A subcommittee meeting Friday scheduled for a “good faith” negotiation between the City and Borough of Juneau and Goldbelt Incorporated over a property value dispute ended with officials from both sides agreeing to a private meeting for a later, unspecified date.
The sides are at odds over how much the land occupied by the Mount Roberts Tramway is actually worth, and their differences of opinion equate to an approximately $200,000 difference in annual rent for the land.
After Friday’s meeting, Juneau Port Director Carl Uchytil said the process would be expedited if the two sides met behind closed doors before engaging in a public debate.
“When they are able to talk freely and with trust, things move more appropriately,” Uchytil said. “In formal settings of parliamentary fashion you lose something.”
He added that the private conversation’s findings would still have to be debated publicly before the Docks and Harbors Board and, possibly, the Assembly.
“I see this as not much different than staff working (and) then making recommendations to the body,” said Tom Donek, a member of the subcommittee and vice-chair of the Docks and Harbors Board.
Both sides have been working to resolve the dispute for the past two years — a fact that has led to Goldbelt calling for an update to the lease, which currently runs through 2030. In particular, Goldbelt wants to see the lease rate renewal time frame changed from three years to five, said Goldbelt CEO Bob Loiselle.
“The more often you have to do appraisals — the more time and money wasted,” Loiselle said. “There’s not a lot to gain from every three years, we could easily do five and neither side would be disadvantaged.”
Altering the lease would require Assembly approval, and that may be a tough sell, Uchytil said.
“You can’t just say the leasor and the leasee want to change it,” he said. “A responsible assemblyman is going to say, ‘Tell me why this isn’t good for the city.’”
The crux of the discord comes from the appraised unimproved value of the property. Goldbelt believes it should be valued at about $1.3 million, and the city’s valuation is around $3.3 million.
The current lease agreement for the property calls for an annual rent that is 10 percent of the appraised unimproved land value, so about $200,000 annually is at stake, Uchytil said.
The issue’s resolution is being delayed again due to a recent CBJ purchase of land of the same classification and in the same area as the 10,000-square-foot tramway lot.
The purchase in question is a 7,200-square-foot tidelands parcel that the city bought from Archipelago Properties in September for $298,000.
Goldbelt will be getting an appraisal done of that property in the near future because its appraised value may change Goldbelt’s estimate on the tramway’s property value, Loiselle said.
The value of any improvements to the land — including everything from the pilings under the deck to the tram itself — is not a factor in the appraisals, but the air space above the property, which allows for the tram to ascend the mountain, is.
For tax purposes over the past two years, the site was valued at $2.4 million, and the building was valued at $1.5 million, Uchytil said.
Still, the valuation of the property is not the only issue, Loiselle said.
“To achieve some of the things we’re looking to achieve would require Assembly approval,” he said. “Our view is a broader view than just trying to plug everything into an existing model.”