2014-07-10 Work Session Kodiak Island Borough
Assembly Work Session
Thursday, July 10, 2014, 7:30 p.m., Borough Conference Room
Work Sessions are informal meetings of the Assembly where Assembly members review the upcoming regular meeting
agenda packet and seek or receive information from staff.Although additional items not listed on the work session agenda
are discussed when introduced by the Mayor,Assembly,or staff,no formal action is taken at work sessions and items that
require formal Assembly action are placed on regular Assembly meeting agenda.Citizen's comments at work sessions
are NOT considered part of the official record.Citizen's comments intended for the"official record"should be made at a
regular Assembly meeting.
Page
1. CITIZENS' COMMENTS (Limited to Three Minutes per Speaker)
2. AGENDA ITEMS
2 - 37 a. Furniture, Fixtures, and Equipment (FF&E) Procurement Process.
(a) Managers Memo.pdf
(b) 7-3-14 Letter to Stewart.pdf
(c) Email from Bud 6-13.pdf
(d) Foster Pepper Letter.pdf
(e) Stewart's letter 6-4-14.pdf
(f) KHS Bond Ordinance.pdf
(g) DEED Agreement.pdf
(h) Amendment to CIP Contract-DR-12-100 DRAFT 130604.pdf
(i) Email To Stewart to Stop purchases.pdf
3. PACKET REVIEW
a. PACKET REVIEW
NEW BUSINESS
CONTRACTS
Contract No. FY2015-06 Four Schools (Port Lions, Karluk, Old Harbor, and
North Star) Generators Project.
Contract No. FY2015-07 Aerial Imagery Acquisition.
ORDINANCES
Ordinance No. FY2015-02 Authorizing the Borough to Issue General
Obligation Bonds in the Principal Amount of Not to Exceed $10,230,000 to
Finance the Renewal and Replacement Schedule Related to Borough Owned
School Facilities, Projects Which are 70% Reimbursable by the State of
Alaska, and to Submit the Question of the Issuance of Such Bonds to the
Qualified Voters of the Borough at the October 7, 2014 Regular Borough
Election.
Ordinance No. FY2015-01A Amending Ordinance No. FY2015-01 Fiscal Year
2015 Budget by Amending the General Fund (Fund 100) and the Replacement
and Renewal Fund (Fund 469) to Fund Painting of the Port Lions School.
EXECUTIVE SESSION
Manager's Performance Evaluation
4. MANAGER'S COMMENTS
5. CLERK'S COMMENTS
6. MAYOR'S COMMENTS
7. ASSEMBLY MEMBERS COMMENTS
Page 1 of 37
AGENDA ITEM #2.a.
occirts-
ti Kodiak Island Borough
A;ro- * P- '`,lt •� OFFICE of the MANAGER
. ,S 4 Bud Cassidy,Borough Manager
,�.. r -- ,
C k " = . k MEMORANDUM
N. .r
i.i.1•7
Date: July 7,2014
To: Mayor Friend and Members of the Assembly
From: Bud Cassidy, Borough Manager 61
Re: FF&E Purchases
This memo is written requesting that the Assembly establish a clear path forward for the
Borough and the School District as Furniture, Fixtures and Equipment (FF&E) for the
KHS Addition and Renovation project are purchased. It is important that there is an
agreed upon methodology so that these items can be purchased and the project not be
delayed. The heavy lifting aspect of the project is the construction of the 4—story tower
and the renovation of the existing space and should not be the purchase of desks and
chairs.
The school district has asked KIBSD Attorney William D. Falsey to be present to
discuss what he sees as a solution, He will describe what he sees as the differences
between items purchased as part of the project versus items that are purchased based
on normal renewal and replacement(R&R) schedule and items purchased outside the
project.
The Assembly concern expressed at various meetings on the subject is that FF&E for
the KHS project be purchased in a manner consistent with Borough ordinance FY2010-
03,specifically that section that states:
"If additional funding becomes available for the projects from grants or other
sources, only enough bonds to finish the projects will be sold."
The borough attorney, as well as the bond attorney, suggests that the way forward is an
interpretation of the language on the ballot by the Assembly. It is a policy call.To date,
the Assembly's interpretation is based on a strict reading of the ballot language as well
as their desire to pass the"red face"test when speaking to members of the public about
FF&E purchases. The Assembly does not want the perception by members of the public
that FF&E for the KHS project has been purchased outside the intent of the voters.
Page 2 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
P. -.1 1
s..,4. _..S. _'�"" I
Kodiak Island Borough School District
722 Mill Bay Road
Kodiak,Alaska 99615
(907)481-6202
July 3,2014
Bud Cassidy,Manager
Kodiak Island Borough
710 Mill Bay Road,Room 125
Kodiak,Alaska 99615
bcassidy@kodiakak.us
Re: KIBSD Purchases, the KHS Renovation&Addition Project,and KIB
Ordinance FY2010-03 Bond Sales
Dear Manager Cassidy:
This letter responds to your emails of June 12 and 13, 2014. I appreciate your
summarizing for me the discussion that took place at the Assembly's June 12 work
session, and your sharing with me a copy of the June 12 memorandum you received
from your bond counsel.
The School District is concerned that the Assembly: (1) was asked to approve a
contract for KHS furniture that the School District does not want or need, and now
(2) may be poised to take an action - not required by DEED or Ordinance- that would
effectively prevent the Borough from receiving maximum State reimbursement of KFIS
Project Funds.
The School District further believes: (3) that if, in the KHS Project, the Borough
and School District are going to deviate from customary and usual procedures
applicable to the procurement of furniture, fixtures and equipment ("FF&E"), greater
clarity is needed regarding how the substitute processes will work.
The School District would like to find a time to make a presentation to the
Assembly and discuss these issues further. In the spirit of open communication, I am
providing courtesy copies of this letter,and its enclosures, to Assembly members.
In advance of future discussions, the following may be helpful.
I. THE SCHOOL DISTRICT DOES NOT BELIEVE THE$1.3 MILLION IN NEW FURNITURE
PURCHASES EMBEDDED IN THE ASSEMBLY'S MAY 15,2014 APPROVAL OF CONTRACT
FY2014-33 IS NECESSARY OR APPROPRIATE.
Page 3 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
July 3,2014
Page 2
In its May 15, 2014 meeting, the KIB Assembly approved Contract
No. FY2014-33. The action authorized the Borough to enter into a contract with School
Specialty for Furniture, Fixtures, and Equipment for the KHS Addition and Renovation
Project in an amount not to exceed$1,334,923.87.
As KIB Staff noted for the Assembly, the $1,334,923.87 contract price was based
on a 171-page "detailed list of room-by-room furnishings." It is the School District's
understanding that the 171-page list called for every piece of furniture in the new KHS
building to be purchased brand new; it assumed that nothing—no desks, tables or
chairs from the existing KHS building—would be carried forward to the new building.
That is not a sensible or appropriate approach. From the beginning, it has been
the School District's view that as many legacy assets as possible from existing school
should be repurposed for the new building.
We appreciate that KIB staff is now working with the School District to revise the
room-by-room purchases list, and that the list now contemplates that many existing
KHS items will be reused.
•
The School District remains concerned, however, that developments of this sort
could have the effect of constraining the KHS Project- requiring dollars to be spent on
unnecessary items, while forcing critical needs to go unmet.
II, THE BOROUGH WILL NOT RECEIVE THE MAXIMUM STATE REIMBURSEMENT FOR
THE KHS PROJECT IF- DESPITE THERE BEING No LEGAL REQUIREMENT TO Do So
- THE BOROUGH REDUCES ORDINANCE FY2010-03 BOND SALES EVERY TIME THE
SCHOOL DISTRICT USES NON-KHS PROJECT FUNDS TO PURCHASE ASSETS THAT
WILL ULTIMATELY BE CARRIED FORWARD TO THE NEW SCHOOL.
As I outlined at greater length my letter to you of June 4, items purchased by the
School District with its operational funds, much like old furniture that can be used in
the new KHS building, are not a part of the KHS Project funding structure (defined by
Appendix A to the Project KHS Agreement), and do not have direct Project-Budget
effects. Because KIBSD Operating Funds are not"grants,""industry-based tax incentive
programs," "reimbursement options," or proceeds from prior bond sales, their
expenditure also should not reduce the amount of bonds sold under KIB Ordinance
FY2010-03, For the benefit of the Assembly members, I have included with this response
a copy of my June 4 letter, which discusses these issues in greater detail.
I was pleased to see that, after his review of my June 4 letter, your bond counsel
issued a legal opinion consistent with those facts, As your counsel advised:
Page 4 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Pieces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
July 3, 2014
Page 3
If. . . the [School District's] proposed expenditures are
neither [a) part of the project . . . nor [b] included in the
project budget, then those expenditures would not
necessarily restrict the ability of the Borough to issue
bonds.. .
The issuance of bonds [under KIB Ordinance FY2010-
03] is within the absolute discretion of the Assembly.'
