• City manager reports end costs could be $1 million less than projected; Condo owners could soon see relief
By Naomi Klouda
Costs for constructing the Homer area natural gasline are coming in under cost, a piece of good news for each property owner who could be paying less when the assessment bills go out in March.
City Manager Walt Wrede made this announcement in his report to the Homer City Council Monday night. An estimated $12.1 million project is costing – as of this date – about $10.6 million. All the invoices and bills for the gasline aren’t paid yet, but that means the estimated $3,283 per lot could ratchet down, Wrede said.
“The City cannot say enough about the quality of the work performed by the contractors so far,” Wrede told the council. “Considering the size, scope and complexity of this project, it is simply amazing that we have not experienced more problems and complaints … We’re pretty happy.”
This news indirectly also potentially lightens the load on condo assessments. The city anticipated a $340,000 shortfall to pay for the gasline if condos areassessed collectively rather than as single units. The city draws closer to finding a solution for condo owners who feel they were unfairly assessed for natural gas hook ups, Wrede said at Monday night’s city council meeting.
While apartment buildings are to be charged for a single hook-up fee of $3,283 to get natural gas flowing to all units, condo owners were assessed per unit. But the city’s plan was contested in court by part-owner of the Kachemak Bay Title building, Ken Castner. He won in his lawsuit against the City of Homer in January, but the city has not yet made a decision on how to look at the 118 properties since many vary in size.
“It’s complicated,” Councilman Beau Burgess told the audience at Monday’s council meeting. “Many condo owners feel like (the) Castner (lawsuit decision) is a definitive ruling on how we should treat condominiums. But there are multiple components.”
Alaska Superior Court Judge Charles Huguelet ordered the city to re-evaluate its assessment for condo owners, an action that is currently underway, City Manager Walt Wrede told the council at Monday night’s meeting. But the Castner ruling didn’t leave a clear path for sorting out the inequities, he has said.
“Condo assessments could move up sooner than Sept. 8 meeting,” Wrede said. “I will work to make recommendations by the end of August. We want to make it very public what the council is thinking. If there are objections, then the proper time is when the final assessment roll is out there for public comment. That would be after the first of the year, before assessments are mailed out in March 2015.”
No property owner has yet received its bill, and therefore no customer has paid yet. The schedule for calculating assessments will be based on construction completion costs, Wrede said. “Let’s take our time and do it right. We will still have the assessments out in the first quarter of 2015, as planned.”
Condo owner Jim Lavrakas told the council the lot itself should determine how the hookup is assessed.
“If it’s a single service to a lot, then that is what the assessment should be. I understand the complicated issues that I didn’t understand before. Some are not as simple as a four-plex with a single line,” Lavrakas said. “There are multi buildings on a large lot – (but) I hope you consider the judge’s ruling and be as fair as you can be.”
Condo owner Mesille Mershon told the council in a letter that she doesn’t understand why there is still debate on the topic in light of Huguelet’s ruling. He had noted the inequity in “lots or parcels that have multiple habitable units and leases were provided the same access to the gas line and were charged only one assessment charge per lot or parcels,” she quoted from the decision.
Mershon would like the city to treat the 17-unit condo building she lives in as it does other multi-dwelling buildings. These are charged a single assessment.
Mary Ann Fell, condo owner at the Landings on the Homer Spit, requested the city to notify condo owners before the assessments go out in order to allow them to “prepare legally if necessary.” Over the past few months, condo owners warned the city that they would launch more lawsuits if the city doesn’t follow Judge Huguelet’s orders.
How the city decides its path for treating condos will be part of the larger assessment picture for the entire Homer Area Natural Gasline project. Here is the tentative schedule set out by Wrede:
•The entire project’s final costs need to be known in order to calculate each property’s portion of the cost. That target date is by the end of September.
•The council decision on how to treat condos is to be voted on Sept. 8.
•In late October, the assessment rolls are to be introduced.
•Public testimony takes place November-January. The council will need to approve assessments after public input.
• Property assessments go out in the mail in March.
As of the city’s last meeting with Enstar, only about four miles were left to install out of the 74 miles starting out the season, Wrede said. About 1,000 homes have hook ups, and 800-900 are already receiving gas.
“We’re being cautiously optimistic that the budget will come in under projections,” Wrede said. “That means assessments will be lower.”
The city set a ceiling of $12.2 million for the gasline construction project, which was not to exceed that amount. As of the end of June, costs came in at $10.6 million.
“The number of lots served is still a moving target. Some were exempted. There’s about 17,000 feet of line that will not be built,” Wrede said, after a shorter way was found or a better way to serve people. In some cases, Enstar found there was no development on forested lots and decided to bypass those lots.
Since there are fewer lots to assess, there will be less revenue but that also means lower construction costs, Wrede said. “(The) 17,000 feet of pipe not being installed means that the project costs may have been reduced by up to $500,000,” Wrede said. “Finally, the condo issue will have to be resolved and we are working on that now…. In short, we are cautiously optimistic at this time, that the final project costs will be under budget.”
What that means for property assesments will not be known until we have final project costs and a final number of properties to be tallied, Wrede said.
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