Press "Enter" to skip to content

This “Land Exchange” proposal is malodorous

fishy

Here is a brand new Public Notice that was published in the local newspaper and on the MSB’s website today.

The MSB is proposing a land exchange of borough land located in Trapper Creek to offset the MSB’s purchase of the Tommy Moe building in downtown Wasilla.  Comments are due by July 20th.

UPDATE:  I am still trying to figure out what is going on with this “land exchange” proposal.  Is the MSB trying to assist the sellers with tax relief via a 1031 IRS exchange? I have no idea – but they are using the buzz words “land exchange” etc and mentioning that the seller already has “significant financial investment” (in the MSB’s parcel!) and real estate investors often try to do 1031 exchanges for the tax benefits. Is that why the MSB is not disclosing the exact figures? 

Land Exchange 1

The MSB authorized the purchase of the Tommy Moe building ONLY one month ago on May 21st, 2019.  At that time, nothing was mentioned about possibly offsetting the cost by giving the owners/sellers of the Tommy Moe building a large parcel of land located next to Petersville Road in Trapper Creek as part of the deal. If this was something the MSB knew about, why didn’t they disclose it???

Kinkaid 4

The MSB Assembly has now adjourned for the summer.  Their last meeting was earlier this week (June 18th) and their next meeting isn’t scheduled until August.

So, three days after the Assembly is off duty, the MSB issues this PUBLIC NOTICE.

Kinkaid 1Kinkaid 2

FYI – This NOTICE gives absolutely no details about Tract B-2, the parcel that the Kincaids would like to own. No Fair Market Value is listed. Nothing.  And nothing is explained about how much of a discount the MSB would get on the Tommy Moe building if they give away this parcel. 

However, I looked it up and Tract B-2 is 58.2 acres.  It is lakefront property. Scotty Lake has fabulous views of Denali:

Scotty Lake.PNG

The Kincaids own the 150 plus acre parcel to the north.

Kinkaid 5

 

Here is the email I just sent in as a Public Comment to this proposed Land Exchange:

“Jeez – the MSB never seems to tell the public the entire story from the get go. 

The last we knew, the MSB was going to purchase 501 N. Tommy Moe Drive for approx. $1.3 million from the Kincaids.
That is what was explained in the Ordinance/Resolution that passed the Assembly a couple of months ago. (Correction – only one month ago.)
Now – mere days after the Assembly has adjourned for the summer – the MSB issues a public notice that – well, in fact, now we want to do a land exchange to offset the cost of the acquisition of the Tommy Moe property.  Mr. Kincaid would like have Tract B-2 in Petersville.
Um – where are the DETAILS about Tract B-2? How many acres is this? What is the FMV? Is there anything special about this land (i.e. gold mining etc)? 
This deal seems quite unusual and suspicious. 
I think this “deal” should be DENIED outright because the MSB staff did not bring it to the public or the Assembly’s attention in a timely manner. 
If the MSB wants to sell this land, put it up for public sale and let people bid on it.”
FYI – I happened to be in Wasilla yesterday and checked out the Tommy Moe building.
It seems overpriced at $1.3 million.  The front office section looks gutted and the back is simply a big storage area. However, it is conveniently located next to the big Fire Station. My theory is that the MSB doesn’t just want this building to use it to continue to store their water rescue items, but that they are planning to make it some sort of Sheriff’s office or Emergency Mgmt headquarters.

 

UPDATE: Here are the most recent MSB tax assessments for the two parcels – the Trapper Creek parcel (Tract B-2) and the Tommy Moe building & land.
The Tommy Moe parcel was appraised at only $876K in 2017 and that was upped to $907K this year. And yet, the MSB is buying this building for almost $1.285 million.
Math – $1,285,000 minus $907,300 equals $377,700.  So the MSB authorized the purchase of the Tommy Moe bldg for $377,700 more than its own assessors say it is worth. 
That is sort of interesting to think about – either the MSB hasn’t read the “Art of the Deal” OR the MSB is admitting that its own assessments are way off.
Tommy Moe assessment
Here is the Tax Assessment for the Trapper Creek Parcel. Now – this parcel is located in a prime spot on Petersville Road just across from the Trapper Creek School.  It is also lakefront property.
Tract B-2

More Background Information:

The MSB Assembly approved the purchase of the Tommy Moe building at their May 21st 2019 meeting. NOTHING was mentioned about the Trapper Creek parcel or a land exchange.  Here are the Ordinance, Resolution, and Informational Memo:

2019-IM-054

2019-RS-031

2019-OR-042

MSB Meeting May 21

UPDATE  – I sent this email to the Assembly members today:

I noticed that the MSB published a Notice of Proposed Land Exchange on their website and in the Frontiersman on Friday (June 21st).

