State of Alaska Department of Natural Resources Division of Mining, Land & Water Northern Region Office

State of Alaska Department of Natural Resources Division of Mining, Land & Water Northern Region Office Preliminary Finding and Decision ADL 419913 City of Delta Junction Proposed Public & Charitable Conveyance Pioneer Park Proposed Action The City of Delta Junction (City) submitted an application to purchase 4.49 acres of state land on which Pioneer Park in Delta Junction is located. This land is currently being leased to the City of Delta Junction. The lease, ADL 415300, expires on October 15, 2021. The City has applied to purchase the land under AS 38.05.810(a)(1), public and charitable conveyance at less than Fair Market Value (FMV). The Department of Natural Resources (DNR), Division of Mining, Land and Water (DMLW) proposes to offer for sale a 3.5-acre parcel to the City for 50% less than FMV with a reversionary clause under AS 38.05.810(g). The difference in acreage is due to the exclusion of the Alaska Highway right-of-way. If approved, all surface estate interest in the parcel will be conveyed to the City upon completion of an appraisal, survey, and any other deliverables identified during adjudication. This document serves as the State s preliminary best interest finding regarding the conveyance of this property. Scope of Review and Proposed Finding The scope of this Preliminary Finding and Decision (PFD) is to determine if it is in the State s best interest to convey a 3.5-acre parcel of state land to the City at less than FMV and to determine the conditions of that conveyance. The scope is based on the statutes, regulations, and other facts contained in this casefile, ADL 419913, and the lease file, ADL 415300. Authority This conveyance application is being adjudicated pursuant to AS 38.05.035(a)(6), issuing conveyances that dispose of state land; AS 38.05.035(b)(1), delegation of the powers and duties of the Director; AS 38.05.035(e), written finding; AS 38.05.810(a)(1), disposal of state land to a political subdivision at less than fair marked value; AS 38.05.945, public notice. The Director of DMLW has the authority to approve the Final Finding and Decision per delegations outlined in Department Order 3. Administrative Record The administrative record includes the conveyance casefile, ADL 419913; the lease casefile, ADL 415300; the closed Interagency Land Management Transfer (ILMT) to the Department of Transportation and Public Facilities (DOTPF), ADL 32815; a public easement issued to Leland R. Baugus, ADL 412587; a public easement for a power pole issued to Golden Valley Electric Association (GVEA), ADL 415616; and a municipal entitlement selection by the City, ADL 400735. Incorporated by reference is the Eastern Tanana Area Plan (ETAP).

Location and Legal Description Location: Northeast of the intersection of the Alaska and Richardson Highways within the boundaries of the City of Delta Junction, USGS 1:63,360 Big Delta (A-4). See attachment. Legal Description: Lots 1 and 2 of USS 2770, containing approximately 2.49 acres; and that portion of Government Lot 83 east of the DOT&PF right-of-way for the Alaska Highway, containing approximately 1.0 acres; within the NW¼ of Section 23, Township 10 South, Range 10 East, Fairbanks Meridian, containing a total of approximately 3.49 acres, more or less. The right-of-way for the Alaska Highway that is within Government Lot 83 will be excluded from the parcel proposed for conveyance; it encompasses approximately 1 acre more or less. Borough/Municipality: The site is within the Unorganized Borough but within the City of Delta Junction. No city lands are impacted, although there is parcel of land owned by the City of Delta Junction adjacent to the subject parcel. Regional/Village Corp: Doyon, Ltd. (Doyon). No corporation lands are impacted. Title The State received patent #50-65-0089 on August 13, 1964 under General Selection (GS) 1220. This site was previously withdrawn under PLO 1371 on December 7, 1956, for use of the Department of Territorial Police as an administrative site. PLO 1371 was revoked via PLO 3177 on July 31, 1963. Per the patent the conveyance is subject to any vested and accrued water rights for mining, agricultural, manufacturing, or other purposes, and rights to ditches and reservoirs used in connection with such water rights as may be recognized and acknowledged by the local customs, laws and decisions of courts; and there is reserved form the land hereby granted, a right-of-way thereon for ditches or canals constructed by the authority of the United States. There is also reserved to the Untied States a right-of-way for the construction of railroads, telegraph and telephone lines, in accordance with the Act of March 12, 1914 (38 Stat. 305; 48 U.S.C. Sec. 305). There was an ILMT, ADL 32815, issued to the DOT&PF in June of 1966. The site was to be used for the construction of a State Troopers facility, but the facility was never built in that location. In 1994 the ILMT was closed since the site had not been used. Waterbodies There are no waterbodies located on this site, and the proposed use of the parcel as a park will not impact any nearby waterbodies. Adjacent Landowners The site is surrounded to the north and south by private land, to the east by state land and to the west by state land, private land, and a city parcel which was conveyed from the State to the City under the Municipal Entitlement Program, casefile ADL 400735. Third Party Interests ADL 415300 is an existing lease to the City that expires on October 15, 2021. If it is determined that conveying the land to the City is in the State s best interest, the lease, ADL 415300, would ADL 419913 City of Delta Junction Pioneer Park Page 2 of 10

