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Assembly Will Mull Changes to Chena Hot Springs Resort Land Sale Agreement

Lisa Scerbak-Powers

Fairbanks, AK - After a heated work session in the Fairbanks North Star Borough Assembly chambers last month, the Mayor has put forth an ordinance that outlines the details for the sale of 1480 acres of property to Chena Hot Springs resort.  During last week’s regular meeting, the Assembly agreed to advance the ordinance, but only so they can discuss the details of the sale.  Some Assembly members believe the ordinance ignores previous agreements between the Borough and the Resort.

  As part of the land sale agreement, Chena Hot Springs Resort Owner Bernie Karl agreed to pay fair market value for the property.  But Karl didn’t agree when the Borough valued the land at $390 per acre.  Last month, he made his opinion known before the Assembly. “I want you to try to pay the taxes and have the employees we have," he told the Assembly last month.  "We paid 900 dollars a day every day in taxes in 2012 in this borough," yelled Karl.  He accused the Borough Planning Department of fraud.   

After a closed-door executive session, the assembly voted to continue negotiations and Karl agreed to pay for a second appraisal.  The two appraisal values would be averaged to determine the final sale price of the property.  But the second appraisal never took place. “This is astonishing to me!” says Assembly member Guy Sattley.  “I grew up thinking things that when I agreed to things and signed things it was fairly binding. Apparently that doesn’t apply here,” Sattley says. 

Part of the Assembly’s agreement last month was that improvements and easements agreed to by Karl would come at no cost to the Borough.  But the Assembly voted by motion and not by ordinance, so the vote was not legally binding.  Borough Mayor Luke Hopkins has since brought forward a new ordinance.  The Resort will still pay the original appraised value at $390 dollars per acre and the Borough will credit the Resort for more than $282 thousand dollars.  Guy Sattley says that essentially cuts the purchase price in half.  “We do have an overall, long term mandate to dispose of borough land," says Sattley, "however we also have a mandate to get fair value for borough assets.  This is an asset of everybody in this borough and selling it for half price is not getting fair market value for this land.”

In an interview last fall, Bernie Karl said easements and improvements would cost him roughly 250 thousand dollars.  “I’m giving up access and a right of way and building a bridge, which I probably shouldn't have done," said Karl.  "I mean that’s what was agreed to and negotiated, so I will do it.  Do I think that should have had to happen to make this work?  No.  But that’s what compromises are all about, right?”

In a June 12th memorandum from Borough Attorney Renee Broker, the Attorney writes  “the Mayor accepted the Buyer’s proposal of a credit” and that “the Borough accepted the Buyer’s value of easements and improvements.”  According to Broker’s memo “The Borough does not have an independent appraisal of those easements or estimated costs of improvements.”

Borough Mayor Luke Hopkins says the agreement differs from what the Assembly voted on in May, because the negotiation process is entirely new. “This is the outcome that we have now," says Hopkins.  "This is what we have to be able to transfer public properties that were entitlement properties from the borough to private ownership that will end up being in taxation and economic development,” the Mayor says.

Guy Sattley tried to keep the new ordinance from advancing during last week’s regular Assembly meeting, but Assemblyman John Davies argued against the move. "I think it’s a matter of importance to the borough and I think it’s important therefore that we have a substantive discussion of it," Davies told the Assembly.  "We should advance it for that purpose.  Whether you agree with it or not, we should discuss it,” he said. The Assembly will consider the new land sale exchange agreement at a work session July third.  It will come before the Assembly for public testimony July 11th.  If the sale is approved, Karl will pay just under $300 thousand dollars for the land at six percent interest over the next 15 years. The Borough still needs to survey the property boundary at a cost of 15 thousand dollars.