City of Palmer agrees to pay feds $857,000

PALMER — A dispute with the U.S. Department of Justice over funds used at the city airport is approaching a settlement, with the city agreeing to shell out $857,000.

According to a city of Palmer press release, the issues at the airport date back 30 years and revolve around improvement funds the city got from the Federal Aviation Administration.

To get the grants, the city had to agree to a number of stipulations, one being that any land leased on airport property for non-aviation uses had to be leased at fair market value. The federal government took issue with three such leases, two of which the city leased to itself.

• An area used to store snow removed from the runways.

• The city’s fire training facility.

• The Mat-Su Borough School District’s nutrition center.

Mayor DeLena Johnson said that she could not comment beyond the press release.

“The settlement agreement, before I can really tell you anything more than what you have before you, has to be filed in federal court,” she said.

She said that could happen as early as this week, after which she will be able to speak more freely.

At the city council’s May 10 meeting, the council agreed to settle the case out of court. The press release was put out Thursday as the city’s response to inquiries about the settlement.

Deputy Mayor Richard Best said the council had decided to funnel all information about the case through the mayor’s office.

The press release cites city lawyers saying Palmer had a good chance of prevailing at trial but that it would cost $1 million in legal fees to fight it. A loss in court could potentially have cost the city $30 million, three times the amount the city got from the FAA.

The press release also quotes city manager Doug Griffin saying that the settlement won’t cause the city to have to restrict services.

“While the city’s reserves are below my comfort level, the city has more than adequate funds to continue normal operations and address any emergencies,” Griffith said in the press release.

Still, given that the city’s operating budget runs to $10 million, an $857,000 settlement is a big hit.

“The DOJ stated that they wanted the city of Palmer to ‘feel pain,’ and we are certainly feeling the pain. This is an example of overreaching by the Department of Justice,” Johnson said in the press release.

The amount of the settlement was arrived at after a look at how much the city could pay.

“The city has now provided the federal government every dollar we can. The city of Palmer just did not have the resources to continue to fight the Civil Division of the Justice Department. They have 700 attorneys and seemingly limitless resources,” Johnson said in the release.

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.