be closed once the City enters into a contract to purchase the parcel or has received title to the parcel. Other interests include a public easement to Leland R. Baugus, ADL 412587, an adjacent landowner, and a utility easement to Golden Valley Electric Association (GVEA), ADL 415616. The public easement for a public road to Mr. Baugus private parcel was issued in 1987. At that time the standard public right-of-way permit had terms that stated the easement was to have and to hold the same until the above described land shall no longer be used for the above mentioned purpose That language has been interpreted to mean that the authorization if for Mr. Baugus to have to and hold and that when he no longer uses it for the purposes for which it was issued, that it is no longer valid. Since Mr. Baugus is deceased an argument could be made that the easement is no longer being use by Mr. Baugus and therefore it is no longer valid. For this reason, DNR, DMLW is amending the easement to be granted to DNR, DMLW. The public easement will remain in the same location and continue to be used for the same purposes, public access to the parcel, lot 82A3. The parcel is still owned by Bertha Baugus. The conveyance will be subject to the following: ADL 412587 Public easement issued to DNR, DMLW for a public driveway from the Alaska Highway to Lot 82A3. ADL 415616 Public utility easement to GVEA for an electric pole which is used for operation of Pioneer Park. Planning and Classification The proposed site is within the boundaries of Eastern Tanana Area Plan (ETAP). This site is located in Unit D-71 of ETAP. The land is designated Public Facilities Transfer and converts to a classification of Reserved Use Land. The unitd-71 consists of three parcels of state land within the City of Delta Junction. The adjacent land uses are a mixture of commercial and residential uses. The management intent is to allow, if determined to be appropriate, for conveyance of the land to the City within a period of 5 years after the adoption of the plan. If the unit is not conveyed during the 5-year time period, the unit will automatically convert to a Settlement-Commercial designation, classified Settlement Land, and the disposal of these lands for other purposes by the State will be appropriate. The proposed land sale is consistent with the area plan. Delta Junction is not within a borough, therefore there is no borough zoning. Although there is no borough zoning, there are city ordinances. No city ordinances conflict with the conveyance of the parcel or continued use as a park. The site is within the City of Delta Junction, which is the platting authority. This site was closed to mineral entry by Mineral Closing Order (MCO) 67, which is appropriate for land being conveyed out of state ownership. Traditional Use Finding Per AS 38.05.830 a traditional use finding is required for land identified for conveyance which is not located within an organized borough. The purpose of the traditional use finding is to determine if the proposed action will affect traditional uses and to identify any mitigating measures to avoid or minimize conflict. The site was originally included in an ILMT to the State of Alaska, Division of Buildings (now DOTPF) in 1966 for use as a State Trooper facility and residence. Though the site ADL 419913 City of Delta Junction Pioneer Park Page 3 of 10

was never fully developed, a concrete slab, well, and septic system were installed. These improvements still remain on site. On August 11, 1984 the ILMT was closed. On October 16, 1996 a lease was issued to the City of Delta Junction under ADL 415300 for the development of Pioneer Park, a public facility used for community activities. The site was further developed to include a community center with a covered pavilion with electric heat, running water and kitchen facilities. The lease expires on October 15, 2021. Within recent history, the traditional use of the area has been public use. The proposed conveyance will be for the same purpose. Additional traditional uses may be identified during the public notice period. If further traditional uses that may be impacted by this conveyance become evident, they will be discussed in the final finding and decision. Access Access to the site is directly from the access (frontage) road, Stirewalt