The opinion from your bond counsel confirms that there is no legal reason to
reduce Ordinance FY2010-03 bond sales in response to School District's expenditures.
Moreover,doing so would essentially be self-defeating. As you confirmed in the
Assembly's June 12 Work Session, the State of Alaska's Department of Education and
Early Development has indicated that it will not treat the School Districts expenditure
of operating funds as part of the KHS Project, absent some"political" direction from the
Assembly to do so.2
The financial bottom-line is clear. If the Assembly: (1) refrains from instructing
DEED that School District purchases should count against line-items in the KHS Project
Memo from Marc Greenburg, Foster Pepper LLC to Bud Cassidy, KIB Manager
•
re:School District Operating Fund Expenditures(June 12, 2014).
2 See Audio from K113 Assembly June 12, 2014 Work Session at 13:55, 15:58, 18:42
available at httpJ/wwµ,.koc)iakak.us/DocumentCenter/View/5961
The [bond) attorney has said it's really a political
decision.
And we called DEED. They're not concerned about
School District purchasing. They've given us an amount of
money in the budget -$2 million right now - to be able to
spend. They're happy to reimburse all$2 million.
From what I'm hearing, DEED is not going to weigh
in on the issue. They just want to pay us the money. The
bond attorney has said any amount of bonds that you
authorize to sell for the project are going to be
reimbursable—reimbursed. So you decide: at the full
amount of the$2 million or at$2 million "minus" . . .
See also id. at 24:10, 24:29:
DEED won't differentiate.
They have basically said this is a political decision.
Page 5 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
July 3,2014
Page 4
budget, and (2) issues bonds in the amount of $68.7 million (as authorized by
Appendix A to the Project Agreement and Ordinance FY2010-03), then the Borough will
be reimbursed at 70% of$68.7 million, or $48.1 million—and it will receive that $48.1
million from the State, however the School District spends its funds.
The Assembly could go another way, however. Despite there being no legal
requirement to do so, and despite its being in tension with original understandings, the
Assembly could: (1) instruct DEED that School District purchases, despite their being
made with non-Project Funds, should count against line-items in the KHS Project
budget, and (2)correspondingly reduce Ordinance P12010-03 bond sales, dollar for
dollar, for each School District expenditure. But if it does so, the Borough will not
receive the maximum $48.1 million from the State.
School District expenditures, unlike bonds proceeds, are not subject to any
reimbursement from the State. To the extent that the Borough refuses, for political or
any other reasons, to issue Ordinance FY2010-03 bonds, it will leave State dollars on the
table.
Moreover, if the Assembly instructs DEED to score the School District's use of
non-Project Funds against the KHS Project Budget, the School District would likely also
have to take action to prevent its expenditures from adversely affecting that Budget—if
money the District would have spent even in the absence of the KHS Project (to, for
instance, replace broken computer monitors) is scored against line items in the KHS
Project Budget (which was not designed to cover such expenses), the School District
would likely have to make efforts to redirect its funds to other needs. That would allow
the KHS Project to be "finished" as designed and budgeted, but it would virtually
guarantee that the building would be hamstrung by significant deficiencies on the day
of its ribbon cutting (with, perhaps, broken monitors sitting in a beautiful new
computer lab, for instance).
This is not a desirable outcome, and is certainly not what voters who supported
the KHS Project believed they were approving. Voters did not expect or require the
Assembly to adopt unnecessary constraints that will: (1) reduce State funding, or
(2) impair the finished project. Nor does the School District believe that the Assembly,
after the benefit of further discussion of the matter, will choose that course.
Page 6 of 37
Furniture, Fixtures, and Equipment (FFBE) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
July 3, 2014
Page 5
III. IF THE BOROUGH AND SCHOOL DISTRICT ARE GOING To DEVIATE FROM
CUSTOMARY AND USUAL FF&E PRACTICES, GREATER CLARITY IS NEtUED
REGARDING HOW THE SUBSTITUTE PROCESSES WILL WORK.
Finally, you are aware that the Borough and the School District have had a
significant amount of discussion regarding how FF&E purchases for the KHS Project
should be made. The School District believes that greater clarity would help the process
proceed more smoothly.
When it comes to the expenditure of"project funds"—which, again, are defined
by the KHS Project Agreement to be only the proceeds of certain, specified bond sales
and two specific legislative grants, and not the School District's operating funds3-
DEED Guidelines make clear that FF&E purchases for "new or rehabilitated school
facilities," are"normally the responsibility of the school district":
Identifying Needed Equipment
The general scope of necessary equipment purchases . . .
should be a part of the educational specification developed
for the project. . . . If the project architect's professional
services include responsibilities for preparing furnishing,
fixtures and equipment (often referred to as FF&E)
documents, . . . The project's design documents should
identify types and quantifies of equipment which conform to
the district's established standards. The actual selection and
purchase of this equipment is normally the responsibility of
the school district in which the school facility is located
unless otherwise agreed when a municipality is the project
manager.4
Cf id. at 6. (emphasis added) ("It is the responsibility of the school district to actually
purchase the equipment and to make specific cost-benefit value decisions and product
selections.")
See Project Agreement,Appendix A at§ 3.
4 STATE OF ALASKA, DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT,
GUIDELINES FOR SCHOOL EQUIPMENT PURCHASES at 3 (2005 ed.) (emphasis added). As
noted in its opening sentences, this guidance governs, and is limited to, "the use of
capital project funds for the purpose of equipping new or rehabilitated school facilities."
See id. at 2.
Page 7 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
July 3,2014
Page 6
The Guidelines acknowledge that a school district and municipality may agree to
shift responsibility for FF&E purchases in circumstances where the municipality (and
not the school district) serves as the project-manager role.
In the KHS Project, the Borough has assumed a significant role in FF&E
discussions, but there is no formal agreement in place to govern FF&E procurement
generally, or the Borough and School District's respective roles in the process in
particular.
It is fair to say that this arrangement has led to some confusion. To offer but one
example, the School District has long-established practices and policies for shipping and
receiving, but some purchases for the KHS Project have not been run through that
framework. The District is not clear what processes have been adopted in their place.
Lack of a clear agreement on respective roles and responsibilities has also led to
substantive confusion regarding whether particular items are actually needed (such as
the all-new furniture called for in Contract No. FY2014-33, as noted above).
If the use of project funds to make FF&E purchase is not to be"the responsibility
of the school district," as usual and customary in these circumstances, but is instead to
be a responsibility shared with the Borough, the School District would like to propose,
at a minimum, that purchases be forwarded to the Assembly for approval only on the
joint recommendation of the School District and Borough staff. And, further, that the
Borough and School District should come to a more explicit agreement about what
procedural practices and protocols will govern FF&E procurement.
The School District believes discussions and agreements along these lines could
serve as a helpful baseline for future projects, as well.
•
Again, it is my hope that through these and future discussions we can continue
to clarify the role of the School District and its purchases in the KHS Project. The School
District appreciates its good working relationship with KIB and the Assembly, and it
remains committed to working with you to see the KHS Project through to a successful
completion.
Please let me know when the School District can meet with the Assembly about
this important subject.
Page 8 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
July 3,2014
Page 7
Sincerely,
KODIAK ISLAND BOROUGH SCHOOL DISTRICI
.._..i
Stewart McDonald
Superintendent
Enclosures
Letter of KIBSD to Cassidy, June 4, 2014 (with KILS Project Agreement and
Ordinance FY2010-03 attachments)
Memo of Marc Greenburg, Foster Pepper LLC to Cassidy re: School District
Operating Fund Expenditures,June 12, 2014.
Cc John Sedor
William D. Falsey
Page 9 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Bud Cassidy
From: Bud Cassidy
Sent: Tuesday,May 27,2014 7:26 AM
To: Stewart McOdonald(smcdonald01 @kibsd.org)
Subject: FF&E Purchases-KHS Addition and Renovation
Stewart-
I am asking that you and your staff stop from purchasing any additional equipment that could be construed to be part of
the KHS project and refrain from entering into any contracts that would lead to the acquisition of additional FF&E.I think
you would agree that there is a need to halt further acquisitions and address what has already been spent before
moving forward with additional FF&E purchases, Of critical importance is how these expenditures may affect the sale of
future bonds for the project,
lam also requesting a full accounting of the money spent as well as the items purchased by the school district on
FF&E to date.It is only then we will know the amount of bonds we can legally sell to complete the project as well as be
consistent with the ballot language that approved this construction.That ballot language,as you know,states:"if
additional funding becomes available for the projects from grants or other sources,only enough bonds to finish the
projects will be sold".That language dictates that the remaining sale of bonds sold to complete the project will be
reduced by an equal amount of money that the school district has expended on FF&E outside of the project
budget. I have discussed this specific bond language with a bond attorney and with the borough attorney and they too
see this as the proper way forward.
