Kenai mulls change on tax

Finance director wants to decrease amount on planes

Posted: Monday, March 22, 2004

City of Kenai Finance Director Larry Semmens thinks decreasing taxes on charter aircraft could give a big lift to the Kenai Municipal Airport.

At Wednesday's Kenai City Council meeting, Semmens asked for permission to speak in favor of an ordinance pending before the Kenai Peninsula Borough Assem-bly that would impose a new tax structure on aircraft within the borough.

"I would like to have direction from the council to testify in favor (of the ordinance)," Semmens said.

Semmens also recommended that if the borough passes the ordinance, the city change its tax structure to mirror the new ordinance.

The finance director explained that the proposed change would amend borough code to create a tax schedule based on the overall weight of an aircraft. If such a plan passes, aircraft owners in the borough would be charged anywhere between $50 and $1,000 per aircraft, based on overall weight.

The city currently assesses property tax at a rate of 3.5 mills for planes at the Kenai airport. The borough also charges property tax, though it has an exemption for planes valued at less than $100,000. That's led to a situation where both the city and borough have been plagued by a trend that has seen aircraft owners moving their planes elsewhere in South-central to avoid paying taxes.

Semmens noted that the proposed changes likely would in-crease slightly the amount small private planes would pay in taxes, but that the trade-off makes sense if the city wants to see its airport grow.

"In the case of the city of Kenai, where we have such an investment in the floatplane basin and the airport, where we don't have aircraft using it because of taxes ... economics trumps fairness," he said.

If taxes are lessened, Semmens said there's a chance the city could see more planes move to town.

"If we change the tax structure, at least there's some chance other aircraft will move back in," he said.

The council agreed with Sem-mens, directing him to go ahead and testify in favor of the ordinance when it comes up again for consideration at the assembly's April 6 meeting.

"The airport needs to be vibrant, and the tax structure needs to be such that it allows it to be," council member Blaine Gilman said.

Semmens told the council that if the proposed change was made to the city's tax code, Kenai would stand to lose roughly $7,000 in revenues.

However, council members said they were comfortable with taking that hit if it were to mean more planes and the accompanying increase in industry that goes with them based at the airport.

"Without these aircrafts there, we will never develop the avionics or other things we need to develop that airport," council member Rick Ross said. "Let's see if it works."

In other action Wednesday, the council:

n Failed to take action on a proposal by the Kenai Chamber of Commerce to sell pull-tabs at the airport. The proposal, which would have amended the lease held by Roger and Linda Petrey of Wings Family Diner to sell pull tabs for the chamber, died when Gilman's motion to approve died for lack of a second.

Later in the meeting, chamber president Tim Navarre asked council members why they let the proposal die without even debating the measure. The council with the exception of Gilman said it was uncomfortable with the idea of selling pull-tabs on such a visible piece of city property.

"I'm not interested in our airport visitors looking at something similar to Las Vegas except on a pull-tab basis," Ross said.

Council member Jim Bookey told Navarre the decision against the pull-tab plan had nothing to do with the chamber, he just didn't feel the idea was in the city's best interest.

"I'm not looking at doing this in any (city) facilities," Bookey said.

n Awarded a lease for Kenai dock stations two and three to R and J Seafoods for $23,500, plus three cents per pound for each pound processed in excess of 783,333 pounds.

n Awarded a contract to set up and operate a prepaid calling card machine-Internet kiosk at the airport to Parker Horn Company.



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