The borough assembly voted unanimously Sept. 23 to authorize withdrawing $424,153 from Wrangell’s almost $12 million savings account to pay for future Parks and Recreation capital projects.

Municipal code allows the assembly to appropriate no more than the “maximum sustainable distribution” from the fund each year, calculated as the long-term expected investment return minus inflation and investment expenses, applied to the five-year average market value of the fund.

Draws are permitted only if they do not erode the fund’s inflation-adjusted principal.

Borough Manager Mason Villarma reported to the assembly that the money would be earmarked for capital improvements, with the assembly to set priorities as staff brings back a detailed project list. Immediate targets include playground safety and accessibility upgrades and roof replacements or repairs at Parks and Recreation facilities.

“We don’t typically draw off of this account, but it’s something I think will prove to be useful in future years for the borough,” Villarma said.

The vote follows a Sept. 9 directive in which the assembly asked staff to prepare a $250,000 draw specifically for playground upgrades.

Citing year-to-date investment gains — buoyed by U.S. stocks trading at or near record levels — borough management recommended authorizing a larger draw, the full sustainable distribution for the current fiscal year to convert a portion of those market gains into long-lived community assets.

The fund has grown from $9.5 million on June 30, 2023, to $11.74 million this past June 30. It was projected to grow to $12.18 million by June 30, 2026, before the decision to take a withdrawal.

Wrangell voters approved an amendment to the municipal charter in 1997 to create the fund, starting it off with a deposit of $5 million from a federal economic aid grant.

The assembly generally withdrew $250,000 a year from the savings account to supplement general fund revenues, but did not budget for any withdrawals the past three years.

Villarma described for the assembly several benefits of taking a withdrawal: using investment gains to build resilient public infrastructure; funding playground and roof work without taking on debt; trimming near-term exposure to a potential market downturn; and avoiding bond issue costs and schedule delays.

He also acknowledged tradeoffs, noting that a larger fiscal year 2026 draw, while still within policy limits, would leave less money invested.

Villarma said staff will return with a targeted project list and an appropriations ordinance. At that point, the assembly would decide how much of the authorized distribution to deploy and in what order projects should proceed.

The assembly action adds to a decision this summer to designate for playground improvements a $63,940 payment that the borough will receive from the merger of two insurance pools into a single self-insurer for Alaska municipalities and school districts. The merger will result in paying back to participating municipalities money no longer needed in reserve for the self-insurer.