The borough would receive seven lots including the cleaned up Union Oil tank farm for a new harbor maintenance facility. (Joe Viechnicki/KFSK)

Petersburg’s planning commission is recommending a land exchange between the borough and fuel company Petro Marine for land around South Nordic Drive south of downtown. Petersburg’s harbor department wants the trade to set up a new harbor maintenance spot just across from the community cold storage.

The borough of Petersburg leases land to Petro, the site of the Southeast Island Fuel gas station and a warehouse behind it on dock street. It’s right across the street from Petro’s fuel plant and the company wants to own that property instead of leasing. In return Petro would give the borough seven lots including the site of the old Union Oil or AFS tank farm. Under former owners, that site was contaminated by leaking heating oil. Conoco Phillips paid for clean up work and had contaminated soil removed. In 2012, the Alaska Department of Environmental Conservation signed off on the clean up work.

Petro plant manager Bob Volk told the commission that that property made sense for the borough. “It has a clean bill of health,” Volk said of the Petro land. “I mean that property’s ready to be used. And there’s seven lots there. I mean it’s a lot of land. It’s almost twice as big as the land we are asking for. I mean it just makes sense to us to be one, instead of having property way down the street. We don’t really want to get in to the lease business, you know leasing out land and what not.”

The difference in assessed value is just under 130,000 dollars, with Petro’s land and building assessed at a higher amount. Volk has told the harbor board and the planning commission that Petro would pay that money back to the borough if the borough would use it to put in a mooring dolphin at the dock that Petro leases from borough. That would provide more space to tie up a cruise ship and still allow Petro to fuel up another vessel at that dock.

The harbor department runs its maintenance work out of a small room in the harbormasters building, a number of shipping containers and several other sites around the borough. Harbor staff want a single consolidated site for maintaining harbor facilities. Harbor master Glorianne Wollen highlighted the location of this Petro land would make for easy access to the drive down float and South Harbor.

“It would really fit what we need and it’s affordable, that’s the other thing,” Wollen said. “I think the other alternative is building something. It’s not an alternative to stay the way we’re presently maintenancing the harbor out of these Conexes and different locations. So we have to do something. So I either have to get this or look at building something new.”

Wollen also noted that acquiring this land was a priority identified in the borough’s most recent comprehensive plan. If the exchange goes through, Petro would no longer be paying property tax on the land it gives to the borough and no longer paying for the leased land at the gas station site. That would mean an annual loss of just over four thousand dollars to the borough’s general fund and an annual loss of $28,500 loss in revenue for the harbor department. A couple of local residents questioned that loss for the borough. James Whitethorn wondered if the borough would put some of the Petro land up for sale. “Would you be interested in like dividing that property, such a big piece of property, dividing it and maybe selling to the public a part of that?” Whitethorn asked. “I don’t know if you were planning on using all of it but that’s a huge piece of property and we could generate some tax revenue if we did that.”

Wollen responded that could be a possibility. She also noted that the harbors raised rates this year and already budgeted for the loss in revenue from the lease.
Commissioners were surprised the land exchange had not already moved forward and were in support.

“I think this is a great idea,” said commission Dave Kensigner. “I think it should be done. I mean I understand the down side of the tax ramifications but it seems like by having the harbor department being able to consolidate their maintenance facilities, there’s going to be a cost savings benefit even though it is possible it’s going to cost, we’re going to lose 28,000 dollars overall in the deal.”

The commission was unanimous in recommending the land exchange and sending a report to the borough assembly. It’ll be up to the assembly to decide whether to move forward with it and direct the borough manager to negotiate a land exchange with Petro.