There is no clear explanation that I can make to the Assemlby or you to the School Board about why the project budget
was exceeded or that a project related expenditure would not be reimbursed by the state. You and I are well aware of
the Assembly's concerns associated with this most expensive public works project ever undertaken by the Kodiak Island
Borough.So concerned were they that the Borough hired a private firm to provide additional project management in an
effort to control project costs.
You and I and our staffs need to be on the same page as we complete this addition and remodel project.Managing a$80
million addition and renovation project is complicated and will become even more complicated without better
coordination of FF&E purchases.
Lastly,the clear ballot language,the understanding of the Assemlby and the School Board and their commitment to the
public about how this project will be funded and constructed is my concern.
I am available to discuss this matter with you further.
Bud Cassidy
Manager
Page 10 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
,P FOSTER PEPPERr,,.
Memorandum
To: Bud Cassidy.Kodiak Island Borough
From: Marc Greenough
Date: June 12.2014
Subject: School District operating fund expenditures
As we have discussed, School District operating fund expenditures on furniture, fixtures and
equipment for the new high school project may. in the view of the Assembly. restrict the abiiity of
the Borough to issue bonds for the project.
We have agreed that if the School District was planning to make the expenditures regardless of
whether or not the new high school was built (for example, new hand instruments), then those
expenditures would not restrict the ability of the Borough to issue bonds for the project.
We have also agreed that if the School District made expenditures that would have been subject to
State reimbursement pursuant to the agreement with the Department of Education and Early
Development if those expenditures had been made out of bond proceeds, then the Assembly could
take the position that the ballot language restricts the issuance of bonds in the amount of those
expenditures. The Assembly could take the position that (1)the limitation on the amount of bonds
authorized was intended to limit overall expenditures on the project and (2)to the extent possible.
such expenditures were intended to be reimbursed by the State,
The letter from counsel to the School District dated June 4, 2014,states that(I)the School District
(1)agreed to use their funds to purchase the larger equipment for rooms such as the music room.
construction technology room, weighticardio room, and auto shop and (2)the School District's
operating fund purchases are not part of the project's funding structure and cannot cause the project
budget to be exceeded.
If the Assembly takes the position that the proposed expenditures are neither part of the project that
was intended to be funded with bond proceeds to assure State reimbursement nor included in the
project budget. then those expenditures would not necessarily restrict the ability of the Borough to
issue bonds for the project.
Regardless of how the Assembly interprets the ballot language, the issuance of bonds is within the
absolute discretion of the Assembly.
cc: Karl Short
Joe Levesque
m,206.447.4400 FAX 206.447.9700 un TURD AVENUE.sure va SEATTLE,WASHINGTON comm 0.04 www.FOSTEA.cou
SEATTLE w.ssiurcroi SPOKANE WASHINGTON
sunny i
Page 11 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
(S) 1
Kodiak Island Borough School District
722 Mill Bay Road
Kodiak, Alaska 99615
(907)481-6202 l LS J{E C 2 11 V P 0
June 4,2014
Bud Cassidy, Manager
1 JUN — aov`k.
Kodiak Island Borough
710 Mill Bay Road,Room 125 f(ILJ MANAGER
Kodiak, Alaska 99615
bcassidy@kodiakak.us
Re: KIBSD Purchases and the KHS Renovation&Addition Project
Dear Manager Cassidy:
This letter responds to your email of May 27, 2014, sent on behalf of the Kodiak
Island Borough ("KIB"), regarding certain Kodiak Island Borough School District
("KIBSD") purchases and the Kodiak High School ("KI-IS") Renovation and Addition
Project
KIBSD remains excited about the KHS Project, our work with KIB, and agrees
that it will be helpful to our ongoing collaboration to ensure that KIB and KIBSD are on
the same page about the relationship of KIBSD purchases to the KHS Project.
Your letter asks KIBSD to "stop purchasing any additional equipment that could
be construed to be part of the KHS project" and requests "a full accounting of the
money spent as well as the items purchased by the school district on FF&E [furniture,
fixtures and equipment] to date,"
The request appears to stem from two concerns: (1) that KIBSD purchases have
caused, or will cause, the "[ICHS] project budget [to be] exceeded," and (2) that the
amount of bonds that KIB may permissibly sell under KIB Ordinance FY2010-03 must
be reduced, dollar for dollar, by "the amount of money that the school district has
expended on FF&E outside of the project budget"
We believe both of these concerns to be misplaced. KIBSD spending has not
caused, and will not cause, the KHS project to go over budget; and the referenced
KIBSD expenditures should not reduce the total amount of bonds to be issued under
MB Ordinance FY2010-03. This letter explains both of these conclusions in greater
detail below.
In the spirit of transparency and cooperation, KIBSD is nevertheless by this letter
also providing KIB with a list of KIBSD purchases that likely would not have occurred
Page 12 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
June 4,2014
Page 2
but-for the existence of the KHS Project Together, those purchases—related to IT
installation and the procurement of certain exercise equipment—amount to $161,643.13
in payment obligations, of which $18,894 has been spent to date. A table describing
these expenditures in greater detail is also set out below.
DISCUSSION
I. Items Recently Purchased by KIBSD with Its Operational Funds, Much Like
Old Furniture That Can Be Used in the New KHS Building, Are Not A Part of
the Project Funding Structure and Do Not Have Direct Project-Budget Effects.
KIBSD would first like to clarify that KIBSD purchases cannot cause the "[KHS]
project budget [to be] exceeded," because they are not a part of the Project Agreement
funding structure.
The KHS Renovation & Addition Project is governed by a February 1, 2012
Project Agreement with the State of Alaska's Department of Education & Early
Development("DEED"). Appendix A and Amendment No. 1 to the Project Agreement
define the Project's "Project Funds" to include proceeds from several specified bond
sales, as well as two legislative grants.' The Project Funds together amount to
approximately$80.5 million.
Amendment No. I then also sets out a Project Budget that limits how the Project
Funds can be spent Among other things, it limits purchases in the "Equipment" Cost
Category to$2 million.
Importantly, the $2 million budget line-item for the Equipment Cost Category
applies only to the expenditure of Project Funds, and nothing else. And this has been
reflected in KIBSD and Krd's working relationship and understandings to date.
From the outset, KIBSD and KIB have worked from the belief that some amount
of legacy KIBSD furniture in the existing KHS building would be repurposed for the
new KHS Project facility. To the extent that chairs and desks already in KIBSD's
possession could be reused in the new building, they would be.
The carryover of legacy KIBSD assets into the new building could have an effect
on the KHS Project, but only an indirect one. The repurposed assets were not
purchased with "Project Funds," are not "Project Funds," and do not count as
expenditures against the $2 million line-item for Equipment in the Project Budget.
Indeed, if that is not the case, KIBSD and KIB would have to assign each of the
repurposed items some cost basis or value, and agree on a GASB-compliant accounting
See attached.
Page 13 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
June 4,2014
Page 3
mechanism to document each item's transfer—both of which could prove difficult, and
neither of which has been contemplated, or understood to be necessary, by KIBSD and
KIB to date.
Rather, repurposed assets are understood to affect the KHS Project only to the
extent that their availability may alter the nature or quality of expenditures in the
Equipment Cost Category that would otherwise have to be made if the new KHS
Project building were truly being built from scratch. In other words, if KIBSD has 50
desks that could be used in the new KITS building, that might eliminate the need to
procure 50 new desks and lead to revisions in the Project's final FF&E specifications; but
the repurposing of the old desks would not change the total amount of Project Funds
available,or count against the Project's$2 million Equipment line-item.
In a like manner, items more recently purchased with KIBSD operating funds
also have only this indirect effect on the KHS Project. KIBSD each year expends a
certain amount of its operating funds on renewal and replacement expenses,whether or
not new facilities are being built. KIBSD operating funds used for such expenditures
are not KI-IS "Project Funds" and the items acquired with the operating funds are not
expenditures under any category of the KHS Project Budget.
It was on this basis that the estimated Project Budget and draft specifications for
the KHS Project were prepared. The existence of some KIBSD purchases was
incorporated as a background assumption. And it was also on this basis KIBSD has
discussed with KIB staff, including Jessi Wolfe and Matt Gandel, its willingness and
intention to make certain direct purchases of items that could be used in the new KHS
facility.2
To the extent that KIBSD operating fund purchases may beneficially alter the
composition of assets on hand that could be used in the new KHS Project building, the
operating fund purchases may lead to a change in the composition of the Project's final
specifications (which ultimately must be approved by DEED). But KIB should
appreciate and have confidence that KIBSD operating fund purchases are not a part of
the Project's funding structure and cannot cause the "[KHS] project budget [to be]
exceeded."
II. Because KIBSD Operating Funds Are Not "Grants," "Industry-Based Tax
Incentive Programs," "Reimbursement Options," or Proceeds from Prior Bond
2 See, e.g., Kodiak Island Borough, Agenda Statement for Contract No. FY2014-33
Furniture, Fixtures, And Equipment For The Kodiak High School Addition And
Renovation Project, May 15,2014 Assembly Regular Meeting ("KIBSD has agreed to use
their funds to purchase the larger equipment for rooms such as the music room,
construction technology room, weight/cardio room,and auto shop.").
