2012-06-14 Work Session Kodiak Island Borough
Assembly Work Session
Thursday, June 14, 2012, 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 forrnal action is taken at work sessions and items that require forrnal
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.
CITIZENS' COMMENTS (Limited to Three Minutes per Speaker)
ITEMS FOR DISCUSSION
1. Kodiak Homelessness Coalition
2. Kodiak Regional Aquaculture Association
3. Borough Manager Applications
PACKET REVIEW:
PUBLIC HEARING — None.
UNFINISHED BUSINESS
Contract No. FY2012 -23 Recycling Contract with Threshold Services, Inc.
NEW BUSINESS
CONTRACTS
Contract No. FY2012 -25 Between the Kodiak Island Borough and the Kodiak Chamber of
Commerce of Kodiak, Alaska for Economic Planning and Project Development Within the
Kodiak Island Borough for FY2013.
Contract No. FY2012 -26 Between the Kodiak Island Borough and the Kodiak Island
Convention and Visitors Bureau for Destination Marketing and Tourism Development Services
for FY2013.
RESOLUTIONS
* Resolution No. FY2012 -28 Authorizing the Records Manager to Dispose of Certain Kodiak
Island Borough Records.
Resolution No. FY2012 -32 Adopting the Comprehensive Economic Development Strategy
(CEDS) 2011.
ORDINANCES FOR INTRODUCTION — None.
OTHER ITEMS
* Confirmation of the Mayoral Appointment to the Cook Inlet Regional Citizens Advisory
Council.
MANAGER'S COMMENTS
CLERK'S COMMENTS
MAYOR'S COMMENTS
•
ASSEMBLY MEMBERS COMMENTS
Kodiak Regional Aquaculture Association
104 Center Ave, Suite 205 pp (907) 486 -6555
Kodiak, AK 99615 .�•/1.� fax (907) 486 -4105
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Kodiak Island Borough Assembly
Work Session, June 14, 2012 (Flag Day!)
KRAA Discussion Items:
Item #1 — Renewal /Amendment of Lease Agreement for Pillar Creek
Hatchery (Map and Value of Pillar Creek Hatchery salmon fisheries)
Item #2 — KIB Severance Tax and KRAA Cost Recovery Fisheries
(Letter with draft language for amendment of a KIB Severance Tax
ordinance, and applicable Alaska Statutes)
Item #3 — Update on KRAA Lake Enrichment project for Kodiak
sockeye salmon lakes; Karluk Compatibility Determination
Pillar Creek Hatchery
KRAA Enhancement Project Salmon Harvest and Values, 2009 - 2011
Commercial Harvest Estimated Exvessel Value
Number Est. Weight 2009 2010 2011
Foul Bay Sockeye: 2009 6,508 38,658 545,229.86
2010 31,126 130,107 5186,053.01
2011 44,142 213,647 5326,879.91
Waterfall Sockeye: 2009 2,234 12,778 $14,950.26 f
2010 19,755 86,922 5124,298.46
2011 37,563 173,541 5265,5 17.73
Spiridon Sockeye: 2009 155,025 920,848 $1,077,392.16
2010 176,473 1,048,249 51,408.482.21
2011 167,293 920,112 51,453,820.44
Crescent Sockeye: 2009 - - -
2010 - - -
2011 4,310 19,912 $30,465.36
$1,137,572.28 $1,612,110.50 51,860,305.58
OTHER PCH SALMON HARVESTS: SUI3SISTENCE / RECREATIONAL (minimum estimates!)
Crescent Sockeye: 2009 959 (+1,469) Crescent Coho: 2009 175
Pt Lions Subsistence 2010 5,048 ( +808) Pt Lions Subsistence 2010 587
2011 11,829 ( +125) 2011 98
d System: 2009 144
Sport kings 2010 1,009
2011 1,953
2009 1,600
Sport Coho 2010 1,600
2011 1,600
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Kodiak Regional Aquaculture Association
104 Center Ave, Suite 205 pp (907) 486 -6555
Kodiak, AK 99615 / �. R•a•q •\ fax (907) 486 -4105
C '* - kraa @gci.net
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To: Kodiak Borough Assembly
710 Mill Bay Road
Kodiak, AK 99615
The Kodiak Regional Aquaculture Association (KRAA) is asking the Kodiak
Island Borough Assembly to modify the Kodiak Island Borough Code of
Ordinances. We are seeking a motion to amend Title 3, Revenue and Finance,
Chapter 3.45 Severance Tax, such that KRAA will not be subject to the Borough
Severance Tax for KRAA cost recovery salmon fisheries.
BACKGROUND:
The non -profit Kodiak Regional Aquaculture Association operates two salmon
hatcheries (State - owned) and also conducts salmon enhancement, rehabilitation,
research, and habitat projects within the Kodiak Island Borough. KRAA is
permitted to do this under Alaska Statutes (AS 16.10.380 and AS16.10.480).
In order to fund KRAA operations, Alaska Statutes allow KRAA to conduct "cost
recovery fisheries" (AS16.10.455) under a permit issued to KRAA, that allows the
harvest adult salmon at locations designated by the Department of Fish and Game.
Cost Recovery fisheries revenues must be used to recover all or part of the costs of
operating the hatcheries and any remaining funds may be used for improvements to
the hatcheries or other salmon enhancement or rehabilitation projects, fisheries
ti research, or reasonable operating or administrative costs (AS 16.10.480(d)).
PROBLEM:
In July 2010, the Borough Finance Department elected to impose the Kodiak
Island Borough Severance Tax on KRAA cost recovery fisheries, and since that
time severance taxes have been collected from the cost recovery salmon buyer and
withheld from final payments to KRAA for cost recovery salmon fisheries. In
2010, the KRAA were levied severance taxes totaling $ 31,686.18 and, in 2011,
severance tax totaled $ 32,493.63 to the Kodiak Island Borough. Total amount so
far is $ 64,179.81 subtracted from KRAA cost recovery revenues.