Road, parallel to the Alaska Highway. The parcel has two driveways to it. Hazardous Materials and Potential Contaminants The City submitted an Environmental Risk Questionnaire that indicates there is no known contamination on site. No fuel tanks will be located on site but there is a water pressure tank used for restrooms and the kitchen facility. The tank will be tested for leaks. The City will not generate, use, store, transport or dispose of toxic and/or hazardous materials. Performance Guaranty and Insurance A performance guaranty and additional insurance will not be required as the land is to be conveyed to the City, which will assume responsibility for the improvements and potential liabilities. If the City enters into a contract to purchase the parcel, rather than purchasing the parcel outright, then the insurance will be required. The current lease requires insurance, but does not require a performance guaranty. Survey While the parcel includes one survey, USS 2770 for Lots 1 and 2, the remainder of the parcel is simply identified as Government Lot 83 and encompasses a portion of the Alaska Highway. A DNR, DMLW approved Alaska State Land Survey will be required prior to conveyance. The applicant will be responsible for obtaining and paying for the survey, and obtaining survey instructions. Compensation and Appraisal Under AS 38.05.810(a)(1), the department may convey land to a political subdivision of the State for less than FMV. The sale of state land must be deemed fair and proper, serve a public purpose, and be in the best interests of the public, with due consideration given to the nature of the public services or function rendered by the applicant and the terms of the grant under which the land was acquired by the State. The City of Delta Junction as a 2nd Class City is a subdivision of the State and therefore qualifies for a sale under AS 38.05.810(a)(1). The City proposes to continue to maintain the parcel as a public park operated by the Pioneers of Alaska, Igloo #35 (Pioneers). The parcel has been used as a park over the last 20 years, since the City entered into a lease with DNR, DMLW. The proposal is for the site to continue to be used as a public park and a location for community events. Use of the site for a public park and community events does serve a public purpose and selling it ADL 419913 City of Delta Junction Pioneer Park Page 4 of 10

could be considered to be in the best interests of the public, especially those within the community of Delta Junction. Because the City is the local government and they have been managing the use of the site in partnership with the Pioneers, it is reasonable to consider selling the parcel to the City for local management and use. Based on upon the public purpose and the nature of the public service, use of the land as a public park and place for community events, and function rendered by the applicant, the local government, DNR, DMLW considers it fair and proper to sell the parcel to the City for less than FMV. Although it is fair and proper to sell the parcel for less than FMW, some compensation to the State is warranted. While AS 38.05.810(a) itself does not set a minimum or specify a percentage of cost for sale, AS 38.05.810(d) states that if the State were to enter into a lease agreement that rental may not be less than one percent of the fair market value on land acquired primarily for development, or less than five percent of fair market value on acquired land. Assuming the land, adjacent to the Alaska Highway, was acquired primarily for development, then an annual rental would be 8-10% of FMV. Although the City has had a lease with no annual rental, a lease issued today would have an annual rental. Therefore, it is reasonable to obtain some return to the State since the land will be unavailable to the State in the future for revenue generation. While in the past DNR, DMLW has conveyed land to municipalities for free, and has done so on two recent occasions to the City, ADL 22287 for the parcel of land encompassing the Visitor s Center and ADL 419242 for the parcel encompassing Sullivan s Roadhouse and the Farmers Market, due to a change in approach related to public and charitable conveyances and the State s current fiscal situation, it is no longer in the State s best interest to convey the parcel for free. While the conveyance of the parcel is being done so under the authorization of AS 38.05.810(a) which requires the decision to be in the public s best interest, AS 38.05.035(e) also applies. AS 38.05.035(e) states that upon a written finding that the interest of the State will be best served, the department can sell state land. In this case it is proposed that it is in the State s best interest convey the land to the City for public purposes, but must include some remuneration to the State. A full market value sale would likely be prohibitive to the City given the location of this parcel. For that reason, it would be appropriate to sell the parcel for less than FMV rather than