HomeMy WebLinkAboutOrdinance No. 3311-2022
Sponsored by: Administration
New Text Underlined; [DELETED TEXT BRACKETED]
CITY OF KENAI
ORDINANCE NO. 3311-2022
AN ORDINANCE DETERMINING THAT REAL PROPERTY DESCRIBED AS LOT 5, BLOCK 1, GUSTY
SUBDIVISION ADDITION NO. 1, ACCORDING TO PLAT NO. 83-126 KRD, CITY-OWNED AIRPORT
LAND LOCATED OUTSIDE THE AIRPORT RESERVE, IS NOT NEEDED FOR A PUBLIC PURPOSE,
WAIVING KMC 22.05.095 METHODS OF SALE OR DISPOSAL AND AUTHORIZING THE SALE OF
THE PROPERTY TO AARON SWANSON DBA FOREVER BUSINESS PLAZA LLC.
WHEREAS, the City of Kenai received a quitclaim deed from the Federal Aviation Administration (FAA)
on December 1, 1963, to nearly 2,000 acres of land subject to certain restrictions, including that no
property shall be used, leased, sold salvaged, or disposed of for reasons other than for airport purposes;
and,
WHEREAS, the City of Kenai received a deed of release from the Federal Aviation Administration (FAA)
on January 16, 1984, for Gusty Subdivision Addition No.1, subject to certain reservations and conditions,
that protect the Airports continued use for airport purposes; and,
WHEREAS, the City has received a request to purchase Lot 5, Block 1, Gusty Subdivision Addition No.
1, according to Plat No. 83-126, from the current Lessee; and,
WHEREAS, KMC 22.05.110 – Determination as to need for public purpose, provides that the City
Council, may determine whether land is no longer needed for public purpose; and,
WHEREAS, the Property is leased to Aaron Swanson, dba Forever Business Plaza, for private
commercial use and is not needed for a public purpose; and,
WHEREAS, Resolution No. 2018-12 amended the City’s Policy for sale of specific Airport Land Lots and
the subject property is one of the properties addressed in the policy; and,
WHEREAS, Resolution No. 2018-12 did not authorize the sale of these lands but only a method for sale;
and,
WHEREAS, Resolution No. 2018-12 had a sunset of July 6, 2021 however the prior, now deceased
lessee, was unable to take advantage of the policy timely; and,
WHEREAS, the sale of this property under the same terms and conditions established by Resolution No.
2018-12 is in the best interest of the City and Airport and encourages new development and/or
improvements to the property; and,
WHEREAS, all provisions of KMC 22.05.100 - Sale procedure, shall be followed; and,
WHEREAS, the provision of KMC 22.05.095, Methods of Sale or Disposal, are hereby waived in
recognition of the City’s prior policy regarding the parcel and unique circumstances of the prior lessee
and is in best interest of the City; and,
WHEREAS, at their regular meeting on September 14, 2022, the Planning and Zoning Commission
reviewed the sale application and recommended approval by the City Council; and,
MEMORANDUM
TO: Mayor Brian Gabriel and Kenai City Council
THROUGH: Paul Ostrander, City Manager
FROM: Max Best, Interim Planning Director
DATE: September 14, 2022
SUBJECT: Ordinance No. 3311-2022 - Determining that real property described as
Lot 5, Block 1, Gusty Subdivision Addition No. 1, city-owned airport
land located outside the airport reserve, is not needed for a public
purpose and authorizing the sale of the property to Aaron Swanson,
dba as Forever Business Plaza LLC
The City has received a request to purchase the above City-owned leased land outside the Airport
Reserve with substantial constructed leasehold improvements.
Aaron Swanson, dba Forever Business Plaza, LLC, is the current lessee of Lot 5, Block 1, Gusty
Subdivision Addition No. 1, which was obtained by transfer on April 27, 2022. The current use is
for an office building and includes substantial recent improvements to the building made by the
Lessee. The 99-year lease term expires on October 10, 2082 and is in good standing.
On January 16, 1984, the Federal Aviation Administration (FAA), released the property for sale
for other than airport purposes, allowing the property to be sold at fair market value. All revenues
from the sale would be deposited in the Airport Land Sale Permanent Fund for use in the
development, improvement, and operation of the Kenai Municipal Airport as required by the Deed
of Release.
Resolution No. 2018-12 amended the City’s Policy for sale of specific Airport Land Lots and the
subject property is one of the properties addressed in the policy. The policy did not provide for
the sale of any specific property, but only a method for such sale, subject to the Ordinances of
the City of Kenai. The policy was is in effect until July 6, 2021. Any specific sale must be separately
approved by the City Council, which may approve or disapprove any such sale, in its sole
discretion. Administration recommends sale of the property under the same terms and conditions
established by Resolution No. 2018-12 to encourage responsible growth and development to
support a thriving business community. Aaron Swanson, dba Forever Business Plaza, LLC,
requests to purchase the property at fair market value of the land excluding lessee-constructed
improvements as determined by an appraisal and a minimum new investment in the construction
of new permanent improvements on the premises equal to 25% of the fair market value of the
land within three (3) years of sale.
Page 2 of 2
Aaron Swanson, dba Forever Business Plaza, LLC, submitted a good-faith deposit and the City
ordered an appraisal to be performed on the property as-if vacant. The fair market value of the
property of $135,000 was determined by an appraisal performed by MacSwain Associates, LLC
on May 18, 2021. Based on the amount of the appraisal, Aaron Swanson, dba Forever Business
Plaza, LLC, is committing to invest a minimum of $33,750 in the construction of new permanent
improvements on the premises.
If the City Council approves the sale, City Administration may proceed with a sale.
Thank you for your consideration.
Attachment A: Aerial Map of 11568 Kenai Spur Highway
Attachment B: Application
Attachment C: Resolution 2018-12
ti t .
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* 04327015
PARCELID:04327015
Municipal
Commercial
Owner:
KENAI CITY OF
2 10 FIDALGO AVE STE 200
KENAI, AK 99611
Legal:
T SN R llW SEC 5 SEWARD MERIDIAN
KN 0840183 GUSTY SUB ADDN NO 1
AMD LOT 5 BLOCK 1
Physical Addresses:
11568 KENAI SPUR HWY
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REC ~IVED
(? City of Kenai
Ll i-Sl 2-:z_ DATE
PLANNING DEPARTMENT
Competitive Lan
Purchase Application K~NAI ~a-ff !Application Date: I fo ( zg }202 2-I
Applicant Information
Name of Applicant: Aaron SwansC:ln
Mailing Address: 37190 Aspenwood Ct I City : Soldotna j state: I AK I zip Code:I 99669
Phone Number(s): Home Phone: 907-252-3069 Work/ Message Phone:
E-mail: (Optional) aaronswanson907@gmail.com
Name to Appear on Deed: I Forever Business Plaza
Mailing Address: 37190 Aspenwood Ct I city: Soldotna jstate: I AK jzip Code:I 99669
Phone Number(s): Home Phone: 907 -252-3069 Work/ Message Phone :
E-mail: (Optional)
Type of Applicant: Cl Individual (at least 18 years of age) □ Partnership □ Corporation □ Government
□ Other IEl Limited Liability Company (LLC) ---------------
Property Information
Legal description of property (or, if subdivision is required , a brief description of property):
Lo~ S ,s\ ~ l ~~ S~\>
Does the property require subdivision? (if Yes, answer next question)
Subdivision costs are the responsibility of the applicant unless the City Council
determines a subdivision serves other City purposes
1. Do you believe the proposed subdivision would serve other City purposes?
2. If determined it does not, applicant is responsible for all subd ivision costs.
If an appraisal is required to determine the minimum price on the land, applicant is responsible
for the deposit to cover costs associated with appraisal. If a sale is approved, the cost of the
appraisal will be either refunded or credited toward the purchaser.
It is the responsibility of the applicant to cover costs associated with title insurance.
It is the responsibility of the applicant to cover recording costs associated with the purchase.
The purchaser must pay not less than 50% of the costs of sale associated with a sale at not
less than fair market value as determined by an appraisal or 100% of the costs of sale if the
sale is at less than fair market value.
Requested closing date:
□ YES IE.I NO
□ YES □ NO
Initials ---
Initials ~
7
,.
Initials~
Initial ~:..::,...~-
lnitic:11 ~:z
Proposed Use and Improvements
Proposed Use (check one): □ Aeronautical IEI Non-Aeronautical
Type of Land Use: IEI Commercial □ Residential □ Industrial □ Public/Institutional □ Tidelands □ Other
Do you plan to construct new or additional improvements? (if Yes, answer next 3 questions) ~YES a NO
1. What is the estimated value of the improvement? ~~\ r e. ~i~.5 S~~..-c_ t)o-\,\... ,.,._~~~a....-
2 . What is the type of improvement? ){_Building □ Land □ Other: ill;. \ex:,~.,:;,~~
3 . What are the dates construction is estimated to commence and be completed? (Generally within two years)
Estimated Start Date: ~ v.~~ 2.o 'l-1-Estimated Completion Date: ?~~~ '2,_o'"l.-'3>
If you do not plan to construct new improvements, how does the proposed use benefit the community?
