Assembly approves nearly $5 million appropriation tied to South Tongass fire rebuild and equipment; loan and insurance timing drew questions

The Ketchikan Gateway Borough Assembly approved Ordinance 2,062 on April 7, appropriating $4,990,297 to support recovery from the April fire that destroyed the South Tongass fire station and equipment. The ordinance packages insurance reimbursements, a previously approved interfund loan from the general fund, and a state homeland security grant to replenish equipment and support rebuild costs.

What passed: the appropriation authorizes use of insurance proceeds to reimburse constituent accounts for contents and vehicle replacement, recognizes a $1.4 million interfund loan from the general fund to the South Tongass service area (the loan had been approved earlier in the year to secure timely purchases, assembly documentation shows) and includes $55,000 tied to a state homeland security grant for portable radios and $100,000 from the South Tongass service area for an aerial ladder upfit.

Why it was contested: assembly members pressed finance staff and the fire chief to explain why an interfund loan was necessary when roughly $3.4 million in insurance reimbursements had already been received. Staff explained the building replacement estimate and some insurance settlement components were still outstanding when the borough had to commit to purchase orders earlier in the year; the loan covered immediate equipment procurement and replacement vehicle orders while the final building valuation and remaining insurance settlement were pending.

Manager and assembly clarifications: borough staff told the assembly they plan not to transfer the full proceeds immediately into the South Tongass account but to use insurance proceeds first and only trigger the interfund loan as cash is needed — a procedural adjustment the assembly endorsed. Assemblymember Glenn Thompson proposed and staff agreed the borough would not charge interest to the South Tongass service area until the borough is actually out of pocket, in order to avoid placing an interest burden on local ratepayers while the borough holds reimbursed cash earning interest.

Action and vote: Ordinance 2,062 (amended during debate to clarify appropriation language) passed on a roll call vote with six yes votes. The ordinance appropriates the insurance proceeds received to date, recognizes the earlier general‑fund loan, and establishes spending authority for equipment replacement and building rebuild activities.

Context and next steps: finance staff and the fire chief said vehicle replacements and a ladder truck purchase were time‑sensitive and required a January contract commitment when insurance settlements were still under review. The assembly requested continued transparency about final insurance settlements, confirmed that funds received for the building would be held pending final valuation, and asked staff to return with any clarifying amendments if settlement numbers change. Members also discussed options to minimize cost impacts on South Tongass ratepayers while ensuring essential firefighting capacity is restored.

Quote: “We had to sign a purchase order in January to get a ladder truck and other apparatus; we didn’t yet have the final insurance appraisal,” the borough’s finance director said during the meeting, explaining the loan’s timing.

Ending: The ordinance gives the borough and the South Tongass service area the spending authority needed to replace apparatus and begin building work. Staff will continue reconciling final insurance payouts with actual replacement costs and bring any further adjustments or accounting refinements to the assembly as settlement details are finalized.