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City Council Approves Fuel Loan; Bahnke to Leave City Manager Job

Nome City Manager Josie Bahnke (right) interviewed by KNOM's Matthew F. Smith shortly after announcing her decision to not renew her contract. Photo: John Handeland, used with permission.

Nome will get its fuel for the winter—and it’ll be about $2 million cheaper than it was last year—after the Nome City Council approved a $6 million diesel purchase for the utility’s generators Tuesday night.

This year, however, the city itself will be on the hook for fuel, and not the utility; it’s an added layer of financial assurance to bankers at Wells Fargo and shippers with Vitus Marine.

“This year, the bank was requiring the city provide its full faith and credit to the bank, for the note,” Utility Manager John Handeland said at the meeting. The utility has been struggling with its finances since November of 2014, when Wells Fargo dropped a revolving line of credit and forced NJUS to seek an emergency $2.2 million line of credit from the city itself.

The money will be held in escrow, essentially held by Wells Fargo for safekeeping until the full delivery—and a final price per gallon—is locked down over the next two weeks for the 2.3 million gallons of diesel. But the city won’t be dumping the $6 million into the escrow account right away. The payments will come gradually, with the utility forking over its monthly fuel payment to the city on the third of every month, in time for the city to pay the bank on the fifth of every month.

In addition to the price being cheaper—due a global glut of oil that’s pushed fuel prices low—Handeland says the utility has secured a lower interest rate of 2.95 percent this year compared to previous years at 3.5 percent. Norton Sound Economic Development Corporation has also offered to reimburse the utility for the interest for the bulk purchase once the debt is paid in full.

The council unanimously agreed to the resolution putting the city’s credit on the line, but Council member Matt Culley added near the end of the meeting that he nearly didn’t. He called on the utility to implement a permanent rate hike—after a temporary rate increase ended last month—to keep the utility working on a path toward financial stability.

“John, I want you to know I almost voted no on this,” Culley began.

Referencing the utility’s long-discussed changes to rate structure, Culley said the final approval for the fuel sale “was going to be our one leverage point to get what [the council] wanted … except we’re kind of under a real ‘squish window’ here. So, I wasn’t going to just stand on my moral high horse for that reason, but, some of those things need to come to a head real quick,” he said.

The council went on to approve one more item: an already-budgeted $140,000 purchase for furniture, fixtures, and equipment for the new museum library and Kawerak heritage center, the Richard Foster Building.

Outside the meeting, there was also big news from City Manager Josie Bahnke: after seven years on the job, she’s opting to not renew her contract. She officially gave the city council 90 days notice, as required by her contract, meaning she’ll be on the job through mid-October. She said, after seven years, it was time for a change.

“I’m proud of all the capital projects that we’ve built, the public safety building, port improvements, and now, the Richard Foster Building,” Bahnke said. “But those are things. I think most of all it’s the people that work here, it’s the people that live in this town, that’s what I’ve been committed to. I think it’s those relationships that I reflect back on, and the team that we built, the team that we built here at the city, I’m most proud of that.”

The council now has to decide how they’ll go about hiring Bahnke’s replacement: either through a local, statewide, or national search. Bahnke said she’s recommending the council look internally at what she calls the “talented, dedicated public servants” already in the region.

1 Comment

  1. […] come October; until then, election supervisor Lauri Wilson is acting director. Earlier this month Bahnke notified the Nome City Council she would not be renewing her contract for an eighth year at the helm of the city, a 90-day notice required by her work […]