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Home My WebLink About1986-12-16 Economic Development Commission SummaryECONOMIC DEVELOPMENT COMMITTEE December 16, 1986 - 7:00 PM Kenai City Hall Vince O'Reill¥, Chairman AGENDA 1. ROLL CALL 2. APPROVAL OF AGENDA 3. APPROVAL OF MINUTES of December 2, 1986 4. REVIEW OF PROGRESS TO DATE 5. PRESENTATION OF NEW MATERIAL 6. PRESENTATION OF TESTIFIERS AND/OR SPECIALISTS a. Mr. Ron Moore, Kenai Peninsula Board of Realtors b. Randy Ernst, Manager, Kenai Municipal Airport c. Kenai Peninsula Homebuilders Association - d. Kenai Peninsula Borough - Frank McIlharg¥ (representative) 6. PUBLIC TESTIMONY 7. COMMITTEE DISCUSSION 8. PREPARE NEXT AGENDA 9. ADJOURNMENT (9: 30 PM) ECONOMIC DEVELOPMENT COMMITTEE December 16, 1986- 7:00 PM Kenai City Hall Vince O' Reilly, Chairman 1. ROLL CALL Present- O' Reilly, Carter, Elson, Miller, Shelden Absent: Meeks, Thomson 2. APPROVAL OF AGENDA Add the names of the two speakers - item c - Larry Holland, item d - Larry Simmons Agenda approved with the addition of the names 3. APPROVAL OF MINUTES of December 2, 1986 Committee Member Shelden requested a change in verbiage to page 3 paragraph 3. The sentence which reads: "Alaska Statebank is pretty much a local bank as opposed to say NBA" should be changed to read: "not aware of situation with banks other than NBA which I know to be healthy." The minutes were approved with the change. 4. REVIEW OF PROGRESS TO DATE Chairman O'Reilly directed attention to the discussion with Mr. McIlhargey last meeting regarding taxes and suggested that for item 8, the next agenda deal with taxes including schools, City of Kenai, and persons from the Dept. of Community & Regional Affairs both in Alaska and outside the state. 5. PRESENTATION OF NEW MATERIAL The Committee was provided with material which had been sent by Mayor Williams, plus additional material obtained from the library. NOTE: due to the technical nature of the discussion and the lack of handout material, the following minutes are taken partially vertabim from tapes. ECONOMIC DEV~ ?MENT COMMITTEE Decemer 16, 1986 Page 2 6. PRESENTATION OF TESTIFIERS AND/OR SPECIALISTS a. Mr. Ron Moore~ Kenai Peninsula Board of Realtors , Mr. Moore informed the COmmittee that he would break down his presentation of data into two areas, the active real estate market, i.e. listing and sales, and the rental market. In March, Vern Frykholm did a apartment survey for the Kenai and Soldotna area. For Kenai, Wildwood is broken out. In August there was a 55% vacancy factor and in November there is a 74% vacancy factor. The best year was 1984 at 9%. After October 1984 the rate has been running 32% or higher. The Wildwood apartments have "caught it", it appears, since the prison came into being. I think the City has to look at something, as far as that portion of the rental industry, because if it continues at that high vacancy rate, there will be foreclosure and you will not have the revenue generated from that source. The rest of the City is 27% vacancy factor which is the highest it has been since January 1984. The last real estate depression was in 1979 and pulled out of that in 1981 when the vacancy factor went as far down as 50%. You must keep in mind that there has been some overbuilding of apartments and the tax laws will change the picture again. Unless they are large scale, there should not be much more construction of apartments. Chairman O'Reill¥ asked for the total number of apartments involved, answer, the poll was 310. Of the 310, 82 were vacant, not including Wildwood. The hardest hit is the efficiency unit. Soldotna has about the same. Of 280 units polled, 67 were vacant for 24%. In 1979 the vacancy factor increased in Kenai and there is no answer for why, unless Wildwood was included. Since both cities are so much the same (figures), it is a good economic indicator that there is an across-the-board 25% vacancy factor. The other part of the market is the housing. We use such factors as the number of houses on the market, the time it is on the market, the average price, the number houses sold this year, etc. I take exception to Mr. Stettler's comment that if you look around you see everything is for sale. That may be true if you go through a large neighborhood such as Woodland where there is a large concentration of houses. If there are 5 signs on a street, the tendency is to think that way. There are a lot of reasons why houses are on the market, there are several that have lost jobs, decreased the household when children leave, or where there had been two working, now only one works and the need for smaller, lower cost houses arises, and, divorce accounts for a large part. Currently, the market area includes North Kenai, Soldotna, Sterling, Cooper Landing and Ninilchik but not Seward. Keeping this in mind, in that area there are 472 units on the market. The hardest hit homes are those which exceed $125,000, obviously ECONOMIC DEVEi MENT COMMITTEE Decemer 16, 1986 Page 3 because there are not many in that market area. Those that can afford a house in that range tend to build a house to their own design. Chairman O'Reilly asked if the figures could be broken down further by the total number of houses vs this 472 figure, Mr. Moore answered that if the Borough were to have a permitting process, that does not mean a building inspector, then we would have some handle on the housing outside the cities. This is the only county or borough in the U.S. or Alaska and that does not provide this information. The tax rolls can only tell you that there is an improvement on property but that can range from a shed or a garage, to a nice A-frame. Mr. Moore recommended that the Committee hear from Jack Cline of the assessor's office for more information. A rough estimate is around 4,000 total homes making the 472 figure roughly 10% of the total. Of the 472 figure, there is a total value of $45,508,154 with an average value of $96,415. The average number of days on the market is 125 days. The Board has been computerized for about a year, therefore there are no figures broken down this way for prior to this year to compare. I do not feel that things are as bad as some have made them out to be. I do not feel that 10% of the houses on the market is bad. Committee Member Shelden asked if the data includes only houses listed or houses in the private sector as well, Mr. Moore answered that the FSBO or "for sale by owner" is not included. We can only generalize from readingseveral sources such as a newspaper. As of December 4th, the figures for the year for the number of houses sold are 232 which accounted for $20,381,913 with an average market time of 95 days and an average selling price of $87,853. These are "sold and closed". There are 62 under contract or pending sales with a total of $5,994,940 with an average time on the market of 170 days. These houses are averaging $96,692. The days on the market are increasing to perhaps 100 to 180 days depending upon location, repairs, and other factors. A house may take an average of 4 months to close. Committee Member Elson asked if there were figures available for new units on the market, answer no. Mr. Moore addressed the houses that have been refinanced and suggested that these figures would have an impact on the market. FHA are at an all-time low at 8 1/8% for some. Example, if refinancing saves a family $250 per month, that is now spendable money. Under the new structure several loans are now assumable which they had not been since 1981. Addressing commercial lease property, Jack Cline would need to address specific figures, but an estimate would be that Kenai is facing about 75,000 ft of vacant space. What is being learned is that when people lose their jobs, they find a way to earn an income and what the general public seems to be doing is leasing small "mom and pop shops". Soldotna is probably around 60,000 ft., of which 24,800 is the old D&A grocery building which accounts for a large amount. One thing to remember is that some of these small strip ? ppÿØÿàJFIFXXÿþLEAD Technologies Inc. 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