Homer Alaska - News

Story last updated at 9:30 PM on Wednesday, March 9, 2011

Bond may be option to fund landfill project, says Carey



BY MICHAEL ARMSTRONG
STAFF WRITER

What would it cost Kenai Peninsula Borough taxpayers yearly if the $9-$12 million price of building a Homer Transfer Facility was paid for with bonds?

In previous discussions on the Homer project, borough Mayor Dave Carey had said he didn't think borough voters would support a bond — even though he hadn't named a price. At a community meeting on the landfill held in Homer last month, Carey said he couldn't count on a bond passing in setting the 2012 fiscal year budget.

"I cannot put in my budget hope," Carey said.

Last week, Carey said he now thinks borough voters should look at a bond.

"The issue of how to fund the Homer Solid Waste Transfer Site needs to include input from voters," Carey said in a 2012 budget preparation document released last Thursday. "In considering funding, a bond issue needs to be considered as well as additional options."

Carey also last week released figures on what a bond might cost taxpayers yearly — the price of a 12-pack of good American beer, three gallons of unleaded gas or two four-packs of energy drinks, although he didn't put it in those terms.

Carey said such a bond, if financed for 15 to 20 years at an interest rate of 2 percent for the first years and 4.1 to 4.6 percent in later years, would be .12 to .17 mills. That's $12 to $17 on $100,000 of assessed property value.

A $12 million expansion of the Central Peninsula Landfill in Soldotna approved in October 2002 added .3675 mills — $36.75 for $100,000 — to the borough's bond debt. It's the only solid waste bond put before voters since 1997.

That landfill is where household waste would be trucked when the Homer landfill's Alaska Department of Environmental Conservation permit expires in August 2013. The Central Peninsula Landfill already takes household waste from the rest of the borough, including a transfer facility in Seward. Transfer facilities in Kenai and Nikiski don't accept waste from commercial haulers, so trash companies collecting household waste have to deliver straight to the Central Peninsula Landfill.

The Kenai and Nikiski transfer sites, about $500,000 each, were paid for with state grants. The borough also seeks state money to pay for all or part of the Homer transfer facility, and had put the project at the top of its capital projects list to the Alaska Legislature. In meetings with legislators, Carey said no one has committed to funding all $12 million.

Carey also has proposed separating the Homer project into two phases, one to do the dirt work and roads and another to build the actual transfer building.

Some assembly members aren't as pessimistic about bonds passing. Bill Smith, the city of Homer's representative on the borough assembly, said not everyone agrees the bonds won't pass.

"It may be that in June the assembly will choose to put bonding on the ballot," Smith said. "I think we can get the mayor to put together a budget that funds the first part of construction and then we will see what the Legislature gives us."

Purchasing bonds to finance large capital projects doesn't necessarily mean an increase in mill rates and taxes. In getting voter approval of bonds, a mill rate is set to show what the cost would be if the general budget can't absorb the increased debt load. In 2002, that solid waste bond did not require an increase in the mill rate and property taxes, said borough finance director Craig Chapman.

Currently, the borough has an annual debt payment of $4.3 million, of which $1.05 million is for Central Peninsula Landfill improvements. That bond will be paid off in the 2014 fiscal year, with a scheduled reduction of between $500,000 and $800,000, Carey said.

In his latest budget document, Carey also said he would:

• Propose the assembly fund support for post-secondary education — Kenai Peninsula College and Kachemak Bay Campus.

• Propose that the topic of the nine-month nonprepared food sales tax exemption be put on a 2011 borough ballot.

"I do not believe it would be appropriate to ask the assembly to rescind it without including a ballot measure," Carey said in his budget document.

Michael Armstrong can be reached at michael.armstrong@homernews.com.

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