DEPARTMENT OF NATURAL RESOURCES

DIVISION OF MINING, LAND AND WATER

August 9,2000

TONY KNOWLES, GOVERNOR

550 W. 7TH AVE., SUITE 640 ANCHORAGE, ALASKA 99501·3576

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Re: ADL 20729 - Top End, Inc., d.b.a. Alaska Raceway Park

Preference Right Purchase Application

Fellow Alaskans,

After careful consideration, the Division of Mining, Land and Water has made a final decision to sell the subject parcel of state land to Top End, Inc. under preference right purchase. The sale will, however, be subject to a number of conditions in response to community concerns raised during the public comment period. These conditions are detailed on page 11 of the attached decision.

All persons who meaningfully participated during the public comment period may appeal this decision as stated in the last paragraph on page 12. This decision becomes final August 29 unless an appeal to the Commissioner is filed.

If you have any questions, please contact me at (907) 269-8604 or Romeo Rescober at (907) 269-8535.

Respectfully,

Sandra Singer

Natural Resource Manager

"Develop, Conserve and Enhance Natural Resources for Present and Future Alaskans"

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STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF MINING, LAND AND WATER

FINAL FINDING AND DECISION

PREFERENCE RIGHT PURCHASE APPLICATION ADL 20729

This Final Finding and Decision is intended to complement and update the Preliminary Finding and Decision dated February 2, 2000.

REQUESTED ACTION:

To ensure that the sale of a parcel of state land to the lessee under preference right purchase pursuant to AS 38.05.102 is in the best interest of the state.

This parcel is located within the Matanuska Susitna Borough and is described as follows:

Lessee: Top End, Inc., d.b.a. Alaska Raceway Park

Legal Description: The W1/2SW1I4, SW1 14NW1 14, E1/2NW1/4NW1/4, SW1/4NW1/4NW1/4 and S1/2NW1/4NW1/4NW1/4, Section 36, T17N, R2E, S.M., containing 155 acres, more or less.

AUTHORITY:

Alaska Statute 38.05.035(e), 38.05.102

ADMINISTRATIVE RECORD:

Department of Natural Resources case file ADL 20729 and the Susitna Area Plan constitute the administrative record used for the basis of this decision.

PUBLIC NOTICE AND COMMENTS:

On February 9,2000, a preliminary finding and decision was issued by the Department of Natural Resources (DNR) to 'convey a parcel of state land to the lessee under preference right purchase.

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Pursuant to AS 38.05.945, the public was invited to comment on the preliminary decision to convey this parcel of state land and the associated proposed Mineral Closing Order. The subject parcel is located within the Matanuska-Susitna Borough, approximately % mile east of the old section of the Glenn Highway, approximately 7 % miles southeast of Palmer and 1 mile north of Knik River.

A public notice was published in the Anchorage Daily News on February 18, 2000 and the Frontiersman on February 25,2000. The same public notice was published in the Frontiersman and Fairbanks Daily News-Miner on March 14, 2000. The same notice was also posted at the Wasilla and Palmer Post Offices, mailed to the applicant, and to the following offices:

1. Matanuska Susitna Borough (MSB)

2. Butte Community Council (BCC)

3. Cook Inlet Region, Inc. (CIRI)

4. Alaska Department of Fish & Game (ADFG)

5. Alaska Department of Environmental Conservation (ADEC)

6. Alaska Department of Transportation & Public Facilities (ADOTPF)

7. DNR - Division of Parks & Outdoor Recreation (DNR-DOPOR)

8. DNR - Division of Mining, Land and Water - Mining/Permitting/Mineral Property Management Section (DNR-DMLW, MPMPMS)

After the publication of the preliminary finding and decision for the sale of this parcel and prior to the public hearing held on April 25, 2000, the Division of Mining, Land and Water (DMLW) received comments on this issue as follows:

4. 64 letters opposed the sale.

5. 200 petition signatures supported the sale.

A Notice of Public Hearing and Extension of Public Comment Period was also published in the Anchorage Daily News, Frontiersman and Fairbanks Daily News-Miner on April 14, 2000. A public hearing was held at the Butte Community School on April 25, 2000. Approximately 100 people attended the hearing. The DMLW received the following information and public comments between April

25, 2000 and April 28, 2000:

1. 88 people signed the Public Hearing Sign-In Sheet.

