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HomeMy WebLinkAbout1999 City of Hoonah CDBG Application Feb 17, 2000DIVISION CF ENERGY STORE &FUEL DIVISION 88 E.HAMLIN ST. P.O.Box C-5030 SEATTLE,WA 98105-0030 PHONE (206)323-3200 FAX (206)323-9165 February 17,2000 FAX (907)451-7251 Ms.Jo Cooper Block Grant Coordinator 209 Forty Mile Avenue Fairbanks,AK 99701-3110 Re:1999 City of Hoonah CDBG Application Dear Ms.Cooper: I am writing to comment on the City of Hoonah's application for a $200,000 CDBG block grant for "Site Preparation”for a new consolidated bulk fuel tank farm.Wards Cove has operated grocery and hardware/general merchandise stores,a tank farm,a gas station and a home heating fuel business in Hoonah for over 25 years. We oppose the City's project as it now stands and oppose the City's application for $200,000 of CDBG grant funds.Our investigation shows that the project will leave genuine health and safety concerns unaddressed and will simply construct a costly white elephant in downtown Hoonah. My letter today represents a substantial change in position from our letter of December 3,1999,which was submitted to you as part of the City of Hoonah's application for this grant.At the point our December 3 letter was written,we knew little about the project,having first heard of it just over two weeks before.Our December 3 letter expressed interest and enthusiasm for the concept, though noting that there were so many unanswered questions that it was difficult to do more than express interest.At that point,we believed that a joint cooperative project was possible. On January 7,2000 we met with the Mayor of Hoonah,Percy Frisby of the Alaska Energy Authority (AEA),and the various Native groups and the Southeast Coalition which are sponsoring the project and providing support,such as grant writing.At that meeting we were informed that the project was intended to be set up as separate entity and in competition with our tank farm, notwithstanding that our tank farm is compliant with all applicable regulations (according to both the Coast Guard and the EPA). (0.Mme Ms.Jo Cooper February 17,2000 Page 2 I mention all of this because I want to be upfront about the fact that our existing business would be harmed by the project as it is currently conceived.Our comments are no less valid because we have an economic motivation to make them.Instead of simply accepting the City's underlying assumptions,we started analyzing them.We think that any agency awarding grant money ought to similarly scrutinize and analyze these assumptions and make sure that this project really makes sense. Fundamentally,the project does not meet basic review criteria for receipt of CDBG funds and will have a negative effect on the Hoonah economy.To summarize our detailed analysis that follows this letter: 1.Genuine health and safety needs exist in Hoonah,but this project does not address those needs.The project is not self-sustaining.In addition,Hoonah already has compliant bulk fuel storage capacity that is roughly double Hoonah's existing needs,so any new tank farm construction would be surplus and duplicative. 2.The project will not lead to economic development. 3.There are numerous errors in the application regarding the use of any grant funds and how this $5,000,000 project will be financed.! If you should have any questions,please do not hesitate to give me a call.We welcome any efforts to look closely at this project,including any questions you have about our analysis.Thank you. Very truly yours, WARDS COVE PACKING COMPANY -b.| Jan Supl Store and Fuel.ivision Manager 'Although the City's CDBG grant application states that the total cost of the project is $1,425,650, the real costs are at least $5,000,000.Attachment A is a project proposal form for the SoutheastAlaskaCommunityEconomicRevitalizationTeamshowingatotalprojectcostof$5,000,000.Note that the form shows the $200,000 CDBG grant as funds already raised. Ms.Jo Cooper February 17,2000 Page 3 cc:Mr.Alec Brindle Senator Ted Stevens Senator Frank Murkowski Rep.Don Young Alaska Energy Authority City of Hoonah Mr.Jeff Staser Lt.Gov.Fran Ulmer STORE &FUEL DIVISION 88 E.HAMLIN ST. P.O.Box C-5030 SEATTLE,WA 98105-0030 PHONE (206)323-3200 FAX (206)323-9165 Evaluation of Hoonah Cooperative Tank Farm Proposal CDBG Grant Application 1.The Project Does Not Address Existing Health and Safety Needs or Create Any Permanent,Positive Economic Development Impact The CDBG application packet requires the applicants to describe the needs that the project will address.The City's describes two main types of needs justifying the project. Both are full of inaccuracies and errors.The City claims that there is a need for the project in order (1)to enhance health and safety and (2)to promote economic development. On page la,the application describes existing tank farms,stating that "All of the sites have deficiencies and are not compliant with State of Alaska and federal code [sic] related to health and safety issues.”There are indeed some health and safety issues here,but this project does not address any of them.There are deficient day tanks in Hoonah,but this project does nothing to fix them!There are two operating bulk fuel tank farms in Hoonah;with ours being the only one that sells fuel in the community.According to both the Coast Guard and the EPA,our tank farm is in compliance with all applicable legal requirements.The proposed project won't fix any deficiencies there because there aren't any.'The other bulk fuel tank farm belongs to Whitestone Logging and is operated only for its own fuel needs.There may be some deficiencies there,but the project wouldn't fix those either.Whitestone Logging's tank farm is located at Whitestone's logging base camp some five miles outside 'The AEA Database forms attached to the application show some deficiencies in our tank farm based on a 1996 visit to Hoonah.This was a mystery to