Describe the proposed business or activity intended:
e,c,i~-N\ D""-~'~sc;es l-t\.Je., ~~r sc:..\o,_ k ~e.. ~c-~<, AJJ.~,~\ r r--.....r P
"Jl -
How does the proposed purchase benefit the City of Kenai and support a th rivi ng 'tiusiness, residential , recr:Ctio~b , ""'
or cultural community? ~ ~' \~ \o ~ ~ \' ti:_ ~ ..,..,
~,'\~ 0 ~ r""'\r,. 6.vl"' \ "'5 ~ 0 \ ~ I ~
~~"'-~O-..\ \f'-~v..,_) ~\N)I.V°"½ \ '1'CON'\"'-') o-..\o.,._~ ~\~\.._ ~("C'.t~ ~'-"'~\""-~$ .VI :ll,·
Submitting an application to purchase does not give the applicant a right to purchase or use the land requested in the application. If the land is
sold in a competitive public sale set in response to this Competitive Land Purchase Application to anyone other than the applicant, the
application fee and any deposi~ de to cover the cost of appraisal or subd ivision will be refunded in total to the applicant. If the land is sold to
the applicant, any deposit, afte c ~ t\ cting~s expenses, will be credited to the purchaser at closing .
Signature: I ~ r-Date: &i I? ,~ I 2A ~ z..
I I/
Print Name: Aaron Swanson Title: owner
For City Use Only: Date Application Fee Received : C.,../'l.~/2-'t-
Accoun t: □ General Fund ,1 Airport Fund Date Application Determined Complete :
Method of Sale (check one): 30 -Day Notice Publication Date :
□ Public Auction □ Over-the-Counter City Council Ordinance:
□ Leased Land with Option to Pu rchase Account Number:
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CITY OF KENAI
Sponsored by: Mayor Brian Gabriel
Vice Mayor Tim Navarre
Council Member Henry Knackstedt
RESOLUTION NO. 2018-12
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, APPROVING AN
AMENDED POLICY FOR THE SALE OF TEN SPECIFIC CITY-OWNED AIRPORT FUND
LEASED LANDS OUTSIDE THE AIRPORT RESERVE WITH SUBSTANTIAL CONSTRUCTED
LEASEHOLD IMPROVEMENTS.
WHEREAS, the City of Kenai received a Quitclaim Deed through the Federal Aviation
Administration (FM) on December 1, 1963, to nearly 2,000 acres of land subject to certain
restrictions, including that no property shall be used, leased, sold, salvaged, or disposed of for
reasons other than for Airport purposes; and,
WHEREAS, in 2016, the City identified ten specific leases on Airport lands, as identified on
Attachment A, that were, or were intended to be outside the Airport Reserve in the very near
future, on which the lessees had constructed substantial improvements; and,
WHEREAS, the ten leased properties have been, or are available to be released for sale by the
FM; and,
WHEREAS, the City Council passed Resolution No. 2016-32, approving and adopting a policy for
ten specific Airport owned leased lands on July 6, 2016 to provide an equitable and uniform
purchase procedure for the current lessees to purchase the specific ten Airport-owned parcels;
and,
WHEREAS, since the policy was adopted, none of the current lessees subject to the policy have
elected to purchase the property they lease from the City; and,
WHEREAS, Administration formed a working group of City staff involved in land management to
evaluate and develop recommendations related to the City 's land sale and lease program to
encourage growth, development, and a thriving business community through reasonable and
responsible land policies and practices; and
WHEREAS, an alternative whereby the net present value of the leasehold is partially offset by the
economic benefits provided by existing thriving businesses in the City such as job creation,
economic activity, and stimulation of the business climate meets these goals; and,
WHEREAS, a third alternative that encourages investment in existing businesses on these
leaseholds meets these goals as well ; and,
WHEREAS, it is in the best interest of the City, Airport and lessees to approve an amendment to
the temporary policy that provides alternative methods for the sale of these properties consistent
with a City-wide land management approach.
Resolution No. 2018-12
Page 2 of 3
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA:
Section 1. That the following policy adopted for the specific ten City-owned leased lands as
identified on Attachment A attached hereto shall be amended as follows:
POLICY FOR SALE OF SPECIFIC AIRPORT LEASED LANDS
Purpose: To implement a policy regarding the sale of Airport owned property outside the
Airport reserve currently leased with substantial leasehold improvements. This Policy is intended
to provide an equitable and uniform purchase procedure for the current Lessees to purchase the
specific ten Airport owned parcels identified in Attachment A.
Disclaimer: This Policy does not provide for the sale of any specific property, but only a method
for such sale, subject to the Ordinances of the City of Kenai. Any specific sale must be separately
approved by the City Council, which may approve or disapprove any such sale, in its sole
discretion. It is intended that this Policy remain in effect [FOR A PERIOD OF NO MORE THAN
FIVE YEARS] until July 6, 2021, however, it is recognized by the City Council and Administration,
and should be recognized by any affected Lessee, that the City Council of Kenai may amend,
modify, or rescind this Policy, or applicable City Ordinances which could affect this Policy, at any
time.
Sale Conditions:
A. If a sale is approved by the City Council of any one of the ten specified leased
properties, the sales price acceptable to the City shall be one of the following
alternatives:
i. 125% of [A] the fair market value of the [RAW] land excluding lessee-constructed
improvements as determined by an appraisal[.t...ru:i
ii. The fair market value of the land excluding lessee-constructed improvements as
determined by an appraisal for properties in which minimum development requirements
have been met according to the following calculation:
Value of Improvements greater than or equal to four times the Appraised Fair Market Value
of the Land
: or,
iii. The fair market value of the land excluding lessee-constructed improvements as
determined by an appraisal and a minimum new investment in the construction of new
permanent improvements on the premises equal to 25% of the fair market value of the
land within three (3) years of sale.
8. In order for such sale to occur subject to this Policy, the following conditions must be met:
New Text Undertined; [DELETED TEXT BRACKETED]
Resolution No. 2018-12
Page 3 of 3
1.
2.
3.
4.
5.
6.
7.
Lessee has constructed lease-hold improvements exceeding
current appraised value of [AIRPORl] the leased property.
Lessee is current with all financial obligations with the City.
Lessee will pay the City to perform a survey (if required).
Lessee wilt" pay for the City to obtain an appraisal.
Property is outside of the Airport Reserve Boundary.
Pro perty has been released for sale by the FAA.
Pro pe rty is determined as not needed for a public purpose.
[B]C. Any conflicting provision, procedure, law or policy provided in Kenai City Code has
precedent over this Policy.
Section 2. That this Resolution takes effect immediately upon passage.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 21st day of February, 2018.
BRIEN GABRIEL, MAYOR
New Text Und erlin ed : [DELETED TEXT BRACKETED)
'Utt'~ «1/t/e, a Pa~~ e~ «Jit/4 a ru.tar-e II
210 Fidalgo Ave, Kenai, Alaska 99611-7794
Telephone: (907) 283-7535 I Fax: (907) 283-3014
www.kenai.city
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Kenai City Council
Mayor Brian Gabriel
Vice Mayor Tim Navarre
Council Member Henry Knackstedt
February 13, 2018
Resolution No. 2018-12 -Amending a Policy for the Sale of Ten
Specific City-Owned Airport Fund Leased Lands
In 2016, the City Council passed Resolution No. 2016-32, approving and adopting a policy for
City-owned leased lands in a distinct land management group to provide an equitable and uniform
purchase procedure for those lessees to purchase the property they lease from the City at 125%
of the fair market value of the land. The ten specific City-owned Airport Fund parcels are located
outside the Airport Reserve and the lessees have completed development requirements pursuant
to their lease with the City.
Resolution No. 2018-12 amends the policy approved and adopted by Resolution No. 2016-32 by
providing two alternative methods for the sale of these properties consistent with the City's new
City-wide land management approach. These alternatives encourage investment in existing
businesses on leaseholds, avoid land speculation, and recognizes that capital investments made
by existing businesses in the City, have created jobs, increased economic activity, and stimulated
the business environment.
The first added alternative allows for a sale of the land at fair market value to lessees that have
met a minimum development requirement. The minimum development is calculated at four times
the appraised fair market value of land. Four times the fair market value of the land represents
the investment amount that equals or exceeds the net present value of leasing the land by
quantifying the economic value of the investment to the City. Building valuation data as published
by the International Code Council was also utilized to estimate construction costs to assure that
the capital investment required is realistic. For example, land appraised at $100,000 or less
requires a minimum development of $400,000.
Page 2 of 2
Resolution No. 201a~12
The second added alternative allows for a sale of the land at fair market value with required
minimum new investment in the construction of new improvements such as storefront
improvements, building remodels, or parking lot improvements equal to 25% of the fair market
valµe of the land within three years of sale. For example, land appraised at $100,000 would
require new investment equal to $25,000.
