Questions raised about taxing Native lands

Posted: Tuesday, June 05, 2001

KENAI (AP) -- Native corporation leaders and loggers are questioning a Kenai Peninsula Borough official's assertion that Native corporations could owe as much as $550,000 in property taxes on land logged last year.

Some Native corporation leaders believe the numbers are inflated, while others questioned how the borough could even think of taxing Native lands.

''We've been encouraged by the Kenai Peninsula Borough to log because of the spruce bark beetle infestation,'' said Michael Beal, chief executive of Seldovia Native Association. ''At SNA, we're only logging because of the spruce bark beetle infestation, and quite frankly, we find it unfair that for dealing with this natural disaster, the borough wants to tax us.''

Bart Garber, chief executive of Tyonek Native Corp., said the tax would put an end to its logging operations.

''We're trying to get that timber out for the fire hazard,'' he said.

Kirk McGee, vice president of real estate for Cook Inlet Region Inc., proposed an ordinance to the borough assembly in April to exempt land within the borough from new or increased taxes resulting from actions to deal with the beetle infestation.

However, John E. Simmons, assistant borough attorney, wrote back that unless the Legislature passes a law to allow the exemption, the borough has no authority to grant it. The Alaska Constitution requires that all tax exemptions be provided in state law, he wrote.

Shane Horan, the borough's tax assessor, said he discovered after he was hired last August that Native corporation lands being logged were not on the tax rolls.

In a packet transmitted May 18 to the assembly, he proposed postponing assessment of the timberland harvests to allow Native corporations time to pursue possible legislation. After all, said Borough Mayor Dale Bagley, the borough has never collected taxes from Native corporation lands.

Bagley said ANCSA unfortunately makes no exception for salvage of beetle-killed trees.

''They're not making much money on it. It's definitely a salvage operation and we definitely appreciate what they're doing. So, do we tax them? According to ANCSA, we definitely do,'' he said.

Horan said he reviewed detailed plans of operations filed with the Alaska Division of Forestry and consulted Chris Clough, a borough GIS technician, and Wade Wahren-brock, state forest practices forester, to determine the acreage logged last year and to identify logging roads, log transfer sites and related tidelands owned by Native corporations.

He estimated that Native corporations logged 68,000 acres within the borough last year and owned 250 miles of roads.

Assessing land at $500 per acre and roads at $50,000 per mile puts the total value subject to taxes at $46 million, he said. At a rate of 12 mills, or $1,200 for each $100,000 in assessed value, the tax bill for last year alone would be $550,000.

Bernie Brown, vice president and chief financial officer for Gates Construction, among the peninsula's largest logging firms, said 68,000 acres is probably closer to the amount Native corporations have logged in the last decade than the amount they have logged in the last year.

Dean Kvasnikoff, whose firm ANRC Inc. puts timber sales together for Native corporations, said margins are thin.

''It's such a fine line,'' he said. ''If they put this kind of assessment on us, we could do nothing. We'd have to shut down.''

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