FINAL BEST INTEREST DECISION – Negotiated Ground Lease – Nikiski

MHT 9201068 MH Parcel(s) SM-1162-01, SM-1162-04

1. Executive Summary.  The applicant—TUGLIQ Energy USA Inc.—requests a ground lease for Trust land to develop a multi-phase solar farm project near Nikiski. The parcels involved are MH Parcel(s) SM-1162-01 and SM-1162-04, designated under file number MHT 9201068. The subject property is legally described as T. 007 N., R. 011 W., SEWARD MERIDIAN, ALASKA, and includes multiple sections covering approximately 680 acres, more or less. The Trust Land Office (TLO) has completed a preliminary decision and provided public notice, receiving and reviewing public comments during the notice period. In response to those comments, the TLO has incorporated or reinforced specific lease stipulations and mitigation measures to address the concerns raised. A draft of the proposed lease is attached as Exhibit B. With these adjustments, the TLO’s Executive Director issues this final written decision approving the proposed lease of the Trust land to TUGLIQ Energy USA Inc. for the solar farm project.

1. Proposed Use of Trust Land.  A ground lease for a multi-phase solar farm project near Nikiski.

1. Applicant/File #.  TUGLIQ Energy USA Inc. / MHT 9201068

1. Subject Property.
2. Legal Description. 

SM-1162-01:

T. 007 N., R. 011 W., SEWARD MERIDIAN, ALASKA

SECTION 27 : SE1/4NE1/4, SE1/4SW1/4, SW1/4SE1/4, E1/2SE1/4

SECTION 33: E1/2NE1/4

SECTION 34:N1/2;

CONTAINING 600.00 ACRES, MORE OR LESS.

ACCORDING TO THE SURVEY PLAT ACCEPTED BY THE UNITED

STATES DEPARTMENT OF THE INTERIOR, BUREAU OF LAND

MANAGEMENT IN DENVER, COLORADO ON DECEMBER 10, 1979.

SM-1162-04:

T. 007N., R. 011 W., SEWARD MERIDIAN, ALASKA

SECTION 33: W1/2NE1/4;

CONTAINING 80.00 ACRES, MORE OR LESS.

ACCORDING TO THE SURVEY PLAT ACCEPTED BY THE UNITED

STATES DEPARTMENT OF THE INTERIOR, BUREAU OF LAND

MANAGEMENT IN DENVER, COLORADO ON DECEMBER 10, 1979.

AGGREGATING 680 ACRES.

• Settlement Parcel Number(s). SM-1162-01, SM-1162-04
• Site Characteristics/Primary Resource Values.  SM-1162-01 and SM-1162-04 are wooded, spruce-dominant, relatively flat parcels located in a rural area outside Nikiski, AK. Portions of the property are classified wetlands by the US Fish and Wildlife Service. The property has several off-road vehicle trails initially, created from timber harvest operations. Currently, the primary resource value is recreational property.  
• Historical and Existing Uses of the Property.  Small scale timber harvest occurred on the property from 2001 through 2005. The timber sale contracts were compliantly completed and closed out. Currently, there are active easement agreements with Homer Electric Association (HEA) for a mainline transmission line running through the southwest corner of SM-l 162-04 along the corridor of Escape Route Road. Alaska Pipeline Company holds a utility easement along the same southwest corner of SM-l162-04 along Escape Route Road. Both existing uses are compatible with the proposed ground leases.

This property was previously leased, MHT 9200844/9200874, by TLO to Renewable IPP, LLC for the purpose of developing a solar farm. As of November 2025, this lease was relinquished and terminated for being unable to secure final project financing.

• Adjacent Land Use Trends.  Adjacent land use trends are mineral exploration and development, public recreation, and wildlife habitat. The applicant leases a block of adjacent State of Alaska Mining Claims and Upland Mining Leases.
• Previous State Plans/Classifications.  Previously a part of the Kenai National Moose Range Legislatively Designated Area, AS 16.20.030(a)(08).
• Existing Plans Affecting the Subject Parcel.  There are no local plans or zoning affecting the subject parcel.  
• Apparent Highest and Best Use.  Given the site characteristics, history, and adjacent land use trends described above, the highest and best use of this property is a negotiated lease for utility scale solar power generation.

• Proposal Background.  On June 12, 2024, the Trust Land Office and Renewable Independent Power Producers (IPP) LLC entered into a lease agreement, serialized as MHT 9200844, for the subject property for the purpose of building a two phased solar farm, interconnection into the Homer Electric Association utility grid on Escape Route Road. IPP was able to complete a handful of studies after lease issuance including a Phase 1 Environmental Site Assessment, Ground Screw testing, Eagle Survey, Wetlands Report, and a Geotechnical & Engineering Considerations Report. On November 14, 2025, this lease was terminated at the request of IPP due to not finding a new developer to take on the project, being unable to secure financing, or a new Power Purchase Agreement due to market conditions at the time.

