WASILLA, Alaska -- The biggest project that Sarah Palin undertook as mayor of this small town was an indoor sports complex, where locals played hockey, soccer, and basketball, especially during the long, dark Alaskan winters. The only catch was that the city began building roads and installing utilities for the project before it had unchallenged title to the land. The misstep led to years of litigation and at least $1.3 million in extra costs for a small municipality with a small budget. What was to be Ms. Palin's legacy has turned into a financial mess that continues to plague Wasilla.
"It's too bad that the city of Wasilla didn't do their homework and secure the land before they began construction," said Kathy Wells, a longtime activist here. "She was not your ceremonial mayor; she was in charge of running the city. So it was her job to make sure things were done correctly." Associated Press
Ms. Palin, now Alaska's governor and Republican Sen. John McCain's running mate, has pointed to her two terms as Wasilla's mayor, from 1996 to 2002, as evidence that she has enough executive experience to take on the presidency, should the need arise -- more than Democratic Sen. Barack Obama, who touts his own background as a community organizer in Chicago.
"I guess a small-town mayor is sort of like a community organizer, except that you have actual responsibilities," Ms. Palin said Wednesday in her acceptance speech at the Republican convention.
Litigation resulting from the dispute over Ms. Palin's sports-complex project is still in the courts, with the land's former owner seeking hundreds of thousands of additional dollars from the city.
Hockey is much loved in Wasilla, and Ms. Palin, whose son was a star player, wanted to build an indoor rink, with a track, basketball courts and soccer field. In the late 1990s, the city sought a 145-acre parcel owned by the Nature Conservancy, which wanted to sell the land to buy more environmentally sensitive property elsewhere. City officials negotiated a price of $126,000. Months passed without the city's securing a signed purchase agreement, according to the city's attorney, Tom Klinkner of Birch, Horton, Bittner & Cherot.
At the same time, Gary Lundgren, a Fairbanks real-estate investor, was in talks with the Nature Conservancy to buy a larger adjacent property. As discussions between the environmental group and the city dragged on, Mr. Lundgren said, he purchased the entire site for about $1 million.
The city sued Mr. Lundgren and the Nature Conservancy, arguing that Wasilla had had a deal. In 2001, a federal district court judge ruled in Wasilla's favor. Mr. Lundgren appealed, but the city believed it would prevail, according to Mr. Klinkner.
Ms. Palin marched ahead, making the public case for a sales-tax increase and $14.7 million bond issue to pay for the sports center, which was to feature a running track, basketball courts and a hockey rink. At the time, the city's annual budget was about $20 million. In a March 2002 referendum, residents approved the mayor's plan by a 20-vote margin, 306 to 286. The city cleared roads, installed utilities and made preparations to build.
Later that year, Ms. Palin's final one as mayor, the federal judge reversed his own decision and ruled that the property rightfully belonged to Mr. Lundgren. Wasilla had never signed the proper papers, the court ruled. Greg Hensel /Alaska Stock In Wasilla, Alaska, the construction of an indoor sports facility (shown above), initiated during Sarah Palin's term as mayor, has led to years of litigation over property rights and at least $1.3 million in extra costs for the town.
Mr. Lundgren said he had offered to give smaller parcels to the city free of charge, but the city held out for a larger tract. The former chief of the city finance department, Ted Leonard, says he doesn't recall such an offer.
After Ms. Palin left office, the city decided to take 80 acres of Mr. Lundgren's property through eminent domain. An Alaska court confirmed the city's right to do so and ordered that an arbitrator determine the appropriate price.
Last year, the arbitrator ordered the city to pay $836,378 for the 80-acre parcel, far more than the $126,000 Wasilla originally thought it would pay for a piece of land 65 acres larger. The arbitrator also determined that the city owed Mr. Lundgren $336,000 in interest. Wasilla's legal bill since the eminent domain action has come to roughly $250,000 so far, according to Mr. Klinkner, the city attorney.
Mr. Lundgren has appealed the decision, arguing that the arbitrator should have awarded him more interest. "It has been 10 years; it's just insane," said Mr. Lundgren, who now lives in Panama. "All [Ms. Palin] had to do was close the transaction."
The McCain-Palin campaign referred questions about the sports complex to Mr. Leonard, the former city finance chief. He blamed the Nature Conservancy for dealing with two different potential buyers at one time. "That's what caused the confusion," he said.
"At the time, with the information she had, [Ms. Palin] made the right decision," Mr. Leonard said. "But you know what? Litigation happens."
The sports facility is finished, set against forest and mountain ranges. Inside, locals kick soccer balls and skate laps on the rink. Last year, it hosted a statewide wrestling tournament.
"All I can say about the sports complex is that it was done on time and under budget," said Donald Moore, a Palin ally who managed the construction. "It was done legally, and for someone else to say it could have been done differently in a better way, that's strictly their opinion."
Ms. Palin cited her mayoral duties as partial evidence of her executive experience. Dianne Woodruff, a Wasilla city councilwoman and critic of Ms. Palin's performance, agreed.
"If people are going to be voting on her based on her experience as Wasilla's mayor, then they should know how she did in the job," Ms. Woodruff said, "the good, the bad and the ugly."
Write to Michael M. Phillips at michael.phillips@wsj.com