Letter to the Kodiak Island Borough ,Tune 14, 2012
Re KRAA and KIB Severance Tax Flag Day
Also in March of 2011, the Borough passed a Resolution in support of KRAA and
our priority project, to restore the productivity of the Kodiak sockeye salmon
systems and to increase the returns of sockeye salmon to Kodiak through lake
fertilization of Karluk, Frazer and Spiridon lakes. In Resolution FY2011 -22, the
Borough also allocated matching funds of up to $50,000 to Kodiak Regional
Aquaculture Association. Those funds have been received by KRAA and are
being utilized for the Karluk, Frazer, and Spiridon Lake Enrichment projects.
So, what we have is the Borough supporting KRAA through the direct allocation
and payment of funds, while at the same time the Borough is taxing KRAA on cost
recovery fisheries revenue needed to fund Kodiak salmon enhancement projects.
SOLUTION:
KRAA asks the Borough Assembly to amend Title 3, Revenue and Finance,
Chapter 3.45 Severance Tax, in one of two ways:
Kodiak Island Borough Code of Ordinances
Title 3 Revenue and Finance
Chapter 3.45 Severance Tax
Section 3.45.010 Definitions, is hereby amended as follows:
3.45.010 Definitions.
In this chapter:
A. "The gross production value" means the value per unit at the point of severance
multiplied by the number of recovered units of the natural resources sold during
the calendar quarter.
B. "Severer or harvester" means a person, company, corporation or other entity
engaged in the business of severing or harvesting natural resources. This includes
offshore processors of fish products who process, deliver, catch, or receive fish
products within the boundaries of the Kodiak Island Borough, but shall not be
interpreted as including the Kodiak Regional Aquaculture Association, a non -profit
regional association qualified under AS l 6.10.380 and formed for the purpose of
enhancing salmon production; or any agents or employees of, or persons under
contract with, the Kodiak Regional Aquaculture Association for the purpose of
2
Letter to the Kodiak Island Borough June 14, 2012
Re KRAA and KIB Severance Tax Flag Day
conducting cost recovery fisheries pursuant to AS 16.10.455 and permitted for the
purposes provided for in AS16.10.480 (d).
OR, alternately:
Section 3.45.030 Exemption, is hereby amended as follows:
3.45.030 Exemption.
If the annual gross production value of severed or harvested natural resources
within the borough does not equal or exceed the amount of $5,000 annually, the
severer or harvester shall be exempt from taxation under this chapter. This
exemption does not apply to KIBC 3.45.020(D). [Ord. 91 -03 §2, 1991. Formerly
§3.26.030]. If the natural resource harvested within the borough are salmon taken
in a salmon cost recovery fishery, as defined in AS 16.10.455, for the Kodiak
Regional Aquaculture Association pursuant to a permit and for the purposes
provided for in AS 16.10.480 (d), the severer or harvester shall be exempt from
taxation under this chapter.
We thank the Kodiak Island Borough Assembly for consideration of this important
issue.
Si•cerely,
/Js
Kevin Brennan
f •
Executive Director
3
Letter to the Kodiak Island Borough June 14, 2012
Re KRAA and KIB Severance Tax Flag Day
ALASKA STATUTES
Sec. 16.10.380. Regional associations.
(a) The commissioner shall assist in and encourage the formation of qualified regional associations for the
purpose of enhancing salmon production. A regional association is qualified if the commissioner determines that it
(1) is comprised of associations representative of commercial fishermen in the region;
(2) includes representatives of other user groups interested in fisheries within the region who wish to belong;
and
(3) possesses a board of directors that includes no less than one representative of each user group that belongs
to the association.
Sec. 16.10.455. Cost recovery fisheries.
(a) A hatchery permit holder may harvest salmon for a facility in
(1) a special harvest area through agents, or employees of or persons under contract with the permit holder as
provided under a pennit from the department or regulations of the Board of Fisheries; or
(2) a terminal harvest area through the common property fishery under this section.
Sec. 16.10.480. Contracts for the operation of state hatcheries.
(a) If the department determines that it is unable to continue operating a state -owned hatchery or that it is in the
best interest of the state to provide lbr the operation of the hatchery by another person or by another person in
cooperation with the state, the department may enter into a contract for the operation or cooperative operation of the
hatchery.
(b) Notwithstanding AS 36.30. when selecting a contractor under (a) of this section, the department shall give
a preference to the regional association organized under AS 16.10.380 that is located in the region in which the
hatchery is located. If the department determines that the preferred regional association does not meet the criteria
established by the department for the contract, the department may not award the contract to the preferred regional
association and shall procure the contract under AS 36.30 after considering the recommendations of the preferred
regional association.
(c) Except as othenvise provided in this section, a contract entered into under this section must provide that the
hatchery will be operated under AS 16.10.400 - 16.10.470 and the regulations adopted under those sections.
(d) The department may issue to a contractor who operates a hatchery under this section a permit to harvest
adult salmon during the term of the contract at locations designated by the department. The contractor shall use
funds received from the sale of adult salmon harvested under the permit to recover all or part of the costs of
operating the hatchery and may use the remaining funds for improvements to the hatchery or other sahnon
enhancement or rehabilitation projects, fisheries research, or the contractor's reasonable operating or administrative
costs in the region in which the hatchery is located including debt retirement or for other fisheries activities of the
contractor.
(e) A contract under this section for the operation of a hatchery may not affect the state's ownership of the
hatchery and does not affect the states responsibility to manage the resource.
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KODIAK ISLAND BOROUGH
WORK SESSION
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