Norene v. Municipality of Anchorage, S-276

• Decision Date: 09 August 1985
• Docket Number: No. S-276,S-276
• Citation: 704 P.2d 199
• Parties: Larry NORENE, Don Karabelnikoff and Grayce Oakley, as Citizens and taxpayers in the Municipality of Anchorage, Appellants, v. MUNICIPALITY OF ANCHORAGE and Humana of Alaska, Inc., d/b/a Humana Hospital, Appellees.
• Court: Alaska Supreme Court

Page 199

704 P.2d 199

Larry NORENE, Don Karabelnikoff and Grayce Oakley, as

Citizens and taxpayers in the Municipality of

Anchorage, Appellants, v. MUNICIPALITY OF ANCHORAGE and Humana of Alaska, Inc., d/b/a

Humana Hospital, Appellees.

No. S-276.

Supreme Court of Alaska.

Aug. 9, 1985.

Michael W. Price, Michael P. Condon, Groh, Eggers & Price, Anchorage, for appellants.

David G. Berry, Asst. Municipal Atty., Anchorage, for appellee Municipality of Anchorage.

J.D. Cellars, Delaney, Wiles, Hayes, Reitman & Brubaker, Anchorage, for appellee Humana of Alaska, Inc.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS and COMPTON, JJ.

OPINION

RABINOWITZ, Chief Justice.

Three Anchorage taxpayers, Larry Norene, Don Karabelnikoff, and Grayce Oakley (Norene) attack a land exchange between the appellees Municipality of Anchorage (Anchorage) and Humana Hospital (Humana). Humana had been leasing its hospital site from Anchorage. In the transaction, Humana received the site (the Humana Hospital site), and adjoining land forming part of the municipal landfill (the landfill property), as well as $450,000. In exchange, Anchorage acquired interests in three downtown properties. First, it received title to the site of the old Community Hospital (the 825 'L' Street property), which it had been leasing from Humana and using as headquarters for its health department. Second, it received the right to lease the land immediately north of the Community Hospital (the lease-purchase property) for $100,000. The lease was to begin on January 1, 1983, and to run for a year. Humana gave Anchorage the option to purchase the property for $870,000, with the lease payment applied to the purchase price. Finally, Anchorage accepted an option to purchase three other downtown lots (the option-to-purchase property) for $906,395. The option was to be exercised before the end of 1983. The Anchorage Assembly approved this arrangement on December 7, 1982.

Norene filed suit three months after the Assembly approved these exchanges, eventually raising four distinct arguments against the transaction. First, Norene contended that the landfill property which Anchorage gave up in the exchange had been dedicated as a park so that it could not be conveyed without voter approval. Second, Norene contended that the Anchorage Municipal Code (AMC) required Anchorage to appraise the tract adjacent to the landfill before disposing of it, and that Anchorage violated its own code when it did not employ an expert appraiser to do this. Third, Norene contended that the exchange, taken as a whole, constituted an abuse of discretion on the part of those who govern Anchorage. Finally, Norene contended that the Assembly had entered into "[a] lease purchase agreement with respect to acquisition of a capital improvement valued in excess of $1,000,000," and that under the Anchorage Home Rule Charter this transaction was invalid unless approved by the voters. The superior court rejected these arguments and granted summary judgment to Anchorage. We affirm.

In 1981, Alaska Hospital, Humana's predecessor in interest, suggested that Anchorage exchange part of the landfill and its interest in the Humana Hospital site for the land and building at 825 'L' Street. Anchorage hired an appraiser, who valued the interests Anchorage would acquire at $3,000,000, and the interests it would give up at $2,225,000. The appraiser for Alaska Hospital valued the 825 'L' Street property at between $3,400,000 and $4,000,000. The parties struck a tentative bargain. In return for the 825 'L' Street property, Anchorage would give Alaska Hospital the landfill property, the Humana Hospital site, and $775,000. The matter was presented to the Assembly. At this point, the Mayor of Anchorage made his reservations known. Shortly afterwards, the Alaska Hospital sold Humana all of its assets, including the 825 'L' Street property and its leasehold interest in the landfill property, and a new round of negotiations began. Eventually, the municipal staff and representatives of Humana negotiated the agreement that Norene is now attacking. The Assembly approved this agreement in December 1982.

The land swap proved controversial. Interested citizens contended that the appraisals on which the Assembly had relied were outdated, and that the property Anchorage was acquiring had been overvalued, while the property it was giving up had been undervalued. An ordinance rescinding the transaction was introduced. By a vote of 7-3, the Anchorage Assembly refused to rescind the transaction. Two months later, Norene filed suit in superior court.