requiring a maximum return to the State. The question then is, what percentage of FMV would be fair and reasonable? Recently DNR, DMLW made a decision to sell a parcel of land to Partners for Progress in Delta Junction for construction and operation of a Career Advancement Center, ADL 419984. In that decision it was determined that 30% of FMV would be fair and reasonable. While a public park for community use and organized activities does serve an important public purpose, it does not rise to the same level as an educational facility that has statewide benefits, educating and developing a workforce in support of advancing the State s economy. For this reason, DNR, DMLW proposes that 50% of FMV would be a reasonable sale price for this parcel to the City. It has been noted that if DNR, DMLW had adjudicated a land sale instead of a lease in 1995/6 when the lease was adjudicated, that the City could have obtained the parcel for free. It should be noted, however, that a sale was considered, but determined not to be in the best interest of the State at the time, and that the State may reasonably need to adjust to changing conditions or considerations of best interest in the future. The October 1995 preliminary finding and decision stated, This land should be retained in state ownership because of its prime location and potential monetary value unless it can be shown that ownership by the City or other entity is of higher value to the public and entering into a lease, initially, will allow more flexibility in the future (pg. 5). The City and the Pioneers have enjoyed use of the site for over 20 years for no annual rental. ADL 419913 City of Delta Junction Pioneer Park Page 5 of 10

While an application for sale was submitted by the City in 2013, it is unknown if a conveyance adjudicated at that time would have been for free. The conveyance of the land for the Visitor s Center, ADL 22287, was adjudicated in 1998, and the conveyance of the parcel for Sullivan Roadhouse and the Farmers Market, ADL 419242, was adjudicated in early 2013. The application for that site was submitted in 2011. Land conveyances typically take time to adjudicate as they are a disposal of state interest and require a thorough adjudication process, so the amount of time taken to adjudicate the conveyance of Pioneer Park is not substantially longer than other conveyances. At this time DNR, DMLW has determined it is likely in the State and the Delta community s best interest to convey the parcel to the City for use as a public park in a partnership with the Pioneers. This considers the investment and infrastructure the Pioneers have invested in the site over the term of the lease, but also what is in the best interest of the State which holds this land in trust for all residents of Alaska. DNR, DMLW understands that the City and the Pioneers will be disappointed that the conveyance will not be for free, especially given the long standing interest in this site and the investment into the site by the Pioneers, but a sale for 50% of FMV still provides a benefit. Not only will the City be obtaining a parcel within the city limits for 50% of FMV, but they will not have to go through a competitive process which would require the parcel be sold to the highest bidder. Selling the parcel for 50% of FMV allows the land to be purchased at a discount in order to support the public purpose of the park, but also provides some direct remuneration to the State for sale of the land which will no longer be available to revenue generation. The City will be responsible for paying for and providing an approved appraisal establishing the FMV of the parcel. Once an approved survey and approved appraisal are received, then the City can submit a Declaration of Intent for sale. If the City does not pay lump sum for the parcel and intends to pay over time, a contract for sale of the parcel will be issued to the City, subject to down payment, interest, terms and conditions as appropriate. An example of a declaration of intent and standard sale contract may be obtained upon request. Agency Review Agency review was conducted from February 28, 2013 through March 15, 2013. The review requested comments on the proposed conveyance and was sent to the following agencies: DNR, DMLW, Realty Services, Jerri Sansone Alaska Department of Fish & Game (ADF&G), Division of Habitat, William A. Morris ADF&G, Sport Fish Division, Delta Junction, Dave Davenport DNR, Division of Parks & Outdoor Recreation/State Historic Preservation Office (SHPO) Alaska Department of Environmental Conservation (DEC), Waste Water Section, Tim Pilon DEC, Drinking Water, Charley Palmer DEC, Contaminated Sites, Melody Debenham DOTPF, Right-of-Way Section, John Bennett United States Army Corps of Engineers, Benjamin Soiseth On December 10, 2014, agency review was sent to DNR, Planning Section within the RADS Unit and Drew Harrington, DMLW, Water Section, NRO with comments to be submitted by December 23, 2014. ADL 419913 City of Delta Junction Pioneer Park Page 6 of 10

