Kenai seeking economic diversity with land reforms

Speaking on Wednesday at the Kenai Peninsula Economic Development District’s Industry Outlook Forum, Christine Cunningham, Assistant to the Kenai City Manager, outlined the reasons Kenai’s administration is seeking to change land policies that critics say have stiffled business in the city: of the city-owned properties offered for lease to industrial and commercial developers, 81 percent remain unleased.

“If we were a landowner looking at vacancy rates, we have a high vacancy rate,” Cunningham said.

The leases that do exist generate a lot of revenue for the city — about $735,000 a year, Cunningham said — but haven’t necessarily created a robust economy. Twelve percent of city leases are over 80 years long “with no real incentives to develop the lease,” Cunningham said.

The first piece of Kenai’s land reforms — which City Manager Paul Ostrander and other administrators first presented to council members in a Nov. 9, 2017 work session — is currently under review by the city council’s advisory groups and is scheduled for a city council vote on Jan. 17. On Wednesday night, the Kenai Planning and Zoning Commission reviewed an ordinance enacting Ostrander’s reforms to airport land leasing, and the Airport Commission did so on Thursday.

Kenai’s airport lease policy is meant to encouraged property development, requiring an investment of up to $100,000 for a five-year lease, and a further $25,000 investment for each subsequent year. However, 47 percent of the airport properties are vacant, with only five new leases being made since 2005. The reform would offer a five-year lease for a $7,500 investment.

Future reforms, which Ostrander said he plans to continue bringing this year, would make a greater fundamental change in Kenai’s land policy.

“Historically our approach to land management has been an as-needed or one-size-fits-all approach,” Cunningham said. “What we’ve talked about, in terms of the going-forward approach, would be looking at individual parcels, getting a land inventory, and handling our city lands in a parcel-specific way. Business friendly rules are ones that don’t create unnecessary hurdles for businesses, so that when somebody applies there’s not an excessive deposit requirement or excessive paperwork or documents to apply for a lease or building permit or something.”

Ostrander, also speaking at the Outlook Forum, commented more broadly on the economic direction he hoped to take Kenai in.

“The city of Kenai certainly recognizes that historically we have been very much an oil and gas and commercial fishing community, but we really want to create an environment where we can diversify our economy as much as possible,” Ostrander said. “I look at Kenai and I see a city that has enormous opportunity for new business to move in. I think there’s some needs that have not been filled in that city, and that should be seen as an opportunity. We want to create a situation here where businesses that are interested in coming on to the peninsula look at Kenai as the best opportunity to locate their business.”

Reach Ben Boettger at benjamin.boettger@peninsulaclarion.com.

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