us,since neither of the two agencies,which inspect our tank farm and have regulatory authority over it have informed us of any such deficiencies.When I asked Matt Carr at the EPA what standards the AEA could be using to show us out of compliance,he indicated that he didn't know but suspected that the AEA may have its own rating criteria separate from applicable legal requirements (even though it has no regulatory authority or ability to impose standards on any existing tank farm).If this is indeed what is happening,funding agencies should take into account that the AEA''s database and prioritization of needs apparently reflect its own subjective views rather than what is legally required of existing tank farms. Hoonah and would still be needed to meet Whitestone's requirements even if an additional tank farm were built in downtown Hoonah.The project doesn't do anything for any health and safety problems in Hoonah. The application is inaccurate in its recital of health and safety needs in another respect,as well.It lists many deficiencies which are clearly references to the L.Kane tank farm,which was permanently shut down and its tanks drained nearly four years ago.The AEA's 1996 Database form for the L.Kane tank farm (attached to the application)recognized even in 1996 that that tank farm was never going to operate again.Yet the City's application exaggerates the health and safety needs in Hoonah by describing problems with the L.Kane facility as though it were an operating tank farm that posed an ongoing threat of spills or accidents. The application also suggests that a health and safety hazard exists because: The entire community relies on one tank farm for all its fuel needs including electricity generation.The tank farm is over 50 years old and needs replacing.It is unlikely the present owner (Wards Cove Packing Co.)would replace the fueling facilities if the site was condemned or had a significant fuel spill. Selling fuel is an insignificant part of Wards Cove Packing Company's business and their facilities and sale hours limit availability forbothboatsandvehicles.”...Hoonah is in a precarious position;one accident could leave the community without any energy source. Loss of fuel for any length of time would cause tremendous economic losses and be a threat to human life. (Application,p.2a)This isn't documentation of a health and safety problem;it's speculation and opinion and erroneous at that.No one came to us and asked if we would repair or replace our tank farm if it were damaged.In fact,our tank farm is insured,and we most definitely would replace the facility if there were an accident.If the Coast Guard and the EPA find our tank farm compliant,no one else should be telling us that it "needs replacing.” As for the City's alarmist claim that an accident could leave the community without any energy source,if there were a major fire at our tank farm,Hoonah would be in no 2 Please note that our standard hours are from 9 AM to 6 PM six days per week.Elsewhere the application states that Hoonah is not a dependable location for refueling because of these hours and that many fishing boats and pleasure craft bypass Hoonah as a result.In fact,we are on call and available to supply fuel on Sundays for fishing boats with fuel needs If the volume of Sunday business were great enough to justify keeping our pumps open,we certainly have every economic incentive to do so.A new tank farm wouldn't find it any more economical or practical to operate during these low-sales periods than we do. worse shape than probably 100 to 200 or more other small rural communities around the state that have only one tank farm.In fact,Hoonah would be in better shape than most because in a pinch the Whitestone Logging tank farm has fuel that could be trucked into town and transferred to the various day tanks around town. DCED needs to examine,analyze and confirm the truth of the many unsupported and speculative statements in the application.I won't cover all of the errors in the City's description of existing conditions and the health and safety needs,but these examples are representative of the types of inaccuracies and loose statements that are made throughout the application.I would be happy to sit down and go through the City's application with you and point out many,many more inaccurate statements if it would be of assistance to you.The bottom line,though,is that while deficient day tanks pose some real health and safety risks in Hoonah,this project would do absolutely nothing to address any of those problems. As the second major justification for the project,the application also states that "The community is planning extensive community development projects,but without the bulk fuel consolidation project will be unable to provide essential fuel at a reasonable cost to stimulate the economy.”(Application at 9b,la-2a)There are two fundamental problems with this statement.First,there is the totally unsupported assumption that a new tank farm would result in lower costs to the community.Second,the "extensive community development projects,”as detailed below,are non-existent as far as we have been able to learn. As to fuel costs,the application states that they are high and that this project is expected to lower them without ever explaining why or how this would happen.(Application, e.g.pp.la-lb,4c,9b)The City's assumption is wrong.First,fuel costs in rural Alaska communities are undoubtedly higher than in urban areas.The City's comparisons of Hoonah fuel costs (by way of electric rates)to Anchorage or Juneau costs are comparisons of apples to watermelons and have no bearing.(Application,p.1b)The City does cite to the cost of fuel in Angoon where one of its sponsors,Tlingit-Haida Regional Electric Authority (THREA)has its own tank farm.