Proposition 3 seeks OK for capital upgrades

Posted: Thursday, September 27, 2001

A decision to upgrade the Borough Building is in the hands of voters Tuesday.

The Kenai Peninsula Borough Assembly is asking voters in Proposition 3 to allow the borrowing of up to $5 million through general obligation bonds to finance a portion of the $7.5 million cost to make capital improvements to the building, located on North Binkley Street in Soldotna.

The money from the bonds would be used to pay a portion of the costs of site preparation, planning, designing, constructing, renovating, expanding, equipping and improving the existing Borough Building.

According to Tim Navarre, assembly president, building an additional structure or adding on to the Borough Building would cost $6 million. The borough would use the $5 million from the bonds and $1 million from its general fund balance to pay for the construction. The borough has allocated another $1.5 million from its general fund balance to pay for necessary remodeling and upgrades to the existing building, bringing the estimated cost of the project to $7.5 million, Navarre said.

Approval of this proposition could result in a property tax increase of $10.80 per $100,000 of assessed taxable property value, based on the estimated total 2001 assessed valuation, a 5 percent rate of interest and a 20-year term. The tax equivalent of the $10.80 increase would be 0.108 mills. The areawide mill rate is 7 mills, said Jeff Sinz, the borough finance director and a member of the borough's space allocation committee.

"It is doubtful that there would be any adjustment of the mill rate to fund this," Sinz said. "It would probably be absorbed by the budget. If there was an adjustment it would increase the mills to approximately 7.1 mills, which is a relatively small adjustment."

Proposition 3 was generated from studies done by the Space Allocation Committee appointed by the mayor to study conditions in the building. The committee was first convened in 1998 and consisted of 10 members representing the borough assembly, administration, school district and the public.

In June 1998, the committee found that the Borough Building was overcrowded and presented health and safety risks. The Borough Building was built in 1971 to house the borough and school district administrative staffs and was designed to meet those needs for a 20-year period.

There have been no major upgrades to the facility in the 30 years since it was built, said Navarre, who served as the chairman of the Space Allocation Committee. Any available space that once existed in the building has been taken over by expanding borough services and personnel. This has left no space for conference rooms for public or borough use, cubicles so small they're not legitimately work spaces, and fire, safety and handicap-access code violations, Navarre said.

"It's a touchy situation," Navarre said. "I believe if the fire marshal was to come in to the Borough Building today we would get written up for a number of violations. Essentially the borough has no choice, the two reports have been very clear. You can ignore a problem for so long, but at some point you can't ignore it anymore because you're putting lives in danger. I hope the public recognizes this and lets us go ahead with the building."

The committee recommended that the borough immediately lease or construct additional office space to house departments of the school district or borough administration, as well as look for a long-term solution to the situation, such as adding to the Borough Building, Navarre said. The borough assembly adopted the committee's report but did not act on its recommendations.

That was three years ago. The committee was reinstated in January and was asked to come up with a written plan to remodel the Borough Building or acquire or build at least 20,000 square feet of additional office space to relieve the overcrowding.

"I think the borough has been responsible," Navarre said. "We stretched ourselves another three years in our current facility. That's why we'll take anybody on a tour of the Borough Building and show them the real needs are there."

If Proposition 3 is not supported by the voters, the borough will still have to pay the $1.5 million to upgrade the existing Borough Building and will need to find 10,000 square feet of office space to lease, which would end up costing more in the long run than building onto the present site, Navarre said.

"If the voters turn down the $5 million they're saying we can't have a new building," Navarre said. "But we would still have to remodel and lease -- we have no choice. We didn't have a choice three years ago, and we certainly don't have a choice today."

Navarre estimates that it would cost at least $1 million to move departments into a new site, not counting the cost of leasing the site. Navarre said he believes it is more cost effective to have the borough and school district offices in the same location because they can consolidate operations such as human resources, finance and data processing.

It also increases customer service and efficiency to have the departments in the same complex, Sinz said.

"I think the best long-term solution is the renovation of the existing borough administrative building and construction of additional office space," Sinz said. "Over the long term that will be the most cost-effective and operationally efficient way to go. But it does require a significant amount of up-front capital outlay. But over the long term, I believe that's likely to be the most cost-efficient way to go."

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