Resolution No. 201S.:12 also makes minor changes to the policy to cfarify appraisal instructions
and conditions that must be met in order for a sale to occur so that the policy is consistent with
.the City Code ancf land practices. In particular, City land appraisals are performed with the
assumption thatthe land is vacant and unencumbered by the lease, lands deeded to the City by
the FAA must be released for sale, and land must be determined as not needed for a public
purpose.
Like the prior Resolution in 2016, this Resolution does not authorize the sale of any property, but
instead establishes a · methodology for sale should the lessee desire to purchase the property and
Council determine that it is in the City's best interest to sell the property,
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CERTIFTCA1! OF DWN'tASHTP I OEDICATmN
I Htflt!8Y CERTIFY n!AT THE cm OF .«NJU 1$ -nt[ OWNtR OF
THE PRCPCRfY SHOWN AND DtDr!IED H!M:ON', MO TH! cm ADOPTS THIS
fll..AN . I niR"tKE:1' cam,., TN.IT 1HE cm OCES HERmr OtCICA'I'! N..L
RIGHT$ DF WAY ffl PUBLTC US[, .U C"""1'S .ILL EA!EMENTS i"D Must
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KENII, Alt . 19911
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I HEREBY CtRTIFY THAT TH[ FOLLOWING CHANGES HAVE BEEN
MADE 8 THAT NO OTHER CHANGES WERE MADE•
U.CURVES LABELED -",t,","'e",•c" 8 "o"
t).CURVE TASU: ADDED
!). ~~i:•;G .. gf 5LOq~ol,,1:E T~ETsWfcf.,Ns€"·3~Jlw~· 5 , BLK. I; AMENDED
4). ~ii:1~04~! ,\Q1ol,,1:ETgE::;.,E~,~6s.·~.L-G, BUC . r: AMENDED
5l.DTSTANCE OF LOT LINE BtTWEEN L·◄ 8 L•S ,8L!l{. I; ADDtO
226,09.
&l ~~~:1~\.:'!s~p~ ~bNE5 ~~!~~f:~4,.L.,,;.' a L· 2, au. 2; AMENDED
Tl.LINE OF L•4flL ·$, BLK.l,LA!IELCD AS R•DIAL TO CUltVE '"e•.
8).LINE OF L · 5 8 L-6, BLK.1, LA8ELED AS RADIAL TO CURVE" B•. 91-~-~R:/~;:;'. LINE OF CORA1. STREET;L.&.BELED AS RADIAL TO
101. RADIAL LINE I DASHED] SHOWN WITHIN LOT 2, BLK. 2.
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NOTE ' ,ICCESS rn T'H'E3E: Lam FROM 'THE
KENAI SPUR HWY. IS PR:)HIIITED. e ACCESS F'EflM'ITTEDF'A(Mco-rcE AVE. CNLY.
a STREET~
AMENDED
GUSTY SUBOIVISION ADO/TION No. I
I..OCA'TcD WT'fHIN THE' NWl/4 SEC. 5, lllld
rHE' NE' V4 SEC. 6, 7:5N., IUIW.,S.M., City of K4nol,
Aloslra, contolning 6·054 oc., m/1 .
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CITY OF UWAI
SOX 580,
KENAI, ALA!lltA
lt!'tfAI, lt.AS'llt'A 99811
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BOOKZOPAGFW6
DEED OF RELEASE
Thia Iutruaent, a Deed of Release, iaade by the United States of Aaerica,
acting by aad through the Manager, Airports Division, Alaskan Region, Federal
Aviation Administration, pursuant to the authority contained in Public I.aw
&1-311 (63 Stat. 700), as aaended, to tbe City of Kenai, a body politic under
the lava of the State of Alaska, Witnesaeth:
WHEREAS, the United States of Aaerica, pursuant to the provisions of the
Federal Property and Administration Act of 1949 (83 Stat. 377) and the Surplus
Property Act of 1944 (S8 Stat, 76S), •• -ended, by inst~nt entitled,
"Quitclai• Deed•, dated Deceaber l, 1963, did realse, release, and forever
quitclaia to tba City of Kenai in and to certain real property located near
Kenai, Alaska, under aod subject to the reservation, eKceptiona, restrictions,
and conditions contained in the Deed, and
WHEREAS, the City of Kenai bas requested the Administrator of the Federal
Aviation Niainiatration to release an area of land bereinafter deacribed, froa
all conditions, reservations, and restrictions contained in aaid "Quitclaia
I>eed• to permit tba long-term lease for nonairport purpose& of said property
eRluaively for development, iaproveaent, operation, and/or 111&intenance of the
Kenai Municipal Airport, aod
Whereas, the Administrator of tbe Federal Avaition AdmJ.nistration, under and
pursuant to the powers aDli authority contained in Public Law &1-311 (3 Stat.
700) la authorl~•d to grant a release froa any of the teru, condltlona,
reservations, and restriction• contained in, and to convey, quitclaim, or
release any right or interest reserved to the United States by any instr-nt
of disposal uoder which surplus airport property waa conveyed to a non-Federal
public ;agency pur•uant to Section 13 of the Surplu• Property Act of 1944 {S8
Stat. 765); and
WHEl!AS, the Administrator of the Federal Aviation Administration baa
deter■ined that said land no longer sarvea the purpose of which lt waa
transferred, and tllat such property can be used or leased by the City of Kenai
for other than airport purposes without aaterially aod adversely affectin& the
developaent, improvement, operation, or aaintenance of the Kenai Airport; and
illlil!AS, the City of lCanai, by City Ordinances No, 612-80, •• aaended, aod No.
711-81, as amended, have established an acceptable procedure for disposing,
tbrouab lease, of said property;
NOW, TlltBEFORE, ln consideration of the benefits to accrue to the United
States and to the civil aviation, the United States of Merica, acting by aod
throuah the Administrator of the Federal Aviation Administration, and pursuant
to~• authority contained in Public Law 81-311 (63 Stat. 700) aod applicable
rules, regulationa, aod ~rdera, hereby conaents to the release and subsequent
lease of the hereinafter described property by the City of 1'.enai in accordance
with the procedures e•tabli•bed by City Ordinances No. 612-80. a• amended, and
No. 711-81, as aaended.
Legal Deacription
All that portion of the Kanai Airport Landa known aa Gusty Subdivision
Addition No. 1 (Tract G-3), vitbin the 111W 1/4 of Section 5 and the IIE l/4 of
Section 6, T5N, llllV, S.M. Alaska. Thia Tract contains 6.054 acres, aore or
leas and ia depicted ln rad on the plat recorded 6-29-83 (83-126), attached to
aod ...Sa a part hereof.
a .. _;:,. .. ~.-~ .. ,..,-.. :~11
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. BOOKdJ..7 PAGE 417
Thia release is granted subject to the following conditions:
l. The inatrwaent used to lease or sale the hereioabove described
property shall expressly include the following reservations and covenants:
A. There ia hereby reserved to the City of Kenai, its sucessors
and assigns, for the use and benefit of the public, a right of
flight for the passage of aircraft in the airspace above the
surface of the prelllises herein conveyed, together with the
right to cause lo said airspace such noise as aay be inherent
lo the operation of aircraft, now known or hereafter used or
navigation of or flight lo the air, using said airspace or
landing at, taking off from., or operating on the Kenai Airport.
B. The Lessee by accepting this conveyance expressly agrees for
itself, its heirs, representatives, successors, and assigns
that it will not erect nor peralt the growth of any tree on the
land conveyed hereunder which would be an airport obstruction
within the standards established by the Federal Aviation
Administration. ln the event the aforesaid convenant is
breached, the City of Kenai reserves the right to enter on the
land conveyed hereunder and to reaove the offending structure
or object and to cut the offending tree, all of which shall be
at the expense of the Lessee, or its heirs, successors, or
assigns.
C The Lessee, by accepting this conveyance expressly agrees for
itself, its heirs, representatives, successors, and assigns
that it will not make use of said property in any 111anner which
lllight interfere with the landing and taking off of aircraft
from said Kenai Airport, or otherwise constitute and airport
hazard. lo the event the aforesaid convenant la breached, the
Leasor reserves the right to enter on the land conveyed
hereunder and cause the abatement of auch interference at the
expenae of the Lessee.
2. All covenants herein contained shall run with the land and shall
loaure to the benefit of, and be binding upon, the heirs,
representatives, successors, and-assigns to the parties hereto.
3. In the event that any of the tenu, conditions, reservations, and
restrictions upon or aubject to which the property is disposed of are not
met, observed, or complied with, all of the property so disposed of or
any portion thereof' shall, at the option of the United States, revert to
the United States and 1tl then existing condition.
4. In the event, the subject property is needed or required in the
future for airport operations, construction or 111anagaent, the FAA will
not participate in the acquisition of the leaae hold interest of this
property.
5. the United State resumes the right to review the propo1ed lease
agreeaent prior to execution of said lease agre-nt.
IN WITNESS WHEREOF, the United States of America has caused this instrument to
be executed as of the p4 day of 0,M: ,I. hr l9eJ.