(Application p.9a)This price is the basis of the City's calculation that every household in Hoonah would save $77 per year if the new tank farm were built.That comparison is totally misleading.First,the price cited for deliveries in Angoon is the landed price,the price paid to the fuel barge before any of THREA's costs of owning and operating a tank farm in Angoon are included.(id.,Attachment C,p.1)In addition,according to THREA's calculations,the landed price in Angoon is several cents per gallon cheaper than what we pay in Hoonah.After making both of these adjustments (even using the impossibly low tank farm operating costs projected by the City),the actual savings would be substantially less than $77 per household figure.Using the more realistic operating costs discussed below, there would actually be no savings in electric costs and probably an increase. The City has essentially just assumed that prices would go down with a new tank farm and asks that you do the same.In this case,our calculations show that the project cannot support itself without charging higher fuel costs than presently exist in Hoonah.The City provides an estimate of operating costs of six cents per gallon,but nowhere explains how that figure was reached and does not provide a projected budget or any other backup information.(Application,p.4c,9b)I suspect that the City assumed that it had the entire market,that we were out of business,and that it was spreading its costs over both wholesale and retail sales of gas and diesel fuel.Even so six cents a gallon is way,way,way too low. Since we are in the bulk fuel business in Hoonah and have some insights into local costs,I prepared a very conservative budget showing some cost figures for annual operations of a stand-alone tank farm.This budget does not include costs that do not occur every year,such as preparation of a spill contingency plan which,once prepared,typically only needs to be updated,or other regulatory costs.Attachment B is two different projected operating budgets.One assumes a tank farm business alone and the other assumes a tank farm with a gas station and home heating fuel deliveries.Spreading the operating costs over a retail gas and heating fuel business as well as over bulk sales should and does reduce the operating cost per gallon,as my budgets show.The City wishes to obtain grant funds for such a retail gas and home heating fuel business.However,Percy Frisby of the AEA informed us that the grant funds that the AEA administers (including the Denali Commission)cannot be used to fund retail sales operations where none previously existed.Since Denali Commission funds are expected by the City to pay for virtually the whole project,the budget for just the tank farm is the likelier of the two.That means the cost per gallon goes up. Even assuming,however,that we were out of business and the tank farm handled all retail and wholesale sales in Hoonah for all types of petroleum products (the best- case scenario for the project),we calculate the operating costs for a stand-alone tank farm at 45 cents per gallon.?Add this to the actual cost of buying the fuel itself (using for the sake of argument THREA's landed price in Angoon,not the more expensive price in Hoonah),and the cost to bulk as well as retail consumers is close to $1.10 per gallon in 1998.This is substantially greater than the $.9004 per gallon that THREA indicates in its internal memo that it paid us for fuel in Hoonah during the same period.(Attachment C).This also assumes that the City somewhere came up with the money to start a gas station and home heating fuel delivery business and that we were conveniently out of the picture.If it did not,the operating cost per gallon would be even higher.The City's tank farm would be a white elephant,which would end up either being subsidized by the City or going out of business. We can run our operation over fifteen cents per gallon cheaper than a stand- alone tank farm simply because we are not a stand-alone tank farm.We also operate a grocery store and a hardware/general merchandise store,a gas station and home heating fuel and commercial bulk fuel delivery businesses just adjacent to our tank farm.We reduce our costs and our prices by sharing our tank farm employees with our retail gas and home heating oil operations and by spreading costs such as insurance,office space and utilities over those operations,our two store operations and our company-wide operations.For example,our store manager doubles as the manager of all of the other businesses,including the bulk fuel tank farm.Instead of having to pay,conservatively,$66,000 plus an extra 30 percent for labor burden for a competent manager for a stand-alone tank farm,we have that person already for our store and add the tank farm to those responsibilities.Our manager doesn't need an office at the tank farm because he already has an office (heated,insured and with a telephone and 3 The operating cost of $4.00 per gallon to the City and Hoonah Schools shown on the first page of my budget (assuming no retail sales)is based on excluding THREA's purchases from any operating costs,which is a precondition per THREA's internal memo (Attachment C)of November 3,1999.As a practical matter,the $331,916 of operating costs under this budget would have to be apportioned over THREA's fuel in spite of THREA's position. support staff)just next door at the store.We get volume discounts on our insurance rates because we insure probably 20 locations in Alaska,a sizeable fleet of vessels and locations in Seattle.Having a tank farm in Hoonah is much less costly on our insurance policy than if we were a small operation purchasing a policy for just one location.No stand-alone tank farm can hope to achieve those efficiencies.At the same time,given the safety risks of a fuel spill or other accident,no stand alone tank farm can afford to put someone whose training and background is essentially that of a fuel truck delivery driver or gas station cashier in charge of managing a sophisticated