2. 25 people testified during the public hearing.

a} - . 12 people opposed the sale.

b) 13 people supported the sale.

3. 21 letters opposed the sale.

4. 57 petition signatures opposed the sale.

5. 4 letters supported the sale.

6. 375 petition signatures supported the sale.

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During the response period, DNR received comments from the following:

Matanuska Susitna Borough's comments:

1. MSB Code Compliance Division: MSB has not adopted a noise ordinance within its boundaries. Further, the borough does not require a conditional use permit for the referenced racetrack in the Butte area of the borough. Racetracks are regulated under 17.60 Conditional Uses in the Core Planning Area of the borough only; the Butte is not part of the Core Planning Area.

In accordance with the Matanuska Susitna Borough Coastal Management Plan (MSBCMP), September, 1987, Chapters 4 and 6, and Amendment #2 dated March 31, 1988, this project is found to be consistent for the following reasons:

1. The project is found to be in compliance with all rules applicable to special land use districts or geographic areas significantly affected by the proposed action.

2. The project is consistent with all rules applicable to the affected uses, activities, habitats and resources.

3. The project is consistent with the management plan for any Areas Which Merit Special Attention (AMSA) that it will significantly affect.

4. All development must comply with the requirements of MSB Title 17 Zoning.

The subject property is located on Flood Insurance Rate Map 9740D and designated as Zone A. This property is federally de$ignated Flood Hazard Area. A Development Permit is required under MSB 17.?9.100 before any development begins in Zone A. MSB 17.29.040 defines development as "any man-made change to improved or unimproved real estate, including but not limited to buildings or other structures, mining, dredging, filling, grading, paving, excavation, or drilling operations located within the area of special flood hazard."

Comments from in-house departments within the borough:

1. Department of Public Works: There is a blocked Section Line Easement. This is the only practical access to many acres of Borough Land.

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The state has allowed the continued blockage of the Section Line Easement. Before the state transfers ownership of the property it should resolve all illegal conditions.

2. Cultural Resources: The subject property has no known cultural resources that will be affected by this project. This conclusion is based on research of documented sites on file in the MSB Cultural Resources Division Office (MSBCRDO). Their records, however are incomplete, therefore should you suspect a site of cultural significance (this may include numerous depressions, house foundations or former garbage dumps) please contact this office. Also if, while operating heavy equipment or during excavation, a concealed archaelogical site is uncovered, please call MSBCRDO at 745-9859.

3. Platting Division: No comment.

4. Planning Division: Located in the 1970 MSB Comprehensive Planning area. The Butte Community Council should be (must be) notified.

5. Recreational Services: No comment.

6. Coastal Zone Management/Code Compliance: The project is consistent with stipulations. The project is located in a federally designated area of special flood hazard (FIRM panel 9740D, Zone A).

Response to Borough Comments:

Section Line Easement: At least one structure (the concession building) encroaches on the section line and the current use of the section line for parking, etc. may restrict access. The solutions are to either a) vacate the easement and provide alternate access; b) or relocate structures outside the section line easement.

No objections or adverse comments were received during the response period of the public notice from other agencies that were notified pursuant to AS 38.05.945.

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PUBLIC COMMENTS:

Issues raised by public comments:

The following is a summary of significant issues raised in public comments (letters, petitions, public hearing testimony) and DNR's response to these.

1. Noise in the Butte area.

a) Noise from racing. Many are concerned about the lack of restriction on hours of operation and the potential for increased noise from future increased hours or an increase in number of race days that may occur if land is privately owned.

b) Noise from users, campers - including radios/stereos late at night and early in the morning.

Response: DNR does not have the authority to actually regulate noise levels. The racetrack currently operates without any noise restrictions on hours of operation. The existing DNR lease contains no restrictions on noise or hours of operation, and DNR's ability to impose such restrictions on the existing lease is doubtful. Any problems associated with noise could occur regardless of the sale, as the existing lease is still valid for 18 years (until 2018).

To help reduce the impact of noise, DNR will convey the land with an easement requiring the owner to retain a vegetative buffer on the east side of the property. In addition, the borough has agreed to consider the sale of land to the west of the racetrack to Top End as a vegetative noise buffer.

