Memorandum 15-057 Lillian Walli Subdivision Development Covenant

Memorandum 15-057

TO:                       MAYOR AND COUNCIL

FROM:                 MARVIN L. YODER, INTERIM CITY MANAGER

DATE:                  APRIL 22, 2015

SUBJECT:         LILLIAN WALLI SUBDIVISION

I first became aware of the Lillian Walli Subdivision in January.   It was clear there were issues but since the plat was dated 1988 it did not seem urgent.  The subdivision has about 80 lots and 15 owners.

In February, Carey apprised of an earlier request for an assessment district for the lots that bordered Eric Lane (Fairview).  The City Council considered that but could not honor that request since in 1988, the City included a document with the Subdivision Agreement that stated “no request for a building permit … will be made until improvements … are completed and accepted by the City”.

That prohibition included tract “B” which is on the Sterling Hwy and next to the Lutheran Church.  The State DOT also honors that agreement and will not allow a driveway permit from West Hill Road to access the subdivision.

When water and sewer were constructed in Sterling Highway, ALL of the lots in Lillian Walli were assessed, including tracts C & D and lots 36 – 38, which were on the west side of West Hill road.  The gas line was constructed in Eric Lane and West Hill which will result in further assessments, but no chance to develop unless a majority of the owners agree to an assessment district to develop the entire subdivision.   Estimates are that to fully fund an assessment district would result in an assessment of over $80,000 per lot.

As you can imagine a few of the owners are somewhat hostile to the City.  They feel that the City is partially responsible for the inability to develop the property.  They have paid assessments and taxes for years and are no closer to a workable development plan then they were 25 years ago.  It should be noted that the City is an owner of eight lots, which it obtained due to foreclosure.  The concern is that if this situation continues, there could be further property owner default when the gas line assessments come due.

With this history, I began to contact the property owners.  There are, excluding the city, 6 major property owners and owners with one to three lots.  I have met with 3 and contacted 3 others by email or phone.   One authorized a local person to speak for him.

We discussed a possible solution which appears to be acceptable to the major owners.  Mr. Klinkner has prepared the attached Resolution which complies with my understanding of the owner’s wishes.

This Resolution applies to tract B and lots 1 through 77 in the Lillian Walli Subdivision.  Tracts A, C & D were exempted when the utility assessment district was formed.

Tract C has been subdivided and developed.  Tract B was purchased by the Lutheran Church and has replated to include a land they previously owned.  Although not developed there is some indication that lot 36 may have been previously exempted from the subdivision requirements.  The current status of lot 17 is not known.

Another decision for the City Council (also part of the Land Allocation plan) would be to determine what will be done with the city owned lots.  There are several options.

The City could sell its lots to a developer prior to the development of the subdivision.
The City could cooperate with the developer and sell the lots after the improvements are complete.
The City could sell some of the lots and designate the remaining acreage for drainage, green space and/or for other community use.

Changes to the current agreement will benefit the City in several ways.

The issues with this subdivision have elicited negative responses toward the City for many years.  Finding a solution will be positive step for the City. 
The Economic Development Commission, among others, has been promoting ways to encourage more affordable housing in Homer.   The lack of affordable, adequate housing was identified as a pressing need in a study by the US Coast Guard.   Allowing individual developers the opportunity to begin construction, without the current restrictions, would be a positive step towards meeting the housing needs in Homer.
Once these lots are developed, the City will realize increase in property taxes as well as increased revenue for the city utilities.