The History of AWG 2006
There are two basic issues relating to the Kenai
Peninsula Borough's bid to host Arctic Winter Games 2006. The first are legal
issues, which we will discuss later, the second issue is about the
money.
Over time, these games could cost each taxpayer a
lot of money! The Kenai Peninsula’s economy is cooling off. With industry
cutting back staff and shutting down facilities, there will be fewer taxpayers
available to share our tax burden. Those of us left are facing huge tax
liabilities to pay for non-essential niceties such as the Arctic Winter Games.
KPB Mayor Dale Bagley has been calling Arctic
Winter Games 2006 “economic development”. He supports
spending over $5 million
in exchange for $2-3 hundred thousand in ticket and tee shirt sales. While
there will be some “economic impact” for hotel, restaurant, and gift shop
owners, these businesses do NOT have to share any of the expense. Their
financial support and/or in kind contributions will be strictly on a voluntary
basis.
The ONLY
group actually “on the hook” for the $5 million are Kenai Peninsula
Borough taxpayers!
Mayor Bagley has signed the Arctic Winter Games
agreement and $200,000 has been included in the 2004 borough budget to start the
process of bringing these games to the Kenai Peninsula. By signing this
agreement, Mayor Bagley has
committed the borough to financially insure the Games, regardless of support
or lack of support from other governmental entities or private donors. Ordinance 2003-24, will
appropriate the $200,000 and provide final authorization for borough
participation in the games.
Members of the Kenai Peninsula Borough Arctic
Winter Games 2006 organizing committee have proposed capital projects that could
cost taxpayers millions to construct for their 5 day event, and would cost
additional millions more each year to maintain and operate
Several smaller capital projects are included in
the bid agreement. This list includes an indoor
ice rink in Homer,
enclosing the Kenai ice
rink, and $587,350 to
develop a biathlon range
in Soldotna. If the Kenai Ice rink upgrade is temporary, which is a real
possibility, it will require additional expense to bring the ice rink back to
its current status.
Major capital projects proposed include a
multi-million dollar
multi-purpose building in Soldotna and a downhill
ski resort in either Homer or Cooper
Landing.
In April 2002 Andrew Carmichael with the Soldotna
Parks & Recreation Department said, "Most of the event facilities needed already
are available in Soldotna. The only sticking point might be the
peninsula's lack of downhill skiing facilities". He said ideas would be
needed for where to hold the skiing events. He mentioned Cooper Landing and
Homer as areas where a venue possibly could be built.
In May 2002, Carmichael told the chamber crowd, "More athletic facilities could enhance the
possibility of getting the games. Specifically,
lack of ice space, a downhill ski slope and a multipurpose area suitable for
games such as indoor soccer could be weak points of the application, but the
peninsula has areas and resources that could develop such facilities between now
and 2006.”
The organizing committee mentioned these needed
construction projects in December 2002. An unnamed consultant working with
the peninsula's Arctic Winter Games Bid Committee in June 2002 said, "The games
would require building some amenities not yet available on the peninsula --
including a downhill ski slope".
Bid committee member Bill Popp in January 2003
said, "We
have, in my opinion, a proven history of being able to do these kinds of
projects," mentioning the Alaska SeaLife Center, the Soldotna
Sports Center and the Challenger Center as examples of the peninsula's ability
and willingness to secure public funding for major money losing projects.
Three Alaskan communities, each using state
grants of $45,000, submitted competing bids to host Arctic Winter Games 2006.
In 2003, the Kenai Peninsula Borough was "awarded" the games. Other bidders
include Juneau and Fairbanks. The KPB bid
$5,044,533, Juneau bid
$4,400,000, and Fairbanks bid
$2,400,000.
It is interesting to note that Fairbanks proposed
an operating budget of $2.4 million to produce the same games! Why is the KPB
bid so much higher? How much money will Arctic Winter Games 2006 actually cost
to produce? Several possible answers include the following:
1.)
$2.4 million? Rick
Solie Fairbanks bid committee, January 2003.
2.)
Between $3.1 and $3.2 million?
Andrew Carmichael March 2002
3.)
Between $3.5 and $4 million?
Andrew Carmichael April 2002
4.)
Between $3 and $5 million?
Dale Bagley Oct 2002
5.)
Between $4 and $5 million?
Assembly President Pete Sprague April 2003
6.)
$5.2 million? Bill Popp
January 2003
The Kenai Peninsula Borough has agreed to spend
over $5 million mostly public tax dollars to produce Arctic Winter Games 2006,
and expect to generate about $200,000 in revenue from event ticket and tee shirt
sales, plus $100,000 in sales tax (based on $5 million being spent).
There will be some economic impact for local
providers of accommodations, restaurants, auto rentals, liquor stores, and gift
shops. Estimates of this impact range from $1 million to $15 million depending
on whom and when you ask.
1.)
Between $1 and $3 million?