Local governments generally regulate noise. Currently, there are no restrictions on other uses regarding noise. Public nuisances and Racetracks are regulated under MSB 17.60 for Conditional Uses in the Core Planning Area of the borough only. The Butte area is not a part of the Core Planning Area. Note that in the Butte community survey conducted by the Community Council in 1999 that other forms of noise (such as dogs) were rated a bigger problem and they are not regulated.

Many letters and comments during the public hearing on April 25, 2000, which was held at the Butte Elementary School Gymnasium, many public comments focused on noise from the racetrack. The Butte community has several options to enact noise controls including asking the Butte area to become subject to MSB 17.60 for racetracks, initiating a comprehensive plan, or requesting the Borough Assembly to adopt a noise ordinance. MSB recommends the process needs to be initiated by the Butte community and submitted to the MSB Planning Department.

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10. The noise and related racetrack uses have negative impacts on adjacent land uses and property values.

Response: The racetrack is an existing use and has existed on this site since 1964 (36 years). The racetrack has a lease that allows it to continue until June 24, 2018 (18 years). DNR will require a buffer on the east side of the parcel and the MSB is considering sale of a parcel on the west side to serve as a buffer.

The incompatibility of uses will exist regardless of the sale. The traditional tool for regulating adjacent property uses is through local planning and zoning. The borough has not adopted a comprehensive plan or zoning for the Butte area. In an area without a zoning ordinance there are many incompatible uses and potential public nuisances (noise from the racetrack and dogs, trash, trespass, junkyards, refuse areas, etc.). All the nuisance concerns identified may be declared to be potentially damaging to the property values and usefulness of adjacent properties or potentially harmful to the public health, safety and welfare. Resolutions of these nuisance concerns are best regulated by local government. The MSB recommends that the Butte community would need to submit their application for zoning to the MSB Planning Department to regulate the land uses in this area.

3. Consistency with Susitna Area Plan and MSB Coastal Management Plan.

Response: The sale of this parcel to Top End, Inc. is consistent with the Susitna Area Plan (June 1985). This area plan was prepared by the Alaska Department of Natural Resources, Alaska Department of Fish and Game and Matanuska Susitna Borough. This parcel was originally classified as Commercial-Industrial by classification no. 159. The Commercial-Industrial land classification was converted to Settlement in 1983 (11 AAC 55.277). Land classified Settlement may be sold. This parcel is within the Susitna Area Plan, Glenn Highway Part 1 ; Management Unit 1 - Palmer-Sutton-Butte; Subunit 1e (Racetrack). The primary designated land surface use within this unit is Public Recreation. The secondary land surface uses within this unit are Settlement and Forestry. The Area Plan did not change the settlement classification of this parcel because of the existing use and development. The sale of this parcel is consistent with settlement designation.

In accordance with the Matanuska Susitna Borough Coastal Management Plan (MSBCMP), September; 1987, Chapters 4 and 6, and Amendment #2 dated March 31,1988, this project is found to be consistent with the MSBCMP stipulations (see MSB's response on pages 2 & 3).

4. Designate the subject parcel as a residential area to fit in with the surrounding community.

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Response: DNR generally does not restrict the future use of land transferred or sold out of state ownership. Local government through planning and zoning authorities traditionally regulates decisions on the future use of private land. As previously noted the borough has not adopted any land use regulations for this area. DNR does note, however that the subject property is located on Flood Insurance Rate Map 9740D and designated as Zone A. This property is federally designated Flood Hazard Area.

5. Concerns about process, having Top End, Inc. deposit $4,500 to process its application.

Response: Nothing in the agreement to expedite processing of the purchase application guarantees that the land will be sold to Top End, Inc. The deposit of $4,500.00 is provided for under AS 38.05.860 regardless of the outcome of the adjudication process. DNR requested the fee in order to pay for staff not otherwise available to process this application, which otherwise would have been processed after DNR processed numerous other preference right applications that were received prior to Top End's.

6. The state needs to balance the economic interest of the owners against the interests of the state's residents to enjoy the quality of life (quiet) of their homes.

Response: DNR has generally not gotten involved in resolving disputes between different land uses. DNR makes decisions regarding whether or not to sell land based upon state interests such as protection of public recreation areas, protection of mineral and other resource development areas that generate revenue, and protection of fish and wildlife habitat for general public use. Because this land is already devoted to a private use (because it is leased for a racetrack), it does not retain these public values. The racetrack has been around for 36 years which pre-dates most of the residences in the area.