The MSB wants to give a 58 acre parcel of land located on Scotty Lake in Trapper Creek (just across from the Trapper Creek school) to Ken & Beth Kincaid in exchange for adjusting the sale price of the Tommy Moe building.
This notice leaves a lot to be desired – including DETAILS of the supposed price tag of the Trapper Creek parcel.
The MSB Assembly just approved the purchase of the Tommy Moe building on May 21st. One month ago. Price tag $1.285 million. A hefty price tag for a pretty basic building for which the MSB tax assessment is only 907K.
And at that time, nothing was mentioned about throwing in a prime Trapper Creek parcel into the deal.
The proposed Trapper Creek land exchange should have all been disclosed to the Assembly (and the public) a month ago at the time of the Public Hearing on the sale of the Tommy Moe bldg.
My theory is that the Kincaids want to do a land “exchange” in order to get a big tax break per IRS section 1031.  Many real estate developers try to do this to avoid paying Capital Gains taxes.
It is not up to the MSB to help a seller avoid taxes.
If the MSB wants to sell recreational property in Trapper Creek, it is needs to do so via our regular land sales.
That is the only fair way to dispose of property.
My questions:
1.  Who is the MSB’s contract appraiser who advised us that the $1.285 price tag was okay?
2.  Where is the supporting documentation for the appraisal of the Tommy Moe building? (This should have been included in the IM with the Ordinance.)
3.  What did the Manager or MSB staff know about the Trapper Creek land exchange proposal and when did they know it and why wasn’t this disclosed at the time of the Public Hearing on the Ordinance?
4. And by the way – when did the MSB give permission for the Kincaids to develop a road and build a bridge on the MSB owned Trapper Creek parcel (Jim Schorr Tract B-2) which they now want to own?
5.  Are there any conflicts of interest btw. Mr. Kincaid and any MSB staffers that would have benefited him in setting up this proposed land exchange?
And then this one too adding a couple more questions: 

Final questions –

We have been leasing the Tommy Moe building since 2007.  What were the terms – i.e. the COST of the lease?  Was this lease ever approved by the Assembly? I read in the Central Matsu FSA’s meeting minutes that they have been paying one third of the lease from their FSA money but that they were only using 1/6th of the building and the MSB Emergency services was paying for 2/3rds of the lease. I recall reading somewhere that the lease cost may have been $150K per year which seems like a lot to rent out a big empty building to use essentially as a storage shed. How much have we paid to the Kincaids (i.e. Palmer Tower LLC) all told over these past 12 years? Why have we waited so long to purchase the building? I read somewhere this building has been for sale for a long time but it wasn’t selling. If that was the case, why didn’t the MSB make an offer years ago?
Is the MSB planning to spend money on improvements at the Tommy Moe bldg? Someone who seems to be in the know today wrote on Facebook that the MSB is definitely planning to make some big renovations to the Tommy Moe building – remodeling the office space up front, putting in fire sprinklers, and adding at least one big bay door in the back.  He was insistent that I was wrong when I said that the MSB announced in the Ordinance and IM that only the roof needed to be repaired and that the sellers were going to cover that cost.  So, my questions are – is the MSB planning to make those improvements (office space, big new bay) and how is this going to be funded? And if so, why not tell the public and the Assembly up front at the time of the public hearing on the purchase?
Also – does the MSB know what the Kincaids want to do with the Trapper Creek parcel? Someone mentioned to me that that parcel would be a good location for a new school or a commercial enterprise. (Normally with an IRS 1031 exchange, it has to be a fairly even exchange.  So for example, if you sell a bldg for a million, you need to buy/build something else worth a million within a certain period of time to avoid capital gains taxes.  Why not be fair and put this parcel up for sale for the general public to bid on? Why do the Kincaids get first choice to purchase this lot?
Here’s my bottom line  – the MSB never ever seems to tell the Assembly or the public the ENTIRE STORY of what they are planning to do up front.  It always comes out in dribbles and drabs.  This Tommy Moe building business is another example. The public isn’t told that the MSB plans to make costly improvements to the building and the public isn’t told up front that the Kincaids have their eye on a Trapper Creek parcel etc etc…My prediction – this fall, the Manager will submit a resolution announcing that he has “found” some money to pay for improvements via this new deal with the Kincaids.
Why not just reveal the whole plan from the beginning – i.e. prior to the Public Hearing and prior to the sale being approved?

January 2020 UPDATE: I asked a MSB source if this “land exchange” ever went through because nothing was recorded with the AK Recorder’s Office and the source said – No, the MSB decided not to go through with it. The manager told source that if the MSB decides to sell the Trapper Creek parcel, it will be sold in the regular manner – i.e. a regular land sale.

3 Comments

  1. Sarah Sarah June 22, 2019

    I agree the execution of this trade should have been open. Is there no other money exchanged if the sellers acquire the land? If no other money is exchanged I can see how this may seem like a good deal to Mat-Su Borough, not taking cash from budget, selling land they already own for value between $12k-$22k depending on which building price you go for. I highly doubt they would have gotten those prices at public auction to sell the entire 58 acre parcel, maybe that is why they should have done it at public auction with a reserve of “if price doesn’t reach $800k we will exchange for this building”?

    • NDS NDS Post author | June 22, 2019

      I think this is not planned to be an even exchange. The MSB already agreed to purchase the Tommy Moe bldg for $1.285 million. Thus, this public notice is to “offset” some of this cost by giving the owners of that bldg the Trapper Creek lot. The Trapper Creek lot is assessed at 130K. So – I agree that if the Kincaids are giving the MSB this Tommy Moe bldg outright in exchange for the Trapper Creek parcel, that would be a good deal for the MSB. But what I think the MSB is doing is – lowering the price tag of the building by adding the Trapper Creek parcel to the exchange…And the MSB is not disclosing the lower price. My guess is – 100K off the price of Tommy Moe bldg. but I have no idea. The MSB needs to disclose all details. And frankly, the MSB should have disclosed this possibility to the Assembly when the Assembly approved the purchase of the Tommy Moe building only one month ago.

Leave a Reply

Your email address will not be published. Required fields are marked *