Accepted titis ,',J...IA
of the City of Kenai
U?fiTED STATES OF AMERICA
The .Adalnistrator e~era~. 1
by:.1,:.1..!~~..!f;J_~~ ·~~;!:l!~~--=--
Manager, rports Divl
day of )}I'( 1nb1 ,-1983 by the City Manager
MACSWAIN ASSOCIATES LLC
4401 Business Park Boulevard, Suite 22, Anchorage, Alaska 99503
APPRAISAL REPORT
Kenai Lot: 25,663± SF (0.59± Acre)
Lot 5, Block 1, Gusty Subdivision
Kenai, Alaska
\
Date of Value: May 16, 2022 File No. 22-3698
Submitted To:
Ryan Foster, Planning Director
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
N
Kenai Spur Highway Lot 5
25,663 SF (0.59 Acre)
Cohoe Avenue
MacSwain Associates LLC
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
4401 Business Park Blvd., Suite 22
Anchorage, Alaska 99503
Phone: 907-561-1965
Fax: 907-561-1955
s.macswain@macswain.com
June 15, 2022
Ryan Foster, Planning Director
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Re: Kenai Lot: 25,663± SF (0.59± Acre)
Lot 5, Block 1, Gusty Subdivision
Kenai, Alaska
Dear Mr. Foster:
We have prepared an Appraisal Report of the above-referenced lot located in Kenai, Alaska.
The appraised parcel contains 25,663± square feet or 0.59± acre. At the request of the client,
we disregard the improvements and land lease and appraise only the subject land. The type
of value estimated is market value. The property rights appraised is the fee simple estate.
The report is prepared in accordance with the Uniform Standards of Professional Appraisal
Practice (USPAP).
Based on the data, reasoning, and analysis that follows, the market value of the appraised
property, as of May 16, 2022, is estimated as follows.
ONE HUNDRED THIRTY FIVE THOUSAND DOLLARS $135,000
Your attention is directed to the Assumptions Limiting Conditions of this report located in
the addendum. We also direct your attention to the Statement of COVID-19 in the
addendum. We hope the appraisal report assists your evaluation of the properties. If you
have any questions regarding this report, please contact this office.
Respectfully submitted,
Steve MacSwain, MAI
State of Alaska Certificate No. 42
MacSwain Associates LLC
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
Appraiser Certification
The undersigned certifies that to the best of their knowledge and belief:
➔ The statements of fact contained in this report are true and correct.
➔ The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, and are our personal, impartial, and unbiased
professional analyses, opinions, and conclusions.
➔ We have no present or prospective interest in the property that is the subject of this report,
and no personal interest with respect to the parties involved.
➔ We have no bias with respect to the property that is the subject of this report or to the parties
involved with this assignment.
➔ MacSwain Associates, LLC previously performed services as an appraiser on the subject
property in September 2021.
➔ Our engagement in this assignment was not contingent upon developing or reporting
predetermined results.
➔ Our compensation for completing this assignment is not contingent upon the development
or reporting of a predetermined value or direction in value that favors the cause of the client,
the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this appraisal.
➔ The reported analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the requirements of the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute.
➔ The reported analyses, opinion, and conclusions were developed, and this report has been
prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
➔ The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
➔ Dwayne Roberts with MacSwain Associates, LLC inspected the appraised property on May
16, 2022. Steve MacSwain, MAI has previously inspected the property.
➔ Dwayne Roberts provided significant real property appraisal assistance to the person signing
this certification.
➔ As of the date of this report, Steve MacSwain, MAI, is a certified General Real Estate
Appraiser in the State of Alaska and has completed the education requirements through June
2023.
MacSwain Associates LLC
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
➔ As of the date of this report, Steve MacSwain, MAI has completed the Standards and Ethics
Education requirements for Designated Members of the Appraisal Institute.
➔ As of the date of this report, Steve MacSwain, MAI has completed the continuing education
requirements for Designated Members of the Appraisal Institute.
➔ As of the date of this report, Steve MacSwain, MAI is a certified General Real Estate
Appraiser in the State of Alaska and has completed the education requirements through June
2023.
6/15/22
Steve MacSwain, MAI
State of Alaska Certificate No. 42
Date
MacSwain Associates LLC
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
Table of Contents
Title Page
Transmittal Letter
Appraiser Certification
Table of Contents
Appraisal Summary 1
Chapter 1: Definition of the Appraisal Problem 5
Chapter 2: Kenai Area Analysis and Industry Outlook 9
Chapter 3: Neighborhood Description and Analysis 15
Chapter 4: Site Description and Analysis 17
Chapter 5: Highest and Best Use Analysis 21
Chapter 6: Land Valuation - Sales Comparison Approach 22
Addendum
Assumptions and Limiting Conditions
Statement on COVID-19
Short Form Agreement
Appraiser Qualifications
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
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Appraisal Summary
Value Type: Market value
Property Type: Commercial
Property Rights Appraised: Fee simple estate
Location: North side of Kenai Spur Highway between Coral Street and
Main Street Loop Road, Kenai, Alaska
Legal Description: Lot 5, Block 1, Gusty Subdivision
Tax Parcel No: 043-270-15
Physical Address: 11568 Kenai Spur Highway
Property Owner: City of Kenai (per KPB)
Zoning: Central Mixed-Use District (CMU)
Site Description: Nearly-rectangular shaped lot containing 25,663 square
feet or 0.59± acre
Topography: Level and near grade with surrounding streets and properties
Frontage/Exposure: 120± feet of Kenai Spur Highway frontage and 105± feet of
Cohoe Avenue frontage
Access: Access via paved ingress/egress from Kenai Spur Highway
on southern boundary and Cohoe Avenue, a gravel road on
northern boundary
Utility Service: All public utilities available
Soil and Subsurface
Conditions:
Based on observations of surrounding development, soils
appear to be suitable for development.
Hazardous Substances: None observed or known, parcel is appraised as if
“environmentally clean”
Wetland Designation: None
Flood Hazard Restrictions: Zone D, an area of undetermined, but possible flood hazard
Easements and Restrictions: 20-foot utility easement along north boundary
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
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Sale/Lease History: The leasehold interest was assigned from Mary Jane Doyle
and Carolyn Lucille Doyle to Don Moffis and Joann Doyle
in 2019. No details of this transaction were provided.
Highest and Best Use: Commercial
Extraordinary Assumption: None
Hypothetical Condition: None
Date of Property Inspection: May 16, 2022
Effective Appraisal Date: May 16, 2022
Date of Report: June 15, 2022
Market Value Estimate: $70,000 ($2.78/SF)
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
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Subject Property Photographs
Date: May 16, 2022 Taken By: Dwayne Roberts
Northeast view of property from Kenai Spur Highway
North view of property from Kenai Spur Highway
---------------------------------
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Subject Property Photographs
Date: May 16, 2022 Taken By: Dwayne Roberts
Southwest view of property from Cohoe Avenue
South view of property from Cohoe Avenue
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
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Chapter 1: Definition of the Appraisal Problem
We prepare an Appraisal Report that analyzes a 25,663± square foot
(0.59± acre) lot in Kenai, Alaska. At the request of the client, we
disregard the improvements and appraise only the subject land. The
type of value estimated is market value. The report is intended to
comply with the Uniform Standards of Professional Appraisal
Practice (USPAP).
Market value
City of Kenai
Assist with a potential sale of the property
City of Kenai
May 16, 2022
May 16, 2022
June 15, 2022
The appraised property is an improved lot owned by the City of Kenai.
At the request of the client, we disregard the improvements and
appraise only the land. The subject property is located on the north
side of Kenai Spur Highway between Coral Street and Main Street
Loop Road in Kenai, Alaska. The subject’s physical address is 11568
Kenai Spur Highway and identified as Parcel ID 043-270-15 by the
City of Kenai.
Overview
Value Type
Client
Intended Use of
Appraisal Report
Intended User of
Appraisal Report
Property Inspection
Date
Effective Appraisal
Date
Date of Report
Identification of Real
Estate Appraised
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The type of value estimated is market value. Market value is defined
as follows.
The most probable price which a property should bring in a
competitive and open market under all conditions requisite to a fair
sale, the buyer and seller each acting prudently and knowledgeably,
and assuming the price is not affected by undue stimulus. Implicit in
this definition is the consummation of a sale as of a specified date and
the passing of title from seller to buyer under conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and acting in
what they consider their own best interests;
c. a reasonable time is allowed for exposure in the open market;
d. payment is made in terms of cash in US dollars or in terms of
financial arrangements comparable thereto; and
e. the price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale. 1
We estimate the market value of the fee simple estate, which is defined
as follows.
Absolute ownership unencumbered by any other interest or estate,
subject only to the limitations imposed by the governmental powers of
taxation, eminent domain, police power, and escheat.2
Per DNR records, the legal description is as follows:
Lot 5, Block 1, Gusty Subdivision, Kenai Recording District, Third
Judicial District, State of Alaska.