tank farm. This raises another concern that is not apparent from the face of the City's application.The City's grant writer for the CDBG application,Bob Tribelhorn,suggested to us that,as one possibility,the proposed tank farm might be operated as a sort of non-profit cooperative,with each major user having its own tank and being in charge of its own tank. Such a proposal would increase the risk of spills and accidents.Under that scenario,there would be divided responsibility for the tank farm,with no one person in charge and the ongoing risk that each user thought that some other user was going to handle a particular function.Each bulk user would have some employee whose primary job was something else entirely travelling to the tank farm once a week or however often to handle deliveries to those pesky,non- compliant day tanks.Most of them would probably be quite competent,but the risk of one of them making a mistake is substantially greater than if a professional operates the tank farm.* Instead of reducing health and safety risks,such a scheme would only increase them. There is another problem with the City's fuzzy thinking about how a new tank farm is inevitably going to reduce fuel prices and prompt new economic development.The City's application never actually says so,but the strong suggestion is that Hoonah needs more fuel storage capacity.Nothing could be further from the truth.We turn away approximately every other fuel delivery barge from our supplier on a year round basis.In other words,our existing tank farm could handle twice the volume of current fuel without our actually needing to add any additional tanks.We can demonstrate that that is the case. Our excess capacity means that inadequate capacity is not any limitation on economic growth in Hoonah.It also means that there is a lot of growth that can occur in Hoonah without any need for a new tank farm.Percy Frisby of the AEA tells us that the grant programs that the AEA administers,including the Denali Commission,are not in the business of increasing a community's existing capacity in the absence of some extraordinary need.° With our tank farm already having double the capacity needed by the community,the Denali "Our sharing of employees among our operations does not pose this risk.We have a professional,full time tank farm worker handling all of our fuel transfers and the actual operations,under the supervision of the manager of our overall operations in Hoonah. >Another problem with the City's application is that it essentially proposes to replace the capacity of the L.Kane tank farm which,as noted above,has been out of business for nearly four years and was never expected to reopen as far back as the AEA's August,1996 visit to Hoonah.There has been no need for that capacity and no reason to "replace”it when it has not been part of the picture in Hoonah for nearly four years.In fact,the fate of the L.Kane tank farm shows that Hoonah will not support two commercial tank farms.In spite of the economies of having a gas station and a store to spread its costs,the L.Kane operation still failed. Commission is unlikely to find any extraordinary need or to make grant funds available.This means that even if the CDBG grant were approved,there probably would not be sufficient other grant funds to construct this project,with its $5 million dollar price tag.Note that the City does not envision any of its own money being spent and would limit its own contribution to a half-acre parcel of undeveloped land.THREA,the other prime mover,has insisted in the attached internal memo of November 3,1999 that it would not participate in this project if it had to make any financial contribution to the project and also insists that it be the eventual owner of the tank farm. We've explained why the City's operating cost estimate is absurd and why the project won't work economically.The City claims that Hoonah fuel costs are too high.In fact,our fuel prices are comparable to or better than those prevailing in other Southeast Alaska communities of a similar size.We recently surveyed fuel prices in other Southeast communities,and Attachment D shows the results.Notwithstanding what THREA pays for bulk fuel for its generators in Angoon (not including operating costs for its tank farm),the cost of both No.I and No.2 diesel (for heating fuel)in Angoon is higher than our prices in Hoonah.We are cheaper than Pelican.On commercial sales of quantities greater than 500 gallons,we were cheaper than Auke Bay (which has all of the benefits of being part of the greater Juneau community and would be expected to be considerably less expensive than any price in Hoonah).We were cheaper than Gustavus,where the federal government operates the tank farm (which should pretty convincingly demonstrate that having the City government instead of a private business operate a tank farm is no guarantee of lower prices even though the government needn't make a profit).The "high”fuel prices claimed by the City are simplytheresultofarurallocationwitharelativelysmallpopulationbase.We invite you to confirm these prices yourself (all fuel prices obviously fluctuate as the price of oil changes,but the fact that we are at or below the prices in comparable communities should not change). The City also claims that these high fuel prices are standing in the way of the "extensive community development projects”planned by the community.(Application at 9b) We asked the City and its sponsors repeatedly what these "extensive community development projects”were,and never received a concrete answer.The approach of the City and its sponsors seems to be "if we build it,they will come."That approach may work just fine in the movies,but it's a poor and wasteful way to allocate grant funds.Agencies awarding grant funds are not typically looking for a return on their investment as a bank would,but they certainly want to know that the project is capable of supporting itself.Our analysis demonstrates that this project is a white elephant,which cannot be self-supporting at current fuel prices in Hoonah. 