Decision clears path for land swap, city park

ANCHORAGE — A Supreme Court decision published Friday clears the way for the creation of a greenbelt park in Wasilla.

City officials in 2011 had sought to trade city-owned land near the end of Riley Street for a parcel near where Cottonwood Creek flows out of Wasilla Lake. Wasilla Lake Church of the Nazarene officials had offered 2.4 acres on two lots along the creek in exchange for 17.34 acres of city-owned land near the end of Riley Street, which the city would subdivide. The City Council approved the swap in 2011.

For now, city officials say they are awaiting a legal review to ensure the court’s decision will allow them to begin construction on a nature walk park by the end of the year. Full construction of the park, which could ultimately involve picnic tables footbridges, and a half-mile pedestrian trail, could take as long as two or three years, officials said.

“I’m hoping by the end of the summer, we’re staring to put a park in there,” said Mayor Bert Cottle.

City and church officials agreed to the swap — church officials had been considering relocating the church since 2004, according to court documents — at which point Castle Properties Inc., a Fairbanks-based real-estate agency that owned a “right of first refusal” on the two lots the church was trading, offered $154,000 to buy them.

The church refused and continued with the land swap, and the real estate company sued in Superior Court to block the sale. When Judge Eric Smith ruled the church had not violated the right of first refusal, they appealed the decision to the Supreme Court.

A developer first purchased two of five lots in the Lakebrook Subdivision in 1986 as a potential site for a retail development, according to court documents. Then-pastor John Vaughn and his wife owned lot 5, and the church owned lots 3 and 4. The 1986 purchaser, a trust owned by Gary Baugh, thought the combined lots would make “an attractive piece of real estate for a developer,” according to the court documents. The trust bought lots 1 and 2, and planned to buy the remaining lots.

The church ultimately agreed to sell a right of first refusal for lots south Palmer-Wasilla Highway along with the right of first refusal on Lots 3 and 4, and Vaughn sold lot 5 to Baugh’s trust for $310,000.

Castle Properties Inc. bought all the lots from the trust in 2002, and inherited the right of first refusal for lots 3 and 4.

In 2004, church officials began discussing relocation to a more suitable site elsewhere in the Valley. The church put lots 3 and 4 up for sale for $600,000 in 2010. Castle made two offers on the property, one for $265,000, and the other for $300,000, and the church refused both of them through a real estate agent. Those offers made no mention of the right of first refusal, according to court documents.

On May 18, 2011, the real estate agency sent notice to the church that they were exercising their right of first refusal. Their new offer, $153,000, was less than a third of the church’s asking price. According to borough property records, the two lots have been appraised at $291,000 since 2013, though it should be noted that property tax assessments rarely reflect a particular property’s market value.

Church documents concerning the property holdings were “a mess,” church officials testified during the Superior Court trial.

“There was testimony at trial suggesting that the then-current Church leaders were unaware of Castle Properties’ right of first refusal until this document (a notice exercising first refusal) was recorded,” according to the court ruling.

On May 27, 2011, agency officials sent church officials a letter saying a “real estate broker has confirmed that this is the upper end of fair market value for the Trade Land,” according to the decision. The company then requested a closing date of June 7, 2011, unless “alternative arrangements” had been made. Church officials wrote back that the right of first refusal was unenforceable, and that they intended to close the deal Aug. 11, 2011. The company sued Aug. 8, 2011.

Smith and the Supreme Court justices also said the city had followed public notice procedures.

The company argued that the church had deprived it of the opportunity to match the city’s offer. Justices disagreed.

“Rather than attempting to slow down the City’s consideration of the proposed land exchange, Castle Properties instead took the time to craft a formal offer with a deadline,” the decision reads.

“Castle properties itself urged that ‘time is of the essence’ and requested a closing by June 7, 2011,” the decision continues.

Castle also argued that the church had acted in bad faith by intentionally refusing to sell in favor of the land swap.

In the May 27, 2011, letter, Castle’s attorney proposed a “win/win” solution, where the company would buy the land from the church at the offered rate, the church would receive the Riley Avenue land, and the city would get fair market value for land.

“It appears that the City of Wasilla is not interested in the cash payment you proposed in your letter,” church officials responded.

A church-hired appraiser valued the 17-acre parcel at about $250,000. That would have left approximately $100,000 for church officials to come up with, and the church had already had difficulty finding affordable land, according to court documents.

The park would follow Cottonwood Creek from the Parks Highway to the Palmer-Wasilla Highway.