7. Sale is or is not in state's interest.

Response: No one has identified any overriding state interests that should require retaining this parcel in state ownership.

8. Questions about borough valuation process. Several people raised the concern that the tax assessment for the racetrack is much lower that the assessment of adjacent (primarily residential) properties.

Response: This is a borough issue, although the apparent reason why the race track property is valued lower is that the tax figures cited are for the leasehold interest only. The land value is not currently taxed as it is state land. Sale of the property will result in taxes assessed on the land and its improvements.

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9. The lease in the past was not in good standing and should have been terminated long ago.

Response: The lease was not terminated in the past and the current lessee is in good standing. Past history cannot be used now to revoke the lease or deny the sale.

10. The racetrack does or does not cause problems of drinking, garbage, etc. Many were concerned about drinking and trash being dumped on state and borough lands in the vicinity of the racetrack and felt there may be a link to these problems.

Response: There are significant problems with trash disposal, drinking and other related problems on state and borough land in the Butte area that are unrelated to the racetrack. There does not appear to be any evidence of drinking and related problems at the racetrack. In addition, the racetrack cannot be responsible for what its customers may do when they are off premises.

11. Racetrack operator needs to own the track so he can finance improvements, including improvements for safety as well as noise abatement in the future.

Response: This is one of the reasons why Top End Inc. has applied to purchase the property.

12. Put the parcel up for competitive bid.

Response: This is not a viable option because Top End, Inc. has 18 more years on its lease and has made significant improvements to the property, many of which are not removable. Any future owner would need to compensate Top End Inc.

Additional Public comments supporting the land sale:

1. Any improvements made would increase the tax value of this parcel and all residents of the area would benefit directly.

2. Top End Inc. operates Alaska Raceway Park and is one of the larger employers of seasonal workers in the Butte area.

3. With the sale of this parcel, Top End Inc. would be better able to secure financing to improve this parcel.

4. Since the parcel will not be used for residential use, the burden for the

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Borough to supply services, such as schools, will not be increased by this sale. This would add much needed revenue to the Borough.

5. Top End, Inc. has been in discussions with the BCC regarding ways of cutting down the noise. The BCC has recommended that the borough sell/lease Top End, Inc. the acreage traditionally used for parking and that the borough retains the land on the west side for recreational use and as a buffer for noise. Top End, Inc. also indicated that the track could be planted with vegetation and other measures to cut down the noise.

6. This racetrack was built many years before many nearby residents arrived in the valley. So many of the people who bought property next to the racetrack knew the racetrack was there. The MSB already has regulations to control the running and future development of racetracks within the borough.

7. This landmark has served the community for almost 35 years. Top End, Inc. should be able to purchase the leased land and continue improving the area and provide a place for safe motor sports in Alaska. Top End, Inc. provides the racers with the only place in Alaska to race the type of race vehicles that are marketed by Alaskan businesses. The racetrack generates economic value throughout South Central Alaska - from parts stores, to car sales, to hotel/motel and restaurants.

DNR Response: Comments noted.

CONDITIONS AND RESERVATIONS:

Subject to:

1. A 50-foot wide section line easement on either side of the section line, or an agreement to provide an equivalent alternate easement approved by the borough and state.

2. All oils, gases, coal, ores, minerals, fissionable materials, geothermal resources, and fossils of every name, kind or description, and which may be in or upon said land described, or any part thereof are reserved pursuant to AS 38.05.125.

DISCUSSIONS AND FINDINGS:

During the comment period the state received public comments from those that opposed and supported this land sale to the lessee. The comments are

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summarized on page 2. The state identified the issues raised by public comments that are opposed to the sale and responded to each issue, which can be found on pages 5 to 8.

This parcel of state land is surrounded by non-state land. DNR's Susitna Area Plan and the land classification identify the parcel for potential disposal. The parcel is currently used for a privately owned racetrack under a valid lease. No overriding values (see page 7, response to public comments #6) have been identified that support the state retaining ownership of the parcel.

The Department of Natural Resources issued Department Order 110 on preference rights for land lease or purchase. The purpose of this department order is to provide specific guidelines for all discretionary preference right decisions. Before a preference right may be granted, a best interest determination must find: (1) whether the sale of the land is in the state's best interest, and (2) whether sale or lease to the preference right claimant is in the state's best interest.

