FINAL BEST INTEREST DECISION – MHT 9201071

Kenai Peninsula Borough Non-Exclusive Term Easement

MHT: 9201071
MH Parcel: S20006

1. Executive Summary.  The Trust Land Office (TLO) intends on granting the Kenai Peninsula Borough (KPB) access across Trust land to access adjacent KPB owned land.  As consideration for the Trust granting KPB an easement, KPB will grant the Trust an access easement across KPB property to provide legal constructible access to Trust parcel S20006, which is presently not accessible by legal and constructible means.   This decision does not approve any future development and only allows the TLO to grant the KPB an access easement needed to access their adjacent lands. The TLO issued a preliminary decision to grant KPB a non-exclusive term easement on June 29, 2026, and provided public notice of that decision from July 2, 2026, through August 3, 2026. The TLO received 14 public comments on the proposed easement during that public notice period. The Executive Director reviewed and considered the comments received and determined that no changes to the proposed easement were necessary; however, the Final Best Interest Decision includes additional explanation and clarification regarding the access arrangement, the basis for the decision, and the scope of the action. The TLO’s Executive Director issues this final decision approving the proposed non-exclusive term easement to the Kenai Peninsula Borough.

1. Applicant/File #.  Kenai Peninsula Borough / MHT 9201071

1. Proposed Use of Trust Land.  A Non-Exclusive Term Easement issued to the Kenai Peninsula Borough (KPB) for access to borough land adjacent to the Trust parcel. The exact location and alignment of the easement will be determined in the future based on site evaluation and may not be one of the exact three options outlined below. This access will provide the ability for further study and planning of the area. As consideration for the Trust granting KPB an easement, KPB will grant the Trust an easement to ensure access through KPB land to MH Parcel S20006 to meet the Trust’s future development needs.

1. Subject Property.
   1. Legal Description. Located in Section 24 in Township 1 North, Range 1 West, Seward Meridian and more particularly described as:

A portion of S1/2NW1/4NW1/4, SW1/4NW1/4, S1/2SE1/4NW1/4, N1/2SW1/4, E1/2NW1/4SW1/4SW1/4, NE1/4SW1/4SW1/4, N1/2SE1/4SW1/4, according to the plat approved by the U.S. Surveyor General’s Office in Juneau, Alaska on June 16, 1914, as depicted in Exhibit 1, Figure 4 (Options 1–3).

Final width will be a maximum of 100 feet. Final length will be based on topography and final layout. Both final width and length shall be established upon completion and acceptance of an as‑built survey or plat.

• Settlement Parcel Number. S20006
  • Site Characteristics/Primary Resource Values. The subject parcel is located in the Blueberry Hill area near Seward, within a landscape dominated by steep ridges, narrow benches, and shallow bedrock typical of the Chugach flysch formation. Bedrock lies close to the surface across much of the area, with exposed outcrops present throughout the parcel. The terrain consists of forested slopes and patches of surficial organics. These characteristics do not materially impede the proposed easement corridor.

Primary resource values associated with the parcel include its physical position within a broader, multi‑acre landscape identified by the Kenai Peninsula Borough (KPB) as important for long‑term community expansion and future access planning. The parcel’s location provides potential linkage between KPB‑owned lands to the east and Melanie Lane/Knotwood Street to the west, making it strategically situated for future access development under borough road standards.

• Historical and Existing Uses of the Property. The subject parcel is largely undeveloped and remains in a natural condition characterized by steep ridges, narrow benches, and shallow bedrock. No constructed infrastructure or active Trust authorized uses currently occur on the parcel. Historical use of the Trust parcel itself has been limited to informal, undeveloped open‑space use. Given the presence of cut stumps on the parcel, it was logged at some point in the past 50-100 years.
  • Adjacent Land Use Trends.  Adjacent lands include KPB holdings—positioned for long‑term access and development planning as part of the Blueberry Hill area near Seward. The Borough Assembly has identified the area as a future community expansion zone and has initiated acquisition and feasibility planning to enable eventual road‑served development.
  • Previous State Plans/Classifications. The 2001 Kenai Area Plan does not include Trust land and therefore does not apply to the subject parcel. Since conveyance into Trust ownership, the parcel is managed solely under the Alaska Mental Health Trust authorities and regulations. No active state land use classifications affect the parcel, and no state planning documents conflict with or limit the proposed easement authorization.  Further, AS 38.04.065 and AS 38.05.300 (and their accompanying regulations) – which outline the classification and reclassification of general state land – are inconsistent with the Enabling Act and thus do not apply to Trust land.  (See Section VI, B).   
  • Existing Plans Affecting the Subject Parcel.  The proposed easement falls within the KPB and there are no KPB plans that affect the easement being granted under this decision.
  • Apparent Highest and Best Use. Given the parcel’s terrain, topographic constraints, shallow bedrock, and its location within a strategic access corridor for broader area development, the highest and best use of the parcel is long‑term land planning and potential future development facilitated by improved access in collaboration with the Kenai Peninsula Borough. Because such planning cannot occur without establishing access, this easement directly supports and enables the parcel’s highest and best use.

