MEMORANDUM

TO: William Popp, Assembly President

Members, Kenai Peninsula Borough Assembly

FROM: Jack Brown, Assembly Member

Drew Scalzi, Assembly Member

DATE: May 16, 2000

SUBJECT: Ordinance 2000-18, North Pacific Volcano Learning Center Conveyance

Following are proposed amendments to Ordinance 2000-18 which, if enacted, would require the North Pacific Volcano Learning Center to pay $315,000 over 25 years to the borough for purchasing the subject property. Payment would be secured by a deed of trust in favor of the borough. The payment schedule would be one dollar per year for the first five years with the remaining twenty years subject to a normal amortization schedule and with interest calculated at two percentage points above prime in accordance with the Kenai Peninsula Borough Code. Also, the final Whereas is proposed for deletion as the property is not currently classified.

Amend the title as follows:

AN ORDINANCE AUTHORIZING THE CONVEYANCE OF TRACT B, GLUD SUBDIVISION, IN THE ANCHOR POINT AREA TO THE NORTH PACIFIC VOLCANO LEARNING CENTER, INC. FOR [LESS THAN] FAIR MARKET VALUE

Amend the sixth Whereas as follows:

WHEREAS, conveying the land to NPVLC serves a public purpose in that it will promote the health, safety, and general welfare of the public by increasing knowledge about volcanoes, by providing economic benefits through new jobs and attracting tourism to the borough, [and] by providing a trail system and protection of the Stariski Creek estuary, and because the borough will recover its cost for the land; and

Amend the ninth Whereas as follows:

[WHEREAS, the subject property is classified as recreational property;]

Amend Section 1 as follows:

SECTION 1. That the assembly finds that selling this land to the NPVLC for other than fair market value is in the best public interest[. This finding is based on], and pursuant to KPB 17.10.230, hereby authorizes exceptions to KPB 17.10.080 (requiring classification prior to transfer), KPB 17.10.120 (terms of a land sale), and the provisions of KPB Chapter 19.30 (economic development) based upon the following findings of fact pursuant to KPB 17.10.230:

1. Special circumstances or conditions exist as

A. NPVLC is a nonprofit corporation formed to construct and operate a volcano learning center in the Kenai Peninsula Borough for the benefit of the general public.

B. The subject property was specifically purchased by the borough (prior to the enactment of KPB Chapter 19.30) because it is a good location for the proposed volcano learning center.

C. As the intended purpose is for this use, the classification process would delay the transfer and is unnecessary.

2. That the exception is necessary for the preservation and enjoyment of a substantial property right and is the most practical manner of complying with the intent of the code because:

[C]A. The project would not proceed if the borough were to require standard payment terms for this property at this time as the NPVLC will use its interest in this land to assist it in obtaining grant funds necessary to construct the facility. Once the facility is constructed, it then plans to generate revenues or raise additional contributions that will enable it to pay for the property. [of the full fair market value at this time for the land.]

[D]B. NPVLC needs title to this property in order to raise grant funds necessary to construct the facility.

3. That granting these exceptions will not be detrimental to the public welfare or injurious to other property in the area because:

[E]A. Construction of a trail and protection for the Stariski Creek estuary will benefit the general public by conserving this critical habitat area for the future.

[F]B. Construction of NPVLC and associated facilities on this property will improve the economy of the Kenai Peninsula Borough by providing jobs for persons employed on the property and by companies providing goods and services for the center, and by further promoting tourism in the Kenai Peninsula Borough. Tourism currently accounts for a significant portion of the Kenai Peninsula Borough's economy.

Amend Section 3 as follows:

SECTION 3. The sale shall be for the sum of [one dollar] $315,000 plus interest accruing from the date of sale at the prime rate on the date of sale plus 2 percent. The payments for the first five years shall be $1 per year; the balance remaining shall be amortized over a period not to exceed 20 years with payments to be in equal installments monthly, semi-annually, or yearly, with the first payment due 6 years from the date of sale. The period for total payment shall be 25 years. The sale shall be secured by a first deed of trust against the property provided that the administration may subordinate that position for construction funding purposes.

The purchaser shall be responsible for acquiring title insurance and shall pay all fees associated with this sale including recording fees, closing costs, escrow setup fees, annual escrow fees, collection fees, surveying and platting fees to the extent applicable, and other associated fees for this sale. All other applicable terms and conditions of KPB Chapter 17.10 shall apply to this sale unless inconsistent with this ordinance.

Amend Section 4 as follows:

SECTION 4. The transfer of this property shall be subject to the following additional conditions:

1. The land shall be used solely for the construction, operation, and development of a volcano learning center, for site development to support the volcano learning center and protect the Stariski Creek estuary, for trails throughout the property which may be used by the public, and other associated public purposes. If the property is not primarily used for these public purposes for a continuous period of one year, [then title to the property shall automatically revert to] the Kenai Peninsula Borough may foreclose the deed of trust for failure to comply with this condition unless otherwise agreed upon in writing by the borough and NPVLC.

2. The transfer of this property to NPVLC shall also be subject to the condition that [ownership of the property shall automatically revert to] the Kenai Peninsula Borough may foreclose the deed of trust in if, within five years of the date of transfer to NPVLC, NPVLC has failed to secure $5 million in funds committed for the construction, operation, and development relating to the development of the volcano learning center, the Stariski Creek estuary, and related site development work.

[3. NPVLC shall be responsible for all fees associated with this transfer which may include recording fees, closing fees, escrow fees, and any other associated fees.]

3. The deed shall be subject to restrictions ordinarily associated with a transfer of land classified as recreational.

4. At [any] such time[,] NPVLC shall pay in full the $315,000 plus all costs, interests, and fees, then the conditions contained in this section shall no longer apply, except for the deed restrictions associated with a recreational use. [may purchase the subject property for the fair market value of the land at the time of purchase, upon such terms as may be agreed upon in writing by the borough and the NPVLC. The conditions on title contained in Section 4 of this ordinance shall no longer apply if the property is purchased for fair market value.]