Proposed land trade draws fire from nearby residents

A proposed Kenai Peninsula Borough land trade to obtain gravel to extend the Kenai Spur Highway has drawn fire from neighbors and Nikiski gravel pit operators.

'It's beach-front and lake-front property. It's got a road to it. It's worth probably twice that much. He'd be a millionaire overnight if he acquired that property. It seems like too good a deal to give one person.'

--Joe Ross, Nikiski gravel pit owner

An ordinance introduced by assembly member Jack Brown of Nikiski would trade 470 acres of borough-owned land on the Cook Inlet bluff by Suneva Lake in Nikiski for 80 acres owned by James Thomas "Tom" Hall.

The borough would use gravel from the 80 acres as its match for roughly $6 million in federal grants to extend the Spur from Nikiski to borough subdivisions at Gray Cliff and Moose Point.

Unless the borough provides the match by summer, Congress may take back the $6 million, Brown said.

The assembly has shown no interest in spending cash for the match, he said, so he has been looking for gravel to use instead. He learned that Hall, who was interested in borough land on the bluff, owns a gravel source.

In January, Brown said, he called a meeting to propose the trade to see if there was any other gravel available near the road project.

"We got all the people we know who are involved in the gravel business," he said.

None offered any other gravel, he said, so he put the proposed trade before the assembly.

"It's a glaring sweetheart deal negotiated between Jack Brown and Tom Hall," said Stan Huhndorf, who said he has been trying to buy some of the borough's 470 acres to secure access to land he already owns.

Brown and Hall denied any back-room deal.

"How could it be a back-room deal when we had this big meeting?" Brown asked.

In addition to the January meeting, he said, he has met with concerned neighbors to the 470 acres. The assembly plans public hearings on the land-trade ordinance April 17 and May 15.

Brown said calls from constituents favor the trade by a four-to-one margin.

The proposed ordinance lists the value of the borough parcels at $571,600 and the value of the gravel at $600,000, assuming a price of $1.50 per cubic yard. The assessed value of Hall's land for property taxes is $56,000.

The ordinance would authorize the borough to sell its land in exchange for the gravel at other than fair market value.

"A competitive sale is not feasible for this borough land because of the borough's immediate need for gravel in close proximity to the (Spur extension project) and the fact that the source of that gravel is located on property owned by James T. Hall ... who is willing to offer gravel as the purchase price for those parcels," it states.

Joe Ross, who owns a Nikiski gravel pit, said the 470 acres is worth far more than $571,000.

"It's beach-front and lake-front property. It's got a road to it. It's worth probably twice that much," he said. "He'd be a millionaire overnight if he acquired that property. It seems like too good a deal to give one person."

Nikiski operators generally pay $2,000 to $6,000 per acre for gravel pit land, he said. He questioned paying even $571,000 for the five-acre pit being discussed to mine the 400,000 cubic yards of gravel the borough seems to be after.

"They're giving him $115,000 per acre," Ross said.

The borough could buy gravel for less from an existing pit, he said.

"The borough is going to go out and create a gravel pit that competes with those of us that are trying to make a living," he said. "They're also trying to put this in over the objections of the people that live out there."

Brown said the borough would acquire the whole 80 acres, not just five. Eighty acres at $6,000 per acre would total $480,000.

Hall said he was interested in the borough land to expand a golf course on land he already owns near Suneva Lake. The borough was preparing to auction some of its land, he said.

"Then, I mentioned that I had gravel. The borough put the ordinance up," he said.

Hall said it was the borough that appraised the 470 acres and put a value on his gravel.

"The gravel is valued at $28,000 more than the land, using the borough's own figures," he said. "I don't see where the (rub) is -- two or three people raising a stink trying to stop it, just out of greed. Anybody could see that it's good for the borough."

Meanwhile, the land he acquires will go on the tax rolls.

Shane Horan, borough assessor, stood by the borough's appraisal of the 470 acres, which was based on recent central peninsula land sales.

For example, 60 acres in Nikiski sold in 1999 for $97,500, or $1,625 per acre. However, that was not beach-front land. He said the borough did identify one beach-front sale of 1.8 acres last year at Cohoe for $30,000, or $16,667 per acre.

However, small parcels bring more per acre than large ones, he said. For the comparison, the borough adjusted the Cohoe price to account for the small lot.

The borough appraisal of $571,000 for 470 acres works out to $1,215 per acre.

Several years ago, 80 acres on the bluff by Stariski Creek sold for $400,000 -- $5,000 per acre -- for the North Pacific Volcano Learning Center.

Horan said the borough did not consider that sale when it appraised the 470 acres, because the Stariski land was too far from Nikiski.

Gary Davis, borough roads director, said it appears there is little usable gravel along the right of way for the Spur extension. After the trade with Hall was proposed, though, the borough found gravel on land it owns adjacent to Hall's 80 acres.

But while Hall's land is accessible, the borough may have to build a road to reach its land. Brown said the borough is analyzing the cost.

"If the borough can show that it will be cost-effective to get its gravel out, that's probably the way (it) will go," Brown said. "If it's expensive, and we go with the Hall option, we would probably reduce the amount of land we sell to Hall."

Brown said he learned only after the Hall deal was proposed that some neighbors are interested in parts of the 470 acres.

If the borough trades land to Hall, he said, it likely will leave buffers around adjoining privately owned parcels.

If people do not trust the borough's numbers, he said, the borough could obtain an independent appraisal.

Brown said he hopes the borough can pick a gravel source by May, conduct an environmental impact statement for the Spur extension this year and begin construction in 2002.

"I'm just pleased that however we accomplish this, we're going to get the extension of the highway," he said.