2.Lower Fuel Prices and Cost Savings to the Community Will Not Be Realized,Nor Created. Page 8 of the application addresses the impact of the project and how it will benefit the low and moderate-income residents of community.Page 8a of the application states that this group's needs will be met in "cost savings in heating fuel,gasoline,and energy costs.” Where are the numbers to support this important claim?Our analysis set out above shows otherwise. Under our attached budget estimates,the City (or the new operating entity)will have to charge between almost 20 cents and potentially as much as 65 cents more per gallon than Hoonah Trading in order to break even.Either fuel prices will go up or the City will need to increase taxes.Certainly,consumers will not pay even 20 cents more per gallon,let alone up to 65 cents per gallon (which is our estimate if no retail gas and heating fuel sales are involved and the new tank farm gets only half the market because we continue in business). The project simply does not meet the criteria for the CDBG program.If the project is built,it will not be providing lower fuel costs to the low and moderate-income resident of the City of Hoonah as intended by the CDBG program.Ultimately the citizens of Hoonah will be worse off,since any operating losses would ultimately have to be paid by the City through higher fuel costs for its own fuel or by imposing sales or other taxes to cover the losses. The City also claims that a new bulk fuel storage facility will create jobs. Temporary construction jobs for the initial construction of the project do not constitute a valid contribution to the community under the application guidelines.These are temporary jobs.If the tank farm cannot be self-sustaining,no jobs involved in operating it can realistically be considered as "permanent"jobs. 3.Miscellaneous Errors in the Application There are other miscellaneous defects in the City's application.The application states that the Hoonah project "is a high priority for the Denali Commission.”Application page 3a.Actually,the City of Hoonah has been rated as number 91 on a list of 141 communities on the AEA's priority list for bulk fuel upgrades.According to Mr.Frisby and Joel Neimeyer of the Denali Commission,funds used to address bulk fuel storage problems are to be used in the order of need,making the Hoonah project among the bottom half of the neediest communities. Attachment E is a priority listing of those communities.Even if all of the City's assumptions and information was correct,the Denali Commission can address perhaps only 20 sites per year.Thus,it looks like it will be at least 4-5 years before the City of Hoonah is legitimately high enough in the priority list to be reviewed for bulk fuel upgrade funds for design or construction under the Denali Commission.Even then,of course,the identified problems in Hoonah are all either day tanks or Whitestone Logging's private tank farm. The grant funds would not be used for "Site Preparation”as claimed on page 1b of the application,but rather for funding of design costs. The application states that a bulk fuel tank farm was a top priority of the Hoonah Economic Development Plan.(Application p.2a)In fact,bulk fuel storage issues are not defined as a top priority in the economic development plan or as "one of the highest needs in the plan"as related in the application.Instead,bulk fuel is one of 15 non-prioritized items listed in the economic development plan as things to accomplish to meet the goals of the economic plan.Elsewhere in the plan,seeking funding for utility expansion,in particular for sewer service expansion,was cited as a "top Capital Improvement Priority,”a designation found no where else in the economic development plan (Attachment F is an excerpt from the economic development plan showing this.)The City's characterization is simply not accurate. Perhaps even more important to this application process is the statement made on Page 7 of the application in response to the request that the applicant include information showing the right to use the land needed for the project.The City states: The land needed for the project is located on property currently owned by the City of Hoonah and Hoonah Trading Co.The City of Hoonah will negotiate a lease with Hoonah Trading Co./Wards Cove Packing (Parent Company).***Documentation for clear title ownership will be obtained prior to the grant award. This will include a title search. Obviously,what we have learned about the project since the application was submitted to DCED makes it highly unlikely that a lease could be arranged.I suppose we should congratulate ourselves on a narrow escape.Before the City rejected our "win-win"approach, we might have gotten into this project without running the numbers,since grant funds are,after all,someone else's money.Fundamentally,though,the fact that the City would be spending someone else's money is a big part of the problem here. CONCLUSION This is an ill-conceived project which illustrates the pitfalls of allowing applicants to aggregate various grants to equal the cost of construction of a project without everhavingtomakeameaningfulfinancialcontributionthemselves.The City's sole contribution here was to be a half an acre of undeveloped land.THREA (whose internal memo indicates that it expected to own and operate the project)specified that it would not participate if it had to put any of its own money into the project.