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11/27/2019
Council discusses annexation concept: No plans for annexation at present

By SCOTT BOWLEN
Daily News Staff Writer

The Ketchikan City Council on Monday heard public comment about — and briefly discussed — the possibility of a city annexation of Ward Cove.

The topic had been placed on the agenda as a discussion item by Council Member Mark Flora, who participated in the meeting by teleconference.

“My whole idea with bringing this forward was just that I think ... there's talk and chatter out there,” Flora said. “A lot of it's not fact-based, as usual. So I thought to throw a little daylight on this and just let the community know where their City Council people are.”

The talk within the community regarding annexation centers around the Ward Cove Dock Group’s proposed construction of a berth that can accommodate two large cruise ships.

The city is concerned about the potential effects of the Ward Cove development on city sales tax revenue and city-supported areawide infrastructure and services.

“While at this time it is difficult to quantify what the financial impacts will actually be from the proposed development at Ward Cove, it can be stated with some certainty that the City of Ketchikan will be adversely affected,” City Mayor Bob Sivertsen stated in a Sept. 10 correspondence to the U.S. Army Corps of Engineers. “The potential loss of sales tax revenues to the city is a real and documented concern.”

The correspondence provided the city’s formal comments to the Corps of Engineers regarding the agency’s consideration of a federal permit requested for the cruise ship berth in Ward Cove.

“The city currently has no desire to expand its municipal boundaries to include Ward Cove,” continued the Sivertsen correspondence. “If, however, the proposed development of cruise ship berths and retail/tour facilities is successfully completed, the city may have no choice but to consider such an action.”

On Monday, Flora said during the council discussion that he didn’t think it’s too early to start talking about the subject.

 “I know that we are not at a decision phase,” Flora said, before noting the potential length of an annexation process. “I also know that given the circumstances, some of us — many of us — may not even be on the City Council if and when it came to a council vote.

“But I'm going to unequivocally state — I am absolutely against annexation,” Flora continued.  “The reasons are multiple. People live in the borough for a reason. They're our neighbors, and I think that the imposition of ... will on those folks does them an enormous disservice.”

He added that the city might want to start thinking about other ways to manage revenue losses or shifts.

“Or is the permanent policy going to be, if any sizable industry or business takes (place) outside of the city limits, we just grab that and make it part of the city?” he said. “We have staffing issues. We have budget issues. We have a $70 million water filtration issue. Extending the boundaries and extending services that we can ill afford to expand doesn't make much sense to me.”

During the earlier public comment portion of the meeting, speakers at the podium had comments and questions indicating uncertainty about the scope of an annexation and its potential effects.

Don Westlund asked “just how much of Ward Cove” would be annexed.

“Would they be satisfied with just the water side of Tongass (Highway), the old mill site, or do you need the uplands also?” asked Westlund

He said that annexing the Ward Cove uplands, depending on how much, could affect the Alaska State Troopers (which has a post at Ward Cove) because the area then would be under the jurisdiction of the city. He also said the North Tongass Service Area would be “adversely affected” by the loss of revenue and with the loss of the North Tongass Volunteer Fire Department station at Ward Cove.

Mike Jensen, who resides in the ”heart” of Refuge Cove, also asked how far an annexation would extend.

“Is it going to extend down into Refuge Cove or out to 12 mile or what?” asked Jensen, who also inquired about how an annexation would affect sales tax and property tax mill rates.

Christy Johnson, who said she is a part owner of a business in Ward Cove, said she was opposed to annexation of Ward Cove.

“It would almost double our property taxes and we would not have the services,” Johnson said.  And if we had double property taxes, we would have to pass some of it on to our customers and our renters, which we would not want to do.”

Johnson and another commenter, Norman Arriola, noted that the annexation concept came up after the plans for a cruise ship berth in Ward Cove became known.

Johnson said she knows the current City Council members weren’t on the council when the city annexed the Shoreline area in 1999.

“Other people were, but I feel it's kind of like a money grab like they did when Shoreline, when Walmart went in,  just to do it for that,” she said.

Jensen asked whether there would be a vote regarding annexation.

“Is it going to go up for a vote to the people — like it didn't happen when Walmart came in?” Jensen asked. “I'm just, this is just questions that I have. What is the plan?

Sivertsen responded that the legislative process for annexation has changed since the Shoreline annexation occurred.

City Manager Karl Amylon said his understanding is that the current state statute describes two possible processes for annexation.

According to information from the Local Boundary Commission that would be involved in an annexation process, one option would require a vote by city voters and voters residing within the area that would be annexed.

The other option would go to the Alaska Legislature, which could either take action to deny the annexation, or take no action, which would allow the annexation to proceed, according to LBC information.

During his conversation with Jensen, Sivertsen stressed that the City Council hadn’t made a decision about annexation.

“We don’t have a plan,” Sivertsen said.

“That’s good,” Jensen responded. “No plan is good. Just leave us alone.”

The amount of city services available in the Shoreline area after the annexation was mentioned during the public comment and the council discussion portion of Monday’s meeting.

Council Member Janalee Gage said she would like to have the right information regarding the Shoreline services cleared up — “what it looks like now and why ... they're not getting the services that I've been told by multiple groups of people that they should be getting because they pay property tax.”

Amylon gave a brief overview of why the city sought to annex the Shoreline area. He and Sivertsen described road services; drainage; and city fire, EMS and police protection as being available there.

“The services that the people from the former Shoreline Service Area are concerned about and allege that they don't get is water and sewer,” Amylon said. “And that's absolutely correct because property taxes do not pay for water and sewer. Water rates and sewer rates pay for those services.”

He said that, after the annexation, the city commissioned engineering studies to estimate the cost of water and sewer services, and held at least two public meetings at Shoreline.

“As per direction of the council at that time, we explained to the residents if you wanted those services, they would have be provided through a local improvement district, which was the way a number of areas of the city had water and sewer extended to them in previous years,” Amylon said. “(The) almost unanimous reaction that we got, and the response we got was, No, we're not going ... to pay for that through a local improvement district. We're satisfied with how we're handling water and sewer as currently configured.’

“And the council told us, as staff, not to pursue it any further,” he continued. “But it's a fundamental accounting principle that property taxes do not pay for water and sewer.”

Some of the other council members weighed in on the overall annexation issue.

Council Member Judy Zenge said she agreed with Flora, noting that she thinks the city has trouble hiring for some positions now.

“How would we possibly even begin to service the borough?” Zenge said. “I think they are good at what they do, and we are good at what we do. We should work together. But I kind of, I wouldn't support annexation.”

Council Member Dick Coose said that, right now, annexation is not on my radar.

“I think we've got things to do to work with Ward Cove and make things (work out),” Coose continued. “Whether the future brings something different, why, that will be for a future council to decide. It's not on my radar.”

The council discussion concluded without direction to staff.

In the agenda materials for the meeting, Amylon had noted that the City Council in October had approved a contract with the McDowell Group for an “analysis of the Ward Cove cruise dock’s impacts on the City of Ketchikan’s finances and operation.”

That analysis is expected to be finished by March 31, according to a memo from Amylon to the council.

Amylon had recommended that the council delay making an annexation decision until the report is completed.

“Pending completion of the McDowell Group’s analysis, it is my belief that any decision regarding annexation of Ward Cove is premature at this time,” Amylon wrote in his memo.