City Prepares for Potential Lawsuit Over Assessment District


     Many of Homer’s condo owners aren’t happy with how the city is assessing their lots as part of the Homer Special Assessment District – or HSAD. So city officials are seeking a second legal opinion. The issue has been a contentious one since officials began discussing the HSAD’s creation to fund construction for a natural gas trunk line into town.

     Condo owners have been the most vocal opponents of the HSAD, which was unanimously approved by the Homer City Council last week. Owners like Ken Castner and David Duke spoke several times to the council during public hearings about what they considered to be an unfair situation. Duke is the president of the Baywatch Condominium Association. He said during a meeting last month that the financial burden for his building would be nearly $40,000. Castner is a one-third owner of the Kachemak Title building. And he expects to pay about $25,000. 

     During last week’s city council meeting, Duke mentioned a letter he submitted to the city from representatives of the seven condominium associations in Homer. He said the letter requested City Attorney Thomas Klinkner reconsider his interpretation of the law. In Chapter 34 of Alaska’s property code, the law states that a condo with an individual owner “constitutes for all purposes a separate parcel of real estate.”

     “I have been talking with staff and people who have specific knowledge of special assessments for utilities within Alaska,” Duke said. “I cannot find one staff person or expert who is levying the special assessment the way Homer is. In fact, when I indicated the way the City of Homer was doing this assessment a number of them were surprised that a lot could be assessed multiple times.”

     There is no exact science to creating a special assessment district. In fact, under state law “municipalities may design their own laws for the creation of a special assessment district and levying the assessments.” But there is a basic structure like required public hearings, the amount of objections needed before the plan can be scrapped and the consequences of not paying the assessed fee.

     Duke said Anchorage and Juneau’s assessment rules are what he calls more “fair”. Calls to the Alaska Department of Law were not returned in time for this story. 

     State Assessor Steve Van Sant declined a recorded interview, but mentioned the main argument condo owners could use would be an equitability issue. He said owners could argue assessment translates into a benefit for the property, not for the owner itself and a multi-unit condo could be considered the same as an apartment. Though, Van Sant said that since the city has such broad authority over the special assessment district that the argument may not be enough. 

     Some of the condo owners mentioned they may be seeking the court’s opinion on the matter. That prompted City Council member Beau Burgess to request the city seek a second legal opinion because he said “litigation seems likely.” City Attorney Thomas Klinkner agreed with Burgess.

     “I would welcome that. I, of course, assume that the opinion will be consistent with what I’ve been telling you. If it’s not, then that’s something you need to know too. Cost? I can’t really speak for whomever you may contact to hire to do that, but I suspect it should be under $1,000. And while it may not forestall litigation, it may satisfy at least some people that the matter’s been resolved correctly,” Klinkner said.

     City Manager Walt Wrede said he plans to hire an attorney this week that will provide an independent second opinion. He said the attorney will have experience in real estate and condo law and he already has a few names on the list.