1 Appraisal of Real Estate, Fifteenth Edition (2020), by the Appraisal Institute, p. 49.
2 Appraisal of Real Estate, Fifteenth Edition (2020), by the Appraisal Institute, p. 60.
Definition of
Market Value
Property Rights
Appraised
Legal Description
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Public Records indicate the owner of the appraised property is as
follows.
City of Kenai
210 Fidalgo Avenue, Suite 200
Kenai, AK 99611
The table below summarizes the historical KPB property assessment
for the appraised property.
KPB Historical Assessed Value (043-270-15)
The leasehold interest was assigned from Mary Jane Doyle and
Carolyn Lucille Doyle to Don Moffis and Joann Doyle in 2019. No
details of this transaction were provided.
This Appraisal Report develops the sales comparison approach to
estimate market value. Neither the cost nor the income capitalization
approach reflects market behavior for vacant land. Qualitative
techniques are used to measure differences between the comparable
sales and the subject. The appraisal report is a summary of the
appraisers’ data, analyses, and conclusions with supporting
documentation retained on file.
Dwayne Roberts of MacSwain Associates, LLC performed the
inspection of the appraised property and assisted Steve MacSwain,
MAI with data collection and analysis. Steve MacSwain, MAI
administered the appraisal process, reviewed draft appraisals, and
concurred with an opinion of value. Preparation of this report
encompassed the following scope of work that concluded with an
opinion of market value.
➔ Inspected the appraised property on May 16, 2022;
➔ Discussed the property with Ryan Foster, Planning Director with
the City of Kenai;
Property Owner
Assessed
Value
Year Land Improvements Total
2022 $105,300 ($4.10/SF) N/A $105,300
2021 $126,400 ($4.93/SF) N/A $126,400
2020 $120,400 ($4.69/SF) N/A $120,400
Three Year Sale
History
Report Type and
Methodology
Scope of Appraisal
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
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➔ Reviewed KPB assessor map 043-270-15;
➔ Reviewed plat 83-126;
➔ Reviewed City of Kenai’s Official Zoning Map and zoning codes;
➔ Gathered data from the KPB Assessor’s office and State of Alaska
Recorder’s office regarding ownership, assessments, and general
property information;
➔ Interviewed Kenai real estate Brokers, agents, and property owners
regarding land sales;
➔ Interviewed Kenai market participants regarding current
commercial and light industrial land market conditions, trends, and
expectations;
➔ Gathered and confirmed information on comparable land sales;
➔ Inspected the primary comparable sales we relied upon in our
comparative analysis; and
➔ Applied the sales comparison approach to arrive at a market value
indication.
We have collected and analyzed market and economic data that
projects real estate trends and activity for similar vacant parcels.
Discussions with Brokers and analysis of similar property sales
indicate that a period of approximately 6-9 months prior to our
effective date of value is a reasonable exposure period.
Exposure Time
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Chapter 2: Kenai Area Analysis and Industry Outlook
The appraised property is located in Kenai, Alaska. A demographic
and economic summary of the Kenai Peninsula Borough (KPB) and
City of Kenai follows. The reader is referred to the map below and on
following pages that illustrate the location and assist in the description
and analysis. We note that due to lack of funding, the KPB ceased
economic and financial publications.
Kenai Location Map
The Kenai Peninsula Borough is comprised of the Kenai Peninsula and
Cook Inlet including areas northeast of the Alaska Peninsula. The
borough also includes portions of Chugach National Forest, Kenai
Wildlife Refuge, Kenai Fjords National Park, Lake Clark National
Park, and Katmai National Park. Encompassing 24,800 square miles,
there are 16,000± square miles (65%) of land and 8,700± square miles
(35%) of water. Three distinct communities and population centers
are established within the Borough. Seward is located at the terminus
of the Seward Highway on the Gulf of Alaska coast, Kenai/Soldotna
are located on Cook Inlet and surrounding the mouth of the Kenai
River, and Homer is located at the terminus of the Sterling Highway
on Cook Inlet and Kachemak Bay. A large portion of the Borough
Overview
Kenai Peninsula
Borough Summary
Kenai
Soldotna
Anchorage N
r1jNM
Cook
Inlet
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population is scattered along the road systems rather than in
identifiable cities or communities.
Population
Together, Kenai, Soldotna, Nikiski, Salamatof, and Kasilof have the
largest population base in the Borough with an estimated 17,000±
residents in 2019. Population within the Kenai census area is 7,056
residents and has remained flat over the past two decades. Similarly,
surrounding communities have experienced population stability.
Employment
Borough employment is characterized as relatively diverse with no
single dominant industry, with the exception of government. The five
industry categories that have the highest economic influence, based on
total wages, within the borough are Federal, State, and local
government (29%) trade, transportation, and utilities (17%), education
and health services (16%), natural resources and mining (11%), leisure
and hospitality (6%), and manufacturing (6%). Supporting
employment sectors include construction (5%), professional and
business services (4%), and financial activities (4%). The table below
indicates 2018 Borough wages by industry.
KPB Total Wages by Industry (2018)
Source: Alaska Department of Labor and Workforce Development, Research and
Analysis Section, January – December 2018
KPB WORKERS BY INDUSTRY (2018)
Natural Resources and Mining
11%
Constructlon
5%
Manufacturing
6%
Trade, Transportation, and
Utllltl es
17%
Other/Unclassified
'"
■nd Businen
Stirvices
""
Leisure and Hospitality
6%
Education and Health Services
16%
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
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Similar to most rural Alaska economies, government is one of the key
employment factors. Leisure and hospitality (tourism) remains as a
driving economic force of the Kenai Peninsula Borough’s economy.
Both residents and non-residents utilize the Peninsula for its vast
fishing, camping, sightseeing, and other recreational opportunities.
The visitor industry is cyclical with most activity occurring during
summer months. However, sales in the visitor industry are an
important source of municipal revenues as both city and borough
government use collected sales taxes to support government
operations. The oil and gas industry is scattered throughout the
Peninsula. Natural gas endeavors marked increases in new exploration
projects in Kenai, on the Westside of Cook Inlet as well as lower
Kenai Peninsula between Clam Gulch and Ninilchik. However,
negative aspects of the industry exist that include closing oil platforms
due to poor production levels. Overall, the outlook for Kenai
Peninsula Borough’s oil and gas industry is continued steady natural
gas exploration and production with stagnant oil efforts. Capital
investment in storage development, reserves replacement, and pipeline
infrastructure are necessary and pressure exploration cost and
development upward.
Location Map
Kenai is located on the western coast of the Peninsula, and is often
associated with Soldotna, which is located 11± miles to the southeast.
These two cities have become known as the “twin cities”, sharing an
City of Kenai
Summary
Kenai
Cook Inlet
Soldotna Kenai River
N
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integrated economy, while maintaining their independence. Kenai is a
home rule city with a population of 7,056. In the summer months, the
area benefits from with tourists fishing the Kenai River. Kenai is also
the center for the oil and gas industry on the Peninsula, providing
services and supplies for Cook Inlet’s oil and natural gas drilling and
exploration. Nikiski, which lies north of Kenai, has two refineries
established to process oil from the Cook Inlet oil platforms and the
Swanson River oil fields. There are numerous oil field support
businesses located in the area as well as the refineries. Kenai has the
largest airport on the peninsula, the Kenai Municipal Airport, which
has regular scheduled flights to/from Anchorage and other
communities in the region.
The Nikiski industrial district located north of Kenai extends along the
shore of Cook Inlet for 1.5± miles and one-mile inland. Despite the
relatively small area, the value of industrial development exceeds $1
billion. The Agrium, Inc. nitrogen plant, Tesoro Alaska refinery and
former ConocoPhillips LNG export plant are the principal industrial
development. The LNG plant ceased operations in 2011, and reopened
for intermittent natural gas shipments until 2015. The plant was sold
to Andeavor in 2018 for $10M±, a significantly below market price.
Agrium merged with PotashCorp in 2018, forming a new company
called Nutrien, who currently owns the former Agrium plant.
In 2014, Homer Electric Association began generating its own power
at the Nikiski Combined Plant, producing 80 megawatts of power. In
addition, HEA purchased the Bernice Lake Power Plant from Chugach
Electric Association for $12M±. These facilities are primary
employers in Nikiski and account for nearly 10% of KPB total
employment. As Nikiski remains a hub for power generation in the
Kenai Peninsula, we do not anticipate major change to the Nikiski
industrial district in the near term. The potential Alaska LNG Project
is on the horizon, with optimism remaining on the Kenai Peninsula for
eventual construction. The project entails a gas processing plant on
the North Slope, an 800-mile gas pipeline and a liquefaction facility in
the Nikiski area. Tentatively, the total project cost is estimated at
$45B±. To date, 570± acres have been acquired in Nikiski to develop
the project. The City of Kenai passed a resolution in December 2018,
giving unanimous support to the LNG project; however, this joint
venture between the State of Alaska and private oil and gas industry
appears to have stalled, with no definite timetable for development.