Rick Solie Fairbanks bid committee, January 2003
2.)
Between $1 and $3.6 million?
Fairbanks News Miner, March 2003
3.)
$4
million? Andrew Carmichael May 16, 2002
4.)
$6
million? Andrew Carmichael May 6, 2002
5.)
Between $6 and $7 million?
Andrew Carmichael April 2002
6.)
Between $6 and $9 million
or more? Dale Bagley April 2003
7.)
Between $10 and $15 million?
plus required construction costs, organizing committee December 2002
Whitehorse was a previous host of the Arctic
Winter Games. Again, depending on whom you ask, the amount of economic impact
varies considerably!
1)
$4 million? From official AWG web site April 2002.
or
2)
$10 million plus? Tom O'Hara, a consultant to the borough's Arctic
Winter Games Bid Committee, June 2002.
Several very IMPORTANT questions the Borough Assembly members should have
asked BEFORE any public funds were appropriated:
1. Exactly what is the total financial exposure to borough taxpayers?
2. Will the operational expenses for these games diminish our borough savings
account? If so, how much will borough mill rate need to be increased to balance
future budgets?
3. Exactly what new facilities will be built?
4. How much will any new facilities cost to build?
5. Where will the money come from to build these new facilities?
6. Who will own these proposed new facilities, and how much will it cost to keep
each new facility open when the games are over?
7. What will be the annual operations and maintenance expense for the life of
any new facilities, and who will be responsible for these costs?
8. Will there be real property tax mill rate increases required to pay for
keeping any new facilities open?
9. Is there a conflict of interest with borough administration personnel serving
as officers on the "host society" board?
And the answers are?
Public Opinion
How
much REAL support is there for the Arctic Winter Games? To answer that
question a team of volunteers administered a 10 question survey to 161 people
selected at random from the crowd at Kenai’s 4th of July
celebration. 161 survey responses for such a small population base provided a
good representative sample with a small margin of error. The questions and
results are show below:
1. Are you a resident of the Kenai Peninsula
Borough?
Yes: 93.2% No: 5.6%
Don’t Know/Not Sure: 1.2%
2. Do you pay real property tax
in the Kenai Peninsula Borough?
Yes: 69.4% No: 28.5%
Don’t Know/Not Sure: 2.1%
3. Do you support borough
involvement in producing Arctic Winter Games 2006?
Yes: 48.4% No: 33.2%
Don’t Know/Not Sure: 18.4%
4. Should our borough consider
spending over $5 million public tax dollars in exchange for $200,000 to $300,000
in Arctic Winter Games revenue?
Yes: 16.7% No: 68.6%
Don’t Know/Not Sure: 14.7%
5. Do you think the borough mayor
and assembly members should be required to follow the same laws they make for
the public?
Yes: 95.7% No: 1.8%
Don’t Know/Not Sure: 2.5%
6. Would you support borough
involvement in building a new ski resort in Homer or Cooper Landing for the
Arctic Winter Games?
Yes: 19.1% No:
62.5% Don’t Know/Not Sure: 18.4%
7. Would you use a new ice rink
in Homer, an indoor soccer field or Biathlon range in Soldotna, or ski resort in
Homer or Cooper Landing?
Yes: 27.3% No:
60% Don’t Know/Not Sure: 12.7%
8. Do you want our borough to finance the
construction and pay future operational expenses of these facilities?
Yes: 13.6% No:
67% Don’t Know/Not Sure: 19.4%
9. Should the borough underwrite and insure the
financial success of the Arctic Winter Games?
Yes: 15.7% No: 64.7%
Don’t Know/Not Sure: 19.6%
10. Are you willing to pay higher taxes to
support the Arctic Winter Games and operational costs of any new facilities
constructed?
Yes: 11.4% No: 79.7%
Don’t Know/Not Sure: 8.9%
Question 1 and 2, revealed the majority of those surveyed are borough residents
and property tax payers.
In
question 3, less than half support borough involvement in producing the games.
Later these numbers quickly eroded when presented with cost figures and use of
public tax dollars.
The
majority in question 4 did not approve of using public money for such a small
return on their "investment".
In
question 5 the majority think borough officials should play by the same rules as
the public is required to.
Questions 6 through 9 shows little support for the borough building new
facilities, for paying future maintenance and operational costs of any new
facilities, and few would use them if built.
Question 10 clearly shows lack of public support for the Arctic Winter Games if
new taxes are required.
Letters
ARCTIC WINTER GAMES
The "Plan"
For
sake of discussion, let’s assume the following scenario: You make an
appointment to see a local banker for the purpose of getting a loan. At this
meeting the banker is told the following:
-
You are a nonprofit
corporation with NO assets, and want to borrow $5,044,533
-
You expect to employ
12 administrators at a total cost of $1,097,008
-
You are going to
feed 2,000 people for 7.5 days in school cafeterias at a cost of $244,000
-
You will provide
accommodations for the same 2,000 people for 7 nights in public schools at a
cost of $132,500
-
You plan to build a
3,500 sq. ft. building that will be used for a week, at a cost of $450,000,
and it will need to be maintained and staffed for life
-
The total capital
investment will be $801,400 plus you accept financial responsibility
for the contractual capital requirements of several other entities that are
not co-signing for this loan.