(attached)If these parties had a real financial stake going into the project,perhaps they would have analyzed it more carefully.Of course the operating losses would eventually give them a stake,but I don't think anyone was thinking too hard about that when applying for what is essentially free money.Ultimately,a few temporary construction jobs are no justification for spending $5 million dollars on a white elephant. If you should have any questions,please do not hesitate to give mea call.We welcome any efforts to look closely at this project,including any questions you have about our analysis.Thank you. Prepared By:Jan Supler Store and Fuel Division Manager Wards Cove Packing Company CITY-OF -HOONAH 1D:9079453445 DEC 21°99 10:44 No.001 P.o2 "SOUTHEAST.ALASKA COMMUNITY ECONOMIC REVITALIZATION TEAMPROJECTPROPOSALFORM. .°Shey arsee ."weeCOMMUNTIY:'City!'of!iiss :my 2 CONTACT nabeytscteter"wy "8 Nas 7. +ePHONE:(907)945-3663:AK (907):.945 =3645.”"ADB,on cing.EDHeORaHSAREH99BI0RachHNIAIL:City.of:Hottiah.@'hooiahspAamTe,12/07799 :ae ss a PROJECT TITLE,Consolidated Bulk Tank Farm ; ro____,Project Type:__Technical Assisiance/CapacityBuilding.is this a phased project?yesWyea,chis ic phase of total phases over,years Feasibility Susdy/Engincering/DesigaTotaProjectCost$_3 000)000,000 bnisemarere ConeveetonProjectCoatRainedinDate:$__307.200 (Land 80,000,$200,000 CDBGy $27,200,Denali Commission)Amouat of this Punding Kequest §,000 Completition Time of Project eptem er,.Is.map evailable for this project?1 no]ie ya,will you plcasc include the map with this foo. 1.Briefly describe the project. A)Whatisthe project? Build a consolidated bulk fue]tank farm in the City of Hoonah which will benefit the the entire community. B)Who is involved? The residents,electrical authority,City of Hoonah and various large businesses. C)When did you begin working on It?The idea was [iret conceived in September,1999 D)Why is it needed?-probicm/need/strategy that the project addresses. Nigh cost of fuel for personal and commercial use.Reduced fuel cost should equale to loweelectrictyfortheCityofHoonah.; E)Wherc will it be located and whatisthe population that it will serve? The City of Hoonsh has selected three potential sites. 2.Summarize efforts you have taken to dale regarding this project. A)Ptanning-is this project part of a plan (economic devt.plan,comprehensive plan,etc.),how does it fit in the plan? The original plan was approved by the Denali Comminsion.The City of Hoonah has submitted a CDBG application for Site preparation in the amoune of $200,000. B)Technical ccadiness -list the feasibility,marketing,enyjneering,dcsign or other technical studies and plans that are needed,whether they have been started and the stage the plan is in toward complction. The Division of Energy is preparing cnginccring studies for the proposed sites. C)Funding -what funds have becn secured?specify $amounts,sources,loca}match,and any conditions attached, The Denali Conmission has funded 35%of budgeted costs. D)Contact with outside agencies -whn have you contacted about the project and what Information have you gathered? We arc working with the Division of Energy,T)inget &Najda Central Council and the S.E.Conference. E)Are there other efforts you have made that are unique to this project? Batam ia Cha ERT PN Mie 9249.Keichil Attachment A Mraft as of 11/1 De de ee ee ee ee"peususivrins "nen would you be ready to start on this project and how long wend if take to accomplish?a Ready to start on March,1999 'Timetocomplkete___December,1999Whatpermitswillberequired?-list the permit,permitting agency,and states of existing applications.There will need to be permits obtained from all federal andStateRegulatoryagencics.j Are other projects rclated to or dependent on this project?yes [7]no &9 \ Is this project dependent on other activitics or actions?yes]nok. Ifyes,describe projects,actions or activities,specifying phases where appropriate. What are the anticipated outcomes of this project?Ifa section does not apply,mark it NA. A)How docs it make your community a better place ta live and work? Provides lowerc utility,fuel and heating cost for the residents and businesses of the community. B)How does it support expansion of existing business or creation of new business? Lower utility and operating costu wil]increase new business. C)What type of needed infrastructure does this project provide? D)Llow many full-time,permanent jobs will this project crrate and/or retain?createin 1-3ycars _10 creatcin 3-5 years 3 retain E)How many businesses will be affected by this project and how? All businesses in the community will be affected. ¥F)What health and safety problem will this project address? lower cuet of heating fuel and electricity will help low income families and provide for a safer cleaner primary heating system. G)What state and/or federal compliance requirements will this project satisfy or correct? Bulk Tank regulations. H)How will the project improve the environment? Remove all non-compliance bulk tanks and provide one safe compliant tank farn. 7,Are there other significant factors we should be aware of?-will the project take advantage of #bird-in-the-hand opportunity,dtilize volunteer efforts,address emergency declarations,etc. 8 What measures of success will you use to evaluale this project? Attachment A Sreafi ae nf 11/18 Proposed Hoonah Consolidated tank farm Annual Operating Expenses &Break-even analysis Assumptions:1 Consolidated tank farm with NO RETAIL SALES,only serving City of Hoonah,THREA,Hoonah Schools(Does not include ay deliver equipment.) Operating expenses: Payroll Manager-Tank farm($5500/mo.)66,000 Yard employee($15/hr)31,680 Bookkeepper/Ordertaker ($12/hr)25,344 Total Payroll Costs Indirect payroll(29.5%of payroll) Repairs &Maintenance Insurance Heating Electricity Telephone Other Utilities SEAPRO Licenses &fees Training Office supplies Other expense/income Total operating costs Annual tank farm subsidy from Hoonah Schools &City of Hoonah Operating cost per gallon to be shared by City of Hoonah &Hoonah Schools for tank farm to break-even (Based on 1999 purchases of 82497 gal.) Page 1 of 1 Attachment B 123,024 36,292 30,000 24,000 3,000 60,000 3,600 3,000 5,000 3,000 5,000 12,000 24,000 331,916 331,916 94.0234 Rev.2/17/00 Proposed Hoonah Consolidated tank farm Annual Operating Expenses &Break-even analysis Assumptions:1 Consolidated tank farm with RETAIL SALES to the public Operating expenses: Payroll Manager-Tank farm($5500/mo.)66,000 Truck Driver($15/hr)31,680 Dockman 31,680 Relief Driver/Dockman(7day op)12,960 Bookkeepper/Ordertaker ($12/hr)25,344 Total Payroll Costs Indirect payroll(29.5%of payroll) Repairs &Maintenance Insurance Heating Electricity Telephone Other Utilities SEAPRO Licenses &fees Training Office supplies Other expense/income 167,664 49,461 60,000 30,000 5,000 60,000 6,000 3,000 5,000 3,000 6,000 12,000 30,000 Total operating costs 437,125 Costs to to be recovered annually from Hoonah Citizens 437,125 Dollars per gallon to subsidy for consolidated tank farm to break-even.