• Proposal Background.  In April 2025, the TLO and KPB entered into a Memorandum of Agreement to jointly obtain a development feasibility study for the Blueberry Hill area. Through summer and fall 2025, both parties coordinated site inspections and worked with the engineering consultant RESPEC, which prepared the feasibility study. The feasibility study concluded that constructing access across the combined Trust and KPB lands is feasible and that three viable conceptual road options exist. The study also demonstrated that access across each party’s land is needed for either landowner to continue coordinated planning and advance toward road layout and subdivision design. The proposed easement provides the KPB with access to its land while securing access necessary for continued Trust land planning and development.

This decision authorizes the Trust Land Office to issue a non‑exclusive term easement to the KPB along one of the three conceptual access corridors, or similar alignment, identified in the feasibility study and shown in Exhibit 1, Figure 4 (Options 1–3). No single corridor is selected at this stage, and the exact location and alignment of the easement will be determined in the future based on site evaluation. The selection among these corridors and any subsequent alignment work will occur through later planning and review processes (e.g., engineering, platting, approvals, and permitting, as applicable).

• Authorities.  The following authorities guide the Executive Director’s final decision: 
  • Applicable Authority.  AS 37.14.009(a), AS 38.05.801, and 11 AAC 99 (key statutes and regulations applicable to Trust land management and disposal). In accordance with AS 38.05.801 et seq. and the implementing regulations governing Alaska Mental Health Trust (“Trust”) land management (11 AAC 99), Trust land shall be managed consistently with the responsibilities accepted by the State under the Alaska Mental Health Enabling Act (P.L. 84-830, 70 Stat. 709 (1956)). This means that management shall be conducted solely in the best interest of the Trust and its beneficiaries. In determining the best interest of the Trust and its beneficiaries, and in determining consistency between state law and the Alaska Mental Health Enabling Act, the Executive Director of the Alaska Mental Health Trust Land Office (“TLO”) shall, at a minimum, consider the following interactive Trust management principles in accordance with 11 AAC 99.020:
• Maximization of long-term revenue from Trust land;
• Protection of the corpus;
• Protection and enhancement of the long-term productivity of Trust land;
• Encouragement of a diversity of revenue-producing uses of Trust land; and
• Management of Trust land prudently, efficiently, and with accountability to the Trust and its beneficiaries.
  • Inconsistency Determination.  As the proposed non-exclusive term easement is specifically authorized under 11 AAC 99, any relevant provision of law applicable to other state lands is inapplicable to this action if it is inconsistent with Trust responsibilities accepted by the State under the Alaska Mental Health Enabling Act (P.L. 84-830, 70 Stat. 709 (1956)) as clarified by AS 38.05.801 and Alaska Mental Health Trust land regulations (11 AAC 99). 11 AAC 99 includes determinations that certain State statutes applicable to other State land do not apply to Trust land unless determined by the Executive Director, on a case-by-case basis, to be consistent with 11 AAC 99.020.
• Terms, Conditions, and Stipulations.  The proposed action includes (and thus is limited to) surface use of the described portions of Trust land under a non‑exclusive term easement, with options for extension as appropriate. 

• Easement Construction and Process. Future development of the access easement being granted by this decision is expected to occur via KPB designated routes and will be subject to applicable KPB permitting, engineering review, and road standards. This decision does not authorize road construction or residential development; any future use and associated traffic will be evaluated under separate approvals and applicable permitting by the appropriate regulatory body.

