PORT ANGELES — Dan McKeen will retire as Port Angeles City Manager next week, leaving the city in a “financially sound situation,” the City Council was told Tuesday.
McKeen, 62, will step down Wednesday after more than six years on the job. He had served as Port Angeles fire chief prior to becoming the city’s top executive in 2012.
“There are a lot of things we accomplished over the years,” McKeen said in his final update to the council Tuesday.
“I can honestly say that it has been one of the best experiences of my work career.”
McKeen will be replaced by Acting City Manager Nathan West, 46, who had served as Port Angeles Community and Economic Development director since 2008.
“There’s a really smooth transition going on,” McKeen said in the special meeting.
“There’s a whole lot of stuff that’s still outstanding. It will all get dealt with, as it always does, but it’s been a great ride.”
Before passing the torch to his successor, McKeen gave the seven-member council a two-hour overview of where the city has been, where it is now and where it is going.
During his address, McKeen said that city residents can expect an “extremely nominal” increase in electric rates in 2019.
McKeen said the city is on the “downhill slope” of its “mountain of debt” despite fiscal challenges like the ongoing curtailment of the McKinley mill on Ediz Hook.
McKinley Paper Co. purchased the former Nippon Paper Industries USA paper mill in March 2017, announcing plans to retool the factory to process recycled corrugated cardboard into manufactured container-board by December 2018.
Last year, each city department identified one-time cuts to offset a budgeted loss of $440,000 in utility tax revenue from the mill’s curtailment this year.
Property tax, sales tax and utility tax each support the city’s general fund, which pays for police, fire, park and street services.
McKinley officials have declined to comment on the status of the mill.
“The last bit of news we have is they do plan on starting back up, but there has been nothing in writing to us yet,” McKeen told the council.
“We anticipate, based on the best information we have, that the curtailment will continue into 2019.”
As part of the retooling, McKinley will install equipment that will be more energy efficient that the paper-making equipment that Nippon had used in the past, McKeen said.
“When the mill starts up — we anticipate it will — they will be using less electricity than Nippon,” McKeen said.
“Purchasing less electricity is good. It’s more sustainable. It’s what we want to see. But it does impact the general fund because utility tax is attached to that.”
The Port Angeles city manager oversees the administration of municipal functions, prepares a draft budget, supervises department heads and reports to the elected council.
The city manager works as a “generalist” as opposed to the “specialists” in charge of individual departments, McKeen said.
Shortly after he became city manager in 2012, city officials discovered mid-year that they were facing an $841,000 deficit in the general fund.
The 2012 budget was balanced by eliminating positions, mostly through attrition.
In subsequent years, the City Council developed long-term strategies and financial policies like having a 25-percent general fund reserve balance as compared to expenses.
“As a result of this strategic direction, today we are in a financially sound situation, despite some challenges,” McKeen said.
Thanks to the new financial policies, Moody’s Investors Service recently raised the city’s bond rating from a medium-high A2 and A3 to a high Aa3.
Last August, city voters approved a 0.2 percent sales tax increase to fund a transportation benefit district to help pay for street projects like the ongoing overhaul of West 10th Street.
The transportation district will help the city acquire grants to pay for future projects, McKeen said.
The city has achieved rate stabilization in most of its utilities thanks in part to a 2014 settlement for its Automatic Metering Infrastructure, or smart meter, project, McKeen said.
Since the operating fund balance in the electric utility exceeds required reserves, the city will be able to pay for a new light operations building without a spike in electric rates or taking on long-term debt, McKeen said.
“Remember what our rate [change] was last year? Zero,” McKeen said of the electric rate.
“We didn’t have a rate increase. This year, it looks like it’s going to be extremely nominal.”
Electric rates will be adjusted in 2019 to match the Bonneville Power Administration’s two-year rate cycle. The city purchases wholesale power from BPA.
Separate cost of service analyses will be completed before the city resets water utility rates for municipal and industrial customers, McKeen said.
No rate increase is expected for solid waste collections at the Port Angeles Regional Transfer Station. Medic 1 rates were previously set to increase by 2.5 percent in 2019.
Labor agreements with the unions that represent city employees are up for renewal this year, McKeen told the council.
The staff has 19 vacancies, including openings in several key positions.
“Everybody’s stepped up to ensure that the job’s still getting done,” McKeen said.
Mayor Sissi Bruch said McKeen did an “amazing job” in his six years as city manager.
“We started out so shaky when you first took over,” Bruch told McKeen, “and [now] we are in a really good, stable place.”
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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at rollikainen@peninsuladailynews.com.
