Alaska Supreme Court denies city petition in Castner case

“Denied.”

In a terse, five-line ruling on May 21, the Alaska Supreme Court made that judgment on the city of Homer’s petition for review of Kenai Superior Judge Charles Huguelet’s order that the city comply with his January 2014 decision in the Ken Castner v. City of Homer lawsuit.

Castner, owner of a condominium in the Kachemak Bay Title Company Building, has continuously prevailed in his challenge of the Natural Gas Homer Special Assessment District as it applies to condominiums. The Alaska Supreme Court decision is the latest and final state court ruling upholding Castner’s claim that the city unfairly and disproportionately assessed condos.

“On consideration of the Petition for Review filed on 4/13/15, and the response filed on 5/16/15, it is ordered: the Petition for Review is denied,” the clerk of the Appellate Courts wrote.

In January 2014, Castner won a decision from Huguelet striking down the assessment as it applied to Castner’s and other condos in the Kachemak Bay Title Company Building. In February, Castner filed a motion asking the city to show why it should not be held in contempt of court for failing to comply with Huguelet’s 2014 order.

The city challenged that motion, and then said because the council in a resolution charged Castner’s condo one-third of the $3,237.14 assessment, it had complied with Huguelet’s decision.

Huguelet on April 3 delivered a harsh rebuke to that claim, ordering the city to comply with his order “and immediately cease using the method for imposing special assessments on condominium unit owners that was ruled unlawful by the order,” the judge said.

The city sought a judicial review of Huguelet’s order, even though a year ago the city did not appeal Huguelet’s January 2014 decision.

“The city reviewed the costs and benefits of filing an appeal and concluded that, on balance, it was in the overall best interest of the community to accept the judge’s decision and move on,” former City Manager Walt Wrede said in February 2014.

In its petition for judicial review, City Attorney Thomas Klinkner wrote that the city interpreted Huguelet’s order as “the decision on an administrative appeal that applied only to the assessment of condominium units in the Kachemak Building,” and thus did not appeal the ruling.

Starting in January, the Homer City Council, meeting in executive session, had directed the city attorney to fight the Castner decision. Council member Beau Burgess said that several legal opinions by the city attorney asserted that Huguelet’s decision applied only to Castner’s condominiums in the Kachemak Bay Title building. That’s why the city didn’t initially appeal.

In his decision, Huguelet had said “the city’s assessment with respect to condominium owners is arbitrary and unreasonable.” While a narrow reading of Huguelet’s decision might be read as applying only to the Castner condos, Castner argued that because Huguelet struck down that portion of the assessment ordinance, the city had no legal basis to assess other condominiums.

When pressed on that point, Burgess said of the judge’s decision, “It’s nebulous.”

When asked why the city didn’t appeal if the decision was nebulous, Burgess replied, “That’s a good question.”

After meeting in executive session at a special meeting on Tuesday afternoon with Klinkner to discuss the Supreme Court ruling, the Homer City Council’s response to the latest decision was equally terse.

“The council spoke with the attorney and he will bring forth a resolution on reassessment of condominiums at our next meeting,” Council member David Lewis said after the council came back into a public meeting.

When asked about the Supreme Court ruling, at the end of Tuesday night’s regular meeting, Lewis said, “Now all the rest of the people have to pick up the assessment for the condos.”

Initially, the city tried to assess all properties in the natural gas special assessment district by parcel, using Kenai Peninsula Borough property records to identify parcels. Because condos have a tax parcel number for sale and assessment purposes, the city tried to assessed condos separately. Huguelet said that assessment should be by the lot, ruling that any lot received the same service, access by a distribution line to natural gas.

In Homer there are 116 condos on 17 lots. Castner and two other condo owners in the Kachemak Bay Title Building were accounted for with the March adjustment to the roll, leaving 113 condos on 16 lots. Now that condos have to be assessed by lot, that’s a net loss of 97 assessments that would be charged to the entire assessment district, including by condo owners. The assessment district has to come up with $316,488.64, said planning technician Julie Engebretsen.

In an ordinance introduced by the city council on Tuesday night amending a 2013 ordinance, that deficit could be paid out of the Free Main Allowance, money paid to the city by Enstar as new customers hook up to the natural gas system. Ordinance 15-17 goes up for second reading and a public hearing at the council’s June 15 meeting in the Cowles Council Chambers, Homer City Hall.

Michael Armstrong can be reached at michael.armstrong@homernews.com.

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