MEMORANDUM 06-115

TO: Mayor Hornaday / Homer City Council

FROM: Walt Wrede

DATE: July 17, 2006

SUBJECT: Resolution 06-23 / KPB Parcel # 175-040-0300

Attached is a letter from Mr. Allen Jantzi of Remax that was written to the Council on behalf of his client, Mr. Michael Gordon. Mr. Janzi’s inquiry prompted Council Member Shadle to sponsor Resolution 06-23 which was entitled “ A RESOLUTION OF THE HOMER CITY COUNCIL, AUTHORIZING AND DIRECTING ADMINISTRATION TO CONDUCT AN APPRAISAL OF KPB PARCEL 175-040-0300, DESIGNATED FOR SALE BY ORDINANCE 91-27, PURSUANT TO HOMER CITY CODE 18.12, AND AUTHORIZING AND DIRECTING THE ADMINISTRATION TO ADVERTISE FOR BIDS FOR THE SALE OF SAID PROPERTY.” Resolution 06-23 was adopted by the Council on February 27, 2006.

In accordance with Resolution 06-23, I have solicited an appraisal from a qualified appraiser. After some research and a hike to the property, the appraiser concluded that he could not provide me with an appraisal because the parcel did not have legal access. He suggested that the best option for the City was to simply negotiate a sale with Mr. Gordon or one of the other adjacent property owners (this is prohibited by the Code unless the Council receives no acceptable bids). There are three adjacent property owners who could theoretically provide legal access if they were the successful bidder.

I have not yet solicited the services of another appraiser because I think the concerns raised by the first one are legitimate and because I wanted to consult with the Council before proceeding any further with the sale of this property. After looking into this matter in a little more detail, I have some real reservations about selling this property at this time. My concerns include:

• No Legal Access: This property has no legal access (unless you are an adjacent property owner who does have legal access). The City discourages developers and subdividers from selling lots that do not have legal access. The practice is illegal in many jurisdictions. Selling lots that do not have legal access often results in a myriad of legal and other problems later on. I think the City should lead by example and not do something that it would discourage a private developer from doing.
• Integrity of Bidding Process: The Homer City Code and Resolution 06-23 call for sealed bids and a competitive bidding process. This is to insure that the City gets the highest value for the asset it is disposing of. Since this parcel does not have legal access, the number of bidders is likely to be restricted to those who own adjacent properties. I am not sure that holding a sale in which the number of bidders is restricted in is the best interest of the City.
• Potential Property Value: As noted above, I was not able to get an appraisal. As I recall, the Borough Assessed value of the property was around $40,000. This is a ten acre parcel with excellent views, great southern exposure, good building sites, and electricity and possible road access close by. Once legal access is obtained, it is not hard to imagine that this property, if divided into four lots, could be worth $800,000 to $1 million or more. Should the city sell this parcel now for pennies on the dollar or wait until later when it could maximize its revenue producing potential?
• Highest and Best Use? Since the Council adopted Resolution 06-23, many people have expressed concern to me that there are better long- term uses for this parcel than simply selling it. Some have suggested that it should be reserved for a park and green space that would serve the public, visitors, and local adjoining neighborhoods that are developing rapidly. Some have suggested that it be added to Karen Hornaday Park to expand what it has to offer (athletic fields, picnic grounds, camping, hiking trails, scenic overlooks, etc.). Trail advocate have said that this parcel provides a key link in the trail system. Many have suggested that this parcel be referred to the Parks and Recreation Commission for further evaluation.

RECOMMENDATION: I would recommend that the Council delay any further consideration of selling this parcel until the Parks and Recreation Commission (and perhaps other Commissions) can review it and until the administration is able to secure legal access from adjacent property owners. Authorize the City Manager to pursue possible legal access, land trades or other alternatives, and to prepare a resolution which amends Resolution 06-23 consistent with this recommendation.