What to do with the nearly $8 million dollars in the borough’s land trust fund was a central question this year as the borough budget was being put together. The mayor’s office wanted to use a portion to help fill the borough’s budget gap, but, the assembly wanted to see a fresh investment plan before the fund was used for general expenditures. That plan has been finalized, and will get a public hearing next week.
When the borough became a borough more than 50 years ago, it was given thousands of acres by the state to be used for, well, any number of things. The proceeds from those sales have always just simply gone into a trust fund, with no real plan on the books for how best to use them. The assembly could vote to spend that money any way it wished, and after the lands department budget was paid for, the rest of the money just kind of sat around. But now, there’s a little more method to the madness. Borough Land Manager Marcus Mueller says the goal is to take maximum advantage of an asset the borough can only sell once.
“We have the opportunity to go beyond that and to have good financial health, where our land program is sustainable and on top of that, provide additional benefits back to the general fund.”
They’ll do that with investments. Things like bonds and mutual funds and also interfund loans, like the one that will be used to pay for land for the new Central Emergency Services station in Soldotna. In a memo to the assembly, Mueller along with finance director Brandi Harbaugh and trust fund project lead Larry Semmens cite an average interest revenue of six percent for the fund. Semmens helped put together a similar program for airport lands in Kenai, which has seen annual returns closer to eight percent for about a decade.
“A lot of this model is based off what the city of Kenai is doing, where you manage your financial assets well and you use some of that to support your operations and you keep those long term assets around so that they’re available to be managed in the long term. The borough is going to be here for a long time, it’s going to need a lands program for a long time and this is our attempt to make sure that we’re sustainable and forward-thinking.”
He says a long term investment strategy for borough land sales has been a long time coming.
“This ordinance that’s in front of the assembly to create a Land Trust Investment Fund really gets after that. And it does so in a way where what we will find is that the borough lands and the financial resources of the borough lands really go to make a lands program cost effective and work well for taxpayers and borough residents.”
The assembly will hold a public hearing on the ordinance creating the new investment fund when it meets next on September 4th.