Assembly approves Ladd Landing option extension

Posted: Sunday, March 18, 2007

The Kenai Peninsula Borough Assembly authorized a one-year extension of an option to lease Ladd Landing on Cook Inlet’s west side to investors in the proposed Chuitna Coal Mine project.

Richard Bass, William Herbert Hunt and the William Herbert Hunt Trust Estate have held the option to lease acreage at Ladd Landing since 1987. Addendums to the original agreement have been added several times in the ensuing years. The existing option was set to expire April 9, 2009. It has been extended until April 9, 2010.

The investors initially requested a five-year extension, but the borough and investors agreed to a one-year extension, which will allow the borough to address conditions altered by recent modifications of coal mine development plans, and to evaluate other proposed changes in the context of a future five-year extension.

Land Management Officer Marcus Mueller is expected to bring back to the assembly an ordinance for a longer extension as well as any other recommended modifications to the option.

Holding an option to lease means the mine investors are first in line for actually leasing the borough property. They hold the right to exercise that option at any time. An ordinance approved Tuesday not only extends the option, but also allows it to be assigned to PacRim Coal LP, the investors’ project management company, when an application to make that assignment becomes effective.

If and when the Beluga coal field is mined, Ladd Landing would become the terminal through which overseas freighters and domestic barges would be loaded with coal. PacRim is developing plans for a conveyor system from the mine site with a trestle extending into Cook Inlet that could handle sea-going vessels. That trestle will be designed to accommodate up to 6,000 tons of coal per day.

Robert Stiles, of PacRim, told the assembly that depending on size, ships would take from less than a day to a little over a day to load. At peak production, ships would be tied up to the trestle dock about 50 percent of the time.

Many environmental issues will have to be addressed before any coal mining is initiated. Those issues, while commented on by assembly members, were not central to the option extension addressed Tuesday.

Stiles did say, however, that mine investors would be required to establish a bond sufficient to recover unrestored mine areas in the unlikely event an ongoing mine project had to be abandoned. That bond could be between $50 million and $100 million, Stiles said.

Meanwhile, PacRim continues putting together a federally required Supplemental Environmental Impact Statement.

The existing option is not a lease. A lease agreement is signed, but does not go into effect until the investors decided to exercise the option, Mueller explained. Over the course of the next year, a modernized version of the lease will be negotiated, written and signed, he said.

At the March 13 meeting, the assembly also adopted several other ordinances, among them approving the lease of borough land in Cooper Landing to Cooper Landing Emergency Services Inc. for $1 a year for 20 years. The land will accommodate medical and firefighting equipment.

The new corporation is in the process of being formed and will join the Cooper Landing Volunteer Fire Department and Cooper Landing Volunteer Ambulance Inc. into one entity.

The assembly also aggreed to charge service areas for the costs of future special elections. Currently, all taxpayers pay for service area special elections through the borough’s general Fund.

The ordinance, sponsored by assembly members Gary Knopp, of Kenai, and Grace Merkes, of Sterling, came out of debate over charging the South Peninsula Hospital Service Area for the cost of an upcoming special election regarding a proposed bond issue.

While the new law will not directly affect that election, it will apply to all future elections.

Current borough code permits the borough to recover the cost of special bond elections when voters approve bonds charging election costs against the bond proceeds.

The new ordinance would charge service areas for any special election costs. The cost of elections for service area-related issues decided by voters during regularly scheduled municipal elections would continue to be covered by the general fund.

In other business, the assembly:

· postponed action on increasing the sales tax to 3 percent on Jan. 1, 2008;

· approved appropriating $100,000 to advance research into an education lawsuit and a lobbying effort regarding education funding;

· approved appropriating $1.18 million in supplemental funding to the school district; and

· authorized the assembly to sign a resolution with the cities of Soldotna and Kenai regarding the Clean Water Act impaired-status designation for the Kenai River.

Hal Spence can be reached at

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