City compromises on Fisherman's Bend lease

Assembly members agree to allow marina owners' rent offer

Posted: Tuesday, October 21, 2008

After a year of negotiation and appraisals, the city Assembly accepted a compromise Monday night from the Fisherman's Bend owners on rent for their marina's tidelands.

Michael Penn / Juneau Empire
Michael Penn / Juneau Empire

The Auke Bay parcel holds Juneau's only private marina, held by Andrew's Marina Inc.

Co-owner Sharon Andrew objected when the city said it would raise rent on the parcel to $62,000, or 8 percent of the assessed value and 20 cents per square foot, from $13,600 and 4.4 cents a square foot.

At issue was the discrepancy between two appraisers, one hired by the city and one by the marina owner, neither of whose credentials were being challenged, who came up with very different values for the parcel.

"At its best, an appraisal is an educated guess," Andrew said. "We're willing to split the difference."

Kim Wold, hired by the Andrews, came up with a fair rent of $12,700 a year - less than the rent Andrews Marina had been paying on its 20-year-old lease.

The city Docks and Harbors board objected and hired its own appraiser, Charles Horan, who said the rent should be $35,800.

The two appraisers used different methods. Wold based his estimate on the income the business brings in, while Horan looked at rents at comparable properties.

A city appraiser, Ken Miller, agreed with the low value, in a December 2007 memo.

Ports Director John Stone said state law required the latter approach.

But Andrews said she recalled coming away from a harbor board meeting with the understanding that she should direct the appraiser to use the income approach, and felt she'd been misled.

She also said she was troubled by the city's dual roles as both "landlord and competitor," since all the other marinas in town are operated by the city.

Fishermen's Bend boat owners came out to support the marina owners, who said they feared higher rents and also worried the marina would be driven out of business.

"I hope you look at this from the point of view of people who will be forced to pay for it," said Ron Somerville, who moors his boat at the marina.

Assembly members unanimously voted to take her compromise offer of $24,500 a year.

"I'm impressed with the fact that asking for two appraisals is a self-inflicted wound, and we are left with a choice between two extremes," said Assembly member Bob Doll, as he offered an amendment to take Andrew's compromise.

He and other Assembly members were concerned that a lower rent on this parcel would be used in future appraisals of other parcels, and that the city would suffer lower revenue as a result.

"This is the only private marina," said Assembly member Jonathan Anderson. "The market does consist of CBJ leases. And that, to me, also makes this a different situation than some of the other cases might be."

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