HomeMy WebLinkAbout2010-01-27 Council Packet - Work SessionOpen Work Session
COUNICL WORK SESSION
JANUARY 27, 2010
7:00 P.M.
KENAI CITY COUNCIL CHAMBERS
AGENDA
Discussion Tract A -1 -A, Baron Park Subdivision /Confirm and Memorialize
Management Authority
Discussion Library Expansion Project /Financing Summary
Adjournment
KENAI, ALASKA
MEMO:
TO: City Council
1 FROM: Rick Koch
DATE: January 26, 2010
SUBJECT: Tract A -1 -A, Baron Park Subdivision
Village with a Past, Gc y with a Future"
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
Telephone: 907 283 -7535 FAX: 907 283 -3014
The purpose of this memorandum is to discuss alternatives and for the administration to make
a recommendation to confirm and memorialize management authority for the above
referenced property.
The property is a 40 acre tract fronting Marathon Road which is owned by the City. At present
the Fire Training Facility (managed by Beacon) is located on 10 acres of the original 40 acre
tract, and until April 2009 the University of Alaska held a lease for the remaining 30 acres.
In 1991 the City's general fund (GF) paid the Airport fund (AF) 212,500 to transfer
management authority of the 40 acre tract to the GF. 212,500 represented the fair market
value of the property, established through appraisal. This represents 5,312.50 per acre.
In May 1991, the City entered into a lease with the University of Alaska for the 40 acre tract for
the purposes of a fire training school, cold water recovery school, or any use reasonably related
thereto. The lease was for an initial period of 50 years with a lessee option to extend for an
additional 49 year period. The annual lease rate was $1.00 per year.
In March 1997, a subdivision of the 40 acre tract was accomplished creating a 10 acre and 30
acre tract. The 10 acre tract was for the City's Fire Training Facility, and the University lease was
amended to 30 acres with all other conditions remaining unchanged.
1!5
'1
1992
In April 2009 The City and University agreed to a termination of the lease agreement for the 30
acre tract. The AF paid the University $325,000 for termination of the lease. The following is a
breakdown of the individual components of the $325,000 payment as provided for in
Ordinance 2380 -2009:
Buildings 95,000
Improvement Other than Buildings 136,338
Machinery Equipment 20,000
Misc. Expenses 73,662
The City Council has directed administration to move forward with the design and construction
of a City park to incorporate the water body commonly referred to as "Marathon Lake The
City has entered into a Memorandum of Understanding with the State Division of Parks
Outdoor Recreation to provide master planning services for the development of the park. For
purposes of this discussion, the area of the park is expected to be 8 acres.
When the City purchased the improvements and terminated its lease with the University, the
City Council agreed the management authority of the property should return to the AF. This
was the reason the AF was the source of the $325,000 payment.
At the time the expenditure was approved by Council, there was also discussion of repayment
to the GF of a portion of the $212,500 which was paid to the AF in 1991 for the portion of the
property that was returned to AF management.
22 acres of the original 40 acre tract will be returned to AF management. The calculation is as
follows:
1991 transfer of management authority to GF
10 acres remaining under GF management for
Fire Training Facility
8 acres remaining under GF management for park
Acreage returning to AF management
40 acres
(10 acres)
(8 acres)
22 acres
The decision to be made is if the AF should pay the GF for the return of management authority
over 22 acres of property. Administration recommends that in addition to the $325,000 the AF
paid the university for the lease termination it should reimburse the GF $43,213 from the
original GF payment to the AF.
This is based on the following:
22 acres $5,312.50 per acre 116,875
Less $73,662 paid by AF to University for $73,622)
Misc. Expenses
Amount due to GF from AF 43,253
The above does not take into account the time value of money from 1991 to present.
Administration believes this is appropriate as our assumption is that, but for the representation
there would be a dynamic training facility on the University lease property, the AF would not
have transferred its management authority to the GF.
If the time value of the $43,253 were included in the calculation, and the value was 3% per
year, the present value would be $73,567.24.
In summation, the administration recommends the AF reimburse the GF $43,253 and return
management authority over 22 acres of the property to the AF, while the GF maintains
management authority over the 10 acre parcel supporting the Fire Training facility and the
future 8 acre parcel which will be the location of a City park.
22 Ac. (AF)
Future Park
8 Ac. (GF)
MAGIC AVE
Fire Training
Facility 10 Ac. (GF)
January 27, 2010
January 27, 2010
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