Since this termination, TUGLIQ Energy USA Inc. (TEU) has expressed interest in continuing the development of the solar farm project. TEU is a specialized Independent Power Producer based out of Quebec, Canada with solar projects and studies ranging from Africa to the Northwest Territory of Candana. TEU will serve as the lessee, with their operational partner Solvest Inc. who specializes in comprehensive renewable energy solutions. The project looks to utilize expiring tax credits in order to make development costs of the project economical. TEU would serve as the original lessee, with an anticipated assignment to a project specific entity, to be created, in which TEU will remain as the asset owner. 

The project was able to secure a Memorandum of Understanding with Homer Electric Association for the connection to their transmission infrastructure for the offtake, which will be updated to a full Power Purchase Agreement as the project advances, subject to regulatory approval.

Should the TLO’s disposal process result in a timely issuance of a lease agreement and financing be secured, it is anticipated that development would begin in early summer 2026 in order to make use of applicable tax credits that make the project feasible. Development will be an initial 79,000 modules across 260 acres of the property with an installed capacity of 56.5 megawatts. An option to lease the second phase of development would expand the project to the remaining 420 acres of the property at a later date, to take advantage of the infrastructure of Phase 1.

1. Authorities.  The following authorities guide the Executive Director’s final decision: 
   1. 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:
2. Maximization of long-term revenue from Trust land;
3. Protection of the corpus;
4. Protection and enhancement of the long-term productivity of Trust land;
5. Encouragement of a diversity of revenue-producing uses of Trust land; and
6. Management of Trust land prudently, efficiently, and with accountability to the Trust and its beneficiaries.
   1. Inconsistency Determination.  As the proposed negotiated land lease 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. The State Statutes deemed inconsistent with Trust management principles and inapplicable to Trust land by these regulations have not been applied to this decision or this action, including, but not limited to, AS 38.04 (Policy for Use and Classification of State Land Surface), AS 38.05.035 (Powers and Duties of the Director), AS 38.05.300 (Classification of Land), AS 38.05.945 (Notice), AS 38.05.946 (Hearings), and 11 AAC 02 (Appeals).

1. Terms and Conditions.
   1. Phases of Agreement: A full life cycle lease agreement was developed by the TLO for renewable energy development projects and consists of 3 total phases within the agreement:
      1. Initial Phase. A 5-year term for TEU to permit, study, secure financing, and construct the project.
      1. Operational Phase. A 30-year term for TEU to operate and maintain the project.
      1. Decommissioning or Reclamation Phase. An 18-month term for TEU to complete reclamation and decommissioning activities as they vacate the property.

These phases each have required plans of operations, development, and reclamation that must be approved by TLO.

• Option to Lease for Solar: An Option to Lease Phase Two of the project will be a term within the lease agreement for the project as a whole. Should TEU opt to exercise the option, the TLO shall review and approve development plans for the additional 420 acres and Phase 2 shall become subject to the existing agreement and its escalations. Should TEU not request to exercise the option to lease by Year 5 of the Operational Phase, the option shall expire or the option to lease fee shall be subject to an escalation for an additional 5 years.
  • Lease Term: Upon final project approval to begin producing power, TLO will review and approve the conversion from the Initial Phase to the Operational Phase which has an initial 30-year term for operations. The lease term may be extended upon request from TEU and subject to TLO approval.
  • Annual Rental: The Initial Phase will have an annual fee of $5,000. The Decommissioning or Reclamation Phase will have an annual fee of $35,000.  The Option to Lease fee shall be $1,000 annually.
  • Production Royalty:  During the operations phase, the monetary return to the Trust is determined by a cost-competitive royalty percentage of gross revenue. The royalty percentage will escalate at 10 and 20 years and during each of the three optional five-year renewal periods.

Data: The TLO will receive copies of all data and information obtained as a result of the Option to Lease for Solar and Lease agreements.

1. Resource Management Considerations.  The proposal is consistent with the “Resource Management Strategy for Trust land,” which was adopted in October 2021 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. The subject property is currently non-performing and has liabilities from unauthorized use. This experienced applicant and the proposal is at a minimal risk level while maximizing returns to the Trust and its beneficiaries.

1. Risk Management Considerations.
   1. Performance Risks.  Performance risks will be minimized through enforcement of the terms and conditions of the lease, including but not limited to those provisions that address development plan approval, diligent resource development over time and reclamation activities.

Environmental Risks.  The development activities performed under the lease will be done within the parameters of local, state and federal environmental protection laws that generally apply to private lands. Lease stipulations require compliance with CERCLA, RCRA, as well as state reclamation requirements. The Lessee will be adequately bonded and ensured.

