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After a Decade, Assembly Will Decide Whether to Finalize Land Deal with Local Resort

Fairbanks, AK - The Fairbanks North Star Borough Assembly will vote on an ordinance tonight that could finalize a land sale between the Borough and Chena Hot Springs Resort.  It’s a sale that’s been in the works for nearly a decade.  But some Assembly members believe this latest version of the deal does not jive with their intent when they allowed for further negotiations back in May.

During a Finance Committee meeting last week, the Assembly questioned Borough Mayor Luke Hopkins and his administration for more than an hour.  Last month, the Mayor brought forth an ordinance that outlines new terms for the sale.  Assemblyman Karl Kassel seemed bewildered. “I’m having a difficult time with this following the intent with what we did previously,” said Kassel.

When the original Purchase Agreement was signed last September, the land had not yet been appraised.  After the appraisal took place, negotiations broke down.  In May, the Assembly agreed to allow for a second appraisal, paid for by Chena Hot Springs Resort Owner Bernie Karl.  He didn’t agree with the first.  Since then, Borough Mayor Luke Hopkins has brought forth a new ordinance, in which the original appraised value of the land - $390 dollars per acre – still stands.  But the new ordinance also proposes a credit of more than 282-thousand dollars.  The Mayor’s Chief of staff, Jeff Jacobsen explains that the credit is meant to offset the cost of easements and improvements Bernie Karl agreed to make when he signed the original purchase agreement. “During the course of the negotiations," explains Jacobsen, "it became apparent that there was inherent value to both parties regarding the acquisition of public access and easements and the expense associated with construction of public parking, bridge and access through adjacent private land to complete access to borough land.”

The credit cuts the sale price of the property by roughly half.  And there are questions about where the dollar amount comes from.  Bernie Karl has said previously that easements and improvements will cost him roughly 150 thousand dollars.  Jeff Jacobsen says the credit is based on the costs of similar projects throughout the Borough. “We utilized information that the Borough recently had," he said.  "In 2010, the borough did a preliminary design for a parking lot, estimated at 120 thousand dollars in 2003 to 2006 we constructed three bridges.  One cost over a 100,000 to construct.”

But Karl Kassel argues the Assembly never agreed to a credit when they voted back in May to approve a second appraisal. “Mr. Karl was quite specific that he didn’t like this appraisal." Kassel was emphatic. "The rest of this agreement was fine.  All these accessory easements and bridges were part of the package and agreed to.  Mr. Karl stated ‘I have no problem doing all that if I just had a fair appraisal.’”

Assemblyman Michael Dukes also says the newly agreed upon terms are not in line with the Assembly’s intent. “At one point somebody mentioned ‘We believe that this follows the spirit of what the assembly was intending when they made their previous action' and I find that almost laughable," he said.  "So, maybe if someone can explain how this fulfills the will of the assembly, I’d be interested to hear it.”

In response, Borough Mayor Luke Hopkins says the Assembly’s approval of a second appraisal also authorized further negotiations. “If you look at the language of option three that was amended," explained the MAyor, "it states that upon the resort agreeing to pay for a second appraisal, then we could move on to negotiate any items below.”  The Mayor’s administration says Bernie Karl has no plans to purchase the property if the ordinance fails.  [In Fairbanks, I’m Emily Schwing.]