(1)90.90 (1)Assumes new tank farm captures 50%of retail sales in the community. Eliminating all competetion reduces overhead cost to $.45 Page 1 of 1 Attachment B ;j j Rev.2/17/00 J 599 01:46 PM HOONAH+TRADING*COMANY 9079453309 P.ee8 - TLINGIT-HAIDA REGIONAL ELECTRICAL AUTHORITY Estimated Benefits of Relocating the Hoonah Tank Farm To Receive Dockside Fuel Deliveries November 3,1999 There will be benefits to three parties:the City of Hoonah,T-HREA,and THREA''s customers. Benefits for the City of Hoonah:1,Compliant tank farm with less risk of fuel spills. 2.Sales tax revenues on retail fuel sales. 3.Increased employment opportunities from retail sales outlet. 4.Fuel price competition could lower fuel costs to the citizens of Hoonah. 5.Ability to purchase fuel seven days per week in Hoonah. BenefitsforT-HREA:1.Compliant tank farm with less risk of fuel spills. 2.Wholesale fuel price instead of retail.The average price per gallon of fuel THREA paid in Hoonah in 1998 was $.9004.In Angoon,where we are able to receive dockside delivery directly to our tanks we paid an average price of $.6271 per gallon in 1998.If we had enjoyed the same price in Hoonah as Angoon,which we believe we would since it would be the same fuel supplier,we would have saved $99,899 in fuel costs in 1998. 3.Potential retail sales could boost company revenues.As long as the retail outlet at least pays for itself,we would break even.If the retail sales are profitable,the additional profits would be used to lower rates to our customers (THREA is anon-profit company). BenefitstoTHREACustomers:1.Lower fuel prices translate into cost of power adjustments to consumers. If the price of fuel is lower than the base rate,a credit is given to customers based on the number of kilowatt hours they purchase.This means lower bills to consumers.If we translate the $99,899 in estimated 1998 fuel cost savings into per customer savings,this would mean an average savings of $76.79 per customer per year,or $.0084 per kilowatt hour sold.If this decrease in fuel costs is given solely to the Hoonah customers,the savings would be $252.27 per year,or $.0210 per kilowatt. hour sold based on 1998 sales figures. Attachment C 2.Hoonah citizens would benefit from fuel price competition if the retail outlet is put in place.Even if the retail outlet is not started,THREA could sell diesel heating fuel to Hoonah citizens at a competitive rate using its delivery truck. 3.Potential for increased employment opportunities. 4.Potential electric rate reductions from profits from retail sales. 5.Ability to purchase fuel seven days per week in Hoonah. Questions for City of H h: 1.Do you have an estimate of annual gallons soldin Hoonah of a.Diesel fuel (for heating,for fishing boats,or other purposes)?b.Unleaded gasoline sales? Other inf ion:. 1.THREA is unwilling to undergo this project unless a.No financing is necessary (in other words,the entire project must be paid for with grant funds). b.No additional costs to THREA (e.g.,lease payments on land,etc.). Any costs would directly undermine the fuel cost savings realized, and therefore would undermine benefits to THREA and its customers. An analysis would need to be done to determine the financial effects of any additional costs to determine if the project is economically feasible. c.THREA would own the entire facility. Attachment C 60 11:21 AM HOUUNAM?TRADING?COMANY FoeTIva5pssou07 ATTN:Jan Supler wv Hoonah Trading Heating Fuel Survey Date:2/04¢/Pm> Lone.L (Cake Tubs 795-4649KakeJohn-Wiltle-Fuet 6ver007-705:9442 Pallcan-Pelican Fuel Dist.907 738-2233 Terry Warta Klawock-Klawork Delta Fuels LLC 907 755-2909 Elfin Cove-Elfin Cove Fuel 907 239-2208 Yakutat-Delta Western 907 784-3311 Metlakatla-Annette Island Gas Svc 907 888-7851 Angoon-Angoon Oil &Gas Co.907 788-3436 Guatavus-Gustavus Gas Co.907 697-2481 (#3331 ¢Skagway 2303 Foss)Basle 100 gallons HF#1 HF#2 HOD£37 ($3 ¢¥7 1.27%[a4 L4Q2 32 IGS 135 1.55 --50. 1.59 1.49 {aIqé Llp Attachment D -Ul Bulk Fuel Storage Deficiency Rankings © 141 Communities Assessed in 1996-98 Weighted Ave.Weighted Ave.Weighted Ave. Points per Points per Points per Tank Farm Community Tank Farm Community Tank Farm 127.5 Part Heiden 67.7 Holy Cross 43.0 122.9 Shageluk 67.5 Ruby 42.5 121.7 Kiana 67.4 Ekwok 418. 