When property-owners on Kenai’s VIP Drive cul-de-sac were billed by the city for part of the cost of paving their road, they contested the bill, saying the paving had been a mistake. Now, a resolution to the dispute leaves the property-owners with a lower price to pay and an acknowledgement from Kenai’s administration that the paving project — allegedly requested by the property owners — was misconceived.

City administrators believed the cul-de-sac owners had formed a local improvement district (LID) — a group of citizens who request a project from the city government and agree to split half the project’s cost evenly among themselves. Kenai allows residents to form LIDs with petitions signed by over half of those who would benefit. A petition signed by the owners of 6 of the cul-de-sac’s 9 properties was submitted to the city administration on Feb. 14, 2014, requesting pavement of the road’s end. The cul-de-sac was paved in early 2015, and a bill for $6,274.58 — half the project’s cost divided by the nine properties — was sent to the addresses of those properties. The billing allowed payment over 10-15 years with a 10 percent annual interest.

At the Kenai city council’s March 16 meeting, 4 of the 7 billed property owners testified that the establishment of the LID, the paving, and the subsequent billing were mistakes. Resident Leslei Spalding said the petition had been initiated by her VIP Drive neighbors Dave and Linda Machado, and she had signed believing it was only to gather a cost estimate.

None of the affected owners had commented at the two council meetings at which the LID was discussed prior to the paving, and hadn’t responded to notices mailed in June 2014. None of those who testified at the March 16 meeting said they had been aware that the paving would take place. Spalding said she had been working on the North Slope at the time and hadn’t been present at her house to receive the notice. Another testified that she’d been renting out her house and living elsewhere.

Spalding also said that the group had collectively decided not to have the cul-de-sac paved based on the cost, and Linda Machado had sent a letter asking for the petition to be disregarded. At the March 16 council meeting, Koch said that he hadn’t received the letter from Machado.

Interviewed on Thursday, Koch said he later found an email from Linda Machado stating that the price for the paving was too high and asking to cancel the project. He hadn’t thought the paving should be stopped based on the email.

“Generally once you go through the process you have a public hearing, and at that time we believed all the residents had gotten notifications, and we didn’t have any other comments aside from that one from Linda that came in after that fact, after the LID was established,” Koch said.

At their March 16 meeting, the council postponed the vote to approve billing the owners. The council later held a closed executive session on the matter, directing Koch to negotiate with the property-owners.

When the Kenai City Council voted on approving the billing assessment at its Wednesday meeting, they were presented with two options: the original bill, and a substitute that would charge the nine property-owners $2,660 without interest. The council approved the lower payment option unanimously and without discussion.

Koch said the city’s failure to send notices to the true locations of the petitioners had invalidated the LID.

“I researched the process and I came to the conclusion that because the notices two years ago — the notices that the council was going to consider creating the LID — 6 of the 9 were mailed to physical addresses rather than mailing addresses,” Koch said. “So our own code requirement for notification was not met. In essence, what I told the group of the folks there was ‘in my opinion, we don’t have an LID.’ It seems to me a fatal flaw.”

Koch said the email from Machado was also a factor in the LID’s invalidation. After determining that an LID hadn’t been established, Koch said he had negotiated with the residents for a different resolution, recognizing that the paving had added value to the properties. Koch said he was satisfied with the outcome.

“In city’s position, we could have ended up with zero. So I still think that they were reasonable,” Koch said. “…They felt that there was some burden on their shoulders, so this is what they came up with.”

Alan Dowell, one of the property-owners who disputed the billing, said he and his neighbors had “just talked about it and discussed it, and decided it really wasn’t fair, since they (the city) already had it paved.”

“We could have been hard-nosed about it and stuck for the city paying for the whole deal, but we all like to think we’re good people, and we are going to benefit by the paved road,” he said.

Of the two other VIP Drive property-owners contacted for this story, one said she had been out-of-town and hadn’t participated in the negotiations, and one hadn’t returned a phone call by press time Thursday afternoon. Koch also said the failure to notify the residents came from the information collected in the LID process — the location of the property, but not of the person.

“It’s easy to understand how it happened,” Koch said. “In some of the spreadsheets I put together in my initial evaluation, I’m not interested in their mailing address — I’m interested in where (the property) is located. So I have their name, Borough parcel number, and the physical address… If you just look at the spreadsheet, the thing that’s on there is the physical address.”

Koch said the Kenai administration would change its procedures to be certain residents receive notices. Future city LID notices will have a return receipt so recipients can acknowledge being notified. Unlike the VIP drive petition form, which only asked for the property owner’s Borough parcel number, future petitions will require a signer’s phone number and email address so they can contacted if questions arise.

“We’re going to make sure that kind of mistake doesn’t happen again in the future,” Koch said.

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.