At the heart of the debate about the borough’s budget is the borough’s land trust fund. It’s got $7.5 million in it right now, but that money isn’t doing much, and there’s not a solid plan for what could be done with it.
Earlier this week, the borough assembly voted down a proposal from mayor Charlie Pierce that would have transferred $4.5 from the trust into the general fund to help pay for education. But the assembly was more interested in putting that money to work in other ways, seeking a more fruitful investment strategy.
Before that can happen, though, the borough needs to have a more firm grasp on what its land holding are. That project comes under the purview of the borough’s land manager, Marcus Mueller. He told the assembly during budget work sessions this week that the classification system currently in place needs to be updated so those kinds of decisions can be made with more clear guidelines.
“Most of our land inventory is not classified. Most of it is unclassified. What we’re working on in the land management division is to try to come up with a new way to look at land classification. For example, if a classification is residential, that’s great. We pull quite a bit of inferred direction from that. But we don’t do residential. We don’t build houses. Rather, we look at that and say, well if the classification there is residential then the instruction there is sell.”
The borough holds about 130,000 acres and Mueller anticipates that about 20 percent of that will eventually be sold off. But it’s not as easy as staking off a claim and putting it up for sale. This is a one shot deal. The state won’t likely be giving out any more land for the borough to manage. So classifying everything and putting a best use on it, whether that’s for a school or a road or for timber or recreation, is the first step.
“What we’ll get out of that is for the first time, we would be able to put our borough land inventory into some pie charts and really see what we have, what we can do with it and where we can go, where our opportunities are and how we want to make the best use of the most malleable asset that the Kenai Peninsula Borough has.”
That’s all one part of the puzzle. Turning those land asset into cash assets is the other. But that also takes some planning. How much should a fund have at a minimum and a maximum? What can that cash be used for, and what would it take to release those funds?
“We have an opportunity now to take those ideas and put them into the mechanics of it; what we could accomplish with it along with how that would work, investment strategies, possibilities of tapping into the (state) Permanent Fund Corporation and having the permanent fund provide custodial account services. So, there’s been work done on it and I’m hopeful that we’ll see that come together on a sheet of paper that everybody can review and have good discussion on.”
As the borough tries to get creative in finding new sources of revenue, look for income from its land assets to be a bigger part of the discussion.
And now, this week’s number: 23.3 billion. That’s the reported sale price of logistics and petroleum refining company Andeavor, known formerly as Tesoro. The sale was announced earlier this week to Marathon, one of the largest refiners in the country. As part of the name change not quite a year ago, Andeavor invested heavily in other refining operations in the western US. Those moves alone had shot Andeavor stock prices up more than 50 percent over the last nine months. This most recent sale had mixed results for shareholders in both companies, with slightly lower stock prices at Marathon and Andeavor shares shooting up nearly 20 percent, settling at more than $150.