The following comments were received: DNR, SHPO: No historic properties affected. DNR, DMLW, Realty Services: Contact DOTPF Right-of-Way as there have been multiple Alaska Highway and Richardson Highway realignments and this land borders both. NRO Comment: See DOTPF Agency Review comments below. DOTPF, ROW Section: No conflict between the sites and the Alaska and Richardson Highways realignment. No objection to the proposed conveyance as the parcels are north of the highway right-of-way. NRO Comments: A question arose regarding a potential conflict of a DOTPF ROW crossing over a portion of Government Lot 83 as well as whether this site was affected by several PLO s (PLO 84, 270, 601, 747, 2665 and 1613). DOTPF stated that the portion of Lot 83 proposed for conveyance to the City is not encumbered by the ROW and the PLO s do not affect this conveyance. DEC, Contaminated Sites: Noted 3 contaminated sites in the vicinity of the proposed conveyance: AT&T Alascom Delta Junction Station, File #120.38.008; Jack s Chevron, File #120.26.008; and North Delta Tank Farm, File #141.38.001. The Alascom and Jack s Chevron sites have had the contamination cleanup completed and institutional controls are in place. The North Delta Tank Farm is active but is in the process of being closed. NRO Comment: None of these sites are located within the boundary of the proposed conveyance. DEC, Drinking Water: The site intersects several drinking water protection areas for public water system (PWS) sources. It does not appear that a change in land use is proposed, or that the risk to nearby PWS sources will change. The water well identified on the property is an unregistered public water system. The owner of the well should contact DEC Drinking Water Program to determine if the well should be registered. Also, the site has no current water rights. The City should apply to DNR for water rights. NRO Comment: DEC Drinking Water Program was contacted and they indicated the well should be registered. The well was installed by DOTPF while the site was under ILMA ADL 32815 for use by the State Troopers. The date of installation is unknown. In subsequent conversations with DEC and the City, it appears that since the well was installed by DOTPF, the State should be the party to submit a Class C Registration. DEC has stated that the well can be registered with DEC without a well log. A Location of Well form was filed with DNR, Division of Mining & Water Management in Anchorage on August 10, 1995 by Cook Drilling, a contractor hired by the Pioneer Igloo #35, the operator of Pioneer Park. Information on the form shows that the well was drilled approximately 40 years ago and Cook Drilling cleaned the well in 1995. Well depth information: depth of hole-142 feet, depth of casing-142 feet. Depth to static water level is 85 feet below the top of the casing. The well intake opening end is an open mend and the pumping level is 35 gpm. DNR, DMLW, NRO has submitted an Inventory and Source Registration Form for Class C Public Water System to DEC. DEC has requested a Bacteria & Nitrate report which is not available. The City will be responsible for obtaining the report and submitting it to DEC prior to issuance of the conveyance document. ADL 419913 City of Delta Junction Pioneer Park Page 7 of 10

DNR, DMLW, Water Section: A Water Right will be required if greater than 500 gallons of water per day for ten days out of the year or greater than 5,000 gallons of water in a single day is withdrawn from the well. If less than this quantity of water is withdrawn from the well the City may still apply for a water right. NRO Comment: The City will probably not need to apply for a water right, but to protect their interest they have been encouraged to do so. No other comments were received. Public Notice Pursuant to AS 38.05.945(b)(3) public notice describing this proposed action will be posted on the Alaska Online Public Notice System for 30 days. Letters with instructions to post the notice will also be sent to the Delta Junction post office and the City of Delta Junction office. Pursuant to AS 38.05.945(c)(1) the City of Delta Junction will be given notice for 30 days. Per 38.05.946, Hearings, the City may hold a hearing within 30 days after receipt of the notice. While the City is the applicant, they are receiving notice under AS 38.05.945 as the municipality in which the proposed action is taking place. Notice will also be sent to the Pioneers of Alaska, Igloo #35, and an adjacent landowner, Bertha Baugus. The other adjacent landowners are the City, the Bureau of Land Management (state selected land), and an unknown land owner. All parcels are vacant except for lot 82A3 which is owned by Bertha Baugus. The public is invited to comment on the proposed land sale. Comments should be submitted to DNR, DMLW, Northern Region Office (NRO), at 3700 Airport Way, Fairbanks, Alaska 99709. Dianna Leinberger can be contacted for further information at dianna.leinberger@alaska.gov or at 907-451-2728. Additional copies of the preliminary