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Kenai Peninsula Borough considers $2.1 million purchase of four Homer properties for South Kenai Peninsula Hospital service area
Summary
The borough introduced an ordinance to acquire four properties in Homer for $2.1 million plus $50,000 for due diligence to secure slope stability and expand hospital campus options; assembly members raised questions about funding source, slope stability, potential parking uses and the difference between purchase price and assessed values.
The Kenai Peninsula Borough finance committee on Aug. 19 heard discussion of an ordinance authorizing the acquisition and appropriation of $2,100,000 to buy four properties in Homer on behalf of the South Kenai Peninsula Hospital service area, with an additional $50,000 proposed for due diligence and closing costs.
Mayor Michicky presented the item, saying the purchase includes properties identified as Walls, Lazy Bulldogs, Pacific Premier and West Wing and that the South Peninsula Hospital (SPH) chief executive was available for questions. The mayor and staff told the committee the purchases would be funded from service-area (prepaid) funds and that SPH supports the plan at this time.
Assemblymembers asked detailed questions about the parcels. Concern focused on the property above the hospital (Pacific Premier/“premier” property) where steep slopes have prompted discussion about slope stability and development constraints. Aaron (borough land-management staff) said the primary goal of acquiring that property is to “secure the stability of the slope above it and to add kind of a protective buffer to the main campus of the hospital.” He added that any future development would require additional steps and public planning actions.
Members asked whether a nearby public right-of-way could be vacated to allow parking expansion on the eastern end of the parcel. Borough staff said a vacation would require a public planning process and that additional analysis would be needed to assess feasibility.
Several members raised questions about the proposed purchase prices compared with assessed values. Staff said the Walls property had a blind appraisal of $470,000 conducted to settle an estate and that the borough negotiated a purchase price of about $500,000. Staff explained that the West Wing parcel had already been converted to commercial use and was under lease to SPH for roughly $3,000 per month, producing approximately $36,000 in annual savings if purchased rather than leased.
Assemblymember Morton expressed concern that purchases reported to the assessor could affect local assessments; Adena, the borough assessor, explained the assessor’s process: sales are reported and trended over three years, single sales are not automatically applied, commercial and residential properties are treated differently, and the office excludes outlier sales from ratio studies when appropriate.
Mayor Michicky and staff also said the borough is seeking rights of first refusal on other adjacent parcels to secure a larger medical-district footprint for the hospital. Service-area board members had previously expressed discomfort with potential development on the steep parcel; staff said that the purchase’s initial goal is stabilization and protection of the hospital campus rather than immediate development.
No final action or vote was recorded in committee; staff and the mayor said additional due diligence and planning steps would follow if the assembly approves the ordinance at a later date.
Why this matters: acquiring land adjacent to a hospital can affect emergency access, future service delivery, capital planning and local property values; the proposed purchases use public service-area funds and prompted multiple questions about purpose, cost and development constraints.
