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Subsidy question lingers in mobile home park deal

Was there a market for extra density downtown? Opinions vary.

Residents and city officials involved in the recent purchase of the Islander Mobile Home Park are defending the city’s role in the transaction, and dispute estimates by some council members that the deal cost the city millions in lost revenue.

“For (councilors) to suggest they didn’t know what was going on is an absolute lie,” said Bill Isley, park resident and former president of the mobile home park’s neighborhood association. “We had many meetings on this with over a hundred people involved. It’s not like we pulled the wool over anyone’s eyes.”

The City Council voted last week to hold a public meeting for any agreement involving the city and sums more than $100,000, after some councilors said they were unaware of some financial aspects of the deal to help residents purchase the 60-space park.

Several councilors, including Bob Scales and Bill Knobloch, said they were surprised to learn that the city’s agreement with residents could cost the city $3.3 million over four years.

The city had authorized residents to sell the property’s unused development rights – essentially excess residential density, under the “Floor Area Ratio” zoning used downtown – to developers looking to increase density allowances on other island construction projects.

Residents were permitted to sell the rights at a 40 percent discount, effectively creating a competitor for the city in the sale of such rights, Scales said.

“I had no clue,” Bill Knobloch said. “I sat on all the committees and never at any point was I aware. This was a naked subsidy and is a revenue loss to the community.”

Overblown?

But Isley contends that the estimated $3.3 million in lost revenue is overblown, arguing that there has been little market for them in the development community to date.

“The city hasn’t sold jack squat of the FARs,” Isley said. “People don’t buy those unless (their development) is incredibly boxed in.”

The city has generated just $265,000 in revenues from the sale of FAR density bonuses since 2000, according to city planner Kathy Cook.

“The city did set up a form of competition, but it’s hard to say if the city is losing revenue,” Cook said. “You’d have to have a crystal ball, and there’s no guarantee of buyers.”

Mayor Darlene Kordonowy, who worked closely on the mobile home park deal, said the million-dollar estimate is an “absolute worst-case scenario.”

“I don’t know if developers would have purchased FARs from the city without the discount” that park residents offered, she said.

The mobile home park deal was completed last month.

Acting as a homeowners association and with financing from various lenders, residents purchased the 6.4-acre property north of City Hall from long-time owner Pat Alderman.

The park will be winnowed to around 50 spaces, while the city has purchased seven spaces for its own purposes.

The north edge of the current park property will be redeveloped by Kelly Samson, who purchased some of the FAR density offered by the neighborhood assoociation. (See sidebar.)

At a recent council meeting, Scales argued that the city could have used the revenue from FAR sales to fund the public purchase of the whole park, giving the city an affordable-housing asset.

Kordonowy initially objected to how the new public disclosure measure was framed, and took issue with some councilors’ characterization of the mobile home park agreement as a back-room deal.

“A few councilors missed some important meetings on the deal, but we made the best decision we could,” she said.

Kordonowy agrees with the new disclosure measure in principle, welcoming it as a method to increase public awareness of city issues.

“It takes us in a good direction and makes us take more seriously our decision making,” she said.

It is unclear how the council will implement the disclosure measure.

While some predicted a bureaucratic nightmare of public meetings on almost every city transaction, including all Open Space Commission acquisitions, Councilwoman Christine Rolfes foresees short additions to regular council meetings.

Kordonowy predicted speedy for-and-against statements regarding city revenues and a brief public comment period.

“We haven’t worked out the procedure,” she said. “Right now, we’re forming the idea.”

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