The borough has told a Wasilla developer who wants to buy municipally owned land and build multiple housing units behind the former Wrangell hospital building that she needs to file a new application if she wants City Hall to consider property tax breaks in the deal.

Providing tax incentives with the purchase of borough-owned land is beyond what municipal code allows in a conventional land sale and needs to be considered under the code’s provisions that deal with offering financial incentives for economic development, explained Borough Manager Mason Villarma.

“We have closed the file,” he said of the developer’s application to buy the lots. “They will have to start the process over again.”

The assembly voted in May to sell the six lots, totaling 1.3 acres, to Jiaying Lu, who had applied to purchase the borough-owned property so that she could build four, fourplex rental buildings.

The borough agreed to sell the property at its appraised value of $316,800. Lu’s written application this past spring, however, did not ask for any property tax incentives to develop new housing.

During subsequent discussions to put together the sales agreement, Lu raised the issue of a break on property taxes for the development, Villarma said.

A tentative negotiated agreement which was pulled from the assembly agenda for its July 29 meeting proposed deferring property taxes on the buildings — not the land — for up to five years after construction, as long as Lu started construction within three years after getting the land rezoned to multifamily residential.

But the terms and number of units kept changing, the manager said.

Lu did not return a call to the Sentinel last week.

Borough code establishes a public process for selling land at less than fair market value for purposes of promoting economic development. That process includes public hearings and review by the economic development board and the planning and zoning commission before the request can go before the assembly for a decision.

In her application last spring to purchase the six lots, Lu said she planned to build fourplexes on the land, putting up the structures at the other end of the property from Evergreen Elementary School.

The borough has been trying to sell the old hospital building since SEARHC moved out in 2021 and has no plans to use the six vacant lots behind the building.

Lu’s application did not include a complete site layout or building design or apartment sizes, though she later submitted architectural drawings from a Wasilla design firm, showing a couple of possible exterior designs of the buildings.

Lu, who worked as a nurse in Wrangell several years ago, said in an interview this spring that she has experience with managing rental property in Alaska.

“I worked in Wrangell for two years as a nurse and came to appreciate the community,” she said, commenting on her time with the Wrangell Medical Center. “There is a lack of updated housing in Wrangell.”

She has lived the past four years in Wasilla.