Kenai City Council fails two measures related to land dispute

A land dispute that has irritated Kenai officials, residents and would-be property developers remains a potential irritant after the Kenai city council failed two measures related to Lawton Acres, a 16.5 acre city-owned property between the Kenai Spur Highway and neighborhoods to the south, long disputed between prospective developers and residents who want it as a buffer against traffic and commercial activity.

At their Wednesday meeting, council members voted down an ordinance that would preserve the property by using $600,000 from the city general fund to release it from a legal obligation to finance the Kenai Municipal Airport. With the ordinance’s introducer, council member Mike Boyle, absent, the only council member voting in favor was Bob Molloy.

Molloy also presented a resolution that would have put three options for Lawton Acres on Kenai’s October 3 election ballot as an advisory vote for future city council action. The resolution failed without a vote because no council member seconded Molloy’s motion to introduce it.

In September 2016, dentist Jeremy Sorhus offered to buy 4 acres on the western end of Lawton Acres, near Kenai Central High School, to build a new clinic for his business, River City Dental. Residents of the nearby neighborhood — some of whom have opposed the intermittent attempts to develop Lawton Acres since stopping a planned Pizza Hut there in 1985 — attended a January council work session on Sorhus’ offer, which many stated was less objectionable than previous proposals.

On Wednesday, Sorhus sent a letter to Kenai City Manager Paul Ostrander withdrawing his interest in buying the property, writing that he is “not interested in any project that causes bitterness between me and the residents of Kenai.”

At the January work session, Ostrander spoke on his preference for selling city land through city-initiated public bidding rather than negotiated sales to individuals who’ve made offers. At the next Lawton Acres discussion on April 19, Ostrander introduced an alternate proposal in which the 16.5 acres is subdivided into four properties with neighborhood-bordering strips of woods, three of which could be offered for commercial development, including the property Sorhus proposed to buy.

“After my original work session in January I felt like even the most ardent opponents of the project had come around and were at least indifferent and maybe even supported the project that I felt would be a beautiful addition the city and would be a very responsible way to develop that property,” Sorhus wrote. “However, the public sentiment changed dramatically when the city sought to expand the scope of my original proposal to include the discussion of development on the entire 16 acre site. It is my belief that that discussion should never have been brought up in the same discussion vein because the dynamics of that lot are so different from east to west. If I were a resident of that neighborhood, I too, would have a strong objection to the development of the western portion of that lot due to the narrow shape… Lumping it all together seemed to destroy the public goodwill initially established in the original work session.”

The roughly wedge-shaped Lawton Acres property has about 524 feet of woods between the Spur Highway and houses on the west end, tapering to about 162 feet on the east.

At the time Boyle introduced his ordinance, the cost of Lawton Acres was unknown. In February 2014 the McDowell Group appraisal company valued it at $450,000, but Kenai city code requires a fresh appraisal before a transaction. Boyle’s ordinance was delayed at its first hearing on June 7 so the new appraisal could be performed , and again on July 5 when the Kenai Council voted to refer it to the airport commission.

Lawton Acres is part of the 2000 acres of Kenai land that belonged to a military airbase in the 1940s and 50s, which the Federal Aviation Commission gave to the city of Kenai in 1963 under the condition that it financially support the city airport. When this property is sold, the revenue becomes part of the investment capital of Kenai’s Airport Land Sale Permanent Fund, which in this year’s city budget contributed $1.19 million to the airport, about 37 percent of this year’s airport budget.

Ostrander calculated that if Lawton Acres’ $600,000 were placed in the Airport Land Sale Permanent fund, it would contribute $30,000 annually to the airport.

The Kenai airport commission unanimously voted against recommending the release of Lawton Acres to the Kenai Council at their meeting on July 13. Three airport commissioners — Paul Minelga, James Zirul, and chair Glenda Feeken — commented to the Kenai council on Wednesday.

“When it’s said the airport doesn’t need the funds or doesn’t need the property, that’s not true,” Minelga said.

Emphasizing the value of Kenai’s airport to the local economy and to the Cook Inlet oil industry, Minelga said the purchase of Lawton Acres would be an insignificant contribution to the airport.

“That property, when it was valued in the appraisal I saw, was grossly undervalued. $600,000 — that’s nothing,” Minelga said. “In airport operation terms, it’s a drop in the bucket.”

In a memo analyzing the financial aspects of the ordinance, Ostrander wrote that “reducing available funds by $600,000 will impact the amount or timing of other City capital projects and the City’s ability to meet short-term operational shortfalls.”

Ostrander calculated that a $600,000 deduction from the general fund — which collects the majority of its revenue from city-wide sales and property taxes, and is projected to hold $10 million by the end of this fiscal year, with $216, — would be equivalent to a one-year property tax increase of $68.45 per $100,000 of taxable property value.

Most of the council members voting against the ordinance said they did so for financial reasons.

“It’s a matter of timing and finances,” said council member Henry Knackstedt, explaining his vote against the purchase. “We’re in a recession officially. We have low oil prices, and I don’t see them going up anytime soon… I don’t see any revenue sharing coming down the pipe from the state. We’ve been enjoying that for a decade, and that takes care of a lot of the things the city has been doing, and that is not going to be continuing. The (Kenai Peninsula) Borough is currently in a $4.5 million deficit with their budget. In a few years the borough’s going to be out of cash if they don’t do something there. The city of Kenai, we’re in pretty good financial condition. However, our sales taxes are down $350,000. Hopefully that is starting to recover, but that is going to take some time. I’m not sure the timing is right for what the majority of folks in the this room want us to do. I feel like I have a financial duty to the city to protect its finances and not spend the $600,000 at this point for the purchase of this property.”

Molloy cited quality of life concerns in his support of the ordinance.

“What (the financial analysis) doesn’t really do — and it’s difficult to do — is monetize quality of life, and the history of the property, a unique property, and monetize personal capital,” Molloy said. “By personal capital I mean the people who live here. We’ve gone through a lot of struggles over Lawton Acres and Walker Lane and the MAPs area. Over that time, a lot of people who were valuable contributors to our society have left because they can’t take it anymore… To me, $600,000 — the personal capital is easily equivalent to that.”

Molloy’s proposed advisory ballot question would have given voters three options to suggest action on the issue: preserving it as Boyle’s ordinance would have, dedicating land of equal value to the airport fund in its place, or doing nothing. The vote would have been advisory because Kenai charter prohibits making appropriations, such the $600,000 for Lawton Acres, by ballot proposition.

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