Editor’s note: The house in an image that previously appeared with this story was mistakenly identified as the house Kenai acquired with its land purchase. It was in fact a house on a nearby property that was not acquired by the city.
Kenai will buy seven parcels of Cook Inlet-fronting property — four of which it needs to build a road to give summer dipnetters access to the southern mouth of the Kenai River — for $1.6 million from the Idaho-based real estate company ARK Properties.
The purchase makes it possible for the city to build the road without disturbing the sensitive environment of a nearby wetland, but also required an unorthodox legal arrangement and the acquisition of unneeded property that made some members of the Kenai City Council uncomfortable. The council nonetheless voted in favor of the purchase at its Wednesday meeting, with council members Terry Bookey and Ryan Marquis in opposition.
Owners of Inlet-front properties between Kenai’s current South Beach access point on Dunes Road and the Kenai river mouth have complained of trespassing dipnetters crossing their land to the river. A group of these property owners have advocated for a road providing more direct access to the north of their land, eliminating the need for dipnetters to trespass.
Kenai’s earlier plans for the new South Beach Access Road routed it around private property by going through the nearby city-owned wetland. After the U.S Fish and Wildlife Service criticized the road’s potential damage to the wetland, the city began negotiating to buy the land owned by ARK Properties, allowing the road to avoid the wetland.
At the council’s Sept. 2 meeting, Kenai City Manager Rick Koch and City Attorney Scott Bloom announced the deal that resulted.
Although only four of ARK’s seven properties were needed for road construction, ARK would only sell the properties together. Koch proposed a plan to buy the seven properties for $1.6 million from a $1.9 million state grant for the road development. Koch said that a gravel road could be built using the remains of the grant money, and the city could sell the four unneeded properties — two of which are developed with an airplane hangar and an unoccupied house — for an estimated $900,000, with which the road could be paved.
A resolution to act on this plan was introduced, debated, and ultimately delayed at the council’s last meeting on Sept. 2. Bloom and Koch had recommended postponement because of a legal obstacle that would prevent Kenai from using the earnings of the land sale for road construction. Section 5-11 of Kenai City code requires that money from land sales be put into a fund from which only the interest could be spent.
The Alaska Department of Commerce, Community, and Economic Development — the agency that had given the road-building grant — provided a solution when they gave Kenai their approval to use grant funds for the land purchase. As a condition of their approval, the agency required Kenai to return to the state earnings from sale of the unneeded property, which would be added to the grant amount and re-given to Kenai. By agreeing to this condition, Bloom said the city would not be directly acquiring money from the land sale but receiving it from the state, and would thus be able to spend it rather than investing it.
Bloom said the provision of the code, which was added by proposition in 1984, was intended to ensure “that the city not just sell land to make money for something else,” and that this transaction was a circumstance beyond what the drafters of the proposition had anticipated.
“I think our charter (code) now is over-broad,” Bloom said. “This is definitely a unique situation that I think falls outside the intent of that proposition.”
Bookey said he remained uncertain both about the risk of the purchase — specifically about the potential maintenance costs and the burden of selling the land’s large house — and about the need for the road. Rather than building a road for dipnet access, he said he preferred to find other ways to improve the fishery, such as recent changes to the fee shacks which he said had made access easier.
Jason Yeoman, one of the South Beach property owners who had previously advocated for the road, said the improvements Bookey referred to hadn’t stopped the problem of trespassing on his land. Another South Beach property owner, Steve Perrizo, had written a letter to the council with similar claims, saying that this summer his property had heavy traffic and vehicles stranded in the sand, “in spite of the efforts that the City of Kenai” has put forth.
In response to Yeoman’s concerns about trespassing, Marquis asked him if he had tried to solve the problem by contacting law enforcement.
“Prior to coming to (the Kenai Council) and talking to you guys about trespassing, the response was that it’s too many people to police, and that it’s just not going to happen,” Yeoman said. “… I was about ready to put my barriers up and basically stop access to the south side. We were going to do that as a group of property owners for the safety of our children. The time frames that people were up and making a bunch of noise was just really not acceptable.”
Marquis said he opposed the purchase both because of its implications for the fishery and its financial cost.
“I think that for a number of years there’s been a mixed message that comes from council,” Marquis said. “When it’s convenient, we act like the dipnet fishery is a big burden and we just wish it would go away. Other times we are enjoying the revenues we gain from it and making it more accessible, which it seems to me would only bring more people here, exacerbating the problem, if there is a problem. So I’m concerned that’s what construction of this road is going to do: provide increased access to the fishery, and I’ve watched how this whole fishery has ballooned over the years, and I feel we haven’t done enough to stop that.”
Secondly, Marquis said, he was “concerned with the city owning very expensive houses.”
According to the Kenai Peninsula Borough Assessing Department, the property containing the four-story, 7,556 square foot house was assessed in 2015 at $1,478,100. The house includes a hot tub, gas fireplace, and a greenhouse.
“We’re going to buy a parcel that has what I would refer to as a mansion on it.” Marquis said. “… The plan is to sell those properties that we don’t need, but I don’t know the real estate market well enough to feel confident that we’ll just be able to turn around and sell it right away.”
Marquis added that he felt the deal was benefitting ARK Properties “way more than it’s benefitting us, and the citizens of Kenai, and the citizens of the city that use the fishery.”
“I would much prefer to purchase just the properties we need, and I’m not sure all our negotiation options for that have been exhausted,” Marquis said.
Council member Brian Gabriel said that although he also had reservations about the purchase he would support it as an alternative to the wetland route, which he opposed.
“I’m not going to lie. When I saw this proposal, it gave me a queasy feeling too,” Gabriel said. “I kind of agree with council member Marquis — these aren’t the sort of deals we enter into. But they accomplish, I think, what we want to accomplish. We get the road built on the uplands, we divest ourselves from the house and the structures … then we get our road and have a very appealing property that we can sell way below assessed value and still be ahead. When I look at it like that, yeah, it still makes me queasy, but that shouldn’t make me back off to the point where I don’t support it.”
Reach Ben Boettger at email@example.com.