The Seward Phoenix Log - News of the Eastern Kenai Peninsula since 1966

By Fern Greenbank
LOG Editor 

Spring Creek land transfer deal hits snag with city

 


The city of Seward and the state Department of Natural Resources Division of Law are at an impasse with regard to the title for the city land on which the Spring Creek Correctional Facility sits. The city says it can’t transfer clear title to the state because the state is now insisting the reversionary clause is not a requirement for clear title.

“It is the city’s position that it is ready and willing to transfer title to the state with the reversionary clause that takes effect if Spring Creek Correctional Facility was to ever cease being operated as a corrections facility,” said William Earnhart, the city’s attorney.

Earnhart said the reversionary clause has been in effect since 1984 when the Kenai Peninsula Borough owned the land on which the prison now operates. When the Borough signed a QuitClaim Deed handing over title of the land to the city of Seward, there was a reversionary clause already in place between the borough and the State Department of Natural Resources (DNR).

At the city council meeting held Monday, Aug. 18, the city attorney was asked by council about the current state of negotiations with the state over the prison land. Earnhart briefed the council, explaining that the assistant district attorney with the Department of Natural Resources, Colleen Moore, is alleging the city cannot assert a reversionary clause that would relinquish the state’s rights to the land if it does not operate a prison.

“We think she’s wrong,” said Earnhart. “We are trying to get movement, but we haven’t had success.”

In a statement released Monday, spokesperson Cari Mills, also an assistant district attorney with the DNR, confirms the state is currently negotiating with the city of Seward to resolve a long-standing issue with respect to the title to the land on which the Spring Creek Correctional Facility sits, and some improvements placed on the land by the city.

“The city was obligated to convey the land to the state after the state paid off the financing used to build the prison facility, which financing was paid off in 2006, yet the city has not yet signed a written deed to the state,” the statement reads. “The state cannot comment further on the negotiations, except to say that the state has never requested that an existing reversionary clause be deleted. Further, the state currently has no intention of discontinuing operation of the Spring Creek Facility in its current location.”

The DNR statement contradicts documentary evidence, however. It is the term “currently” that concerns city officials.

According to public documents, in 1984 when the Kenai Peninsula Borough agreed to deed approximately 324 acres to the city of Seward to allow for the building of a prison by the state, the borough retained an interest in the property in the event the state did not construct the prison or use the land for that purpose.

In 1985, the legislature failed to fund the construction of the prison, so the city agreed to finance it with bonds. The city agreed to hand over clear title in the form of a QuitClaim Deed when the bond was repaid. The bond was retired in 2006. In 2013 the Borough decided to transfer its reversionary interest to the city because the city needed to re-plat the property to exclude the area where public utilities had been installed and are operated by the city.

“A reversionary interest has always been contemplated by all parties,” said Earnhart. “Until 2013 when an objection was made.”

In a letter written by Brent Goodrum, director of the division of Mining Land and Water with the Department of Natural Resources, he says the reversion clause could be “triggered” if the city re-platted to maintain ownership over part of the property in the deed. He said in 2008, then director of DNR Division of Mining Land and Water Dick Mylius, asked that the borough’s reversion clause be removed.

“Unfortunately the matter was never seriously discussed and has been left unresolved since then,” he wrote.

It’s a lot of jostling of a reversion clause, but the end result is that the state does not want there to be one and the city says there must be one. All landowners have a right to include a reversion clause in the sale or transfer of land it owns and one has been in place for decades related to the prison property.

“If, for whatever reason, the state no longer operated a prison on the property, the city would be left to deal with a derelict building and all the liabilities that could ensue, including potentially hazardous materials,” said Earnhart.

When the Kenai Peninsula Borough determined it was best to transfer the reversion clause to the city in December of 2013, there was no objection raised by the DNR.

“The city intends to retain the portion of the parcel that contains its municipal facilities,” wrote Keith Snarey, land management agent for the borough. “The release of the borough’s use restriction and reversionary interest would allow the city and state to pursue their management intents. The proposed method of releasing the deed restriction and reversionary interest in two parts will allow the city of Seward to subdivide the parcel and continue its established municipal uses while retaining a right of reversion upon conveying the correctional facility site to the state.”

“The city needs to protect itself, that’s all,” says Earnhart.

QuitClaim Deeds passing from the borough to the city have been signed off by the DNR in the past and Assistant City Manager Ron Long said so far, the Department of Corrections which operates the prison and the Department of Transportation, which has a vested interest in public safety, have expressed no objection to the reversion clause.

“Currently the state is operating the prison without a lease and without title to the property,” said Long. “Technically, it needs approval for use by the City Council until such time as the state has the title.”

Long and Earnhart both say they have confidence the issue will eventually be resolved. If negotiations are not successful, a judge would have to decide which interpretation of the law is correct and just.

 

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