I. Does AMC § 25.30.080 require Anchorage to obtain a formal appraisal from a qualified appraiser before disposing of land?

AMC § 25.30.080 reads, in pertinent part, as follows:

Appraisal-Notice of Disposal

A. Prior to the disposal of an interest in municipal land under Section 25.30.040A, the Division of Property Management shall determine the fair market value of the land.

Raymond Mann, property management officer for the Municipality of Anchorage, estimated the fair market value of Parcel 'F', one of the pieces of landfill property. Neither Mann nor anyone on his staff was a qualified appraiser.

Norene contends that the title of AMC § 25.30.080 "clearly indicates two requirements: first appraisal, and second, notice of disposal." Norene asserts that the term appraisal should be given its most common meaning: "an appraisal performed by a qualified appraiser for the purposes of determining fair market value."

According to Norene, the City did not meet the appraisal requirement of AMC § 25.30.080 because Mann is not a qualified appraiser, and therefore the sale of Parcel 'F' is void. Norene further contends that because Parcel 'F' was an integral part of the whole transaction, the entire transaction is void.

Anchorage suggests an alternative definition of the term "appraisal" as "a valuation of property by the estimate of an authorized person." Anchorage maintains that AMC § 25.30.080 does not require the Division of Property Management (DPM) to use any specific method to estimate fair market value, or to use appraisers with particular skills. In support of this position, Anchorage argues that had the Assembly wished to require an appraisal by a qualified appraiser, it would have done so. Previous disposal ordinances had expressly required such appraisals. See Greater Anchorage Area Borough Code of Ordinances § 14.20.030(A); and City of Anchorage Code of Ordinances § 4.16.230. AMC § 25.30.080 has no such requirement.

We are in agreement with Anchorage's interpretation of AMC § 25.30.080 and therefore hold that the superior court properly granted summary judgment in favor of Anchorage on this issue. In our view, the record in this case reflects that Anchorage's property management officer determined the fair market value of the subject 2.5 acre parcel in accordance with accepted appraisal methodology, thereby fulfilling the requirements of AMC § 25.30.080.

II. Was the land exchange an abuse of discretion?

The parties agree that Anchorage had discretion to enter into land exchanges, and that a reviewing court has the authority to decide whether or not Anchorage abused this discretion. Norene argues that since there were a variety of factual errors in the information supplied to the Assembly by the municipal administration regarding the land-swap, the Assembly's decision to consummate the land swap constitutes an abuse of discretion. ¹

Anchorage responds that, given the information presented by the municipal administration, the Assembly did not act arbitrarily. While Norene may take issue with the wisdom of the Assembly's judgment, Anchorage argues in light of the facts as presented to the Assembly, no abuse of discretion took place. Implicit in Anchorage's argument is the further contention that it is the Assembly's exercise of discretion which this court should review and not that of the municipal administration. We agree with Anchorage's position.

According to McQuillin, "where a local legislative body has power to determine the expediency or necessity of measures relating to local government, its judgment upon the matters within the scope of its authority cannot be controlled by the courts." ² As we stated in Concerned Citizens of South Kenai Peninsula v. Kenai Peninsula Borough, 527 P.2d 447, 452 (Alaska 1974):

It is not a court's role to decide whether a particular statute or ordinance is a wise one; the choice between competing notions of public policy is to be made by elected representatives of the people.

With these considerations in mind, we hold that the superior court appropriately granted summary judgment on this issue. Appraisers informed the Assembly that the land exchange was financially sound, and the Assembly was made aware of the problems with the properties it was acquiring. Varying estimates of the value of the land it was giving up were before it. The Assembly decided to rely on one estimate and disregard others. Consideration of such factors is for the Assembly, not the courts.

III. Does § 13.08 of the Anchorage Home Rule Charter require voter approval because the transaction Anchorage entered into was a lease-purchase agreement worth more that $1,000,000?

At issue here is one component of the subject land exchanges and § 13.08(b) of the Anchorage Home Rule Charter. Section 13.08(b) provides:

The Assembly by ordinance may authorize a contract, lease, or obligation requiring funds from future appropriations. A lease purchase agreement with respect to acquisition of a capital improvement valued in excess of $1,000,000 is not valid until approved by a majority of the qualified voters voting on the question.

We must first answer the question whether the transaction concerning Lots 7A, 8A, and 9A, Block 84, was a lease-purchase agreement as defined by AMC § 25.20.060. ³

We conclude that this transaction was a lease-purchase agreement as defined by AMC §...