119.4 Emmonak -67.3 Gustavus 417 116.1 Deering 67.0 Port Lions 40.0 115.1 Sheldon Point 67.0 Pelican 39.5 115.0 Lower Kalskag 66.8 Pilat Station 39.4 110.0 Shishinaref 65.4 Levelock 37.6 108.2 Stony River 65.2 Anak 37.5 107.4 Telia 65.0 Newhalen 37.3 102.9 Alakanuk -64.3 Grayling 365 101.3 Brevig Mission 64.7 McGrath 35.4 101.1 Nightmute 64.3 Kasaan 3.0 100.0 Port Alsworth 64.0 Stevens Village 34.7 99.8 Russian Mission .63.7 Quinhagak 34.7 98.8 Newtok 63.3 Koliganek 33.6 98.6 Shungnak 62.4 Metiakatla 33.4 $5.6 Hooper Bay -62.1 _Scammon Bay 32.4 $4.6 Fatse Pass 61.0 Saint Mary's 32.1 94.3 Bettes 60.6 Teller 32.0 93.2 Pifot Point §9.5 Chignik Bay 31.7 91.0 Coffman Cove 58.2 Shaktoolik 31.5 90.1 Ouzinkie 58.1 Wates 29.6 85.1"Craig 575 Ambier 29.4 84.3 South Naknek 573 Goodnews Bay 28.7 83.7 Tuntutufak 572 Kawock 28.5 83.2 Unaiakeet '$7.2 Hughes 26.9 -826 Allakaket 57.0 Kwigillingok 25.0 81.9 Kaltag -§5.9 Twin Huls 24.6 815 New Stuyahok 54.9 Kivalina 23.3 60.3 Mekoryuk 54.9 Perryville 20.9 80.0 Pedro Bay 54.9 Selawik 20.1 796 Elim 54.5 Alaina 20.0 78.0 Thome Bay 532 Hollis 20.0 77.8 Marshall 50.3 Pitka's Point 20.0 72 Avanof Bay 0.1 Nondaiton "46.0 76.4 Elfin Cove 50.0 Galena 15.7 75.2 Tenakee Springs 43.5 King Cove 10.4 74.3 Kobuk 49.5 Hydaburg 82 743 Fort Yukon 49.0 Cold Bay 73 72.3 Iftarnna 48.4 Port Alexander 62 TAT Tatitlek 48.0 Saint Michael 5.8 71.3 Hoonah 47.4 Sand Point 5.3 *Mountain Village 70.3 Savoonga 46.7 Karluk 5.0 White Mountain 70.0 Golovin 462 Akutan 4.7 i 69.5 Kipnuk |45.6 Naknek 3.6 69.1 Kake 44.9 Angoon 0.4 69.0 Eek 43.3 ume Village 0.0 Attachment E emamees Se caeearedCITYOFHOONAH.©a &.=_Sas { oe ae'-_aS 3OVERALLECONOMICbevelonmewiiEARgeMay,1999.4a.dtis made up of personsexivork vee Bibi al agile BCBS eadevelopmentofthecity.;/A Tsiof sazpeople who serve on the commie *witicd brief descriptiona42”"iyoftheirbusinessand/6r.political:batkoround is provided i AgpendixexOfte.=”=o a te To f--nk an ym =iN =-'4/-.3f ?,om uf7 CloreHoonahiisapredomityNative_conmnmimity locate of sorteof'phictagotIsland,the northem-most sland ins BagAliska charchipelago:Itiis”situaréd'oymrssLn'the eastern shore of PortFiederik =wit (GESHoonahistiome,45 aie aeaEesVeSe:.+,i #7westofJumeanand1002aic"iles non «fog mite of ama CominthisarentatmybeFicodtyhissadEeraioyteARS:rs Fess 4 7A S 22%ae SY WN3.HISTORY ""£7 }:/oa Dy As t a (SEHoonzhisthelargestTingitSAlaskd*Prior to the coming of Russian Settee arenumbersduringthelate1700's the traditional history of Hoonah revolved''around Saaing with other peoples,notably the interior tribes in Canada,and the establishment ofthe various clans and clan houses in town. Attachment F Sewerage The city's waste water collection and treatment system was funded by the U.S.Public Health Service and was completed in 1974.The plant has the capacity for a community of 2,000 people and is generally well operated and maintained.A numberoflift stations have been installed throughout the community in order to carry sewerage from beach front locations to the plant.A sewer line was installed in late 1992 to those homes outside of the former city limits on Garteeni Highway.However,at this time the lack of financial resources to expand sewer lines to service new development may hold up some residential and business growth m town. While the plant's capacity seems adequate for the city's population of approximately 1,000,there are problems with infiltrationandinflow,especiallyinthespring during break-up.The city staffalsobelieveresidentsrunwaterintheWintertopreventfreezingwhichcontributestoexcessive loads.Since 1984 thecity has repaired or replaced a substantial portion of the lines in the city, especially in the older areas of town.This appears to have lessened the inflow and infiltration problems. Because the City was unableto obtain funding to installasewerline to the airportaseptictank was installedaspartofthe State of Alaska,DOT,airport upgrade. Solid Waste Previous to 1984,Hoonah solid waste was disposed of in an open dump located just behind theresidentialareanearthewaterstoragetanks.It was a health hazard and safety hazard for it invited bears to visit.With state fimding assistance,a better locarion was developed on the White Alice Road about two miles from town.This new site is located along a ridge Ime where there is Ittle chance for uphill water sources to infiltrate the fill It is removed from town and operateswithperiodiccoveroverthewasteminimizingtheproblemswiththeolddump.Site restoration 'was completed at the old dump site.The site was covered with soil and a rifle range constructed on top. AttachmentF The design report for the new landfill indicates that the site was selected based primarily on the need to relocate the facility in a short time frame.In June 1995 the Southeast Alaska Regional Health Corporation (SEARCH)completed an assessment of the capacity of the landfill'.They determinedthatthe City probablybas 15-20 years capacity left at the present landfill,based on current operation,existing DEC Solid Waste regulations,projected population,and disposal volume of the projected population.However,this assumes use of the entire area and if slopes are too steep the whole area may not actually be available.SEARCH firther noted that the Hoonah waste stream could be significantly reduced by recycling,proper disposal of hazardous waste,and incineration.Incineration in particular could reduce the waste stream from 50-80% and thus increase the use of the landfill for two to five times as many years. The sewer collection and water distribution systems also needs to be expanded to serve new development.The lack of utilities appears to be holding up expansionofthe City's "NorthSubdivision".There is also a lack of long term capacity to handle ""oray water”.Seeking finding assistance for utility expansion has also been a top Capital Improvement Priority. Electric Utilitv Hoonah's electricity is supplied by the Tlingit Haida Regional Electrical Authority (THREA) diesel generators.The rural location,price of fuel and limited fel storage capacityallcontribute to the high cost of this energy.Some believe that the high cost of electricity is inhibitmg economic development in the area..In the last year interest has been shown by outside power companiestotakeover production of power from THREA.While presentations to the publichaveguaranteedshorttermsavingsthelong-term affects are uncertain.At this pomt there has been no change in the status quo.) The conmmunity is interested in power-sharing with other communities and im alternative energy sources,inchiding hydroelectric power. 3 June 5,1995 letter from Southeast Alaska Regional Health Corporation,Shawn Sorenson,to Robert Pinard,City of Hoona. Attachment F