The discretionary criteria set out in the order for determining AS 38.05.102 preference rights are:

1. Has the applicant substantially improved the land?

2. Is the applicant actively using the land?

3. Would an open public sale cause inequitable detriment to the lessee?

These criteria are intended to assist in the examination of the equities of a preference right claim. Although not required by statute, they help to amplify legislative intent as understood by the department. That intent is to assist lessees, who have made substantial investments, to obtain further rights to land should the land become available for disposal.

In applying the criteria of Department Order 110 to ADL 20729, the DNR finds that substantial improvements have been made to the parcel. The estimated value of improvements is approximately $66,800. Furthermore, the lessee is continuously and actively using the land for recreational and commercial purposes that is compatible to the primary and secondary uses designated by the Susitna Area Plan.

Since the lessee has placed substantial improvements on the lease and is continuously and actively using the land, these would represent an equitable interest in the land that will justify the selling of this land to the lessee. The DNR finds that a revocation of the lease or an eventual public sale or a release of the leasehold would cause injustice or inequitable detriment to the present lessee.

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The conveyance of state land to the lessee is or "will be" subject to the following conditions:

1. A land survey must be completed by a licensed land surveyor in the State of Alaska under the instructions issued by the Division of Mining, Land and Water. The survey cost is at the expense of the lessee.

2. An appraiser approved by the state, at the expense of the lessee, must complete a fair market value appraisal of the land. The lessee will be provided with a current list of appraisers that are acceptable by the state.

3. Within 2 years of the date of this decision, the lessee must either have reached an agreement acceptable to the borough and the state to relocate the existing section line easements to other borough lands so as to provide equal (or better) access or remove all structures and uses that encroach on the section line. At least one structure (the concession building) clearly appears to encroach on the section line. Additional encroachment may be determined by the survey required above. The Director could extend this date if appeals, litigation or other factors beyond the applicant's control delay the state or borough's process.

4. The state conveys the raceway tract with a 200-foot wide visual and sound vegetative easement along the east boundary. This easement will buffer the raceway from the borough-owned lands to the east. The raceway does not use this area now and creating the buffer will help reduce noise impacts on the existing and future development east of the racetrack. The applicant has agreed to this buffer and suggested the 200foot width.

5. Along the west boundary of the raceway, the applicant will pursue purchase of a buffer strip from the borough, to provide for a vegetative visual and sound buffer so that the borough can sell its remaining lands west of the raceway and to buffer private properties to the west.

6. The applicant will also pursue purchase from the borough of approximately 27 acres, including the part that is cleared and for many years used for parking by the raceway. Approximately 1/3 to % of the area is parking lot and the balance would be maintained as a vegetative sound and visual buffer. This acreage collected junk and debris from the former raceway lessee, much of which has been removed. However, the applicant is willing to finish the cleanup and plant better screening vegetation and grass to minimize dust and noise.

7. The borough has agreed to re-notice the proposed sale of parking area and buffer lands to the raceway owners. The Community Council has

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previously concurred with an application to lease the parking area and provide a greenbelt between the raceway and property owners along the Old Glenn Highway. In addition to selling instead of leasing the parking lot, the current proposal differs by creating lots for the borough to sell, responding to interest in purchasing lands in the area.

DECISION:

From these discussions and findings, the DNR concludes that, because the land is appropriate for private ownership and the preference right claim is substantiated by improvements, occupancy, and use, the granting of a preference right under AS 38.05.102 is in the state's best interest. The case file has been found to be complete and the requirements of all applicable statutes have been satisfied. Therefore, the DNR allows the lessee to acquire this parcel under preference right purchase.

Upon approval of the mineral closing order, fair market value appraisal and survey plat the case file will be forwarded to the Contract Administration Unit for the issuance of the land sale contract.

A person who meaningfully participated in comment on this decision and who is affected by the decision may appeal it, in accordance with AS 38.05.035(i)-0), to John Shively, Commissioner, Department of Natural Resources, 550 W. 7th Avenue, Suite 1400, Anchorage, Alaska 99501-3561. Any appeal must be received at the above address, or received by being faxed to 1-907-269-8918, by August..4!i, 2000. The appeal must comply with AS 38.05.0350) and 11 AAC 02.030(a)(1)-(2) and (a)(4)-(8). If no appeal is filed by that date, this decision then goes into effect.

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Dick Mylius, Chief

08/09/2000

08/09/2000