Council won't loosen bond requirements for developer

Posted: Monday, August 06, 2001

The city council of Kenai, concerned two new developments might be stalled and go unbuilt, is requiring performance bonds from the developers, but that's not sitting well with one of them.

The bonds were put in place for developments in Inlet Woods and Five Iron Heights subdivisions to ensure the land is not bought and then just sits there.

Sean Anderson is prepared to buy 4.39 acres in Five Irons for $23,500 and build on them, but a performance bond that guarantees road paving, water and other utilities has caused him pause.

"I'm dissatisfied by the performance bond," Anderson told the council.

Anderson wouldn't immediately say how much the performance bond would cost, saying it was less than the purchase price of the land, but council member Joe Moore pressed him, and Anderson said it was $5,000.

"The amount is not the point, but the fact that it is coming out of my pocket," Anderson said. "I shouldn't have to bond for power, telephone and gas. It should only be roads and water."

As an alternative, Anderson asked that the council codify the performance bond requirement, indicating it was unfair to ask only him and Clint Hall, who is developing parts of Inlet Woods, to take such bonds out.

City Manager Linda Snow said Anderson had a legitimate concern that all builders be treated the same.

Council member Jim Bookey was unsympathetic to Anderson's case, saying the requirement is only business and he should be able to amortize the cost over time.

"I'm worried this could be potentially another Inlet Woods," Bookey said. "I felt from the start there needed to be a performance bond."

However, council member Duane Bannock argued that the performance bond requirement was put in place after the property had been appraised, and could have decreased the fair market value of the land if it had been factored in, costing Anderson less.

Mayor John Williams agreed, saying he could see the cost of the bond subtracted from the price of the land. He said that the bond really is an insurance policy for the city, so it is not stuck with a half-developed subdivision, like it was with Inlet Woods some years ago.

Bookey was unconvinced.

"If $5,000 is that critical to you, then we're in big trouble," he said to Anderson. "Personally, I'm tired of this project and we should move on."

Bannock introduced a motion to have a new appraisal that takes into consideration the performance bond, but it failed on a three-three vote, with Bookey, Moore and Linda Swarner voting no.

Anderson's father-in-law, Bob Favretto, who also is Bannock's employer at Kenai Chrysler Center, addressed the council after the vote.

"You should see yourselves from this audience and see what you just did. It's pathetic," he said.

Those comments drew the rap of the gavel by the mayor, but Favretto continued.

"It's sad that you let personalities ... affect the council. This is an unhealthy dialog," he said.

"I have been involved in economic development and economic development is moving forward not back. You should deal with the positive, not the negative."

In other news from Wednesday's council meeting:

n The city bought two new trucks. One from Seekins Ford for $24,701 for the airport and another from Kenai Chrysler Center for $22,048 for the building department. The mayor split the purchases into two votes. The Seekins vote passed 6-0, while the Chrysler vote passed 5-0 with Bannock abstaining.

n Snow said the city's consultants, Peratrovich, Nottingham and Drage Inc., have begun the permitting process for the Kenai sea wall. The city recently was notified by Sen. Ted Steven's office that $500,000 has been appropriated for design of the sea wall and coastal trail. The main barrier to the project are state and federal agencies concerned about the environmental impact of the wall.

n After much debate, the council decided to keep a soil screening machine that belongs to the airport. It had been included in the list of the city's annual auction items, because it cannot screen sand to FAA specifications for use on the runway. City engineer Jack LaShot said the city doesn't own a supply of raw sand to screen and has been buying sand recently. It is used, he said, for screening a small amount of recycled road sand and has been used on the city's ball diamonds in the past.

Bookey was concerned that the city may need it in the future, as was council member Pat Porter. The council voted to keep the machine.

n Dorothy Tunseth was appointed to the Beautification Committee after stepping down from it a year ago. Roger Meeks resigned from the Council on Aging. Anyone interested in serving on any city commissions or committees should contact the city clerk's office.

n Airport Manager Becky Cronkhite informed the council that further landscaping will be done in the city cemetery. No trees will be topped, though some will be removed completely. The work is part of a project to reduce the height of trees in the cemetery, which borders the airport.

The next regular city council meeting is scheduled for Aug. 15.

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