Condo owner files suit over gas line assessment

The owner of several business condominiums has filed a lawsuit in Superior Court against the city of Homer and the Homer City Council seeking to overturn the ordinance that created the Natural Gas Homer Special Assessment District. Ken Castner III said the ordinance violates his rights to equal protection and due process of law, and that the city’s natural gas line assessment scheme violates statutory law.

“What I’m having a hard time with, nobody other than me seems to think there’s any discrimination going on here,” Castner said. “Everybody think it’s acceptable for a particular person to pay six times anybody else.”

He said the assessment plan disproportionately assesses his property and the assessment far outweighs the value or benefit of the gas line to him.

Castner owns one unit in full and parts of two other units in the Kachemak Bay Title Building, a five-unit office condominium development on Ben Walters Way. Because of the way the city set up the natural gas special assessment district, real parcels with separate tax numbers are assessed individually. In most cases, that is by an actual physical lot, a piece of land, but in the case of condominiums, each unit is assessed.

The Kachemak Bay Title Building has six taxable units: the lot itself that’s owned in common and five units. Two of those units aren’t even offices, but a boiler room and a bathroom. Under the way the assessment roll was set, however, the Kachemak Bay Title Building owners would pay six assessments of $3,283 each, or $19,698 total.

Castner said the condo association set up its structure because that’s how the Kenai Peninsula Borough said it would be best to tax condo owners. By taxing units like a boiler room, each co-owner is responsible for a share of the taxes.

Other condominium owners also had protested the assessment district plan, but have not joined Castner’s lawsuit. In anticipation of legal challenges, and before Castner filed his lawsuit on March 4, the city sought legal opinions from two Anchorage law firms specializing in real estate law.

At Monday night’s Homer city council meeting, City Manager Walt Wrede briefed the council on those opinions. One, written by Sally Kucko of Groh Eggers, is from a firm that represents condo associations, Wrede said. The other is from James McCollum, a lawyer with more than 20 years in real estate and property law.

Wrede said Kucko reviewed Castner’s letters and testimony to the council on the ordinance and the ordinance. Both opinions support city attorney Tom Klinkner’s earlier opinion that the assessment plan is valid. The opinions cite a section of the Alaska Statutes, AS.30.08.720(b), that says a condo unit is a separate parcel of real estate “for all purposes” and that it “shall be separately taxed and assessed.”

Attorney Holly Wells, Klinkner’s associate attending Monday’s council meeting, also noted that it may be too early for Castner’s case to be decided on by the court because the final assessment roll will be set once the gas line project is built and property owners start paying assessments.

Castner said he filed when he did because his reading of the law was that he had to file before a deadline of Monday.

Castner said the council created its assessment district ordinance as the means to make the gas line build out happen.

“I’m not trying to kill the project. I’m not trying to stop the project. I’m not asking for an injunction to stop them from construction,” he said.

The case has been assigned to Kenai Superior Court Judge Charles Huguelet, but no court date for a hearing has been set. Wrede said he received a summons last Thursday notifying him of the lawsuit.

Michael Armstrong can be reached at