Page 14 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
June 4, 2014
Page 4
Sales,Their Expenditure Should Not Reduce the Amount of Bonds Sold Under
KIB Ordinance FY2010-03.
KIBSD purchases also should not reduce the number or value of bonds that K1B
Ordinance FY2010-03 permits KIB to sell.
Ordinance FY2010-03 permits KIB to issue bonds to cover "the cost of planning,
design, construction, furnishing and equipping of school and related capital
improvements in the Borough,"3 including, without limitation, certain listed projects:
"additions to Kodiak High School, renovation of Kodiak High School for instructional
and School District administrative space, and demolition of the Business
Department/Learning Center."'
The Ordinance estimates the total "Estimated Cost' for the projects at
$80.8 millions Because $4.49 million was available to the projects from proceeds of
bond sales previously issued for school repair and replacement projects,6 Ordinance
FY2010-03 authorizes KU13 to issue bonds in amount up to $76.31 million?
The Ordinance also forthrightly notes that funding for the Projects to be bonded
could alternatively come from any of four other sources, three of which could be
"identified" or "applied for" by KIBSD or KIB: (1) grants, (2) industry-based tax
incentive programs, and (3) other "additional . . . reimbursement options"; and the
remaining source was (4) prior bond sales. Each is addressed in the Ordinance's
motivating recitals:
WHEREAS, the School District has identified grants and
industry-based tax incentive programs which could fund
millions of dollars towards the Borough's debt service for
construction of Kodiak High School, but for which an
application can be submitted only after a bond ordinance is
approved;and
WHEREAS, the Borough and School District will,continue to
seek and apply for additional grants and_reimbursement
options to reduce the debt service cost of the renovation and
expansion of Kodiak High School; and
3 KIB Ordinance FY2010-03 at§ 2.
' Id. at§ 3.
S Id. at§4.
6 Id.
7 Id. at§2.
Page 15 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
June 4, 2014
Page 5
WHEREAS, $4,490,000 in p oceeds of Borough school bonds
previously issued for school repair and replacements
projects is available for the renovation of Kodiak High
School[.je
This is the only relevant discussion of alternative funding sources mentioned in
the Ordinance.
The Ordinance's discussion of prior bonds, grants, industry-based tax incentive
programs, and additional reimbursement options for which KIBSD or KIB could apply
is later referenced in language that went to the voters under section 4. Voters were told
that total project costs were estimated to be$80.8 million, and that funds were available
from two prior bond sales. Then, consistent with the Ordinance's recitals, ballot
language informed voters that KIB would issue less than $76.31 million in bonds if
"additional funding' becomes available "from grants or other sources".
fAlvailable Funds in other projects
KHS Exterior Insulation and Window Replacement (590,000)
KHS Voc Ed Renovation&Pool Reclamation (3,900,000)
Total deductions (4,490,000)
If additional funding becomes available for the projects from
grants or other sources, only enough bonds to finish the
projects will be sold.9
The phrase"from grants or other sources" in the above-quoted language must be
read in context And in that context, it is clear that the type of"additional funding" that
would lead to bond-sale reductions are the four sources referenced in the Ordinance's
recitals: (1) grants, (2) industry-based tax incentive programs, (3) other legislative
reimbursement options, and (4) proceeds of prior bond sales.10
Id. at p.2
9 Id. at § 4. There is some question about the legal effect of this language, given
that it is not mirrored in section 3 of the Ordinance, which authorizes KIB to issue
bonds in the amount of$7631 million without any such limitation. Because the quoted
"from grants or other sources" language in section 4 plainly was not intended to cover
KIBSD's expenditure of its own operating funds, the issue need not be addressed at
length, though it may further support KIBSD's position.
70 See, e.g, BLACK'S LAW DICTIONARY (2d. online ed.) (entry for the interpretive
canon"uoscitur a sociis": "A Latin term for'it is known by the company it keeps', it is the
concept that the intended meaning of an ambiguous word depends on the context in
which it is used.").
Page 16 of 37
Furniture. Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
June 4,2014
Page 6
It would also have been clear to voters that the types of "additional funding"
implied by "other sources" would be sources like the two types of "additional funds"
explicitly mentioned in the language before them: proceeds of prior bond sales, and
"grants." That is interpretation accords with commonsense, and is certainly how a
reviewing court would interpret the provision. Where general words "follow an
enumeration of specific things," the general words are "not to be construed in their
widest extent, but are to be held as applying only to . . . things of the same general kind
or class as those specifically mentioned.""r
Plainly, KIBSD operating funds are not like "grants," "industry-based tax
incentive programs," other legislative "reimbursement options" or proceeds from prior
bond sales. They are not something for which KIBSD or KIl3 can "seek" or"apply," and
are different in kind from those targeted, external funding sources, the availability of
which did not inform the design of the KHS Project specifications or Project Budget
KIBSD operating funds are therefore not "other sources" for purposes of the
limiting language in section 4, and so should not reduce the number or value of bonds
that KIB Ordinance FY2010-03 permits KIB to sell.
III. Schedule of Recent KIBSD Purchases.
While KIBSD does not believe it relevant to the KI-IS Project budget, or to future
bond sales, it is also willing, in the spirit of transparency and cooperation, to provide
KIB with a list of KIBSD purchases that likely would not have occurred but-for the
existence of the KHS Project,
The relevant expenditures were made from operating funds that KIBSD placed in
an account it denoted its "510 account." Some funds placed in KIBSD's 510 account
were used to make purchases for district-wide purposes; others were used for
unremarkable renewal and replacement expenses that would have occurred in the
absence of any building project, or the KHS Project in particular.
KIBSD made four expenditures—relating to IT equipment and installation, and
exercise machines—from the 510 account that it arguably would not have made if the
KHS Project were not underway. Those expenses are detailed below. The two entries
See, e.g, BLACK'S LAW DI-IIONARY (entry for the interpretive canon "ejusdern
geueris": "Of the same kind, class, or nature. In statutory construction, the 'ejusdern
geueris rule' is that where general words follow an enumeration of persons or things, by
words of a particular and specific meaning, such general words are not to be construed
in their widest extent, but are to be held as applying only to persons or things of the
same general kind or class as those specifically mentioned.")(emphasis added).
Page 17 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Kodiak Island Borough Manager Bud Cassidy
June 4,2014
Page 7
for"cardio equipment" reflect purchases that may have been made in the absence of the
KITS Project (as there were plans to place stationary bikes in the existing gymnasium),
but are listed because the purchases were ultimately made with the space-availability
and space-configuration of the new KHS facility in mind, and so were at least arguably
influenced by the KHS Project.
h3At
key'
Vred1 17$4, Purcase # tt'5cc
ne6CAtiotiii1P Od ltdffast-6163 2014
rx<rt,.. . °aaL b°db igvumberm o 2u n nt 3
i
Integrated SOW for New High 4-100-110-110- $135,335.00 34051807 517,185.00
Logic School 510-440-15
Grainger Patch Cables for HS 4-100-110-110- 57,541,23 34051957 50.00
network 510450-15
School Cardio Equipment- 4-100-110-110 58,689.50 34051450 $1,709.00
Specialty J Pal plus shipping 510-45015
School Cardio Equipment 4-100-110-110- $10,068.40 34051450 50.00
Specialty 510-510-15
Totals: , $161,643.13 ( $18,894.00
KIBSD has no present plans to obligate or expend any amount of money from its
operating budget, or any other source, on items that could be fairly or accurately
characterized as"part of the KITS project" or"FF&E."
I hope this discussion will serve to clarify the role of KIBSD purchases in the
KHS Project. KIBSD appreciates its good relationship with KIB and remains committed
to working with KIB to see the KHS Project through to a successful completion.
We hope that KIB can confirm KIBSD's understanding that its purchases are
outside of the KHS Project funding structure; do not directly affect Project Budget line
items;and will not affect, reduce or delay future KIB Ordinance FY2010-03 bond sales.
I look forward to your response.
Sincerely,
KO S • t u ROUG„.SCHOOL DISTRICT
u peri n tenden t�IT/ for
S ip
Enclosures
Cc John Sedor
William D. Falsey
Page 18 of 37
Furniture, Fixtures, and Equipment(FF&E) Procurement Proces...
AGENDA ITEM #2.a.
