MEMORANDUM

Kenai Peninsula Borough

Finance Department

TO: William R. Popp, Assembly President

Members of the Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Borough Mayor

FROM: Jeffrey Sinz, Finance Director

DATE: August 21, 2000

SUBJECT: Assembly Ordinance 2000-19-10 Moose Range Meadows Utility Special Assessment Fund

The assembly adopted the Resolution of Necessity 2000-067, establishing the Moose Range Meadows Utility Special Assessment District (USAD) during the August 15, 2000 meeting. With passage of the Resolution of Necessity, the next step in the USAD process is assembly consideration of a Resolution to Proceed. The resolution will be introduced for assembly action at the September 26, 2000 meeting. If approved, construction of the natural gas line may begin this fall, 2000. The attached ordinance appropriates the estimated project costs and authorizes an interfund loan from the General Fund to finance the USAD.

The total cost of the gas line project is estimated at $82,969.76. This includes direct cost of $72,910.00 and indirect administrative cost of $10,059.76. Funding for the project will be provided through an interfund loan from the Borough General Fund. The loan will be repaid through 10 annual assessments levied on property located within the USAD. Billings will include an interest charge equal to the published prime rate in effect at the time of the loan plus 2%. The prime rate is currently 9.5%. If it remains unchanged through project completion, residents of the USAD will be charged an interest rate of 11.5%(9.5% + 2%). This is the same formula used to determine the rate of interest on the interfund loans used to finance the other USAD projects. Early payments can be made without penalty.

If for any reason the USAD is not formed, the loan will not be made and the General Fund will absorb any administrative costs that exceed the $1,000 filing fee received with the petition.

A shortened hearing date is requested so that this matter can be considered along with the Moose Range Meadows USAD Resolution to Proceed during the September 26, 2000 assembly meeting. This schedule will facilitate completion of the project during the 2000 construction season.