In 2012, ENSTAR Natural Gas Company began injecting natural gas
into their new storage facility in Kenai. The Cook Inlet Natural Gas
Storage Alaska facility (CINGSA) is Alaska’s first independent gas
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
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storage facility with 11 billion cubic feet of capacity. The project cost
is estimated at $160M±.
Although most oil and gas fields in the Cook Inlet Basin are well past
their peak, annual production has not declined significantly in the past
decade. Moreover, smaller independent oil companies are prospecting
in the Cook Inlet basin with the intent of using new technology to
enhance production profitability. However, the maturing life-cycle of
oil and gas production has caused attrition in smaller businesses that
support this industry. More importantly, this economic trend has
created a market imbalance for industrial and commercial real estate.
For example, we observed several smaller industrial or commercial
properties that are vacant or abandoned because of contraction in the
oil and gas industry. Recent capital investments made by larger energy
companies have helped revitalize Kenai Peninsula’s oil and gas sector.
Natural gas prices gradually recovered into summer 2014 from their
lows in early 2012. Late 2014 to early 2015 saw another downturn in
natural gas prices before a mid-2016/17 recovery. After briefly
spiking in 4th quarter 2018, natural gas prices trended downward into
2020, where they reached record low prices in March, and again in
July due to lack of demand driven by the COVID-19 pandemic. Prices
made a slight recovery in the second half of 2020, but continue to
remain much lower than the 20-yaer average. If demand for natural
gas from Asia and the Lower 48 recovers, additional capital
investment in the Kenai Peninsula will become more viable. Expressed
in the table below is the U.S. Average Natural Gas Price over the past
ten-year period, which has experienced significant volatility.
Historical Natural Gas Price ($/MMBTU)
Source: macrotrends
$5.50
$5
$4.50
$4
$3.50
$3
$2 .50
$2
2012 2014 2016 2018 2020
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Optimism has been created by renewed investment in the Kenai
Peninsula. Sale activity remains relatively scarce with assemblage,
expansion, or special-purpose use representing the principal
components of demand. Short-term uncertainty will likely continue to
dampen the Kenai economy, which benefits from anglers and
sightseeing tourism. Travel restrictions, and decreasing demand linked
to the COVID-19 virus are slowly recovering from 2021 with cautious
optimism for continued recovery in 2022. After analysis, we
determined that industrial and commercial property values have been
relatively stable over the past decade, but have declined from the
1980s peak.
Conclusion
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Chapter 3: Neighborhood Description and Analysis
The appraised land is located just south of the Kenai Municipal
Airport and southwest of the Kenai Business District. This chapter
will focus on the supply and demand factors of these neighborhoods,
which affect the valuation process.
Kenai Neighborhood Map
The subject neighborhood is bound by the Kenai Airport to the north,
the Kenai Spur Highway to the south and east, and the Kenai Business
District to the northeast. The Kenai Business District is the
commercial core of Kenai. Development includes many types of
commercial and industrial uses including big box retailers, strip and
enclosed malls, restaurants, convenience stores, small businesses, and
airport-related businesses. The Kenai Airport was recently remodeled
modernizing the terminal building. Lowes, which was constructed in
2008, closed in 2011. After eight years of vacancy, the property sold to
U-Haul in 2019. This City-owned, public-use airport contains a 7,855-
foot asphalt paved runway, as well as an additional gravel runway and
seaplane basin. Currently, scheduled flight service to Anchorage is
available on both Ravn Alaska and Grant Aviation. Development in
Overview
Neighborhood
Description
N Kenai Airport
Subject
Kenai Business District
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the immediate neighborhood consists of both aviation and non-aviation
related uses.
The zoning map below assists in visualizing neighborhood zoning
districts. The immediate neighborhood is zoned Central Mixed-Use
established to provide a centrally located area in the City for general
retail shopping, personal and professional services, entertainment,
restaurants, and related businesses. This district is also intended to
accommodate a mixture of residential and commercial uses. The CMU
Zone shall be designed to encourage pedestrian movement throughout
the area. Building and other structures within the district should be
compatible with one another and the surrounding area
Zoning Map
To summarize, the Kenai Business District is the commercial core of
Kenai. The neighborhood is well-located and benefits from its
proximity to the Kenai Spur Highway, as well as the airport and other
commercial districts in the area. The outlook for the neighborhood is
favorable as it continues to be a good commercial district for Kenai
Summary
Light Industrial
Airport Light Industrial N
Suburban Residential
Conservation General Commercial
Central Mixed-Use
Appraised Parcel
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Chapter 4: Site Description and Analysis
Analysis of land describes the characteristics that enhance or detract
from its utility or marketability. The site description and analysis is
based on our property inspection and review of plat 83-126, aerial,
Borough and other mapping. The plat map below and aerial mapping
on the following pages assist in the description and analysis of the
parcel that follows.
Plat 83-126
Location: North side of Kenai Spur Highway between
Coral Street and Main Street Loop Road, Kenai,
Alaska
Physical address: 11568 Kenai Spur Highway, Kenai, Alaska
Shape and Land
Area:
Nearly-rectangular shaped lot containing
25,663 square feet or 0.59± acre
Access: Access via paved ingress/egress from Kenai
Spur Highway on southern boundary and Cohoe
Overview
Site Description
N
Subject
Kenai Spur Highway
Cohoe Avenue
Main Street
Coral Street
t
NS:.18.
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Avenue, a gravel road on northern boundary
Zoning: Central Mixed-Use District (CMU)
Frontage and
Exposure:
120± feet of Kenai Spur Highway frontage and
105± feet of Cohoe Avenue frontage
Easements and
Restrictions:
20-foot utility easement along north boundary
Public Utilities: All public utilities available
Topography: Level and near grade with surrounding streets and
properties
GIS Aerial Map (Kenai Peninsula Borough)
Soil Conditions: Soils mapped as urban lands, and appear suitable
for construction based on surrounding development
Wetland
Designation:
None
Flood Hazard: Zone D, an area of undetermined, but possible
flood hazard per FEMA
N
Subject
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Environmental
Conditions:
The existence of any hazardous material or other
type of environmental contamination, which may
or may not be present on the property, was not
observed by the appraisers nor do the appraisers
have any knowledge of the existence of such
substances. Our value conclusion assumes that the
property is free of environmental and hazardous
contaminants.
Site Utility: The subject site’s positive attributes include good
location, size, and access near the Kenai Airport
and Downtown Kenai. Overall, physical character
makes the site well suited for commercial
development.
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Chapter 5: Highest and Best Use Analysis
Highest and best use is a market-driven concept rather than a
subjective conclusion based on the experience of the appraiser or a
property owner’s wishes. Economic incentive is the motivation that
has a market-effect on the productivity or profitability of the land. The
Dictionary of Real Estate Appraisal (Seventh Edition) defines highest
and best use as follows.
The reasonably probably use of a property that results in the highest
value. The four criteria that the highest and best use must meet are
legal permissibility, physical possibility, financial feasibility, and
maximum productivity.
A property’s highest and best use as vacant may differ from that as
improved. It is the appraiser’s responsibility to analyze each scenario;
then identify, explain, and justify the conclusion of each type of use.
Per client instructions, the subject property is analyzed as though
vacant.
Determination of a property’s most profitable use requires analyzing
all feasible alternatives. The criteria for testing potential uses as
though vacant are legally permissible, physically possible, financially
feasible, and maximally productive. The following highest and best
use analysis is the foundation of the appraisal process for the subject
properties.
Physical Possibility: The appraised parcel contains 25,663 square feet
or 0.59± acre fronting the Kenai Spur Highway. Frontage measures
120± feet, which enhances access, exposure, and development
potential. Demand along the Kenai Spur Highway commercial corridor
is high when compared to alternative interior commercial locations.
Highway frontage and linkage to alternative commercial locations in
Kenai are positive characteristics.
Legal Permissibility: Although the appraised property is within the
City of Kenai, zoning regulations do not generally apply to current
ownership because the property remains in restricted status. The
subject parcel is zoned Central Mixed Use (CMU) which encourages
commercial-type development in a centrally located area in the City of
Kenai, primarily for shopping, personal and professional services,
entertainment services, entertainment establishments and restaurants
and related businesses. The CMU district is also intended to
accommodate a mixture of residential and commercial uses, and
designed in a manner that encourages pedestrian movement throughout
Overview
Highest and Best Use
Analysis As If Vacant
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
21
the area. Although certain industrial use are allowed., most within the
CMU zone require a conditional use permit to ensure compatibility
with surrounding land uses. We are not aware of any recorded plat
restrictions that may affect development potential of the subject
property.
Financial Feasibility: Physically possible uses permitted are all
financially viable. Financially feasible commercial uses include
restaurants (both dining and fast food), hotel/motel, retail, and office
use. Other commercial uses are possible, which may offer greater risk
and lack economic feasibility. In conclusion, the Commercial
neighborhood’s location, existing land use trends, and physical
characteristics all support commercial development, which we
consider to by the highest and best use.
The subject’s physical characteristics, surrounding land use, CMU
zoning, location, access, etc., encourage commercial development.