1 Introduced by: Manager Gifford
— 2 Requested by: School Board/Assembly
3 Drafted by: Finance Director/Bond Counsel
4 Introduced on: 07(76/2009
5 Public Hearing: 08(062009
6 Amended: 08/06/2009
7 Adopted: 08/062009
8
9 KODIAK ISLAND BOROUGH
10 ORDINANCE NO. FY2010-03
11 •
12 AN ORDINANCE OF THE KODIAK ISLAND BOROUGH ASSEMBLY
13 AUTHORIZING THE BOROUGH TO ISSUE GENERAL OBLIGATION BONDS
14 IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $76,310,000
15 TO FINANCE THE PLANNING, DESIGN AND CONSTRUCTION OF SCHOOL
16 AND RELATED CAPITAL IMPROVEMENTS IN THE BOROUGH INCLUDING WITHOUT
17 LIMITATION THE RECONSTRUCTION AND RENOVATION OF THE KODIAK HIGH
18 SCHOOL, AND TO SUBMIT THE QUESTION OF THE ISSUANCE OF SUCH BONDS TO
19 THE QUALIFIED VOTERS OF THE BOROUGH AT THE OCTOBER 6, 2009 REGULAR
20 BOROUGH ELECTION
21
22 WHEREAS, under the provisions of AS 29.47.190, a municipality may incur general obligation
23 debt only after a bond authorization ordinance is approved by a majority of those voting on the
24 question at a regular or special election; and
— 25
26 WHEREAS, educational requirements have changed since Kodiak High School was originally
27 constructed in 1966 as a regional education center; and
28
29 WHEREAS, Kodiak High School's design shortfalls were recognized and multiple remodeling
30 projects have been completed to bring the facility into code compliance; and
31
32 WHEREAS, the last addition of vocational or academic space to Kodiak High School occurred
33 in 1972; and
34
35 WHEREAS, in the late 1980s enrollment at Kodiak High School grew beyond 500 students
36 and a four phase reconstruction project began; and
37
38 WHEREAS, the fourth phase of the above project, which would have addressed needed
39 additional academic instructional space, was never started; and
40
41 WHEREAS, enrollment at Kodiak High School has soared from 550 students to as high as
42 850 over the past twenty years and is forecasted to remain at approximately 800 students into
43 the foreseeable future;and
44
45 WHEREAS, enrollment projections demonstrate a continued enrollment of 200 or more
46 students above the capacity of the existing Kodiak High School educational facility; and
47
48 WHEREAS, providing the space that currently is needed for Kodiak High School instruction
49 requires the use of community schools facilities, auditorium space and rented space, as well as
50 overcrowding of the existing high school facilities; and
Kodiak Island Borough Ordinance No, FY2010.03
Page 1 of 5
Page 19 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
•
51
52 WHEREAS, the instructional space available for Kodiak High School does not support the
53 instructional programs which are needed to prepare our high school students for success in the
54 world marketplace;and
55
56 WHEREAS, the current state debt service reimbursement plan provides that the State of
57 Alaska will reimburse the Borough for not less than sixty percent (60%) of debt service on the
58 eligible portion of bonds authorized by the qualified voters of the Borough on or after October 1,
59 2006 but before November 30, 2010, to pay costs of school construction, additions to schools,
60 and major rehabilitation projects;and;
61
62 WHEREAS, the Board of Education and Borough Assembly have commissioned an architect
63 to fully evaluate reconstruction options that support the kind of programs necessary for Kodiak
64 High School to fully meet the educational expectations defined by our community; and
65
66 WHEREAS, the conceptual process has undergone two years of refinement;and
67
68 WHEREAS, the educational facilities and space survey identified that a substantial remodel
69 and new expansion of Kodiak High School will meet instructional space needs in grades K-12
70 throughout our community;and
71
72 WHEREAS, the Kodiak Island Borough School Districts educational mission is severely
73 compromised by facility limitations at Kodiak High School;and
74
75 WHEREAS, the Board of Education believes the District would be best served by all District-
76 wide services being congregated in renovated space in the existing Kodiak High School
77 building;and
78
79 WHEREAS, public feedback since the first bond election in 2008 has yielded a more cost-
80 effective design for the renovation and expansion of Kodiak High School;and
81
82 WHEREAS, funding for further architectural design work and Cost estimation for the
83 renovation and expansion of Kodiak High School depends on voter approval of a bond
84 ordinance for the project;and
85
86 WHEREAS, the School District has identified grants and industry-based tax incentive
87 programs which could fund millions of dollars towards the Borough's debt service for
88 construction of Kodiak High School, but for which an application can be submitted only after a
89 bond ordinance is approved; and
90
91 WHEREAS, the Borough and School District will continue to seek and apply for additional
92 grants and reimbursement options to reduce the debt service cost of the renovation and
93 expansion of Kodiak High School;and
94
95 WHEREAS, $4,490,000 in proceeds of Borough school bonds previously issued for school
96 repair and replacements projects is available for the renovation of Kodiak High School;and
97
98 WHEREAS, the Borough views the school and related capital improvements authorized
99 herein as necessary and beneficial to the community;
100
Kodiak Island Borough Ordinance No. FY2010-03
Page 2 of 5
Page 20 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
101 NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND
102 BOROUGH THAT:
103
104 Section 1: This ordinance is not of a general or permanent nature and shall not become a
105 part of the Kodiak Island Borough Code of Ordinances.
106
107 Section 2: It is hereby determined to be for a public purpose and in the public interest of the
108 Borough to incur general obligation bonded indebtedness in an amount not to
109 exceed Seventy Six Million Three Hundred and Ten Thousand Dollars
110 ($76,310,000) for the purpose of paying the cost of planning, design,
111 construction, furnishing and equipping of school and related capital
112 improvements in the Borough, including without limitation additions to Kodiak
113 High School, renovation of Kodiak High School for instructional and School
114 District administrative space, and demolition of the Business
115 Department/Learning Center,
116
117 Section 3: The Borough is authorized to borrow the sum of Seventy Six Million Three
138 Hundred and Ten Thousand Dollars ($76,310,000) to finance the capital
119 improvements described in Section 2, and the borrowing shall be evidenced by
120 the issuance of general obligation bonds of the Borough; provided that bonds
121 may not be issued for any project unless the project is eligible for debt service
122 reimbursement by the State of Alaska. The full faith and credit of the Borough
123 are pledged for payment of the principal of and interest on the bonds, and ad
124 valorem taxes upon all taxable property in the Borough shall be levied without
125 limitation as to rate or amount to pay the principal of and interest on the bonds
126 when due.
127
128 Section 4: The Borough shall submit the following proposition to the qualified voters of the
129 Borough at the October 6, 2009 regular Borough election. The proposition must
130 receive an affirmative vote from a majority of the qualified voters voting on the
131 question to be approved.
132
133 PROPOSITION NO. 1
134 GENERAL OBLIGATION BONDS-$76,310,000- KODIAK HIGH SCHOOL
135
136 Shall the Kodiak Island Borough incur debt and issue general
137 obligation bonds in an amount not to exceed Seventy Six Million
138 Three Hundred and Ten Thousand Dollars ($76,310,000) for the
139 purpose of paying the cost of planning, design, construction,
140 furnishing and equipping of school and related capital
141 improvements in the Borough, including without limitation the
142 projects described below?
143
Kodiak Island Borough Ordinance No. FY2010-03
Page 3 of 5
Page 21 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Pracas...
AGENDA ITEM #2.a.
Project Estimated Cost
Additions to Kodiak High School $ 44,270,000
Renovate existing Kodiak High School 35,210,000
Renovate part of Kodiak High School
for School District Administraion 1,100,000
Demolish Existing Business Department
and Learning Center 220,000
Total 80,800,000
Less available Funds in other projects
KHS Exterior Insulation and Window Replacement (590,000)
KHS Voc Ed Renotetion& Pool Reclamation (3,900,000)
Total deductions (4,490,000)
Total amount of bond issue $ 76,310,000
144
145 The projects are expected to qualify for not less than 60% State
146 debt service reimbursement, funding for which is subject to annual
147 appropriation. The projects will be phased to limit disruption to the
148 education of students, and bonds will be sold only as needed to
149 pay project costs. If the State fully funds the debt service
150 reimbursement program,the average annual debt service payable
151 by the Borough after State reimbursement, is estimated to be
152 $2,108,152 $2,409,317. This amount of debt service may require
153 an additional annual property tax levy of$577 $660 per$250,000
154 of assessed value, or its equivalent. This example of a property
155 tax levy is provided for illustrative purposes only.
156
157 If additional funding becomes available for the projects from
158 grants or other sources, only enough bonds to finish the projects
159 will be sold.
160
161 The bonds shall be secured by a pledge of the full faith and credit
162 of the Borough. (Ordinance No. FY 2010-03)
163
164 Section 5: The proposition shall be printed on a ballot which may set forth other general
165 obligation bond propositions, and the following words shall be added as
166 appropriate next to an oval provided for marking the ballot for voting by hand or
167 machine:
168 PROPOSITION NO. 1
O YES
O NO
169
170
Kodiak Island Borough Ordinance No. FY2010-03
Page 4 of 5
Page 22 of 37
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AGENDA ITEM #2.a.
