An $18 million offer made by Homer Electric Association in February seeking to purchase the Seward Electrical Utility was rejected Monday by the Seward City Council.
On behalf of the city, City Manager Scott Janke wrote HEA General Manager Norm Story expressing his regret that it had taken so long to reach a decision.
"I would like to apologize to you personally for the amount of time it has taken to take formal action regarding your offer. The idea of selling the electric utility has broad implications in Seward and has required a great amount of time to digest," Janke said. "In the end, I believe the offer made by Homer Electric Association simply didn't satisfy the city council's financial requirements, especially in the short term."
The utility is a major source of city operating revenue, Janke said.
Janke was traveling and not available for further comment.
HEA spokesperson, Joe Gallagher, said the council had voted 5-1 against the offer.
"From HEA's perspective, we've had a good, open discussion with Seward about this and it was a very important issue for the city of Seward," he said. "They've owned the utility for a long time. We appreciate the council's work looking at an offer we thought was fair, but which apparently didn't meet the needs of Seward at this time."
Gallagher said HEA has had the purchase of Seward Electric Utility on its front burner for some time. HEA may make another offer in the future, he said.
"This vote by no means closes the door on the issue," he said.
This was not the first time HEA has made an offer for the utility. A public vote requiring a 60-percent majority was held in November 2000. Seward voters favored the sale 510-443 but fell 61 votes short.
In July, Janke had said any sale would need to make up for the nearly $1 million the utility means to the city's annual $7 million general fund.
One idea was to put the sale money into a kind of permanent fund and have the interest earnings subsidize the city's general fund. But in July, the stock market did not appear robust enough to generate the necessary 8.5 percent return, he said.
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