Below is an outline of the easement construction and process after this final best interest decision is issued: 

1. Easement Construction License
   1. The TLO will issue a revocable, temporary construction license that allows entry, permitting, staking/survey, and construction necessary to produce the as‑built survey; it terminates upon issuance/recording of the final easement.
   1. As explained above, the grantee (KPB) must comply with all local laws and required processes prior to any construction beginning under this Easement Construction License.
   1. KPB must comply with all of the conditions and stipulations under that License.   
   1. The license may be issued for a wider corridor envelope to allow planning and construction flexibility.
   1. As-built Survey
      1. A survey prepared by a licensed surveyor that depicts the final location, width, and length of the authorization; it is submitted for TLO approval and then recorded, and TLO uses it to finalize the legal description prior to easement issuance.
   1. Easement is recorded
      1. Upon acceptance of the as‑built survey and satisfaction of license conditions, TLO issues and records the non‑exclusive term easement matching the as‑built.

1. Resource Management Considerations.  The proposed disposal is consistent with the “Resource Management Strategy for Trust Land” (RMS), which was adopted October 2021 in consultation with the Trust and provides for the TLO to maximize return at prudent levels of risk, prevent liabilities, and convert nonperforming assets into performing assets.

• Risk Management Considerations.
  • Performance Risks.  Performance risks will be minimized through enforcement of the terms and conditions of the easement.
  • Environmental Risks.  The activities performed under the easement will be done within the parameters of local, state and federal environmental protection laws that generally apply to private lands. The grantee will be adequately bonded and insured.
  • Public Concerns. Comments were received in opposition and support during the public notice. (See Section XIV. Public Comments and Responses).

• Due Diligence.
  • Site Inspection. TLO Staff have inspected the parcel in the past and are generally familiar with the Trust parcel affected by this decision. TLO Staff would inspect the activity periodically throughout the life of this authorization.
  • Valuation. There will be no cash revenue received for this authorization. However, in exchange, the KPB is also granting the Trust access through its parcel at no cost, which is necessary for the further development of the Trust’s parcel.
  • Terms and Conditions Review. The standard TLO Easement Agreement documents have been reviewed by the Department of Law.

• Trust Authority Consultation.  Consistent with 11 AAC 99.030(d), on April 23, 2026, the Executive Director consulted with the Alaska Mental Health Trust Resource Management Committee. The Committee recommended that the proposed transaction be forwarded to the Alaska Mental Health Trust board of trustees. On May 20, 2026, the board of trustees adopted the motion stating:

“The Alaska Mental Health Trust Authority board of trustees concur with the decision to dispose of a portion of Trust parcel S20006 through a non-exclusive term easement to the Kenai Peninsula Borough.”

• Public Notice.  The TLO satisfied 11 AAC 99.050 and the Alaska Constitution’s notice requirements by providing public notice as follows:
• in “a newspaper or other publication of general circulation” when it published notice of this decision in The Seward Folly on July 2, 2026 and in the Peninsula Clarion on July 3, 2026.
• to the “appropriate municipality” and to “the appropriate Alaska Native regional nonprofit corporation;” on July 2, 2026 via email; and
• posted on the Alaska Online Public Notice website from July 2, 2026 through August 3, 2026.

11 AAC 99.050 provides a process to provide the public adequate notice so they can engage in this process and comment on the proposed easement.  The TLO satisfied 11 AAC 99.050 and there was public engagement in this matter.  

The comments received during the public notice period are addressed in the following section.  

• Public Comments and Responses. A total of 14 comments were received during the notice period that began on July 2, 2026. As the comments spoke on common topics, each topic will be summarized and addressed. 

Many of the public comments express concerns about the impacts related to development of the access easement the Trust is granting to KPB: environmental issues, increased flooding potential, traffic, and safety. This decision does not approve any development of these easements and only allows the TLO to grant an access easement to KPB through Trust land (See Section VIII). As consideration for granting KPB that access easement, the Trust receives an access easement needed to access its Trust land; access that will improve the value of Trust land. Any future development of either access easement would be subject to separate review, permitting, and approval processes, as applicable, by the appropriate regulatory authorities.        

Comment Topic 1: Several commenters asserted that the proposed easements are inconsistent with the Trust management principles contained in AS 38.05.801 and 11 AAC 99.020 because the property interests being conveyed have not been appraised or otherwise assigned a monetary value. Commenters questioned whether the easements provide fair value to the Trust and asserted that granting the easement without a valuation fails to demonstrate that the transaction maximizes long-term revenue or otherwise satisfies the Executive Director’s fiduciary obligations.

