Assembly OKs land sale to volcano center

Posted: Thursday, May 18, 2000

The Kenai Peninsula Borough Assembly stopped short Tuesday of giving free land for the proposed $12.5 million North Pacific Volcano Learning Center.

Instead, it offered 80 acres near the mouth of Stariski Creek for $315,000 and agreed to finance the sale to North Pacific Volcano Learning Center Inc. for 25 years.

The corporation will accrue interest from the date of sale at prime plus 2 percent -- 11.5 percent interest if the deal closed today. However, it will have to pay just $1 per year for the first five years. After that, it will make regular payments on the principal and accumulated interest.

The deal meets the original intent of the corporation's board when it asked the assembly two years ago to buy land for the center, said spokesman Emmitt Trimble.

The borough financed the purchase of the land, securing it for the center and giving the corporation time to raise money, he said. Now, the corporation will repay the borough.

The volcano center will be a huge boost to the economy when it opens, Trimble said. Backers see it as one of a string of tourism pearls reaching from the Alaska SeaLife Center in Seward to the planned Alaska Maritime Wildlife Refuge visitor center in Homer.

Corporation officials convinced the assembly two years ago to buy the land, saying they had put $50,000 down on it but feared they could not make two $200,000 balloon payments.

The borough's appraiser subsequently valued the land at $250,000, while the corporation's appraiser valued it at $380,000. The assembly agreed to pay $315,000. The seller wanted $400,000, and the corporation paid the remaining $85,000.

However, the corporation has been unable to obtain grants with the borough holding the title. So, last month, assembly members Tim Navarre of Kenai and Drew Scalzi of Homer proposed giving it the land for $1. Some saw that as a contribution to economic development, but others questioned whether the borough should subsidize nonprofit corporations.

On Tuesday, Scalzi and Nikiski assembly member Jack Brown proposed selling the land.

Sterling assembly member Grace Merkes said she opposed the original borough purchase and could never agree to giving the land away.

However, she said, she could agree to a sale.

"We were told that we would either have our land or the money," she said.

If the corporation fails to pay, and the borough takes back the land, she said, "we get more than we have into it, because already the volcano center has $85,000 into it."

The borough stands to make 10 percent interest, she said, and the sale gives the corporation a chance to prove itself.

Scalzi said the volcano center would benefit the entire borough. He said he believes in the project and appreciates the time and money organizers have volunteered.

"We're partnering with private citizens out there who have ponied up," he said.

Kasilof assembly member Paul Fischer questioned giving the corporation special breaks.

"If the taxpayer comes in and says, 'I want to buy some borough land,' he doesn't get terms," Fischer said. "He's got to have his 10 percent down. He's got to make his monthly payments."

The sale would tie up $315,000 in borough assets, he said, and the corporation would not pay property taxes. In five years, he said, the accrued interest could total more than $150,000. The corporation could be nearly $500,000 in debt.

J. Michael James, assistant cashier at the National Bank of Alaska in Soldotna, said Wednesday that with interest at 11.5 percent and payments of $1 per year, the corporation would owe $181,125 in interest after five years. Including the principal, its debt would be $496,125. For the final 20 years, its payments would be roughly $63,490 per year.

Fischer said the corporation could abandon the deal without paying another dime. It could leave an unfinished building. Then, maybe the borough would not even want the land back.

"In the best interest of the borough, I'm concerned that we should get something more than five years-five dollars," he said.

He asked why the corporation cannot raise the money to buy the land.

"You're providing us the opportunity to raise that $315,000 and pay off the property. That was the intent when we came to the assembly," Trimble said.

The ordinance authorizing the sale passed 7-1 with Fischer dissenting and Seward assembly member Patrick O'Brien absent.

In other business, the assembly:

n Adopted a menu of specific options for citizens who want to propose zoning for their neighborhoods.

n Adopted an ordinance extending the Kenai River habitat protection ordinance to nearly a dozen Kenai River tributaries and to more than a dozen other salmon streams from the Swanson River to the Fox River near Homer.

The ordinance bans most building, clearing, excavation and commercial use within 50 feet of listed rivers and restricts logging and fuel tank installation within the broader river flood plains.

n Appropriated $451,245 from the state Division of Emergency Services to reimburse the borough for costs incurred during severe storms last winter.

n Approved bylaws for the Central Kenai Peninsula Hospital Service Area Board.

n Put off deciding whether to continue Mayor Dale Bagley's appeal of the state's Kenai Area Plan.

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