Based on these factors, the highest and best use, as vacant, is for
commercial development.
Highest and Best Use: Commercial
Highest and Best Use
As Though Vacant
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
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Chapter 6: Land Valuation - Sales Comparison Approach
The sales comparison approach is a systematic procedure of estimating
the subject’s market value by comparing it directly to property sales
afforded similar physical and economic character. The approach is
founded on the principle of substitution, theorizing value is a function
of a knowledgeable investor’s (buyer) intent to pay no more for a
specific property than the cost of acquiring an alternative property
offering similar utility (economic satisfaction). The sales comparison
approach is the best approach for valuing vacant land.
Our sales search focused on vacant land with similar physical and
economic character to the subject, located in the immediate
neighborhood. In order to facilitate a comparative analysis, we
expanded our search to include commercial and light industrial
properties in other Kenai neighborhoods. These criteria produced five
sales that transpired in from 2016 to 2022. The primary land sales we
relied upon are listed in the table below. Additional details of the
comparables are retained on file.
Summary of Primary Land Sales
No. Location Zone Sale
Date
Sale
Price
Size
(SF)
$/SF
1 Northeast corner of Trading Bay Road and
Main Street Loop
CMU 5/22 $300,000 114,497 $2.62
2 Northwest corner of Kenai Spur Highway and
Main Street Loop Road (east)
CMU 1/20 $605,000 121,091 $5.00
3 Southwest corner of Kenai Spur Highway and
S. Forest Drive
CG 2/19 $455,000 219,107 $2.08
4 Northeast corner of Kenai Spur Highway and
Coral Street
CMU 8/18 $180,000 35,851 $5.02
5 Northwest corner of Kenai Spur Highway and
Main Street Loop Road (west)
CMU 8/16 $170,400 28,520 $5.97
North side of Kenai Spur Highway between
Coral Street and Main Street Loop Road
(Subject)
CMU -- -- 25,663 -- --
Overview
Comparative Market
Analysis
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
23
The elements of comparison that have the greatest influence on market
behavior and the price paid for similar land in Kenai is location and
physical character, including clearing/grading, frontage/access, and
size. Importantly, the subject lot has highway frontage with very good
exposure and access. We use a qualitative comparison technique that
rates elements of comparison as superior, inferior, or similar.
Comparable Land Sales Map
Land Sale 1
Land Sale 1 is the May 2022 sale located on the northeast corner of
Trading Bay Road and Main Street Loop Road. Northeast of the
subject, the irregular-shaped parcel consists of 114,497 square feet.
All public utilities are available in the immediate neighborhood.
Topography is generally level, and the parcel is partially cleared and
developed with a retail strip mall. Zoning is CMU, Central Mixed-
Use. The sale was between the City of Kenai and former land lessee
who purchased the land underlying the improvements. The sale price
of $300,000 indicates a unit value of $2.62 per square foot. By
comparison, this sale lacks highway frontage, and no improvements
were included in the sale. Conversely, its good corner location with
Elements of
Comparison
N
Subject
3
Kenai Spur Highway
Kenai Municipal
Airport
4 2
1
5
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
24
frontage near the Kenai Airport and within the Kenai Commercial
Core. Overall, Land Sale 1 is rated inferior, indicating a unit value
greater than $2.62 per square foot for the appraised land.
Land Sale 2
Land Sale 2 is the January 2020 sale located on the northwest corner
of Kenai Spur Highway and Main Street Loop Road (east), proximate
to the Commercial Core of Kenai. Located 1.3± road miles south of
the subject, the nearly rectangular-shaped parcel consists of two
totaling 121,091 square feet. All public utilities are available in the
immediate neighborhood. Topography is generally level, and the
parcel is cleared and developed with a motel. Zoning is CMU, Central
Mixed-Use. The sale was between the City of Kenai and former land
lessee who purchased the land underlying the improvements. The sale
price of $605,000 indicates a unit value of $5.00 per square foot. By
comparison, this sale is inferior for size, and similar to the subject for
location with highway frontage near the Kenai Commercial Core.
Overall, Land Sale 2 is rated similar, indicating a unit value
approximating $5.00 per square foot for the appraised land.
Land Sale 3
Land Sale 3 is the February 2019 sale located on the southwest corner
of Kenai Spur Highway and S. Forest Drive, west of the Kenai
Commercial Core. This location is 2.2± road miles southwest of the
subject. The nearly rectangular-shaped lot contains 219,107± square
feet. All public utilities are available in the immediate neighborhood.
Topography is generally level, and the property was cleared and
leveled at the time of sale. The property is zoned CG, General
Commercial. Originally listed for $499,000, the property sold after
132 days of market exposure. The sellers previously purchased the
property in 2007 for $175,000, and subsequently cleared the site. The
price appreciation is attributed to passage of time, as well as value
added due to clearing and leveling. The 2019 sale price of $455,000
indicates a unit value of $2.08 per square foot. By comparison, this
sale is rated inferior for size differential and location. Land Sale 3 is
rated inferior, indicating a unit value greater than $2.08 per square foot
for the appraised land.
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
25
Land Sale 4
Land Sale 4 is the August 2018 sale located at the northeast corner of
Kenai Spur Highway and Coral Street, just outside of the Airport
Reserve. This location is adjacent to the subject. The irregular-shaped
site contains 35,851± square feet. The site is cleared and improved
with a commercial building. All public utilities are available in the
immediate neighborhood. Zoning is CMU, Central Mixed-Use. Per
the plat, no direct Kenai Spur Highway access is permitted, although
curb cuts allow for direct physical access. The sale was between the
City of Kenai and former land lessee who purchased the land
underlying the improvements. The sale price of $180,000 indicates a
unit value of $5.02 per square foot. By comparison, this sale has good
corner location with highway frontage proximate to the Commercial
Core. Land Sale 4 is slightly inferior for size, superior for corner
location, and similar in terms of physical character and access. Thus,
Land Sale 4 is rated similar, indicating a unit value approximating
$5.02 per square foot for the appraised land.
Land Sale 5
Land Sale 5 is the August 2016 sale located on the northwest corner of
Kenai Spur Highway and Main Street Loop Road (west) just south of
the Airport Reserve and the Commercial Core. The property is located
near the subject with similar access and frontage. The nearly
rectangular-shaped lot contains 28,520± square feet. All public
utilities are available in the immediate neighborhood. The property is
cleared and zoned CMU, Central Mixed Use. The property was
purchased from the City of Kenai by the land lessee, who owned two
small commercial structures on the property. The sale price of
$170,400 was based on a 2015 appraisal, with a 20% premium paid.
Land Sale 5 is similar in size and superior for location and access
indicating a unit value less than $5.97 per square foot for the appraised
land.
22-3698 – Lot 5, Block 1, Gusty Subdivision, Kenai, Alaska
MacSwain Associates LLC
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Presented below is a rating grid and analysis of the land sales used in
comparative analysis.
Land Sale $/SF Rank Net Adjustment
5 $5.97 Superior
Subject -- -- -- -- -- --
4 $5.02 Similar -- --
2 $5.00 Similar -- --
1 $2.62 Inferior
3 $2.08 Inferior
The comparable land sales indicate a value range from $2.08 to $5.97
per square foot. Land Sale 5 is rated superior indicating a unit value
less than $5.97 per square foot. Conversely, Land Sales 1 and 3 are
rated inferior indicating a unit value greater than $2.62 per square foot.
Land Sales 2 and 4 are rated similar indicating a unit value
approximating $5.00 per square foot. After comparative analysis and
making the necessary adjustments, we conclude with a market value
between $5.00 and $5.50 per square foot, which develops the
following indicators.
25,663 SF × $5.00/SF = $128,315
25,663 SF × $5.50/SF = $141,147
Based on the preceding analysis, the market value of the appraised
land, as of May 16, 2022, is estimated as follows.
Market Value Estimate $135,000 (R)
Estimated 6 to 12 months
Reconciliation of
Comparative Market
Analysis
Marketing and
Exposure Time
22-3698 – Lot 5, Block 1, Gusty Subdivision Addition No. 1, Kenai, Alaska
MacSwain Associates LLC
Assumptions and Limiting Conditions
This appraisal is subject to the following assumptions and limiting conditions.
➔ No responsibility is assumed for the legal description provided or for matters pertaining to
legal or title considerations. Title to the property is assumed to be marketable unless
otherwise stated.
➔ The property is appraised free and clear of all liens or encumbrances unless otherwise
stated.
➔ The information furnished by others is believed to be reliable, but no warranty is given for
its accuracy.
➔ All maps, plot plans, and other illustrative material are believed to be accurate, but are
included only to help the reader visualize the property.
➔ It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or
structures that render it more or less valuable. No responsibility is assumed for such
conditions or for obtaining the engineering studies that may be required to discover them.
➔ It is assumed the property is in full compliance with all applicable federal, state, and local
environmental regulations and laws unless the lack of compliance is stated, described, and
considered in the appraisal report.
➔ It is assumed the property conforms to all applicable zoning, land use regulations, and
platting restrictions unless the nonconformity is identified, described, and considered in the
appraisal report.
