A robust conversation was held by the Ketchikan City Council at the regular meeting Thursday about the search for a new City of Ketchikan/Ketchikan Public Utilities manager, and whether those two roles should continue to be combined or split into two positions.

The positions were consolidated in 1999 during the previous manager Karl Amylon’s tenure. He retired on Aug. 31.

Two memos detailing the potential consequences of splitting the position, written by Acting City/KPU Manager Lacey Simpson and City Finance Director Michelle Johansen, are included in the meeting agenda.

Both memos list multiple extra costs, negative effects to personnel and hampered efficiency as the potential results of having separate managers. Johansen’s memo estimates that the current cost of employing one dual-purpose manager with support staff and resources is $742,249 annually. She stated that splitting the position would cost an estimated $1,471,008 annually.

“The financial impact to general fund would require a property tax or sales tax increase,” Johansen wrote.

In addition to the increased expense to the city, Simpson wrote that the consolidation of the managerial roles “has resulted in operational efficiencies, cost reductions, increased employee morale, and enhanced service delivery.”

On Thursday, council members Judy Zenge and Mark Flora focused on the grim financial position of the city, which they said gave little choice in the matter, following one year with no cruise ship revenue and a second year with a drastically reduced season.

Zenge said that “for the time being, I think the positions need to be combined. I mean, the costs — we wouldn’t have the money to separate them now anyway.”

She said the reports submitted by Simpson and Johansen were important so that community members could understand why the council would need to choose to continue with a one-manager system.

“It’s nice to say that we need two people, and maybe we do, but we cannot do that right now. We can’t afford it,” she said.

Flora said that “it’s time to move forward in pursuit of a single combined manager. The financial realities are dictating that is the way to go.”

Council Member Janalee Gage said that an effort to recruit a new manager needs to be started first, to assess whether there will be a candidate who will have the ability to perform well in that dual managerial role.

Council Member Jai Mahtani agreed, calling Amylon a “unique” individual in being able to work effectively in that role. He concluded that for now, one person should be found to fill the dual managerial role, then decisions concerning the position could be revisited at a later time.

Council Member Abby Bradberry took a different view, however, saying that it is imperative, especially during these times of stress, that it would be beneficial to find a way to fund the addition of a second manager because KPU is a growing entity, the city has complex issues that need to be dealt with, and the port also is in dire need of focus and leadership.

City of Ketchikan Mayor Dave Kiffer, Simpson and Johansen all emphasized the conflicts, confusion and extra expense that had been seen in the years before the KPU and city manager positions were combined.

Following that discussion, the council moved on to the related agenda item to consider approving a draft Request For Proposals to hire a recruitment service firm to help in the search for a city/KPU manager.

That motion passed 5-1, with Bradberry voting no.

The council next discussed whether to approve a motion to amend the 2021 general government budget to provide $4.7 million to the city's Port Fund. The motion also included an appropriation of $180,000 to the city’s Public Health Fund.

The transfer to the Public Health Fund is intended to support the Ketchikan Medical Center roof replacement project.

The $4.7 million to the Port Fund is to bolster reserves that have been depleted by the complete absence of cruise ship visits to the port in 2020 and the large reduction of visits in 2021.

The revenue targeted for transfer is intended to be sourced from a May 2021 donation of $2 million from Norwegian Cruise Lines and $2.7 million received in August from the federal American Rescue Plan Act program via the Alaska Commercial Passenger Vessel excise tax fund.

Ketchikan was one of six Southeast Alaska ports that received a portion of a $10 million donation from NCL, according to a memo written by Johansen.

“Serious consideration should be given to utilizing the $2,000,000 to pay debt service costs in the amount of $1,654,875 and other operating costs of the port fund,” Johansen wrote.

She added that “the expected 2021 revenues of the port fund are approximately $1.35 million compared to the expected costs of $6.5 to $6.9 million.”

Johansen also noted that the next cruise ship expected to visit the Port of Ketchikan is scheduled to arrive on April 29, and that the funds targeted to fill the port fund gap will be “sufficient to carry us through the first five months of 2022.”

Much of the council’s discussion centered around whether enough effort had been made to seek financial support from other cruise lines or Ketchikan Dock Company, which leases Berth 4 to the city.

Simpson explained that in previous talks between city staff and cruise line representatives, the message was that cruise line companies considered the revenue brought by their passengers and payment of city fees as sufficient support.

“If the council wants to take a different direction, to have a conversation about how our cruise line partners can help sustain the port financially, while both entities are receiving very little revenue, that’s a different discussion,” Simpson said.

Flora said that, in his opinion, that model of support sounds like “business as usual, to me: ‘We’ll bring you people.’”

The focus on the benefit of sales taxes brought by ship passengers is problematic, he explained, as it might not be sustainable at times and it also seems to make the city reluctant to seek additional revenue from the tourists.

Kiffer said that city leaders had in past months asked cruise lines for funds to complete a list of projects that were presented to them, but the companies have not yet responded.

Flora also emphasized that financial plans need to be more long-term, looking further into the future. He mentioned larger capital projects that needed to be funded that already have been put off due to lack of revenue, with no plan forward for how they will be completed, such as the cathodic protection on the berth pilings that is overdue.

He said he reluctantly would vote to support the motion, but would very much have liked to have had different options brought to the table to avoid having to use the rare unencumbered $2 million from NCL simply to cover debt service.

Bradberry asked whether possibly ship operators could be asked to pay more for preferential berthing privileges as a way of garnering revenue for the port.

Kiffer argued that using that tactic would be giving port control to the lines, an idea which previously was rejected by the council and community members.

The council did vote to direct staff to seek information from Ketchikan Dock Company about possibly deferring lease payments for Berth 4 as a way to keep the port fund solvent until the cruise economy recovers.

The motion to transfer the funds unanimously was approved.

Other actions taken by the council in the last half of the meeting included

● Unanimous approval of an agreement for emergency dispatch services between the City of Ketchikan and the Ketchikan Gateway Borough, effective Jan. 1.

● Unanimous approval of a motion to accept the 2020 annual comprehensive financial report of the City of Ketchikan and the supplementary compliance report section.

A special meeting to interview and select a new council member is scheduled to be held at 6 p.m. Tuesday at the Council Chambers, located in City Hall at 334 Front St.

The next regular City Council meeting will be held at 7 p.m. Nov. 18, at the Council Chambers. There is time allotted at the start of the meeting for public comment.

Meetings can be viewed live via the KPU cable television service, on the City of Ketchikan YouTube channel, on the City of Ketchikan’s Facebook page and also on the City of Ketchikan website at http://www.ktn-ak.us/current-agendas-and-minutes.