Kenai council talks about tax credit, property sale

Kenai’s City Council unanimously approved a tax credit for residential sprinkler systems in new homes and postponed a decision on selling a piece of land at its Wednesday meeting.

The credit was proposed as an alternative to mandating the systems, which was proposed in the 2009 International Residential Building Code. The city has not adopted that update to its code.

Councilman Terry Bookey, who works for Central Emergency Services, co-sponsored the ordinance.

“From experience, I can tell you the tremendous benefits that are realized when people have residential sprinkler systems in their homes,” Bookey said.

But, he said, the public was not interested in the mandate when it came before the council last spring.

“We’re avoiding the mandate,” Bookey said. “...We’re giving people the incentive.”

Co-sponsor Councilman Ryan Marquis agreed, and noted that the Kenai Peninsula Builders Association, which had given testimony opposing a mandate, sent the city a letter of support for the tax credits.

“I think it really boiled down to an issue of do you want to use a carrot or a stick,” Marquis said.

Councilman Tim Navarre said he appreciated how the ordinance was crafted.

“I don’t think the stick would have worked,” he said.

The sponsors worked with city administration, including City Manager Rick Koch, City Attorney Krista Stearns and Finance Director Terry Eubank, to develop the ordinance. Under the terms of the substitute passed Wednesday, legal owners of qualified dwellings can receive a property tax credit for the cost of installing a system, or $2 per square foot, whichever is less. The credit can be applied to the city’s real property taxes for that property.

According to a memo from city Finance Director Terry Eubank, had the credit been in place since 2007, it would have had an impact of about $50,405 on the city’s revenue for the 2011 fiscal year if every new home took advantage of the incentive. That figure includes a total of 57 new homes constructed since 2007, with an estimated 4-year period for each owner to use up their full credit.

The council postponed a decision on selling a piece of land in the Gusty subdivision until it could get more information about the financing.

Koch has been working on the sale for quite some time, and told the council Ma & Pa Alaskan Treasures, Inc., the potential buyer, had been assured of a sale before he worked for the city, and he has been trying to make good on that agreement. 

The sales agreement called for city financing, and Koch told the council that the buyers have been making timely payments on the other loan they have, which is with a different lender, often paying more than was required. That loan is for the buildings on the land the city is now considering selling.

Because a different lender financed the purchase of buildings on the property that is for sale, the city could have an inferior position in case of a default. 

Stearns said the worst case scenario was that if both loans defaulted, the city could face losing the land if it wasn’t willing to buy everything outright.

Councilman Bob Molloy asked for the postponement to get more information about the buyers’ ability to repay the city, as well as the exact terms of the other loan on the land, and the duration of that loan.

Mayor Pat Porter voted against the postponement, as did Navarre and Marquis.

The council also confirmed two people to city committees and commissions.

Mayor Pat Porter nominated Susan Lovett to continue serving on the beautifcation committee, which was confirmed unanimously.

Porter’s appointment of Ken Peterson to the Planning and Zoning Commission was also confirmed. Councilmen Mike Boyle and Molloy voted against that nomination.

“I look for a broader base of interests,” Boyle said.

 

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.

 

In other business:

  •  The council agreed to spend $500 to sponsor the Industry Outlook Forum.
  • The council also heard a presentation on the proposed Kahtnu surgery center, and public testimony from one person — Rick Ross — on the same matter.
  • The council changed the city’s capital improvements list to reflect how much the city wants for road improvements.

 

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