City seeks to end land dispute with Alaska Mental Health Trust Authority by purchasing Homer Spit lot

The Homer City Council introduced an ordinance at its Monday meeting that seeks to end a years-long legal dispute over a piece of land on the Homer Spit.

Ordinance 17-41 would allow the city to purchase a parcel of Kenai Peninsula Borough land, Lot 42, from the Alaska Mental Health Trust Authority. City Manager Katie Koester explained that the city has been in negotiations with Alaska Mental Health for the last three years about their portion of the lot, a long piece of land that actually extends into the mouth of the Homer Harbor.

The issue came up when the city sought an easement in order to construct the Homer Spit Trail in 2013. Koester told the council that Lot 42 is owned in part by the Alaska Department of Natural Resources and in part by the Alaska Mental Health Trust Authority Land Office.

“The easement was granted, but resulted in TLO (Trust Land Office) claiming ownership both of its portion of Lot 42 as well as land essential to Harbor operations and management,” Koester wrote in a memo to the city council.

At one point throughout the negotiations, the city received a trespass notice for the mouth of the Homer Harbor, Koester said.

In order to rectify the issue, the city got the lot appraised. The appraised value of the portion of Lot 42 owned by Alaska Mental Health came in at $550,000, Koester said. It’s in the city’s best interest to own outright the entirety of Lot 42, as it is now being leased to Icicle Seafoods, she said.

The city made an offer of $550,600 for Lot 42 in its entirety in order to avoid a legal battle, Koester said, even though she said the administration is confident the city has a solid claim to their version of ownership of the lot. Essentially, DNR will transfer its portion of the lot to Alaska Mental Health so that the city can acquire it all at once, according to the memo.

“I think of it as …we found a middle ground,” Koester said. “They wanted to charge us that amount for a lot less land. We were probably overpaying for Lot 42 if that were the only thing we were purchasing.”

The payment for the lot will be split between the city’s general fund, which will contribute a $300,000 loan, and the port and harbor enterprise fund, which will contribute $250,600 for the purchase. Koester said this decision was made to ensure the port and harbor enterprise fund is not drawn down on too much.

“There’s plenty of money in our general fund, so we’re not going to miss the $300,000,” said council member Heath Smith. “… So, you know, we’ll be OK.”

There will be a public hearing for the ordinance to purchase Lot 42 at the council’s Nov. 27 meeting, at which point council members will vote.

Reach Megan Pacer at megan.pacer@homernews.com.

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