171 Section 6: Sections 2 and 3 of this ordinance shall become effective only if the proposition
172 described in Section 4 is approved by a majority of the qualified voters voting on
173 the proposition at the October 6, 2009 regular Borough election. The remaining
174 sections of this ordinance shall become effective upon adoption by the Kodiak
175 Island Borough Assembly.
176
177 ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
178 THIS SIXTH DAY OF AUGUST, 2009
179
180
181 KODIAK ISLAND BOROUGH
182
183
18
165 5 0-
186 U ome M. Selby, Borough May
187 ATTEST: G=�
188
189
190
191
192 Nova M. Javier,MMC Borough Clerk
•
Kodiak Island Borough Ordinance No. FY2010-03
Page 5 of 5
Page 23 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
Page 24 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces...
AGENDA ITEM #2.a.
starE DF LA /Gooe,tploce SEAN PARNELL, GOVERNOR
801 West 10 Street,Suite 200
Department of Education & Early Development P.O.aU a sn Al a a811-0500
(907)455-1858
Division of School Finance (907)463-5279 fax
Kimberly.Andraws@alaska.gov
July 24,2012
Jessica Wolfe,Acting Project Manager
Kodiak Island Borough
Engineering/Facilities Department
710 Mill Bay Road
Kodiak,AK 99615
Re: Kodiak HS Addition& Renovation, EED#DR-12-100
Dear Mr, Wolfe:
Enclosed please find the borough's copy of a fully executed project agreement for the referenced
project. We look forward to your progress on this project.
•
Sincerely,
Jl .9(4.44x aas
Kimberly M. Andrews, Architectural Assistant III
Facilities
Enclosure
Page 25 of 37
Furniture, Fixtures, and Equipment (FF&E) Procurement Proces.,.
AGENDA ITEM #2.a.
PROJECT AGREEMENT
for the project
Kodiak High School Renovation & Addition
between
The State of Alaska, Department of Education & Early Development
and
Kodiak Island I3oroueh School District
THIS CONTRACTUAL AGREEMENT,effective February I,2012 is made between the
State of Alaska,Department of Education &Early Development(hereinafter called department)
and the Kodiak Island Borough (hereinafter called Recipient). The department and the
Recipient arc entering into this agreement pursuant to AS 14.11.100,AS 14.07.020 and 4 AAC
31.023 et seq.. This agreement is required for authorization for debt reimbursement funding.
Whereas hinds have been authorized by the Legislature for the Department of Education&Early
Development to allocate to projects,and whereas the department has determined that the Project
described in Appendix"A"(hereinafter also referred to as"the Project")of this agreement is
eligible for state debt reimbursement, and whereas the Recipient has made a request to the
department that the Project be funded under the authority of AS 14.11.100(a),and whereas the
Recipient is agreeing to assume all responsibility for the planning,design and construction of the
Project,and whereas the scope of this agreement consists of all contract clauses as set forth
below and incorporates the provisions and requirements of Appendices A through D as listed
below:
Appendix A Project Scope and Budget
Appendix B Laws, Codes, Regulations, Standards and Guidelines
Appendix C Submittal Requirements
Appendix D Budget Category Definitions
The parties enter into the following agreement:
Contract Clauses
1. Project Responsibility: As between the Department and the Recipient,the Recipient is
responsible for planning, design, and construction of the Project.Nothing in this Agreement,
express or implied, is intended or shall be construed to give any person,other than the State
of Alaska and the Recipient,any right,remedy or claim under or by reason of this
Agreement. The covenants,stipulations and agreements in this Agreement are and shall be
for the sole and exclusive benefit of the State and the Recipient,and their successors and
assigns.
2. Project Coordinator: The Recipient's coordinator for this agreement is Woody Koning,
Director of Engineering and Facilities. The Recipient agrees to notify the department of
any change in coordinator. � �
Project tDR 12400 Page I of S P50 Initials 1 "11A)
��""
�{
Kodiak High School Renovation&Addition Project Agreement Recipient Initial /yam
Page 26 of 37
Furniture, Fixtures, and Equipment(FF&E) Procurement Proces...
AGENDA ITEM #2.a.
PROJECT AGREEMENT
3. Governing Provisions: This agreement shall be governed by the laws of the State of Alaska.
The Recipient agrees during the planning,design,and construction to comply with all
provisions of state and federal law and regulation as applicable. Failure to comply with the
requirements set out in this paragraph is subject to the default procedure and remedies
provided in paragraph 13:
The following table lists the state regulations most frequently applied to school capital
projects and their citation in the Alaska Administrative Code.
Accessibility 4 AAC 31.013(a)(I)
Allowable Cost for Debt Reimbursement 4 AAC 31.061 &4 AAC 31.064
Bidding and Award 4 AAC 31.080
Budget Reductions 4 AAC 31.022(e) & 31.062
Project Agreement 4 AAC 31.023
Project Document Approval 4 AAC 31.040&31.062
Project Document Reviews 4 AAC 31.030&31.062
Purchase of Temporary Facilities 4 AAC 31.050
Reporting Procedures 4 AAC 31.060
School Space 4 AAC 31.020 &31.061
Site Acquisition and Selection 4 AAC 31.025
Use of Consultants 4 AAC 31.065
4. Debt Reimbursement(Bonds)Funds: The department agrees to make available the funds
necessary to reimburse debt payments for the Project proportionate to the total amount
appropriated for debt reimbursement by the Legislature in the fiscal year. Recipient shall
submit a request for anticipated payments annually by October 15 of the year preceding the
fiscal year for which payments are to be requested.The request shall include bond payment
schedules showing the costs by individual project. Payments are subject to compliance with
the procedures set out in 4 AAC 31.060(e).
5. Project Document Reviews: The Recipient shall submit the elements of the plan as outlined
in 4 AAC 31.030 for department review as they are developed. Drawings must be submitted
in Portable Document Format (PDF),and must be clearly indexed on the title sheet or in a
cover letter to the department. Other project documentation must be provided in electronic
format wherever practicable. Final construction document submittals shall be signed and
stamped by the Registered Design Professional(4 AAC 31.040). Each applicable document
shall be provided at no cost to the State. Cost estimates are required at each design phase and
shall be provided in the State's standard building system estimate format(EED Cost Format).
The Recipient shall also provide an Energy Consumption and Cost report, as necessary, in
accordance with AS 14.07.020(a)(11). The Energy Consumption and Cost report will
provide estimated annual energy consumption and cost information for electricity and
heating following construction of the project in this Agreement.
6. Approvals and Permits: The Recipient shall coordinate all regulatory agency reviews and
obtain all necessary written approvals from all agencies having jurisdiction over the Project.
Project ORR 12-100 Page 2 of 5 ICED Initials "t�` y�"
Kodiak High School Renovation d Addition Project Agreement Recipient Initial
Page 27 of 37
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AGENDA ITEM #2.a.
PROJECT AGREEMENT
7. Safety Precautions and Programs: The Recipient shall provide for and oversee all safety
orders,precautions and programs necessary to insure reasonable safety for the planning,
design,and construction of the Project. In this connection,the Recipient shall take
reasonable precautions for the safety of all Project employees and all other persons whom the
Project might affect, all work and materials incorporated in the Project, all property and
improvements on the construction site and adjacent thereto,and shall comply with all
applicable laws,ordinances,rules,regulations and orders.
8. Project Scope Review: The Recipient shall ensure the Project as designed conforms to the
Project scope as described in Appendix"A". Any modifications to the scope and/or budget
of the Project shall be submitted to the department in a written amendment for review and
approval. The Project scope may not be expanded beyond a scope permitted under AS
14.11.100(j). The Recipient shall forward copies of all final hid or proposal documents to the
department prior to advertising for either as set out in 4 AAC 31.040. If any such documents
conflict with the Project scope,the Recipient will be notified that further payments of
reimbursement funds will not be made by the department until those conflicting aspects are
corrected and an amendment is approved.
9. Project Audit: In accordance with 4 AAC 31.023(c)(3),the Recipient's performance is
subject to financial audit at any time. Project records shall be maintained for three(3)years
after the project completion and acceptance. Within three hundred and sixty-live (365)days
after certification of beneficial occupancy and/or substantial completion,the Recipient agrees
to provide an auditable accounting of expenditures of the Project.
10. Project Accounting: Project accounting shall incltide all sources of revenues and Project
expenditures by every budgeted expense category. The expense categories shall conform to
the categories indicated in Appendix A and defined in Appendix D. If the amount of the
funding is more than$300,000,the Recipient may be required to provide an independent
project audit. The cost of an audit required by the department is an allowable project
expense. Accounting for the Project shall comply with the Codification of Governmental
Accounting and Financial Reporting Standards as published by the Governmental
Accounting Standards Board(GASB).
11. Final Inspection and Acceptance: The department may, in its discretion,participate in the
final inspection. The Recipient shall furnish to the department,project documents certifying
beneficial occupancy and/or substantial completion. The department shall have fifteen (15)
days after final inspection or after receipt of the Recipient's project deliverables to make
objections,after which time the Project shall be deemed accepted by the department.
Objections will be presented in writing by the department and must he responded to in a
satisfactory manner by the Recipient.
