Judge orders city to stop ‘unlawful’ gas assessments for condo owners

In a harsh rebuke to how the city of Homer assessed condominiums for the Homer Natural Gas Assessment District, Kenai Superior Court Judge Charles Huguelet last Friday afternoon ordered the city to comply with his Jan. 6, 2014, ruling.

 In his decision in the Ken Castner v. City of Homer case, Huguelet called the city’s method “arbitrary and unreasonable.”

“It is herby ordered that the City fully comply with the Order and immediately cease using the method for imposing special assessments on condominium unit owners that was ruled unlawful by the Order,” Huguelet wrote in his order on April 3.

The Homer City Council on Wednesday night met in a special meeting and executive session to consider its options regarding the judge’s order, but at press time earlier that day it was not known what action the council took.

Huguelet’s order came about after Ken Castner in February filed a motion asking the city to show cause 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 in the Kachemak Bay Title Company Building one-third of the $3,237.14 assessment, it had complied with Huguelet’s decision.

Castner asserted that Huguelet’s judgment should apply to all the condo owners as Huguelet originally decided.

“The order says ‘Get with it,’” Castner said in reaction to Huguelet’s ruling.

Interim City Manager Marvin Yoder said on Friday that he had read the order and talked to City Attorney Thomas Klinkner.

“That has some very serious implications for the city as far as book keeping and also some serious implications for the homeowners in the city,” Yoder said of Huguelet’s order. “We have to take a hard look at it because of the serious implications down the line.”

Yoder said on Tuesday that at the special meeting the council might consider appealing Huguelet’s decision.


“The first thing we have to decide is if we are going to appeal,” Yoder said.

Depending on what the council decides, it would then discuss the matter at its regular meeting starting at 6 p.m. Monday.

In Friday’s ruling, Huguelet said his decision was final. In a press release in February 2014, the city said it would not appeal. Under the doctrine of res judicata, or “a matter judged,” the city cannot relitigate the assessment method’s legality, the judge wrote.

Condo owners expressed relief at the news.

“Thank you for the good news, and what a beautiful weekend to get it on,” said Amy Springer, owner of a condo on Bay Avenue, said last Friday.

“I think it’s great news, and I’m glad the judge clarified the order so it’s clear to the city of Homer what they should do,” said Margarida Kondak, owner of a condo in a four-unit building on Mountainview Avenue.

Kondak’s condo is near a four-unit apartment building exactly the same floor plan and lot size. Except for the Kachemak Bay Title Company Building, the city assessed all properties by tax parcel number and not by lot, so that the apartment building would pay one assessment while a condo in a four-unit condominium complex would pay four assessments.

“Well, I think it’s fantastic,” said Shelli Gordon, owner of one of the Land’s End Lodges on the Homer Spit. “It saves me the trouble of filing a complaint with the Superior Court. … I think what the judge is doing is fair. I also think any small child could have told you this.”

Homer City Council member Bryan Zak said that it was interesting how the decision had gone over the past two years and is now at a point where the city will have to comply. Zak said earlier he had leaned toward the condo owners’ rationale.

“From what I heard in testimony that Amy Springer provided, it seemed to make it nice and clear and succinct,” he said. “I think the judge’s decision kind of says it all, really.”

Zak said the city attorney had a different interpretation.

“We’ve been pretty much following our attorney’s advice on this one,” he said. “It’s hard to convince any other council members when the attorney is advising one thing — it’s hard to convince other council members differently.”

Council member Catriona Reynolds said it would be costly in legal fees and staff time to continue to oppose Huguelet’s order.

“The benefits of being able to complete the process and limit costs of a lengthy, divisive legal battle outweigh the benefit of continuing on the current plan,” she said.

It would be better to devote time and energy to other issues such as park, arts, recreation and culture facilities and completing the Public Safety Building, Reynolds said.

In 2013, Castner, an owner of a condominium in the Kachemak Bay Title Company Building on Ben Walters Lane, challenged the city ordinance establishing how property owners would be assessed in the natural gas assessment district. 

Castner argued the ordinance was unjust, and the assessment should have been by lot. Huguelet agreed and issued his  decision in January 2014. Huguelet struck down the portion of Ordinance 13-02 setting up the assessment district that required condo owners to pay by parcel, not by lot.

In a memo last December to Yoder, former City Manager Walt Wrede summarized the issue with condos and the final assessment roll. He wrote that the council could accept Klinkner’s recommendation, but if the council had questions or disagreed, it also could meet in executive session on Jan. 12 to discuss other options.

The council in an executive session decided to stick to its original ordinance regarding how it assesses condominiums for the Homer Natural Gas Distribution System project. The city then issued a draft roll of the Natural Gas Homer Special Assessment District and assessed Castner’s Kachemak Bay Title Company Building condo the full amount. That prompted Castner to file his February motion to Huguelet asking the city to show cause why it should not be held in contempt of court.

After Castner filed his motion, the council passed a resolution changing the assessment for that one building to $3,237.14, or $1,079.05, for each of three condos, but it did not change assessments for other condo owners.

The city asserted that Huguelet’s 2014 decision didn’t apply to the other condo owners and replied that it had complied with the order to show cause because it gave Castner relief.

In his latest order, Huguelet also shot down that argument. He wrote that Castner challenged the legality of the assessment as it applied to all condo owners, and that the city recognized this in its 2013 reply.

“The Order applies to all condominiums and is not limited solely to the Kachemak Building, or Mr. Castner’s condominium at the Kachemak Building,” Huguelet wrote.

Huguelet did not rule on Castner’s motion that the judge find the city in contempt of court. Huguelet said he would defer a decision whether to hold further proceedings “pending its determination that the city has fully complied with this order,” he wrote.

Under city code, the city has one year to correct any deficiency in an assessment district found by a court. If the assessment is increased, a new hearing would be set and notice published. The council would confirm a new assessment roll by resolution.

In a November status report, Wrede wrote that if condos were assessed by lot, 102 properties would be dropped from the roll at a cost of about $335,000, and assessments would go up by about $45. The gas line came in $340,000 below budget, Wrede wrote in the same memo.

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