MEMORANDUM

TO: Timothy Navarre, President

Members of the Kenai Peninsula Borough

THRU: Dale L. Bagley, Mayor

THRU: Robert L. Bright, Planning Director

Max Best, Borough Surveyor

FROM: Roy E. Dudley, Land Management Agent

DATE: April 25, 2002

SUBJECT: Ordinance 2002-18 authorizing removal of restrictions on the land leased with option to purchase to the United States Postal Service in Cooper Landing for a new main post office.

The Kenai Peninsula Borough (KPB) has entered into a lease pursuant to Ordinance 2001-37 with the United States Postal Service (USPS) of a one-acre parcel within Tract B, USS 5105, Section 28, T5N, R3W, S.M., Alaska at the intersection of the Sterling Highway and Snug Harbor Road for a new main post office. The lease site is within land that the Cooper Landing Land Use Plan recommends for centralized public facilities. The land is classified as government.

Section 3 of Ordinance 2001-37 requires that the lease and sale documents must contain restrictions requiring that the land be used for a main post office for the Cooper Landing community. The lease also contains the KPB 17.10.130(D) restriction that restricts use of the site to its government classification. The USPS requests that these restrictions be removed from the lease and not be required for the sale documents.

The USPS uses an Assignable Option to Purchase to solicit a contractor to construct the new post office. The KPB lease with the USPS is written to accomplish the Postal Service's methodology of marketing an option agreement. The USPS will assign the lease to its selected contractor who will construct and maintain the new Cooper Landing Post Office in accordance with the USPS design requirements. The contractor as assignee to the lease will exercise the option to purchase the site when the KPB receives its patent deed to the site from the State of Alaska.

The contractor/assignee relies on the residual value of the building and land at the termination of its relationship with the USPS to recoup part of its investment. It will be difficult for the USPS to market its Assignable Option to Purchase if the contractor/assignee cannot put the site to another productive use due to development and use restrictions placed on the site by the KPB.

Ordinance 2002-18 revokes the requirement contained in Section 3 of Ordinance 2001-37 that requires that the lease and sale documents must contain restrictions requiring that the land be used for a main post office for the Cooper Landing community. The ordinance also authorizes an exception pursuant to KPB 17.10.230 to the requirements of KPB Chapter 17.10.130(D) that conveyance instruments restrict the use of the site to its government classification.