Response Topic 1: The Executive Director evaluated the easement being granted and the consideration being received by the Trust from KPB under AS 38.05.801 and 11 AAC 99.020.  These statutes and regulations require these decisions to consider the long‑term revenue, corpus protection, land productivity, diversified uses, and prudent management. Securing constructible legal access to the Trust parcel is a prerequisite to subdivision, marketability, and future sale.  Without constructible legal access, the trust parcel’s economic and development potential is severely constrained, which is not in the best interest of Trust Beneficiaries. Because Borough platting requirements will require the dedication of legal access through the Trust’s parcel to adjacent parcels for any future subdivision of the Trust’s parcel, the Trust is not conceding value it would otherwise retain—this action ensures the Trust receives access, can collaboratively develop and share costs with the Borough, and can realize future revenue from the parcel. Additionally, the cost of an appraisal for this type of use is highly likely to be more than the valuation of the easement, which would not be a prudent use of Trust resources. Accordingly, the easement granted by KPB provides fair value without additional appraisal expenses, enhances long‑term revenue potential, and is consistent with the Trust management principles.

Comment Topic 2: Several commenters questioned the TLO’s determination that the proposed easement should proceed as a non-competitive disposal. Commenters asserted that the Best Interest Decision does not adequately demonstrate that the Kenai Peninsula Borough is the only qualified party or that a competitive process would not better serve the Trust. Some commenters suggested the Trust could realize greater value by pursuing other access arrangements.

Response Topic 2: The Executive Director considered these comments in evaluating whether a non-competitive disposal is appropriate under 11 AAC 99.040. In this case, a non‑competitive disposal is in the Trust’s best interest.  Only KPB – who owns the lands that the Trust needs to access its land — can grant the Trust this access easement.  No other party controls the land and thus able to grant the Trust the access easement it needs to improve the value of Trust lands. Based on the TLO’s knowledge, a competitive disposal process would not be feasible and would not serve the best interest of the Trust or its beneficiaries because: (1) there are no other landowners similarly situated as KPB who could offer the Trust the easement it needs to access its land; and (2) KPB is the only landowner capable of granting such an easement in exchange for an easement across Trust land.

Comment Topic 3: Several commenters expressed concerns that future roadway construction and development may increase traffic through the Questa Woods neighborhood and adversely affect roadway safety, emergency access, pedestrians, bicyclists, and the rural character of the area. Commenters cited existing roadway constraints, including the railroad crossing, narrow bridge, flooding, and roadway geometry.

Response Topic 3: The Executive Director appreciates the concerns expressed regarding roadway conditions and neighborhood impacts. This decision does not establish a final roadway alignment, authorize roadway construction, modify existing infrastructure, approve a subdivision, or determine the nature or extent of future development. The proposed action – as reflected in this decision – is limited to the issuance of a legal access easement.

The roadway and infrastructure conditions identified by commenters may be relevant to the review and design of any future subdivision, roadway, or development proposal. Such a proposal would be subject to applicable federal, state, and local planning, permitting, engineering, and regulatory requirements, which may include evaluation of roadway design, traffic, emergency access, drainage, pedestrian and bicycle safety, and other infrastructure considerations. The specific improvements or mitigation measures that may be required would be determined through those future processes by the responsible regulatory body and are outside the scope of this easement decision.

Comment Topic 4: Several commenters questioned the environmental findings contained in the Best Interest Decision and expressed concerns regarding grading, excavation, drainage, erosion, stormwater management, wetlands, and other environmental considerations. Commenters also asserted that additional site-specific environmental evaluation should occur before the easement is granted.

Response Topic 4: The Executive Director recognizes the environmental concerns raised by commenters. The proposed action – as reflected in this decision – is limited to the issuance of a legal access easement. The proposed easement preserves legal access rather than authorizes construction of a specific roadway, detailed engineering and environmental analyses remain dependent upon the selection of a future alignment and any proposed project design.

Future roadway construction or land development would remain subject to applicable environmental laws, permitting requirements, and engineering review. The Executive Director finds that granting KPB an easement across Trust land does not eliminate those future requirements and that preserving legal access at this stage is consistent with prudent management of Trust land and the long-term interests of the Trust and its beneficiaries.

Comment Topic 5: Several commenters suggested that alternative access routes should be evaluated before the proposed easement is granted, including routes that may reduce neighborhood impacts or provide more favorable engineering or development conditions. One commenter, writing in support of the proposed easement, stated that future use of the land reserves will require multiple points of access to mitigate impacts on any one area and that the proposed easement is necessary to secure one of those access points.

Response Topic 5: The Executive Director appreciates the alternatives and considerations raised by commenters. Issuance of the proposed easement secures and preserves legal access necessary for the future management of Trust land while maintaining the Trust’s ability to pursue additional access opportunities.