12. Project Close-out: Thirty(30) days after the issuance of a final independent audit report by
the Recipient, or ninety(90) days after receipt of the auditable accounting of expenditures of
the facility if an audit is not required, the reimbursement rate shall be adjusted,as necessary,
to an amount not greater than the cost of legitimate project expenses. This does not preclude
the Recipient from redirecting unused bond proceeds in accordance with 4 AAC 31.064. The
Recipient may,within thirty (30)days after a final audit,or within ninety(90)days of the
date of receipt of the auditable accounting of expenditures of the Project if no audit is
Project#012 l2-100 Page 3 of 5 EED!mauls a1t�/�
Kodiak High School Renovation&Addition Project Agreement Recipient lnitial4, Cp,
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AGENDA ITEM #2.a.
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conducted,request the department to expand the scope of services to be provided by the
Recipient consistent with Appendix A of this Agreement.
13. Maintenance, Operation,Ownership of the Completed Project: Responsibilities for
maintenance,operations,and ownership of the facility shall be borne by the Recipient or
their legal designee. The Recipient shall acquire from the project's designers and contractor,
project documentation required to establish an effective facility management and preventive
maintenance program that satisfies the requirements of AS 14.11.011(b)(4). The Recipient
shall provide evidence to the State that the completed project has been incorporated in the
district's facility management program and the Recipient, if required,has established legal
ownership of the facility.
14.Termination of Contract for Cause: The term of the contract shall not exceed five years from
the effective date of the agreement unless an extension is granted by the State. If,through
any cause,the Recipient shall fail to fulfill in timely and proper manner its obligations under
this contract,or if the Recipient shall violate any of the covenants,agreements or stipulations
of this contract,the department shall provide written notice of the breach and an
accompanying cure. If the recipient fails to cure the breach within 30 days after receiving
notification,Recipient will be considered in default of this Agreement unless the cure period
is extended at the discretion of the department. Upon a default by the Recipient under this
Agreement,the department may reduce or terminate future debt service reimbursement,
and/or recover past debt service reimbursement payments in whole or in part as the
department, in its discretion, determines appropriate to the nature of the Recipient's default.
15.Termination Upon Withdrawal of Project Approval: Project approval may be withdrawn in
accordance with 4 AAC 31.075. If the project approval is withdrawn,the provisions of
paragraph 13 regarding contract termination shall apply.
16. Contracting: In the event the Recipient contracts any work covered by this project
agreement,the Recipient shall require compliance by its contractors with AS 36.05.010
through AS 36.05.110 and shall require compliance with all federal,state,and local laws,
regulations and ordinances.
17. Percent for Art: If the Project is a school construction or renovation project,the Recipient
shall expend on art an amount equal to the percentage(as specified in AS 35.27.020)of the
cost of construction. Art may be selected by the superintendent or a committee appointed by
the superintendent,subject to approval of the school board.
18. State Held Harmless: The Recipient shall indemnify,defend,and hold harmless the State of
Alaska and the Department of Education& Early Development, its officers,agents, and
employees from and against any and all suits,claims, damages, losses and expenses arising
out of any act or omission of the Recipient under this agreement or the Project specified
hereunder.
19. Reporting Requirements: Annual reports shall be filed by October 15 each year for debt
reimbursement projects using form 05-08-015 available on the department's website,or upon
request.
20. In-House Requests: Recipient may request, in writing,that all or portions of the Project be
completed utilizing Recipient employees. A request to utilize in-house forces to complete work on
Project#DR 12-100 Page 4 of EED Initials `^ t"VA)
Kodiak High School Renovation&Addition Project Agreement Recipient[Pittiots
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the Project must be approved by the Commissioner prior to initiation of the work. [4 AAC
31.080(a)]
21, Alternative Procurement: Recipient may request, in writing, that an alternative method of
procurement he utilized for construction of the Project. A request to utilize alternative
procurement methods for construction of the Project must be approved by the Department in
advance of advertising for construction. [4 AAC 31.080(0.1
22. Project Schedule: Project construction and closeout shall be completed within five years of
the date of the projcct agreement. If the district fails to show activity on the project for one
fiscal year,the department may withdraw project approval [4 AAC 31.075(b)].
OO /
Recipient(Name and Title) ( Date
ji)q I/!a Mite-'.—/ 'here ✓EF 2/13//2-
State of Alaska, Department of Education& Early Development Date
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KodiaA Nigh School Renovation&Addition Project.4greemetu Recipient Initials.
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APPENDIX A
1. Project Scope of Work: (Use additional pages if-necessary)
Eligible Gross Square Footage: 1181,561gsf/; 4 AAC 31.020(e)
Renovation and Addition at the existing Kodiak High School with work including, but not strictly
limited to:
• Demolition and reconstruction of the 2-story cafeteria/commons area;
• Renovation of existing high school;
• Construction of a 4-story classroom wing;
• Construction of an elevated, interior track around main gym;
• Demolition of the business office at learning center facility(facility number 280000-03);
• Completion of DR-04-120 scope of work; DR-05-117 funds incorporated in this project are
now reimbursed at 70%.
This project is approved at a 70%debt reimbursement rate.
2. The Recipient further agrees to comply with the following additional conditions:
The District acknowledges the Municipality or Borough may assume any or all of the
responsibilities of this grant. (AS 14.14.060)
3. Project Funds -Kodiak High School Renovation &Addition
AS 14.11.100(a)(16)
Approved Principal Amount($76,310,000 approved,using less due to other funds/grants): $68,679,814
Other-bond funds(DR-05-117) $3,577,430
Other bond funds (DR-04-120) $591,579
Other bond funds (DR-04-116) $92,186
FY13 Legislative Grant $7,000,000
FY12 Legislative Grant 12-OC-625 $538,000
Project Total $80,479,009
4. Project Budget
DR-05-117,OR-04-
Cost Category Leg.Grants 120,DR-04-116 DR Funds %of Const. Total Project Budget
1. CM(by consultant) $125,272 $1,103,977 2.00% $1,229,249
2. Land $0 $0 N/A $0
3. Site Investigation $0 $0 N/A $0
4. Design Services $10,000 $103,829 $6,032,418 10.00% $6,146,247
5. Construction $7,480,000 $3,407,748 $50,574,717 100.00% $61,462,465
6. Equipment $228,179 $1,624,021 3.01% $1,852,200
7. District Administrative
Overhead $48,000 $150,275 $4,673,624 7.93% $4,871,899
•
8. Percent for Art $37,902 $576,723 1.00% $614,625
9. Project Contingency $207,990 $4,094,334 7.00% $4,302,324
Totals $7,538,000 $4,261,195 $68,679,814 130.94% $80,479,009
Project KDR 12-100 Page I of l EED Initials
Kodiak High School Renovation c@ Addition Appendix A Recipient Initial .
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APPENDIX B
LAWS,CODES,REGULATIONS,STANDARDS,AND GUIDELINES
(as applicable)
LAWS
P.L. 101-336 Americans with Disabilities Act of 1990; Title Il, Part 35, Section 35.151; and Title Ill, Part 36,
Section 36.401-36.402 incorporating the Americans with Disabilities Act Accessibility Guidelines(ADAAG)
AS 36.05.010- 110 Wages and Hours of Labor and regulations covering procurement requirements and wage rates.
CODES AND REGULATIONS
The building code adopted by the Department of Public Safety under 13 AAC 50.020;
Title 14 CFR,Part 77,Federal Aviation Administration Airspace Restrictions as adopted and modified by the
Federal Aviation Administration;
The electrical code adopted by the Department of Labor under 8 AAC 70.025;
The plumbing code adopted by AS 18.60.705;
The mechanical code adopted by the Department of Public Safety under 13 AAC 50.023;
National Boiler Inspection Code,as published by the American Society of Mechanical Engineers(ASME)and as
adopted by AS 18.60.180;
The fire code adopted by the Department of Public Safety under 13 AAC 50.025.
NOIF:
If a sut?fecl is not covered in the International Building Code, International Mechanical Code, or the International
Fire Code,a recognized national standard such as NFPA Vols. 1-6, 1996 Edition will be utilized
Codes adopted by the Department of Environmental Conservation 1br Wastewater and Sewer under AS 46.03.720,
18 AAC 72 and 18 AAC 80
Fuel handling requirements as specified in 40 C.F.R 112.3(a) (revised as of January I, 1992)and, if applicable,as
described in 40 C.F.R I12.20(f)(6),shall comply with 40 C.F.R. 117.7.1.
