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Forming a Homer Special Assessment District

How does the Homer Special Assessment District (HSAD) work?

Click here to learn how the  Natural Gas Homer Special Assessment District works.

How many lots/parcels are included in the Natural Gas HSAD? 3855

When and where are/were the public meetings to discuss the gas line?
A series of neighborhood meetings were held October 16, 17 and 29. Council held public hearings on the assessment January 14 and 28, and February 11, 2013. Lot owners were notified via certified the first week in November.  City staff gave multiple presentations to individual organizations on the Natural Gas HSAD.

What is the difference between and LID and an SAD?
A Local Improvement District (LID) and Special Assessment District (SAD) are the same thing. The terminology was changed when City code was updated to allow the formation of assessment district for natural gas utilities, Ordinance 12-15.

Will all City lots be included in the Special Assessment District?
No. Some lots/parcels will not be included because the lot is undeveloped, has no legal access, is not developable or if a lot of pipe would serve only a few customers. About 10% of City of Homer lots/parcels will not be included in the Natural Gas HSAD. The Council adopted guidelines for determining the exclusion of lots/parcels at the August 27th meeting in Resolution 12-076. Owners of all excluded lots/parcels were sent a notification September 6th 2012. The City Council made additional adjustments to the preliminary assessment roll. outlined in Memorandum 13-017.  These changes fall in two categories; lands that have changed through a platting action recorded on or prior to January 28th, 2013, and additional lands that should be exempt from the district per Resolution 12-076. Your lot/parcel will not be assessed if it is not included in the HSAD.

I don’t want gas – if the Special Assessment District passes will I still have to hook up?
No. You do not have to hook up to Natural Gas just because you have access to it. However, if you are in the Natural Gas HSAD you still will be required to pay the assessment on your lot/parcel for building the distribution system.

How do I object to the formation of a Special Assessment District?

THE OBJECTION PERIOD IS NOW CLOSED. You need to object in writing on a form provided by the Clerk’s office no later than January 25th 2013 at 5pm. All lot/parcel owners were sent a form and notified of the public meeting by certified mail the first week of November. You can also find it online or contact the Clerk's Office for a new copy of your objection form. The signed original must be delivered to the Clerk’s Office. If more than one individual is listed as an owner of a lot/parcel, both must sign the form for the objection to be valid.  In some cases a lot/parcel is owned by multiple individuals. If this is the case, all forms must be signed and returned for the objection to be valid.  Each lot/parcel owner listed will receive a certified mailing with an objection form. The City will hold public hearings at Council meetings January 14 and 28, 2013.

The Special Assessment District passed but I believe my lot should not be included.

There is a public comment period for lot/parcel owners to ask to be exempted from the Natural Gas Homer Special Assessment District. This occurs after the construction of the gas line is complete and all lot owners are notified via certified mail of the hearing date (estimated date in 2015).  Assessments will not be collected before that opportunity.

My lot is in the City limits but  excluded from the Natural Gas HSAD. How can I be included in the Natural Gas HSAD? If you believe your lot/parcel should not have been excluded from the Natural Gas HSAD, petition the Council to be included.  The sooner the better.

When do I pay my assessment?
The assessment is not due, and interest does not start accruing, until all of the work in the special assessment district is complete. This could be not till 2015 for a project as large as this.

Can I pay the assessment from the Homer Natural Gas SAD over time?
Yes. It can be payable over a 10 year period. The City will pass the interest rate it receives on to the lot/parcel owner. At this time, the estimated rate is 4% which corresponds to an annual payment of $405. Lot owners can choose to pay the $3,283.30 upfront to avoid interest accrual.

Why doesn’t Enstar pay for the distribution system instead of the City forming a Special Assessment District?
The cost of building a distribution system is always borne by the consumer. In some cases the utility builds that cost into their rate structure through a tariff (for example, Southern Peninsula users will be paying for 25% of the trunk line with a $1 per MCF tariff). In other cases neighborhoods get together and form a USAD (similar to a Special Assessment District) within the Borough to pay for a distribution system in their subdivision. Homeowners can also work directly with Enstar. The City Council voted act as one big subdivision that is going to pay Enstar up front for constructing the distribution system.

What are some downsides to the City-wide Natural Gas HSAD?

1. The City will be borrowing a lot of money. To finance this project the City will have to borrow more than the City of Homer annual general fund budget.

2. People will be forced to pay assessments even if they do not hook up to natural gas.

3. Paying the assessment will be particularly burdensome for individuals on limited or fixed incomes.

4. Multiple lot owners will be assessed multiple times.

5. There is a huge administrative cost involved with a project of this scale.

How will multiple lots/parcels be treated?

All lots/parcels will be assessed equally. This means if you own two lots with your driveway on one and your house on another, you will be assessed $3283.30 for each lot. 

Can I vacate a lot line to avoid having to pay multiple assessments?

If you vacated the lot line with the Borough and it was recorded before January 28th Public Hearing, your lot will only be counted as one for the purposes of the assessment.  This is spelled out in Homer City Code 17.04.070(c). The lot line vacation process takes at least 60 days, and averages 90 days.

If my lot/parcel fronts the trunk line, do I still have to pay the assessment?

Yes. All lots in the Natural Gas HSAD are assessed equally.  The trunk line that runs in City limits and the distribution system are considered one project that the City of Homer is paying for (through a combination of borrowing money and the grant from the State of Alaska).  About 25% of the project cost is attributable towards building the trunk line in City limits and is paid for by the grant from the State of Alaska. By including all lots in the HSAD everyone benefits from the public dollars the State dedicated towards the project. 

How will the City assess condominiums?

Each unit will be assessed individually.  Alaska Law defines condominiums as separate parcels of real estate (AS 34.08.720). Each parcel owner was sent an objection form and have the opportunity to object. You can view legal opinions on how condominiums are treated under state law here.

What refunds will ENSTAR pay the City?

ENSTAR projects the economic feasibility of a main extension by comparing the estimated cost of constructing the main extension with the total Free Main Allowance (FMA) for the customers that are expected to receive gas service from the main extension.  The FMA is designed to allocate the cost of existing ENSTAR plant among its customers, and ENSTAR calculates it annually.  Its calculation is described in Section 602c of the ENSTAR tariff

ENSTAR will refund to the City of Homer the amount of the FMA for each customer that connects directly to the gas mains that are constructed within the HSAD during the year of their construction and during the following 10 years.  One estimate by Enstar is that if 90% of the homes in the HSAD hook up to gas in the first few years, approximately 10% of the project cost will be refunded back to the City.

A customer that connects to main extension from a gas line constructed within the HSAD must pay a prorated share of construction of the improvement in the HSAD.  ENSTAR refunds to the City the amount of such payments received during the year of construction of the improvement in the HSAD and the two following years.

The City will use any funds refunded from ENSTAR to pay down the loan for building the distribution system in the HSAD.  The City will equally distribute the benefit to all lot/parcel owners. If you pay your assessment in full when the improvement is completed, you would receive a refund of part of the assessment from the City. If you are paying your assessment in annual installments, either the number or the amount of the installments will be reduced.  Because the City cannot predict how much ENSTAR will refund through the FMA and new hookups outside the HSAD, this figure has not been included in the calculation of the per lot/parcel assessment of $3283.