MEMORANDUM

TO: Timothy Navarre, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Mayor

THRU: Colette Thompson, Borough Attorney

Robert Bright, Planning Director

Roy Dudley, Land Management Agent

FROM: Charles Franz, CEO, South Peninsula Hospital

DATE: July 26, 2001

SUBJECT: Ordinance 2001-19-08 authorizing the acquisition of Lots 2 and 3, Block 8, Fairview Subdivision, Plat No. 56-2936, Homer Recording District and appropriating $121,000.

The accompanying ordinance would authorize the South Peninsula Hospital Service Area through the borough to purchase Lots 2 and 3, Block 8, Fairview Subdivision, Plat No. 56-2936, which are situated next to the South Peninsula Hospital. Both the nonprofit operating board of directors and the service area board of directors have approved the proposed purchase. As shown in the attached documents, for approximately seven years the hospital has attempted to negotiate with the owner of the properties to buy these parcels. The property is needed by the hospital in order to expand the hospital facilities. The hospital is in the process of developing a long-term strategic plan, but its options are severely limited by the lack of contiguous available property. At this time these parcels would probably be used to provide space to replace the existing clinic building with a new administrative office and clinic.

The proposed purchase price is significantly greater than the appraised or assessed market value of these properties. Attached is a memorandum summarizing efforts to buy the property. The 1998 appraisal estimated these lots to be worth $53,500. The most recent appraisal by our assessing department, dated July 26, 2001, finds that the current assessed value is $17,600 per parcel, or $35,200 total. Despite this disparity, the service area board and operating board have both requested that the assembly approve the purchase as they believe the hospital needs the property to better serve the service area, and the seller is unwilling to sell the property for a lesser sum.