STANDARDS
Energy Conservation Requirements A.S.H.R.A.E.90.1
State of Alaska,Department of Education and Early Development,Accounting Manual and Chart of Accounts
ASTM F 1487-98,Standard Consumer Safety Performance Specifications for Playground Equipment for Public Use
Project BDR 12-100 Page 1 oft BED Initials _etit
Kodiak(Iigh School Renovation&Addition Appendix B Recipient Initials-fX
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APPENDIX B
A NON-EXHAUSTIVE LIST OF POTENTIALLY APPLICABLE STATUTES,CODES,
REGULATIONS,STANDARDS,AND GUIDELINES
GUIDELINES
The Council of Educational Facility Planning International,Creating Connections:The CEFPI Guide for
Educational Facility Planning
State of Alaska,Department of Education&Early Development,A Guide to Writing,Educational Specifications
State of Alaska,Department of Education&Early Development,Guidelines for School Equipment Purchases
State of Alaska,Department of Education&Early Development,Swimming Pool Guidelines
State of Alaska,Department of Education&Early Development,Site Selection Criteria and Evaluation Guideline
State of Alaska Council on the Arts,Guidelines for Art Requirements for Public Buildings
•
Project ilDR 12-100 Page 2 of 2 RED Initials '✓*�
Kodiak High School Renovation,@ Addition Appendix B Recipient Initial
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.APPENDIX C
SUBMITTAL REQUIREMENTS AND REQUIRED APPROVALS
(as applicable)
Item Agency Review Review&
Only Approval
I. Annual Report(Due October 15) Department of Education&Early Development X
2. Sit - - '.s- Department of Education$e-€arty Development X
3. Educational Specifications Department of Education&Early Development X
4, A/E Services Agreement Department of Education&Early Development X
5, Schematic Design Documents Department of Education&Early Development X
6. Design Development Documents Department of Education&Early Development X
7. Energy Consumption and Cost Department of Education&Early Development X
Report
8. Construction Documents Department of Education&Early Development X
Department of Public Safety X
(unless local review authority granted)
Department of Environmental X
Conservation
9. Bid Documents Department of Education&Early Development X
10. Building Permit Department of Education&Early Development X
1 1, Bid Tabulation Department of Education& Early Development X
12, Construction Contract Department of Education&Early Development X
Department of Labor(AS 36.05.035 Notification) X
13. Contractor's Payment/Performance Department of Education&Early Development X
Bond
14, Substantial Completion Certificate/ Department of Education&Early Development X
Occupancy Permit
15. Release of Liens Department of Education&Early Development X
16. Change Order Log Department of Education&Early Development X
17, Release from Contract Department of Education&Early Development X
1$. Preventive Maintenance and Department of Education&Early Development X
Facility Management Documents
19, Recorded Building Title Department of Education&,Early Development X
20, Final Project Accounting Department of Education&Early Development X
Evidence of the construction contractor's provision of the following items to the appropriate entity.
21. Corporate Income Tax Clearance Department of Revenue X
22. Unemployment Security Tax Department of Labor X
Clearance
23. Notice of completion of public Department of Labor X
works )/,�,t�
Project tDR 12-100 Page 1 of! EED Initials r/"' �r3
Kodiak High School Renovation&Addition Appendix C Recipient Initials-1
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APPENDIX D
BUDGET CATEGORY DEFINITIONS&ACCOUNT CODES
Construction Management:By Consultant(CM)includes management of the project's scope,schedule,
quality,and budget during any phase of the planning,design and construction of the facility and full time
onsite representation. Consultant CM should include all costs incurred by private consultant to perform
• the CM work. Refer to AS 14.1 1.020(c)for the limitations on consultant CM. (EED Chart of Accounts
FC 884,OC 413)
Land includes actual purchase price plus title insurance, fees and closing costs. Land cost is limited to the
current fair market value,by appraisal,not to exceed the amount budgeted for land in the project
agreement. Land costs are excluded from project percent calculations. (FED Chart of Accounts FC 882,
OC 520)
Site Investigation includes land survey,geotechnical investigation,environmental and cultural survey,
and site selection study costs,but not site preparation costs. Site investigation costs are excluded from
project percent calculations. (EED Chart of Accounts FC 882,OC various)
Design Services includes all full standard architectural and engineering services as described in AIA
Documents B 102-2007,and 8201-2007, Additional A/E services such as educational specifications,
condition surveys,and post occupancy evaluations should also be categorized as Design Services,
however,onsite owner representation and inspections beyond the scope of work described in AEA
Documents B 102-2007,and 8201-2007 should be categorized as CM. (BED Chart of Accounts FC 883.
OC 416)
Construction includes the cost of all material,labor,equipment,and associated expenses required to
perform the project's facility construction and site development. Construction costs can be incurred via a
competitively awarded contract or,with prior department approval,via the use of in-house labor and
procurement of materials per local ordinances. (BED Chart of Accounts FC 885,OC 500)
Equipment includes all moveable furnishings and instructional devices or aids such as classroom
furniture, musical instruments,science lab and physical education equipment and stage/sound equipment.
It does not include installed equipment, or consumable supplies,with the exception of the initial purchase
of library books. For more information see the EED publication Guidelines for School Equipment
Purchases. This item also includes Technology such as electronic and digital equipment with associated
software and peripherals such as computers,printers,video projectors,digital cameras,TVNCRs,
telephones,and video cameras. Consultant services necessary to make technology items operational may
also he included.(EED Chart of Accounts FC 886,OC 510)
District Administrative Overhead includes an allocable share of district overhead costs,such as payroll,
accounts payable,procurement services,and preparation of the six-year capital improvement plan and
specific project applications. It also includes In-}louse Construction Management(CM)which is similar
to the CM-by Consultant,with the exception that In-house CM includes actual district/borough staff time
allocated to the project,staff'travel expenses,and other direct costs of the in-house activity. (EED Chart
of Accounts FC 881, OC 528)
Art includes the selection,design/fabrication and installation of works of art. (EED Chart of Accounts FC
888 [new],OC various)
Project Contingency is a safety factor to allow for unforeseen changes. The use of contingency funds to
address budget overruns should be coordinated with the department. No costs shall be accounted for as
Contingency expenditures. (EED Chart of Accounts FC 889[new],OC[budget account only])
,�QQti
Prgject MDR 12-10!I Page 1 of l EEL)/nilia(s a,�'
Kodiak High School Renovation d)Addition Appendix D Recipient Initials_/arc
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•
AGENDA ITEM #2.a.
EED Debt Number: xx-xxx Project Name: xxx
Alaska Department of Education & Early Development
Amendment No. xxx
to the
Project Agreement
Appendix A— Budget
Project Total $80,479,009 $0 580,479,009
3. Project Budget
Change This Revised Total
Cost Category Current Budget Amendment %of Const. Project Budget
1. CM(by consultant) $1,229,249 $105,906 2.00% $1,335,155
2. Land $0 $0 N/A $0
3. Site Investigation $0 $0 N/A $0
4. Design Services $6,146,247 $593,122 10.10% $6,739,369
5. Construction $61,462,465 $5,295,285 100.00% $66,757,750
6. Equipment $1,852,200 $147,800 3,00% $2,000,000,
7. District Administrative
Overhead $4,871,899 ($3,571,899) 1.95% $1,300,000
8. Percent for Art $614,625 $52,953 1,00% $667,578
9. Project Contingency $4,302,324 ($2,623,167) 2,52% $1,679,157
Totals $80,479,009 -$1 120.55°/ $80,479,009
Page 36 of 37
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AGENDA ITEM #2.a.
Bud Cassidy
From Bud Cassidy
Sent Tuesday, May 27.2014 7:26 AM
To: Stewart McDdonald(smcdonaldOl @kibsd.org)
Subject: FF&E Purchases- IOC Addition and Renovation
Stewart-
I am asking that you and your staff stop from purchasing any additional equipment that could be construed to be part of
the KH5 project and refrain from entering into any contracts that would lead to the acquisition of additional FF&E.I think
you would agree that there is a need to halt further acquisitions and address what has already been spent before
moving forward with additional FF&E purchases. Of critical importance is how these expenditures may affect the sale of
future bonds for the project.
I am also requesting a full accounting of the money spent as well as the items purchased by the school district on
FF&E to date.It is only then we will know the amount of bonds we can legally sell to complete the project as well as be
consistent with the ballot language that approved this construction.That ballot language,as you know,states:"if
additional funding becomes available for the projects from grants or other sources,only enough bonds to finish the
projects will be sold".That language dictates that the remaining sale of bonds sold to complete the project will be
reduced by an equal amount of money that the school district has expended on FF&E outside of the project
budget. I have discussed this specific bond language with a bond attorney and with the borough attorney and they too
see this as the proper way forward.
There is no clear explanation that I can make to the Assemlby or you to the School Board about why the project budget
was exceeded or that a project related expenditure would not be reimbursed by the state. You and I are well aware of
the Assembly's concerns associated with this most expensive public works project ever undertaken by the Kodiak Island
Borough.So concerned were they that the Borough hired a private firm to provide additional project management in an
effort to control project costs.
You and I and our staffs need to be on the same page as we complete this addition and remodel project.Managing a$80
million addition and renovation project is complicated and will become even more complicated without better
coordination of FF&E purchases.
lastly,the clear ballot language,the understanding of the Assemlby and the School Board and their commitment to the
public about how this project will be funded and constructed is my concern.
I am available to discuss this matter with you further.
Bud Cassidy
Manager
Page 37 of 37
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KODIAK ISLAND BOROUGH
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