State seeks foreclosure on Mat-Maid property

Fronti-rsman reporter

PALMER -- The fate of the historic Mat-Maid warehouse building at 325 E. Dahlia Street in downtown Palmer is now in the hands of the state of Alaska. The state is concerned both with the current owners' failure to utilize the property and their laxity in paying existing fees on the lot.

A new authorization from the Palmer City Council assigns the state the right to collect the back taxes and interest on the property from Heritage Properties LLC, which currently holds title to the building. The state plans to foreclose on the property, and, if successful, would regain title to the land and begin putting it to productive use, in addition to paying Palmer the fees. If the state is unsuccessful, Heritage would keep the title, but still be forced to pay the back fees on the property.

The council voted unanimously in favor of the authorization. This action grants Tom Healy, Palmer city manager, the authority to transfer the responsibility for extracting the back taxes, including interest, from Heritage Properties to the state, which has better tools and more resources to handle the case.

The property has had unpaid back taxes weighing upon it for quite some time now. In December 2000, when the property was signed over to Heritage, its total indebtedness was roughly $70,000, and interest has been accruing on this money since December 2001 at a rate of 7.53 percent. This translates to a total of more than $80,000.

The deed of trust signed by Heritage on Dec. 12, 2000, stipulated, among other things, that the company pay "all taxes and assessments affecting said property; when due, all encumbrances charges and liens, with interest, on said property or any part thereof."

Healy said the city had not pursued any special measures to extract this money from Heritage, since the payment of back taxes and fees is recognized to be a legal responsibility. Healy mentioned that there were some negotiations between Heritage and the city to exchange Heritage's ownership of the city water tower for partial or full alleviation of fees on the property in the years following the transfer, but that agreement had never been reached.

According to John Torgerson for the Department of Natural Resources' Board of Agriculture and Conservation, the state is contemplating suing Heritage for breach of contract, including violation of historical covenants.

"The state's efforts to work with Heritage Properties LLC have not borne fruit," Torgerson wrote in a letter to the Palmer City Council. Torgerson mentioned that his office had sent several letters to Heritage Properties, but was less than pleased with the results.

"To the best of the state's knowledge, no physical progress was made on the site prior to the fire and none has been made since," Torgerson's letter continued, "unless we count the demolition of the burned structure as progress."

In February 2003, the Cannery and Creamery building adjoining the warehouse was destroyed by a fire that also caused minor damage to the warehouse. The site of the creamery was bulldozed and covered with gravel by Heritage.

Torgerson believes that the state's action in this manner is primarily for the benefit of Palmer residents concerned with the property.

"We don't want to leave the people in Palmer on the hook," Torgerson said. "We don't want to see an empty lot there for the rest of our lives."

Torgerson's sentiments concerning Heritage's lack of action are shared by many Palmer residents, according to Healy.

"There's been a lot of frustration on the part of the citizens of Palmer," Healy said in an interview Friday.

Though he said that he would like to avoid a court case and thinks that it's too early to tell for sure whether or not the issue will be resolved in this manner, Torgerson said the state is ready to proceed in any capacity.

"The ball's in our court now, and we're gonna be pitching," he said.

Contact Daniel Spoth at daniel.spoth@frontiersman.com.