Comment Topic 6: Several commenters questioned whether additional public review should occur before the easement is approved and asserted that future development plans have not been sufficiently defined to support the proposed Best Interest Decision.

Response Topic 6: The Executive Director recognizes the interest expressed by commenters regarding future planning and development of the subject property. This Best Interest Decision is limited to determining whether granting the proposed non-exclusive easement to KPB — with the consideration being provided – is in the best interest of the Trust and its beneficiaries. This Decision does not approve a subdivision, roadway construction, or future land development. Should any of the access easements be developed in the future, that development will be subject to applicable planning, environmental review, permitting, and other legal requirements. The Executive Director finds that issuance of the proposed easement is consistent with the Trust’s statutory responsibility to actively manage Trust land for the long-term benefit of Trust beneficiaries.

• Best Interest Decision – Conclusion. After consideration of the applicable statutory and regulatory requirements, the information contained in the Best Interest Decision, and all timely public comments received, the Executive Director finds that granting a non-exclusive easement to KPB is in the best interest of the Trust and its beneficiaries.

  The Executive Director has considered each of the public comments and concludes that none identify information requiring modification of the proposed disposal.  The Executive Director finds that granting KPB an easement as described – and receiving an easement from KPB as consideration — is consistent with the Trust’s fiduciary obligations under AS 38.05.801 and the Trust management principles outlined in 11 AAC 99.020.

  Accordingly, the Executive Director determines that granting the KPB a non-exclusive term easement serves the long-term interests of the Trust, protects and enhances the value of the Trust corpus, and is consistent with the Executive Director’s fiduciary duty to actively manage Trust land for the benefit of Trust beneficiaries. Therefore, the proposed disposal is approved.

• Non-competitive Disposal Determination. 11 AAC 99.020(d) allows for the disposal of Trust land through a competitive basis, unless the Executive Director in consultation with the Trust Authority, determines in a written decision required by 11 AAC 99.040 that a non-competitive disposal is in the best interest of the Trust and its beneficiaries. In this case, a non‑competitive disposal is in the Trust’s best interest because the consideration that the Trust seeks here (of an access easement across KPB lands to Trust lands) can only be provided by KPB. No other party controls the land necessary to provide the Trust the needed access. As a result, a competitive disposal process involving parties who do not own the required land would not be feasible and would not serve the best interest of the Trust or its beneficiaries.

• Available Documents. Background documents and information cited herein are on file and available for review at the TLO, located at 2600 Cordova Street, Suite 201, Anchorage, AK 99503.

The disposal action proposed by this decision will occur no less than 20 days after the first publication date of this decision, and after the conclusion of the TLO administrative process.  For specific dates or further information about the disposal, interested parties should contact the TLO at the above address, or visit the website at:  https://alaskamentalhealthtrust.org/trust-land-office/           .

•  Reconsideration or Appeal. This Decision constitutes the final agency decision in this matter pursuant to 11 AAC 99.060.  To be eligible to file for reconsideration of this Decision, or to file a subsequent appeal to the Superior Court, a person must have submitted written comments during the public notice period.  Persons who submitted timely written comments will be provided with a copy of this final written decision and will be eligible to request reconsideration within 20 calendar days after publication of the notice or receipt of the decision, whichever is earlier under 11 AAC 99.060(b).  A request for reconsideration must be accompanied by the fee established by the Executive Director under 11 AAC 99.130 (set at $500) to be eligible for reconsideration.  The Executive Director shall order or deny reconsideration within 20 calendar days after receiving the request for reconsideration. If the Executive Director takes no action during the 20-day period following the request for reconsideration, the request is considered denied. Denial of a request for reconsideration is the final administrative decision for purposes of appeal to the superior court under AS 44.62.560.

For the reasons provided above, the decision to dispose of these Trust lands by issuing an easement to the applicant is in the best interest of the trust and its beneficiaries and thus is

APPROVED:

____________________________________                               __________________

Jusdi Warner                                                                                 Date

Executive Director

Alaska Mental Health Trust Land Office

Exhibits:

• Exhibit 1 – Feasibility Study
• Exhibit 2 – Memorandum of Agreement Between TLO and KPB
• Exhibit 3 – Draft Templates for Easement Construction License and Easement

Exhibit 1 – Feasibility Study

Exhibit 2 –

Memorandum of Agreement Between TLO and KPB

Exhibit 3 – Draft Templates for Easement Construction License

and Easement

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