Homer Alaska - News

Story last updated at 4:42 PM on Wednesday, February 29, 2012

Citizens excluded in talks over land purchase

Improperly recorded sewer lined reduced property's appraisal

By Michael Armstrong
Staff Writer

Monday afternoon at a special meeting, the Homer City Council again met in executive session to discuss the purchase of a lot owned by Nicholas Kazan at 89 Sterling Highway, just west of the Public Works complex that includes the sewer treatment plant.

At its Feb. 13 meeting and also after meeting in executive session, the council by a 5-0 vote rejected an ordinance to purchase Kazan's 1.1-acre commercial lot for $260,000. The council had balked at the price, $30,000 less than a bank appraisal of $290,000. Council member Bryan Zak said then he thought the city could get an even better price.

"I don't feel like we're in a position to hurry and could offer a lower price," Zak said.

After the Feb. 13 and 27 executive sessions, council member Francie Roberts said the same thing: The council had discussed the land purchase and gave Homer City Manager Walt Wrede and city attorney Tom Klinkner direction on how to proceed.

A memo by Wrede on the lot purchase says the city wants the land for expansion of Public Works facilities. Expanding Public Works has been on the city's capital improvement list, and buying the lot would give the department room to grow. The lot includes Beluga Slough frontage that also could be used to link a trail from Bishop's Beach to a trail along Lake Street on the slough.

What's not in Wrede's memo and documents accompanying the ordinance, and what the council has not discussed openly, is what Wrede calls a side benefit: The land purchase would resolve a dispute with Kazan over an unrecorded sewer line that Kazan said restricts how he can develop the 1.1-acre commercial lot.

Wrede downplays the relevance of the sewer line issue in driving the land purchase.

"That's not what was motivating the sale," Wrede said. "That's why there was no emphasis on that."

But Wrede agreed that buying Kazan's land would resolve the sewer line issue.

"Everybody would have come away a winner, a winner at least in the sense that Nick would have come away happy," Wrede said.

In emails to the Homer News and phone interviews from his native Romania, Kazan has harshly criticized the council's rejection of the purchase.

"It's horrible what they've done to me," Kazan said. "No one can say they did not know this was a convenient way to put the issue behind, an issue that calls for greater exposure for potential liability that no one wants to face."

Wrede said he told the council about the sewer line issue, briefing them at an executive session last summer. Kazan also said he had sent Mayor James Hornaday and council members emails about the sewer line issue. Council members would have known about that when they considered the land purchase on Feb. 13.

Before the city offered to purchase his land, Kazan had been negotiating with the city for a land swap that would settle an issue regarding the unrecorded sewer line on the southeast corner of his lot. When Kazan bought the land in 2001, the main sewer line carrying treated effluent into Kachemak Bay was recorded. A second line parallel to that line that brings effluent into the plant wasn't recorded, at least as far as Kazan's real estate agent, title company and surveyor could find.

That second line wasn't even noted when Kazan went to get approval for a planned condominium development in 2003 — even though the proposed building site was near the second line. Because of market conditions, that project didn't go forward.

Last summer, Kazan proposed a 30-unit, log-cabin vacation resort, Enchanted Forest Nordic Village. It was during planning of that project that Public Works identified the second line on Kazan's property.

"It was really upsetting to Nick," Wrede said. "It meant he had to change his setback even more."

As part of his application for a loan from First National Bank Alaska for the cabins, Kazan got an appraisal of $350,000 for his lot. After the second sewer line was discovered, FNBA had him get a second appraisal. That one came in at $290,000. Kazan said that in effect the issue with the setback and the second line lowered the property value $60,000.

Wrede and Kazan worked out a proposed land trade. The city would get the part of the lot with the two sewer lines. Kazan would get a strip of land on the east border of his lot next to city land.

"We decided to make it right," Wrede said. "The whole idea would be to make it easier to site his development."

When the city considered buying Kazan's property, the proposed land trade was dropped, since the purchase would resolve the unrecorded sewer line issue. Wrede said if the city wound up not buying Kazan's property, he would reopen discussions on the land swap.

Kazan also said occasional sewer odors from the treatment plant made it impossible to develop his property. He did some land clearing in July 2011, but at one point a worker vomited because the smell was so bad. Kazan alleges the city should control the odor better and that by not doing so it is a taking of his property.

Wrede said there were several days last summer when the odor was bad. Odors also come from Beluga Slough from methane gas.

"I don't think you can ever avoid it completely," Wrede said of the odors. "Obviously, we want to be a good neighbor ad do whatever we can to control the smell."

Wrede said there haven't been many complaints of the odor.

After the council rejected the purchase on Feb. 13, Kazan said he emailed Wrede saying his sale offer of $260,000 was firm. Because of the lower appraisal caused by the second sewer line issue, Kazan said his price is really $90,000 less than the $350,000 appraisal before the sewer line problem was discovered. Kazan said he doesn't have the money to litigate and the council knows this.

"Does it give them license to push me this hard?" Kazan asked.

A refugee from Communist Romania, Kazan came to Alaska and started the Café Europa bakeries. He said that when he has been a victim of perceived injustice before, he went on hunger strikes in protest. He's prepared to do that again, he said.

"If it pushes me where I have to do what I have to do, it is going to be a monstrous disgrace I'm pushing on Homer," Kazan said. "It's horrible what they've done to me."

Wrede said the council still does not want to buy Kazan's property at the $260,000 price. Kazan said he hopes the city will agree to what he thinks is a fair price.

"I really hope this is done and gets over with," he said.

The $260,000 price is good until March15, Kazan said. If the city negotiated another deal, it would take two more meetings on March 12 and 27 to approve a purchase ordinance.

Michael Armstrong can be reached at michael.armstrong@homernews.com.