Public Concerns.  Historically, significant concern has been expressed about the impact of the leasing activities on public resources such as fish and wildlife. Environmental laws, regulations, and specialized operating guidelines have been developed to mitigate potential impacts to public resources. As noted above, the TLO lease will require full compliance with those laws and regulations.

1. Due Diligence.
   1. Site Inspection. TLO staff frequently visit these parcels as they are road accessible. User developed trails and litter are often observed on the property. Granting a Lessee the use of parcels and development is one of the TLO’s primary tools against trespass such as litter and unauthorized trail development.
   1. Valuation.  The fee structure for solar power generation is cost-competitive to solar farms in the lower 48 region of the United States. The determining factors for the royalty established were scale of the project, location, and access to transmission lines.

While the 260-acre, 79,000 solar module, phase one portion of the project will be the largest solar farm in the State of Alaska, it is not considered a large project for developing utility scale power generation. Therefore, the up-front costs are spread over a smaller project with a higher per megawatt cost as compared to other utility scale solar projects.

The distribution of solar energy in Nikiski, AK is similar and not superior to many other areas in the State of Alaska. Therefore, it is considered a good but not superior site for solar power generation.

The subject property has direct access to HEA high voltage transmission lines providing the necessary access to transmit the power generated into the existing grid for the Kenai Peninsula.

Based on the criterion above, a cost-competitive royalty percentage of gross revenue with escalating rates at 10 and 20 years was negotiated. Rate escalations would also occur with each of the optional three, five-year renewal periods. There are no allowable deductions.

• Terms and Conditions Review. Terms and conditions of this agreement are consistent with the TLO’s standard negotiated ground lease(s), which best serve the interest of the Trust. Additional solar farm specific terms or conditions may be applied to the agreement. Per standard practice, all agreements will be reviewed by the Department of Law.

1. Trust Authority Consultation.  The Alaska Mental Health Trust board of trustees was consulted on February 19, 2026, and the board of trustees concurred with the Executive Director of the Trust Land Office’s (TLO) decision to lease Trust parcels SM-1162-01 and SM-1162-04 through a negotiated term lease.

1. Public Notice.  The TLO satisfied 11 AAC 99.050 and the Alaska Constitution’s notice requirements by providing public notice as follows:
2. in “a newspaper or other publication of general circulation” when it published notice of this decision in Kenai Peninsula Clarion once on March 13, 2026.
3. to the “appropriate municipality” and to “the appropriate Alaska Native regional nonprofit corporation;” on March 13, 2026, via email; and
4. posted on the Alaska Online Public Notice website from March 13, 2026, through April 14, 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 lease.  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 12 comments were received during the notice period that began on March 13, 2026. As the comments spoke on common topics, each topic will be summarized and addressed.

Comment Topic 1: Three comments were received expressing support for the leasing of the subject lands for the proposed project noting renewable energy benefits, long-term community/state interest, reducing reliance on natural gas, and that the project may serve as inspiration for more renewable energy projects in the future.

Response Topic 1: Comments have been noted.

Comment Topic 2:  Six comments expressed concerns in relation to the project location, noting that the project would be too close to residential areas, that better locations for the project exist, desire for the TLO to use the location for other purposes such as housing, concerns about access to the site and the impacts of fencing the project, and why Nikiski is chosen for “eyesores”?

Response Topic 2: The project is similar distance to residential areas as other industrial projects in the region and may be less noticeable given tree coverage and site control measures that the applicant may opt to include such as fencing or buffers. Given the projects proximity to HEA infrastructure and road access, the applicant has identified this parcel as the project’s ideal location.

Comment Topic 3: Seven comments raised concerns about destruction of wildlife habitat (moose, bears, lynx, wolves, coyotes, eagles, and osprey were specifically mentioned), including moose habitat, general ecosystem impacts, and wildfire risk due to electrical infrastructure.  

Response Topic 3: The Trust parcel effected by this project is directly adjacent to 1.9 million acres within the Kenai National Wildlife Refuge. All development activities are to be conducted in accordance with all local, state, and federal laws and regulations that govern these activities with respect to wildlife relocation, mitigation measures, and ecosystem impacts. All development and operation plans are developed to minimize wildfire risk with standard site control measures such as buffers, or any other method that the applicant may propose during the final creation of plans.

Comment Topic 4: Three comments stated concerns about solar feasibility in Alaska’s latitude and climate, noting limited winter sunlight, snow removal challenges, need for generators during winter months, and efficiency concerns specific to northern climates. Response Topic 4: Solar is a renewable energy resource that has been proven in Alaska to be achievable on a utility scale, notably within the Matanuska-Susitna Borough. While the winter months provide unique challenges, the long summer days do offset these and combined with the applicant’s arctic experience in prior projects, they possess the ability to account for the challenges a project like this may face.

Comment Topic 5: Seven comments raised concerns about poor financial returns, cost to consumers, and economic feasibility of the project.

