Castner Wins Lawsuit Over Condo Assessments

     A Kenai Superior Court judge sided with Ken Castner in a lawsuit against the City of Homer. He filed papers last March after taking issue with the way city officials were assessing condos as part of the Homer Special Assessment District to cover costs of the natural gas project.

      “I’m happy. He heard the argument and saw the value of the argument,” Castner said.

     It’s no surprise he’s happy with the judge’s ruling. According to Judge Charles Huguelet’s opinion, The Kachemak Bay Title building was assessed nine times bringing its total bill close to $30,000. Castner is part owner of the building. The city is charging $3,200 per lot within the boundaries of the HSAD. 

     That didn’t sit well with Castner because each condo inside his building is considered a single lot. That’s according to an interpretation of an Alaska State Statute by City Attorney Thomas Klinkner and two other legal opinions the city received.

     Castner’s main argument from the beginning was the city’s assessment rules disproportionally affected him as part owner of the Kachemak Bay Title building. 

     “The courts give city’s a huge amount of leeway as to how they go about doing these things. So the city could have chosen many different methods to assess the benefits of natural gas being installed in the city. But what they can’t do is do disproportional assessment. So if you had a huge amount of benefit they could charge you more. But you if you have the same benefit, they can’t charge you more. And that’s where I was. I’m getting the same benefit as anybody else,” Castner said.

     Judge Huguelet wrote the city’s assessment rules for condos “imposed an arbitrary, unreasonable and inequitable burden” on Castner and other condo owners. Huguelet pointed out in his opinion the city assessed similarly situated buildings like apartments and the hospital as a single lot. He called that “disproportionate.” 

     Huguelet also wrote city officials did not comply with Alaska state statute when it came to correcting “errors or inequalities” in the assessment rolls after hearing testimony from condo owners in town.  In the opinion, he says it’s “unreasonable” for the Kachemak Bay Title building’s assessment to be nine times higher for the same single two-inch pipe that is connected to every other building to receive natural gas. 

     City Manager Walt Wrede said the city council considered many options for the assessment district and decided the “per lot” choice was best and most fair. Wrede said he’s surprised by the judge’s ruling.

     “I think shocked is really the word. We felt like we did our research. We got multiple legal opinions. Two of the attorneys the council paid were experts in condominium law. In fact, they both represented condominium associations,” he said.

      Wrede said the city council will be getting together with the city attorney within the next week or so to look over the decision.

     “We’ll take a look at the ruling. We’ll take a look at what the judge based his ruling on. We think the judge got it wrong,” he said.

     If the ruling stands, the council will need to re-examine the assessment district. Wrede said there are 113 condos that would be affected in this situation. 

     “We would only charge an assessment to the properties there. I think that’s about 16 properties, which means the net loss is about 102. So 102 assessments times $3,200… is over $300,000,” Wrede said.

     He said then the council will have to decide what to do next: have the city eat the costs and possibly cover that amount with reserve funds. Or spread the costs around to other lot owners within the HSAD. 

     “I can imagine that the other property owners are not going to be happy about that.”

     Wrede said that could increase individual lot assessments by about $100 more.