Anchorage Mayor Dan Sullivan on Friday turned down a proposal for the city to help create a 60-acre park west of Campbell Lake at the estuary of Campbell Creek.

The city had been working with Great Land Trust, a conservation organization that was amassing $6.8 million for the project from government and private grants and money set aside to preserve wetlands.

The property owners, heirs of two families that have held the land for decades, agreed to sell it for parkland, said Phil Shephard, director of Great Land Trust.

It would be an important addition to preserve natural landscape next to Campbell Creek and provide prized public access to the Cook Inlet coast, said Shephard. The land sits in southwest Anchorage, where Campbell Creek flows out of Campbell Lake, rolls over a dam, and runs into the Inlet. It is adjacent to the Anchorage Coastal Wildlife Refuge.

The city Parks Commission last month approved a resolution supporting the purchase, saying the land is specifically identified in Anchorage's comprehensive plan as a priority parcel for open space. Some community councils and a Campbell Lake homeowners group passed statements favoring it.

Great Land Trust also has in its files a March 2010 letter from City Manager George Vakalis saying on behalf of the municipality, "We strongly support this project."

But Sullivan said Friday that he's decided $2.7 million in money dedicated to protecting wetlands and the coastline should not go to this project.

One reason is that the city Parks Department is too strapped to take on any new parklands to manage, he said.

Another is that he believes 15 to 20 acres of it is prime development land, and could fit 35 to 40 houses. "The upper portion is absolutely beautiful developable land," the mayor said.

Sullivan believes the estuary itself will be adequately protected by existing city laws.

And he said Anchorage has plenty of parkland already. Taking into account the Chugach State Park and Lake George Preserve, "We have more parkland (per capita) than any city in America," he said.

Great Land Trust needs the $2.7 million to be able to buy the land. It's part of the money they were counting on, said Shephard.

The $2.7 million is "mitigation" money -- money the federal government requires developers who build on certain wetlands to pay into a fund to purchase other wetlands to make up for ones that are developed. Some of the mitigation money is also from a pool set aside from oil leasing revenues in the Beaufort and Chukchi seas, said Shephard.

He said it is unclear whether the city can actually take back a commitment to spend $1.1 million of the money, which is managed by the U.S. Army Corps of Engineers. But there's no dispute about the rest of the $2.7 million, he said -- the city controls it.

If the deal fails, Great Land Trust will be out about $150,000, Shephard said. About half of that is earnest money put down to secure the property; the other is money spent on legal issues, appraisals and the like to move the project along.