Response Topic 5: The TLO’s lease structure and royalty rate are designed to protect the Trust, maximize revenues as compensation to the Trust, and do so in a controlled manner. Functions of the lease, including a phased development approach, are designed to be able to guarantee that financial assurances are in place prior to development.

Although consumer costs are outside the scope of this decision, the TLO considers the project beneficial for both Trust beneficiaries and Homer Electric Association (HEA) members. The project requires an offtake agreement between TUGLIQ Energy USA Inc. and HEA. HEA’s mission is to provide safe, reliable electricity to its members and community with excellent customer service and innovative energy solutions at reasonable prices.

Comment Topic 6: Two comments focused specifically on the TLO’s obligations under 11 AAC 99.020 and the proposed project, specifically around long-term revenue maximization, protection of the corpus, long-term productivity of Trust land, and use diversity/future options.   

Response Topic 6: The issuance of a revenue generating lease on a non-performing asset, while retaining the land is a primary method of ensuring long-term revenue generation. Protection of the corpus is achieved by the TLO’s lease agreement that has favorable terms that protect the corpus, prevent unnecessary degradation with strict TLO oversite with field inspection and development plan review/approval process.

Comment Topic 7: Five comments included several alternative uses, none being formal proposals but rather ideas, including housing development, hydropower expansion, agriculture, logging/habitat restoration in other parcels, splitting solar facilities over multiple smaller areas, and natural gas investments.

Response Topic 7: The revenue the Trust stands to receive from a solar project on this parcel is a way the Trust can maximize its revenue from the land prior to other disposals such as housing development, sales, or agriculture development. The development of a solar project does not preclude other future uses of the land after the useable life of the project and after reclamation. The solar generating facilities are not split over multiple small areas in order to preserve the economics of the project, thus spreading the development costs over more generating capacity. Natural gas exploration and development is a compatible use that can take place simultaneously to the solar project should an interest be received.

Comment Topic 8: Two comments raised concerns about solar panel disposal, lifespan, and after-life management.

Response Topic 8: The after-life management of the solar panels is the responsibility of TUGLIQ Energy USA Inc. Standardly, panels are disposed of in accordance with all local, state, and federal laws and regulations, if not reused, refurbished, or recycled.

Comment Topic 9: One comment raised questions regarding the Trust’s timing around this project, motivation for Nikiski Senior Center sponsorship, and why this project rather than supporting housing development.

Response Topic 9: The timing of this project is directly tied to a deadline for tax credits on new renewables energy projects that TUGLIQ Energy USA Inc. is attempting to make use of in order for the project to be economical. The Nikiski Senior Center is outside the scope of this decision, and this project is in no way involved in any funding decisions.  This project does not preclude future development of subdivisions or housing development post reclamation/lease expiration or preclude the TLO from similar projects on any of the other Trust owned parcels in the region.

XIV.    Best Interest Decision – Conclusion.  The Executive Director finds that the proposed lease is in the best interest of the Trust, subject to the terms and conditions addressed in this decision. This can be addressed by considering the TLO’s alternatives to TUGLIQ Energy USA Inc.’s’ proposed lease:

1. Do Nothing: refuse the offer to lease the subject lands and discourage further development. This is not a preferred option because it would not maximize revenue from the lands. 
2. Alternate Option: offer the lands for competitive leasing.. To competitively lease the lands would be contrary to the Trust’s interest.
3. Proceed as Proposed: receive revenues from lease rentals.

Given that context, the Executive Director finds that the lease of this land will maximize long-term revenue from the land, that it will not affect or harm the trust corpus, that this lease continues to diversify the Trust’s land use portfolio, and that with the various conditions and stipulations included in the lease the land will be used prudently, efficiently, and with accountability for the trust and its beneficiaries. This decision does not preclude the TLO from determining that an alternative proposal will serve the best interest of the Trust. A future determination of that nature will require a best interest decision specific to the proposal.

XV.     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. The proposed negotiated leases exceed the anticipated return if the property were subdivided and lots sold. Given the high return, relatively low property value, and net present value of money, the proposed negotiated leases are in the best interest of the Trust and its beneficiaries. If another party submits a qualified offer as explained in Section XIII, the Executive Director may consider a competitive disposal under the authority of this decision.

XVI.    Available Documents.  Background documents and information cited herein is on file and available for review at the TLO, located at 2600 Cordova Street, Suite 201, Anchorage, Alaska 99503. Phone: (907) 269-8658.  Email:  mhtlo@alaska.gov.

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/.         

XVII. 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 leasing them to the applicant is in the best interests of the trust and its beneficiaries and thus is APPROVED:

To see the Full Final Best Interest Decision please click the below link:

https://alaskamentalhealthtrust.org/wp-content/uploads/2026/05/MHT_9201068_Final_Best_Interest_Decision.pdf