-
However, you have
several rich uncles that might give you some money to help pay off the
loan, but they also will not co-sign.
-
For your investment
of $5,044,533, plus time and effort you expect to make $198,500 gross.
Of
course the banker would be a fool to make a loan based on this "business plan",
especially while the Kenai Peninsula’s economy is cooling off. Many bankers are
now seeing more “problem” loans and increased foreclosure rate.
How
much will the Arctic Winter Games cost, and who will pay this bill? Are
new facilities needed, who will pay construction costs, and then own them?
If new facilities are built, who will pay future operations costs? How
much will taxes be raised to pay for this? So many questions, so few
answers. There was a time when public money was not spent until all the
answers were known. Now it seems you just need a few friends in government
to make money fall from the heavens! Why worry, it's SOMEONE ELSE'S MONEY
anyway!
Mike
McBride
Kenai
Borough administration not playing by rules on Arctic Winter Games
A home run? Sure, but the bat was corked!
Over
the airways, in newsprint and in person, much has been said these past few weeks
about the borough government's role in obtaining and hosting the Arctic Winter
Games.
Back
in 2000, when Borough Mayor Dale Bagley was first elected, he created the
Community and Economic Development Division and staffed it with two assembly
members. Could this have been because he had some projects he wanted to do and
didn't want to have to comply with borough economic development review as per
the code and because he was unhappy with the Economic Development District?
Soon
after, this organization, CEDD, aggressively courted and wooed the organizers of
the little known Arctic Winter Games. The borough's theory was to take a few big
swings, maybe hit a home run and make it to the fall classic (as the games have
been tagged by this home team). Well, CEDD swung its bat and ... Boom! Contact!
As the bat crackles, the ball is lofted high into the air.
Now,
as we all have been made keenly aware by a constant public relations campaign,
the Kenai Peninsula Borough was indeed chosen as the host community for the 2006
Arctic Winter Games. We also know that the borough should operate per its
charter and respect the ordinances and statutes that have been legislated and
codified.
So a
few concerned and prudent citizens asked out loud which laws and policies guided
the borough and empowered it with the authority to underwrite and fund these
games? After all, $5 million is an awful lot of accumulated property tax revenue
to spend without exercising due process.
A
host society is supposed to be formed as a nonprofit and standalone entity to
put the games on. It should be formed as a limited liability corporation and be
totally disassociated with borough departments and employees to ensure the games
are above reproach. As it stands now, the borough mayor and the two former
assembly members, now employees of CEDD, are to be members of the board of
directors.
It
turns out that back in 1999, when the borough was considering using its
state-granted powers of economic development, it did indeed codify some state
statutes defining economic development. These codes expressly spelled out the
criteria and guidelines concerning the borough's powers regarding economic
development. Collectively, these codes are known as Chapter 19.30 of the borough
code.
Sammy
Sosa, as well as every baseball fan, knows that major league baseball has a hard
and fast decree about corked bats in the rulebook. If a player uses a corked
bat, he's out ‹ no exceptions. Well, the bat that the borough's CEDD used to hit
the Arctic Winter Games' "home run" was corked, just like Sammy's!
You
see, Borough Code 19.30 wasn't adhered to. It turns out that the borough far
exceeded its statutory powers when it pursued and won the Arctic Winter Games.
Now,
those of us keeping track of the rules are calling foul. Ah, but wait. The
manager of the home team, Mayor Bagley, wants the governing body, the borough
assembly, to exempt this particular bat because the Arctic Winter Games "home
run" is so exciting and popular with fans. In fact, Mayor Bagley wants the
assembly to pass an ordinance to exempt the Arctic Winter Games from 19.30.
When
politicians who have no accountability run newly formed government agencies,
they don't seem to worry about little things like adhering to policies and
procedures, not even the laws they created. It seems that whenever someone gets
caught doing something wrong, they just simply pass another ordinance to
legitimize their actions. After all, why should the government be held to the
same level of accountability as the rest of its citizens?
Kenai
Peninsula Borough residents need to contact their respective borough assembly
representatives and let them know that what the borough administration is doing
just isn't right. Sure, we all want the Arctic Winter Games, but the borough
government is setting a dangerous precedent by going about winning them in such
a devious manner. Without consent of the voters, the borough government is
arbitrarily changing the rules it uses to govern.
It's
time we, the people, hold the borough administration accountable and see that it
functions within the laws created to protect the public interest.
Gary
Cadd
Kenai |
