Assembly raises bar on natural gas LIDs

MAT-SU -- In choosing whether to continue offering residents a financing method for laying in natural gas that some say coerced people to put a lien on their title or to forego the offer altogether, the Mat-Su Borough Assembly took the middle road Tuesday.

For several years, the borough has offered property owners a deal that makes it easier to finance projects to receive natural gas at area homes. If property owners want to run gas to their homes, they obtain the agreement of more than half their affected neighbors, submit it to the borough and the issue gets forwarded to the assembly for a public hearing. Generally, if more than 50 percent of the property owners agree to bringing the service to the area, the measure passes.

The assembly has discussed the borough's commitment to finance natural gas projects through local improvement districts several times during the past few months, and recently considered requiring that every property owner affected by the LID approve of the project. Some assembly members have stated a reluctance to approve LIDs, as they see the practice as a way to subsidize Enstar, a private company.

"I have been the sole assembly member who has consistently voted against gas LIDs if they haven't reached 100-percent [approval]," Simpson said at the borough assembly meeting when it came up in April. "I hold to the principle that it is inherently coercive, and government does not have a role in funding a privately-held organization."

Other assembly members, at that meeting, voiced their agreement with Simpson's stance, but said a 100-percent approval rating would likely never happen, especially if any of the lots involved were owned by the local, state or federal government. Governmental bodies generally don't respond to inquiries about LIDs, and those non-votes count as a "no" vote when the borough tallies support for the project.

The ordinance was postponed indefinitely in April, and assembly members requested borough staff to come back with a different proposal. After several discussions with lending institutions, Enstar and other municipalities, Borough Finance Director Tammy Clayton said her best recommendation was to raise the approval rating bar.

"We went to Enstar, asking them to finance their own [extensions]," Clayton said. "Their legal counsel said Enstar cannot extend credit to new customers."

Clayton said the borough could issue bonds, but the bond issuance costs would make the process unnecessarily more expensive to property owners. Other scenarios were considered, Clayton said, but a look at other municipalities showed the best way to go may be to set the percentage at 75 percent to reduce the possibility that people are coerced into having to pay additional money for a service they may or may not be able to afford -- and thereby put a lien against their homes.

Assembly member Kelly Lankford Ladere asked whether the Kenai Peninsula Borough, that currently uses the 75-percent approval rating, had a track record of success with the higher percentage.

"The bottom line is, you'll have fewer gas LIDs with a higher percentage rate," Borough Manager John Duffy said.

Ron Eggleston, during the public hearing, told assembly members it would be damaging to Mat-Su's burgeoning construction industry to reduce the amount of gas LIDs issued by the borough. As a real estate agent, he said, he knows that whether gas is hooked up to a property is one of the first questions prospective homeowners ask.

"Whether it is 50, 60, 70 or 100 [percent] you're going to have someone who's dissatisfied," Eggleston said. "A few people out there are being forced into doing this, but a lot of these people couldn't afford to get it in on their own. If it isn't broken, don't fix it."

Some who testified said the measure didn't go far enough.

"While this ordinance is better than nothing, it doesn't go far enough," Ken Slauson said. He took umbrage with Enstar's reply that it couldn't extend credit to new customers to lay gas lines, stating that Enstar was, in effect, asking the borough to extend credit to it for further expansion of its business.

Former assembly member and frequent speaker before the assembly, Jay Nolfi said gas LIDs was one of her favorite topics.

"I would highly recommend and suggest that you do, do away with LIDs," Nolfi said. "They are not a necessary way of obtaining natural gas. Once again, I have never approved and will not approve of the borough subsidizing [Enstar]."

Simpson asked Borough attorney Teresa Williams what would happen if the borough stopped offering gas LIDs. According to state statute 29.46.020, she said, the state can require that a local municipality offer special assessments, with the approval rating of affected property owners set at more than 50 percent.

"If we don't have rules, it defaults to the state statute, which is 50 percent," Williams said.

Assembly member Mary Kvalheim, who had voiced opposition to the process of allowing the gas LIDs previously, amended the motion, changing the requirement from 75 percent to 99 percent.

"I can't support private enterprise making money at the expense of people's homes," Kvalheim said.

Kvalheim withdrew the motion when it was pointed out that such a drastic approval rating would prevent neighborhoods where the project was strongly supported from obtaining gas line extensions with borough financing.

Although some assembly members expressed caution that setting the approval bar too high may put a damper on new housing development at a time when the construction industry is one of the borough's largest employers, the motion passed by a vote of six to one, with assembly member Jim Colver opposed.

The new approval level takes effect immediately, but will not change those LIDs that have already been approved.