The Anchorage-based contracting and transportation company PRL Logistics is offering to buy a four-story, 7,556-square foot mansion on Kenai’s south beach from its owners, Kenai’s municipal government, in a deal that may eventually finance improvements to Kenai’s south beach access road.
PRL Logistics founder and CEO Ron Hyde announced plans to move his company’s corporate headquarters from Anchorage to Kenai, negotiating with Kenai City Council members in a closed executive session at a council meeting April 19. Now an ordinance up for introduction at the council meeting on Wednesday would sell the city-owned house to PRL for $825,000. If introduced, the council will vote on the sale at their May 17 meeting.
The south beach house was built by Marvin and Rosetta “Sis” Dragseth, founders of the Kenai-based seafood processor Royal Pacific Fisheries. Both Dragseths died in May 2016, but had sold their south beach house and land earlier. The house includes a hot tub, a red velvet upholstered lounge with a gas fireplace, nautical and oriental-themed decorations and a tower office that overlooks the Kenai River’s mouth. Kenai’s sale ordinance states that “PRL’s business plan is to potentially use the the property for office space, lodging, restaurant/bar, event hosting and airport related activities to support its business, including the operation of an airship.” PRL plans to begin operating a Lockheed-Martin airship from Kenai by 2019.
When the city begin to consider building a road to the south beach in early 2015 — giving access to summer dipnetters who previously trekked to the southern river mouth over private property from an entrance on Dunes Road, about 2 miles south — the Dragseth mansion and other south beach properties were owned by the Idaho-based Ark Properties. After city administrators unsuccessfully tried to purchase this land, they proceeded with a road design that swerved around it through undeveloped city-owned wetlands to the north — a path which the U.S Fish and Wildlife Service stated “would encroach directly upon a very rich, ecologically sensitive wetland area which hosts spring and fall migrations of geese, ducks, and many species of shorebirds” in a comment to the project’s federal permitters, the Army Corps of Engineers. Subsequently, Kenai resumed negotiating for the Ark properties, purchasing seven of them for $1.6 million in September 2015.
Only four of the seven properties were needed for the road, but Ark Properties would only sell them together. Kenai made the purchase from a $1.9 million state grant given for the road construction, resulting in an arrangement with the state grant agency, the Alaska Department of Commerce, Community and Economic Development, that requires Kenai to use money from the eventual sale of the mansion and land for improvements to south beach access. Then-Kenai City Manager Rick Koch estimated at the time that selling the properties could bring about $900,000.
The gravel-surfaced south beach access road was built in time for the 2016 dipnet fishery. Kenai City Manager Paul Ostrander said the improvements made with the possible sale money could include paving it.
“We don’t have accurate estimates on what it would take to pave the access road, but we’re confident (the $825,000 sale price) would be enough,” Ostrander said.
Except for the dining room table and chairs and the desk in the tower office, Ostrander said Ark Properties still owns the mansion’s furnishings and artwork, which were not included in the sale price.
Kenai code requires city lands to be appraised for a current value before they are sold, but the ordinance states that this requirement doesn’t apply to the Dragseth mansion. Unlike other city land, the mansion isn’t financially dedicated to either the general fund or the airport fund, but to the state grant for south beach access improvement. Ostrander said the property was assessed when it was bought, but its value has likely changed because the property lines have since been redrawn to accommodate the new road.
“We had an appraisal done previously on the property, I believe back in 2015,” Ostrander said. “Since then it’s been subdivided and the land amount has changed, but we’re comfortable that we understand what the value of the property is, and how much we think the market would support, as far as what the market would pay for the building, without going to appraisal.”
The Kenai Peninsula Borough’s total assessment of the property’s value, for tax purposes, is $1,621,600.
Up for introduction alongside the Kenai council’s sale ordinance is another that exempts the private airstrip near the mansion — also built and used by the Dragseths — from a 2000 Kenai city ordinance prohibiting vehicle traffic through the beachfront dunes to protect sensitive plant life in the area. PRL plans to use the airstrip to land planes — and potentially its airship —and has made the sale of the house and land contingent on having an exception to the vehicle prohibition. The ordinance would allow Kenai to conditionally permit such use.
Although originally part of the mansion property, the airstrip was separated when Kenai redrew the property lines after purchasing the mansion. PRL plans to negotiate for it separately. The ordinance would let PRL back out of the purchasing the mansion if it is unable to also get the airstrip.
Reach Ben Boettger at ben.boettger@peninsulaclarion.com.
