Cap issue on tap

A borough ordinance that would exclude grant funds from the calculation used to determine if proposed capital spending would exceed $1 million and trigger a public vote gets its second scheduled public hearing at Tuesday's Kenai Peninsula Borough Assembly meeting.

The original Ordinance 2008-17, introduced in June, already has been substituted with a measure that added a provision that would increase the amount that could be spent in the North Peninsula Recreation Service Area without an election from $500,000 to $1 million.

Tuesday, the assembly will consider a second substitute, this one to be introduced by Assemblywoman Milli Martin, of Diamond Ridge, which would authorize an exception to the voter-approval requirement to allow acquisition and construction of a new fire station in Nikiski. The existing Fire Station No. 2 is 37 years old and unable to accommodate emergency response equipment and personnel and costly to maintain and heat.

Martin says the exemption for the project is needed, part because the state capital budget included a state grant of nearly $3.38 million to fund design and construction, and a vote would unnecessarily delay launch of the much-needed project and could drive up the price of construction because of rising material costs.

Martin said supporters of the 2005 ballot initiative that lowered the election requirement ceiling from $1.5 million to $1 million argued that project funded by grants nevertheless led to increased maintenance costs and operating expenses for the borough.

"However, in this case the grant fund will purchase a facility to replace an existing facility that has been partially condemned and is increasingly expensive to maintain," Martin said. "The maintenance expenses for the replacement facility should be less than those currently incurred for the existing station."

She said she was hesitant to propose amending the ordinance excluding grant funds from the $1 million calculation but supports exempting the fire station project because of its unique aspects.

Martin said she has "deep concerns" about amending the code regarding grants and the recreation service area spending. She said her own constituents (in the Diamond Ridge-Anchor Point area) "have made it very clear" they resent past assembly actions negating voter wishes.

However, Martin also said she believes more voters cast ballots in favor of the initiative to limit spending to $1 million without a vote, than in support of another provision -- that a successful appeal to voters for permission to spend in excess of that amount needs a 60-percent supermajority. She said she would have no problem supporting an amendment to change that back to a simple majority.

"In fact, I expect someone will come forward with an amendment to do that," she said.

Meanwhile, the first substitute, offered by Mayor John Williams and Assemblyman Gary Superman, of Nikiski, not only proposed increasing the recreation service area election-free spending limit to $1 million, but also seeks to exclude from the calculation hospital plant and replacement funds with regard to projects of Central Peninsula Hospital and South Peninsula Hospital.

In a July 24 memo to the assembly, Williams and Assembly President Grace Merkes, of Sterling, noted the rapidly rising costs in medical fields.

"Spending the money and time to obtain voter approval for the purchase of every piece of medical equipment that is a capital improvement project or for a modification to the hospital that would cost over $1 million could significantly impair the operations of these hospitals," they wrote.

Plant Expansion and Replacement Funds are built through money earned from operations. Spending from those funds for capital improvements already requires assembly approval.

Ruby Denison was the prime sponsor of the 2005 initiative limiting spending without a vote. She previously has called the ordinance a "creative accounting method" meant to circumvent the 2005 vote.

"Ms. Martin makes dome cogent points regarding the replacement of the Nikiski Fire Station," Denison said in a prepared statement Wednesday. "However, it is likely that discussions about this project have been going on for more than one year, and a prudent assembly member would have proposed getting voter approval in advance of such an expensive and long-term project."

She suggested Superman should have gotten the issue on last year's ballot. Had that vote been held and come out successfully, there would be no problem using the grant funds. She said she doesn't think residents of Nikiski should be penalized "by Mr. Superman's unwillingness to abide by the simple constraints" of the borough law produced by the capital projects initiative.

"I support the Martin substitute," she said, adding that the original substitute was "totally unacceptable."

Hal Spence can be reached at hspence@ptialaska.net.