Palmer council weighs airport, golf course uses; temporary sales tax hike aired for library construction finance

There was extended discussion on Palmer’s airport at last Tuesday’s city council meeting. What weighed heavily on peoples’ minds, in comments made at the Nov. 4 meeting, was the possibility that part of the city golf course could be taken for expanded aviation activity.

The importance of the airport to Palmer’s economy was also recognized, however.

There was no action taken or required at the Tuesday meeting but what’s driving the golf course and airport discussion is a new master plan needed for the airport. Periodic updates to master plans are required by the FAA.

If there is more demand for land for aviation use, such as for hangers or aircraft tie-downs, the city will have to adhere to Federal Aviation Agency requirements that city land now used for golfing be used to support aviation. The airport-use requirement is a condition for FAA funds used to acquire land, Palmer city manager Kolby Zerkel said.

Supporters of the golf course are asking the city to request that the FAA lift the aviation-use requirement.

“This is possible,” Zerkel said, but to get federal approval the city must do an analysis to show continued golfing qualifies as “community use,” to be allowable under federal rules.

“This might be difficult to do,” Zerkel said, because the golf course is managed by a private, for-profit company, with fees charged to golfers. This is unlikely to fall under the FAA’s definition of community use.

However, the notion that there is pent-up demand for aviation use is contested by golf course supporters. In the audience participation part of the meeting where public comments are encouraged, golf course supporters said it will be difficult to show there is need for new lands for aviation.

“Right now I see no evidence of unmet need,” that would justify taking golf course land for the airport, one member of the public argued. “The facts are clear that the golf course is worth saving. To eliminate a gem like this (the golf course) for Palmer would be very short-sighted. The airport at present almost breaks even,” in covering city costs, while the golf course brings in revenue above costs.

In other topics, financing methods for the new city library were discussed with city manager Zerkel and city finance director Gina Davis laying out options. Those include use of city general obligation bonds for the library that have been authorized by voters along with cash that is available from an insurance settlement from the that roof collapse that damaged the former library.

There was also a state capital appropriation and community donations. But a temporary 1% increase in the city sales tax, to lower the burden on property taxpayer, was also raised Tuesday in discussions within the council.

Most users of the new library will be people who do not reside within city limits and who will not contribute to bond repayments with property tax, it was argued within the council. However, library users outside the city will likely pay city sales tax. A temporary sales tax increase is a way for them to contribute to paying for construction.

The library construction bid from H5 Construction for $12 million was accepted by the council but questions were asked why this is below the $15 million estimated earlier and authorized by the council. Zerkel said the bid by H5 was in response to the project outlined in the Request for Proposals. It should be looked at as a kind of first phase. “There are always change orders,” once construction starts that will increase costs, she said.

The mix of financing options presented by Zerkel and Davis include payment all with cash for the construction; a 50-50 mix of $6 million cash and $6 million from city bonds and variations of the two. The city has $9 million in cash now available for the library. If bonds are sold, from $10 million in city bonds authorized by voters, an interest rate of 3.75% per year over 20 years was assumed.

If borrowed bond money is used and part or all of the cash is left in the bank, earnings in that at an 4% interest rate was estimated. Several financing scenarios with mixtures of cash and debt were presented to the council, as well as an option of the 1% temporary sales tax increase, but the decision on which to use was deferred to a future meeting.

The council also adopted a new fee and fine schedule for its Fiscal Year 2026, which begins Jan. 1. Increases in a wide variety of fees for city service will see increases. John Alcantra, a council member, raised questions as to what is driving fee upward.

Mostly it is inflation and rising costs for fuel and equipment, Alcantra was told by city staff. However, Jude Bilafer, Palmer’s public works director, said water theft from Palmer’s water system is a growing problem helps drive up costs. Bilafer’s remarks at the council’s Oct. 28 meeting where the fee schedule was reviewed.

Most of the water theft occurs at water hydrants outside city limits, Bilafer said. Palmer’s water and wastewater services support residential and commercial customers in areas around Palmer including some not within the city. Construction contractors are partly to blame for this, Bilafer said.

“I’ve seen 2,500-gallon water trucks and at least one 5,000-gallon tank truck pull up to a city hydrant and fill up,” he told the council. “When I contact the company owners they pay up because it’s pretty hard to argue with a photo,” he said.

There are other issues of non-payment developing, however. An increasing problem is that of residential water users not paying bills after nonpayment notices and when city employees are sent to disconnect service they find the water meters and cutoff valves blocked by piles of rock and soil.

“We’ve seen people, when it is ten below, pile up rocks and then spray water that freezes, making it virtually impossible to access the meter and valve,” Bilafer told the council. “This is not yet a major problem but it is increasing.” Putting out cameras to record theft isn’t a practical solution because people damage or steal the cameras. “The longest we’ve been able to keep a camera operating is about two days,” Bilafer said.

The overall problem of water loss in the city system is a long-standing issue that has been ignored for too long, he said. When people use the city water without paying for it the costs are borne by local residents and businesses who do pay their bills.