decision and an example land sale contract may be obtained from the NRO. Interested parties have the right to comment during the public notice period and the commenters who are aggrieved by the final finding and decision will have the right to appeal it. In order to be able to appeal the final finding and decision, a person must provide written comments during the preliminary decision comment period. A copy of the final decision will be sent to any person who comments on the preliminary decision, and will include an explanation of the appeal process. Discussion On January 4, 1979 the City of Delta Junction as a part of their municipal entitlement applied for 7 acres of land which included the Pioneer Park parcel (Lots 1 and 2 of USS 2770 and Government Lot 83) and Government Lot 84. A final decision was made the following year to convey only Government Lot 84, which is adjacent to, but within Pioneer Park. Lots 1 and 2 of USS 2770 and Government Lot 83 were within ADL 32815, which was an ILMT to DOTPF. According to the LAS abstract, the reason for not conveying the land to the City as a part of their municipal entitlement was that the State still had an interest in the land under the ILMT. The City has since received the remainder of their land entitlement. The ILMT was eventually closed in 1994 as a result of the lack of use and the lease application submitted by the City on behalf of the Pioneers on April 14, 1994. ADL 419913 City of Delta Junction Pioneer Park Page 8 of 10

The lease application, ADL 415300, was for the land to be developed and used as a public park and activity area for the citizens of Delta Junction, to be managed by the Pioneers. A lease was issued to the City on October 16, 1996, expiring on October 15, 2021. On February 25, 2013 the City applied to purchase this site at no cost under AS 38.05.810(a)(1). The Pioneers continue to manage the site on behalf of the City. As was mentioned the site was previously authorized under ILMT to DOTPF under ADL 32815 issued on June 17, 1966 for use as a residence and operations building for the State Trooper outpost. During the term of the ILMT the site was never fully developed but the following improvements were made to the site: concrete slab, storage trailers, water well, and septic tank. Two driveways from the access road off the Alaska Highway were also installed. Under the current lease the Pioneers constructed a community park and a community meeting room with a covered pavilion on the existing slab. The meeting room contains bathroom facilities and a full kitchen with electricity, which is also the heating and cooking source. The building and pavilion is used for community events during the summer only (approximately May 15 through September 15). The improvements are estimated to have a value of $150,000, with an additional $2,000 planned for recreational improvements such as a horseshoe pit. Public events such as barbecues, Easter egg hunts and summer children s activities are held on the site. In addition to the proposed horseshoe pits, additional outdoor recreational events are planned. An inspection of the site by NRO personnel was conducted on June 21, 2013 with Mike Tvenge, City Manager for the City. The site was clean with no evidence of trash or contamination. The community building and covered pavilion was located on the site. The well and septic system were located and measured to confirm that the wellhead was at least 100 feet from the septic system. The distance is 132 feet which exceeds the minimum requirement of 100 feet. The cleanout for the septic system is 61.3 feet to the septic tank. There is an orange ATCO-type unit used for storage by the Pioneers situated in a treed area of the site. ADL 415616 is a public utility easement issued to GVEA for an electric pole which is used for the operation of Pioneer Park. The pole was located and a photograph taken. A full inspection report with photographs is in the casefile. On December 17, 2014 NRO submitted the Class C Public Water System Classification and Registration form to Lee Johnson of DEC. A Bacteria and Nitrate Report is required before the well can be registered. As this land is being conveyed to the City at no cost, the City will be required to bear the cost of the test and must submit the required test report to DEC prior to issuance of the conveyance document. The City has also been encouraged to apply to DNR for water rights for this site. The conveyance will be subject to the following: ADL 412587 Public easement for a public driveway from the Alaska Highway to Lot 82A3, private property owned by Bertha Baugus. ADL 415616 Public Utility Easement to Golden Valley Electric Association (GVEA) for an electric pole which is used for operation of Pioneer Park. ADL 419913 City of Delta Junction Pioneer Park Page 9 of 10

Location Diagram - ADL 419913 Pioneer Park Fairbanks Meridian, Township 10 South, Range 10 East, Section 23 ADL 419913 Pioneer Park Richardson Highway Alaska Highway DOTPF Maintenance Station Visitor Center