Unalaska, AK – The City of Unalaska is finally feeling the impacts of the global economic crisis. The market crash is affecting the sale of bonds meant to finance the new powerhouse project. City Financial Director Tonya Miller said the interest rates on the bonds are too high to make the project affordable.

"If we're getting up to close to 8 percent then the rate payers would have to pay rates that are similar to what we're paying now for electricity," she said, "which would mean it was pointless to build a new powerhouse that aims to give us better rates."

The finance department has come up with an alternative plan - the city will loan itself the money. "Our general fund investments are earning less than four percent now, so instead of the electric fund is paying up to 8 percent, we can loan the money from the general fund at about 5.5 percent and that way the electric fund is paying less and the general fund is earning more."

Miller said she hopes it's only a short-term loan because it might affect other projects that were originally designated money from the general fund.

"We may have to rearrange those designations and even maybe drop off some, but hopefully this is just a short term fix for the electric fund," she said. "But with the economy the way it is, we just felt like that would be the safest bet for our tax dollars in the general fund and for our rate payers in the electric fund."

If the market does not change, the loan could become permanent and the city would pay itself back over 25 years. The high rates will also affect the general obligation school bond voters approved in October. The city will try to wait until rates are lower before selling it.

The city council will decide on what funding course to take for the new powerhouse at their Dec. 30th meeting.