Homer and State Argue Gas Assessments

Nov 4, 2015

The City of Homer wants the Alaska Department of Transportation and Public Facilities to pay a little more than $26,000 in natural gas assessments for eight state owned plots of land. DOT refuses. The city and DOT are negotiating a solution.

Natural gas seems to be the fossil fuel that can do no wrong. It has boomed in popularity not just in Alaska but the rest of the U.S. and countries across the globe. It’s relatively cheap and clean. Those benefits were not lost on the Homer City Council in 2011 when they started down the path to a gas transition.

The city used a legislative grant to pay for a pipeline to bring the gas from Anchor Point into Homer and Kachemak City, according to the Homer Department of Public Works. But, the city borrowed over $12 million from the Kenai Peninsula Borough to pay for the 73 mile distribution system used to deliver the gas to individual properties.

“As part of that project the city decided to create a very large all-city special assessment district that assessed each property equally for putting natural gas in all the streets and right of ways in Homer,” said Homer City Manager Katie Koester.

The assessments were set aside by the city to pay its debt to the borough. City Manager Katie Koester says DOT has properties inside that special assessment district.

“We’re engaged in conversations right now with DOT about those properties and getting payment from them. [We’re] letting them know that just because it’s a state property doesn’t mean it’s excluded from the district,” said Koester.

Koester says only  properties that can't be developed are excluded from the district and on that DOT agrees.

Jill Reese with the Department of Transportation says the properties in question are what are known as Right of Way.

“Whenever we expand a road sometimes we don’t have enough of an easement or an owned property that the road already traverses in order to make it longer or wider. Sometimes we have to go buy extra property from private individuals in order to do that,” said Reese.

Once those properties are purchased they are labeled Right of Ways and state statute forbids developing them.

“It’s like any ditch or anything along the road. You can’t develop it,” said Reese. “It’s not subject to the assessment since there’s no opportunity to develop the property and take advantage of the gas line.”

But, Koester says the properties she’s talking about are developable and right now the city is trying to explain that to the agency. 

“A lot of these properties are benefited properties. They have facilities on them and structures on them. So right now I think it’s really just a matter of engaging with DOT and educating them about the types of properties,” said Koester.

She says the city has already exempted DOT properties that she calls truly undevelopable.

“Only a road is on them or there would be no ability to build a structure,” said Koester.

She adds that other state entities have paid assessments on their lots. She is confident the city and DOT will find a solution to their disagreement.

Koester also says it’s important for the public to know everyone with properties inside the district is being treated to the same standard.