreement. They authorized the mayor to sign it at a ceremony while the international committee and other dignitaries were in town, making it contingent on later approval by the assembly.
The next major step will be establishing a nonprofit organization called the Host Society to manage and stage the games. Borough money for the games is in the proposed fiscal year 2004 budget that is up for adoption June 3.
When that is adopted, the assembly plans to consider the ordinance formally approving payments to the Host Society to support preparations to conduct the games through the exercise of economic development powers. It is that ordinance that will spell out that Chapter 19.30 does not apply.
Borough officials have said the borough likely would be expected to chip in from $500,000 to $600,000 and that it hopes to get at least $1 million from the federal government, though it may ask for as much as $2 million. Another $1 million will be sought from the state, an amount in line with past state support for Arctic Winter Games events in Alaska. The proposed 2004 borough budget includes a request for around $200,000.
McBride said Alaska Voters Organization is not formally behind the effort to get answers to the legal and financial questions. It only provided an avenue for acquiring borough documents, he said.
The informal group will hold a meeting soon to analyze the answers they have so far received and decide if they wish to pursue the issues further.
"I think the questions still exist," he said. "The answers have been very vague. It has an almost slimy feel to it, for lack of a better phrase."
None of those questioning the legal basis for the games agreement said they oppose the games. Most went out of their way to say the games are a great idea. But they said they want those games grounded in solid law and backed by financial commitments beyond those of borough taxpayers alone.
In other business, the assembly:
By a vote of 2-7, rejected Ordinance 2003-11, which would have removed that portion of the borough sales tax on fuels that was applied to state and federal taxes on those products. The majority of assembly members said they didn't like the "tax-on-a-tax," but found it a necessary evil considering the expensive complications it would place on the borough tax code and businesses.
Such taxes on taxes apply to a host of products, Chris Moss of Homer pointed out. Ron Long of Seward said the savings per gallon likely would be less than 2 cents. The measure, he said, wasn't real tax relief. Paul Fischer of Kasilof and Grace Merkes of Sterling supported the ordinance.
Adopted Ordinance 2003-14, clearing away any confusion that mill rates adopted when service areas are created might require a vote of the residents to be changed. In fact, only the assembly has the power to alter mill rates.
Adopted Ordinance 2002-19-39, appropriating $300,000 in Road Service Area funds to the Edginton Road Improvement Project.
Postponed action on Ordinance 2003-19, which appropriates funds for fiscal year 2004 beginning July 1. Another public hearing will be held at the June 3 meeting, the night the budget ordinance is expected to pass.
Voted to pass Resolution 2003-062, designating approximately 38 acres in an old Anchor Point gravel pit as recreational land, clearing the way for creation of a supervised shooting range.
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