Assembly briefed on Port McKenzie farm parcels; borough weighing hold-vs.-sell options

Land management staff told the Matanuska-Susitna Borough Assembly on Dec. 17 that two farm parcels outside Port McKenzie purchased for a planned rail extension are active hay operations but face legal and financial constraints that complicate long-term borough ownership or sale.

The presentation by Suzanne Riley of the borough’s Land Management Division described the parcels as roughly 600 acres each, with houses and large pole barns, and hay permits that the borough has extended through the 2025 summer growing season. “The rent revenue for both properties and the hay production is a total of $34,000 of revenue in the calendar year 2024,” Riley said. She told the assembly the borough estimates about $24,000 in expenses over that period, producing roughly $10,000 in net cash flow excluding major repairs.

Why it matters: the parcels were acquired to preserve a transportation corridor for a proposed Port McKenzie rail extension. The corridor includes a 1,300-foot-wide strip (about 200 acres) where the borough already holds terminal reserve easements; outside that corridor the land remains under agricultural covenants that limit uses and subdivision. Any sale or subdivision will be constrained by those covenants and by the borough’s desire to preserve future rail options.

Key facts and options

- Acquisition and rail status: The farms were purchased in 2013 as part of land acquired for a rail extension project that has paused. Riley said 25 of 32 miles of rail embankment are complete, six of seven bridges are built, and an estimated $270 million would be needed to finish the project. The borough earlier established terminal reserve easements along the corridor.

- Parcel details: Each parcel is about 600 acres. Parcel 31 contains a rented 3,410-square-foot house, a 1,000-square-foot cabin and buildings used for hay storage. Parcel 32 includes a 3,728-square-foot house (tenant moving by month-end) and multiple pole barns; the parcel 32 hay permit covers roughly 397 acres. Riley said “the hay permit on parcel 31 is 282 acres.”

- Revenue and costs: Riley said the combined 2024 revenue from rents and hay production was $34,000, with estimated expenses of $24,000; that cash flow figure excludes potential major repairs (for example roof work) that would change the balance.

- Legal limits: Riley reviewed state-imposed agricultural covenants tied to the property. Under those covenants a patented parcel may be subdivided only once into no more than four parcels, each not smaller than 40 acres, and the use must remain agricultural. The borough has authority over the corridor easement that was condemned of certain covenants to allow transportation uses, but the remainder of the parcels remain subject to the ag covenants.

- Options under consideration: Land Management presented four broad approaches for Assembly direction: (1a) continue to hold and competitively lease both houses and the hay permit at market rate (single-tenant preferred for management simplicity); (1b) hold and winterize the houses while leasing hay only; (2a) sell all except the rail easement (which likely would realize a loss compared with original purchase); (2b) subdivide and sell home sites (subdividing once, into no-less-than-40-acre lots) while retaining the larger hay fields for future public use.

Financial context: Riley told the Assembly she did not include a purchase appraisal in the handout, but later in discussion said the borough paid roughly $2.8 million for one parcel and $2.3 million for the other in 2013; an appraisal completed last year valued the properties at about $1.3 million (Riley’s words). Manager Mitchell Brown added that selling now would likely mean realizing a loss compared to the original purchase price because the parcels had been acquired for a corridor that has not been completed.

Assembly and public reaction

Several assembly members said they want to get out of day-to-day landlord activities; Assemblymember McKee said, “I wanna get out of the landlord business.” Assemblymember Bernier and others urged staff to pursue options that reduce borough property-management workload while protecting the corridor. Manager Brown told the assembly he did not expect a decision that night but asked members to consider their preferences; he said staff would return with proposed legislation and seek a decision in the near future.

Public commenters and prospective tenants: Several residents and area stakeholders spoke during audience participation. Farmer and resident Trent Blankenship suggested long-term leases with minimum floors to make farming viable; he said a multi-year lease (for example, five years plus option) would let an operator invest in equipment and infrastructure. Rod Hansen of the North Lakes Community Council urged the assembly to consider timing, marketplace interest and public notification. Resident Joe Brown asked whether hay permits could be issued for multi-year terms; staff replied they would pursue five-year permits with options to extend as one feasible approach.

Next steps and staff requests

Land Management told the Assembly it will follow up on acquisition records and return with a request for direction within a few months. Riley said the borough will publish public notice for area residents before any sale and that staff will prepare options for the Assembly to consider, likely next summer if the Assembly elects to sell. Manager Brown reminded members that revenues from any sale would be applied back to the Port McKenzie project rather than to the borough general fund.

Ending

For now, the borough will continue managing the properties and the hay permits have been extended to cover the 2025 growing season while staff prepares options and financial context for the Assembly’s future decision.