➔ Possession of this report, or a copy thereof, does not carry with it the right of publication.
➔ The appraisers, by reason of this appraisal, is not required to give consultation or testimony
or to be in attendance in court with reference to the property in question unless
arrangements have been previously made.
➔ Neither all nor any part of the contents of this report shall be disseminated to the public
through advertising, public relations, news, sales, or other media without the prior written
consent and approval of the appraisers.
➔ The existence of any hazardous material or other type of environmental contamination,
which may or may not be present on the property, was not observed by the appraisers nor
do the appraisers have any knowledge of the existence of such substances. However, the
presence of these substances may affect the value of the property. Therefore, the client is
urged to retain an environmental assessment for discovery and evaluation.
22-3698 – Lot 5, Block 1, Gusty Subdivision Addition No. 1, Kenai, Alaska
MacSwain Associates LLC
Statement of COVID-19
This appraisal was performed following public awareness that COVID-19 was affecting
residents in the United States. At the time of the appraisal, COVID-19 is having widespread
health and economic impacts. The effects of COVID-19 on the real estate market in the subject
neighborhood are not yet measurable based on reliable data. The analysis and value opinion in
this appraisal are based on the data available to the appraisers at the time of the assignment and
apply only as of the effective date indicated. No analysis or opinions contained in this
appraisal should be construed as predictions of future market conditions or value.
MacSwain Associates LLC
4401 Business Park Boulevard, Suite 22, Anchorage, Alaska 99503
Appraiser: Steve MacSwain, MAI
Member of Appraisal Institute - No. 5700
State of Alaska, Certified General Real Estate Appraiser - No. 42
Professional Experience: 1986 to Present - MacSwain Associates LLC
1976 to 1986 - Appraisal Company of Alaska - President
1970 to 1975 - Real Estate Services Corporation – Appraiser
1969 to 1970 - State of Alaska Department of Highways - Right of Way Agent
Real estate appraiser and consultant of all property types throughout Alaska including commercial, industrial,
subdivisions and special-purpose properties. Appraisals have been performed for financing, leasing, insurance,
condemnation, taxation, property damages, investment analysis, and buy-sell decisions. Appraisals include valuation
of both real property and business enterprises. Professional experience totals 49 years. Life-long Alaskan resident
of Alaskan Native descent.
Education: Bachelor of Business Administration, Finance (1969), University of Alaska Fairbanks
Appraisal Education: The following is a list of completed appraisal courses and seminars.
2021 – Cool Tools: New Technology for Real Estate Appraisers by the Appraisal Institute
2021 – Desktop Appraisals (Bifurcated, Hybrid) and Evaluations by the Appraisal Institute
2021 – Hot Topics & Myths in Appraiser Liability by LIA Administrators & Insurance Services
2020 – Uniform Standards of Professional Appraisal Practice – Update by the Appraisal Institute
2019 – How Tenants Create or Destroy Value: Leasehold Valuation and its Impact on Value –by the Appraisal Institute
2017 – Appraising Environmentally Contaminated Properties by the Appraisal Institute
2017 – Residential & Commercial Valuation of Solar by the Appraisal Institute
2017 – Right of Way Acquisition for Pipeline Projects by the International Right of Way Association
2015 – Litigation Appraising: Specialized Topics and Applications by the Appraisal Institute
2015 – Business Practices and Ethics by the Appraisal Institute
2013 – Complex Litigation Appraisal Case Studies by the Appraisal Institute
2013 – Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) by the Appraisal Institute
2012 – Appraisal Curriculum Overview by the Appraisal Institute
2010 – Reviewing Appraisals in Eminent Domain by the International Right of Way Association
2010 – Commercial Appraisal Engagement and Review Seminar for Bankers and Appraisers by the Appraisal Institute
2009 – The Appraiser as an Expert Witness: Preparation and Testimony by the Appraisal Institute
2009 – Attacking and Defending an Appraisal in Litigation by Whitmer Education
2008 – Uniform Standards of Professional Appraisal Practice by the Appraisal Institute
2007 – Business Practices and Ethics by the Appraisal Institute
2007 – Eminent Domain Law for Right of Way Professionals by the International Right of Way Association
2007 – Appraisal Review for Federal Aid Programs by the International Right of Way Association
2007 – Analyzing Operating Expenses by the Appraisal Institute
1969-2006: Numerous appraisal classes pertaining to principles, income capitalization, cost analysis, sale
comparison approach, and highest and best use analysis by the Appraisal Institute, Society of Real Estate Appraisers,
International Right-of-Way Association, International Association of Assessing Officers, and Marshall Valuation
Service
Membership and Organizations: Member of Appraisal Institute – No. 5700, International Right of Way
Association (IRWA), and Building Owners and Managers Association (BOMA)
Public Service: Past Chairman of the State Board of Certified Appraisers
Past Member of Board of Equalization, Municipality of Anchorage, National Experience Review Committee of
the Appraisal Institute, and Regional Ethics and Counseling Panel of the Appraisal Institute
Past President of Alaska Chapter 57 of the Appraisal Institute
Significant Assignments:
è Appraised Pacific Spaceport Complex-Alaska (PSCA) land and facilities for Alaska Aerospace Corporation on
Kodiak Island.
è Appraised proposed LNG Pipeline, a FERC-regulated 860-mile pipeline transporting liquefied natural gas.
è Appraised the Trans-Alaska Pipeline System, a FERC-regulated 800- pipeline that transports crude oil from
Prudhoe Bay to Valdez, for TAPS ownership.
è Appraised remote lands (65,000± acres) owned by three Native corporations damaged by the Selendang Ayu
grounding and subsequent oil spill.
è Appraised Calais Company, Inc., a real estate holding company consisting of 39 commercial parcels in Anchorage.
è Principal real estate consultant and expert witness for all lands affected by the Exxon Valdez oil spill. Project
involved over 2,000,000 acres of remote land and nearly 2,000 private property owners.
è Appointed as a representative of a three-member panel that analyzed and valued over 1,000,000 acres and 8,000
parcels for the Mental Health Lands Settlement.
è Contract assessor for the North Slope Borough, Kodiak Island Borough, City of Nome, and the City of Valdez.
è Represented Seibu Alaska, Inc. (Alyeska Resort and Alyeska Prince Hotel) in preparing of their property tax
appeal with the Municipality of Anchorage that resulted in a $65 million reduction in assessed value.
è Appraised submerged tideland parcels and wetlands parcels located in Womens Bay on Kodiak Island for the
purpose of an exchange between Koniag, Inc. and U.S. Fish and Wildlife Service.
è Appraised Common Carrier Pipeline right-of-ways leased and operated by BP Transportation Alaska and
ConocoPhillips Alaska.
è Appraised 3,600 acres consisting of the former Adak Naval Air Station and Submarine Base conveyed to the City
of Adak and the State of Alaska.
Expert Witness Experience: Steve MacSwain, MAI is qualified as an expert witness in both the United States
Federal Court and the State of Alaska Superior Court. Steve has testified as an expert witness in State and Federal
courts. In addition, Steve has testified as expert witness in numerous Alaskan municipal tax courts, public hearings,
and depositions on matters related to real property.
Arbitrator Experience: Appointed a Master by the Superior Court of Alaska and Municipality of Anchorage to
serve as an arbitrator in determining just compensation.
State of Alaska Ucenae #: APRG42
Effecti~: 61812021
Expires: 06/30/2023 Department of Commerce, Community, and Economic Development
Division of Corporations, Business, and Professional Licensing
Board of Certified Real Estate Appraisers
Licensee : STEVEN JAMES MACSWAIN
License Type : Certified General Real Estate Appraiser
Status : Active
Relationships
No relat ionships fo und .
Commissioner: Julie Anderson
Designations
No designations found .
MEMORANDUM
TO: Mayor Gabriel and Council Members
THROUGH: Paul Ostrander, City Manager
FROM: Max Best, Interim Planning Director
DATE: September 15, 2022
SUBJECT: Ordinance No. 3311-2022 - Determining that real property described as
Lot 5, Block 1, Gusty Subdivision Addition No. 1, city-owned airport
land located outside the airport reserve, is not needed for a public
purpose and authorizing the sale of the property to Aaron Swanson,
dba as Forever Business Plaza LLC.
The purpose of the memo is to request an amendments to Ordinance No. 3311-2022.
At the regularly scheduled Planning and Zoning Commission meeting of September 14, 2022
the Planning Commission voted to recommend approval of Ordinance No. 3311-2022. The
Administration is requesting an amendment to fill in the blank in the 12th WHEREAS by adding
the word “approval”.
At the regularly Scheduled Airport Commission meeting of September 8, 2022 the Airport
Commission voted to recommend approval of Ordinance No. 3311-2022 .The Administration is
requesting an amendment to fill in the blank in the 13th WHEREAS by adding the word
“approval”.
The following amendment is respectfully requested.
Motion
Thank you for your consideration.
I move to fill in the blanks on the 12th and 13th WHEREAS with the word approval.