Wheels turning slowly: Tax exemption ordinance gets at value of local government

Posted: Sunday, August 29, 2010

Jean Holben might be just a name on a piece of paper.

But that's up to the Kenai Peninsula Borough Assembly.

Like most senior citizens, Holben's memory and health are declining. Holben, a grandmother, no longer has the wherewithal to handle her personal finances. When she began falling behind on her mortgage payments, her children decided it was time to sort through the stacks of paperwork and clear everything up.

That's when they discovered the blank forms that would allow Holben a property tax exemption for up to $300,000. Holben's Cooper Landing property was valued at $364,300 in 2010, according to borough records, meaning all but $64,300 of her property could be tax exempt.

The exemptions are granted to all borough properties with residents over the age of 65. It stems from Alaska statute that grants senior citizen tax exemptions on properties up to $150,000. Borough ordinance increased the ceiling on local properties.

But citizens must be somewhat proactive if they want to take advantage of the tax break. They must file a written application with the borough assessor by Feb. 15. Late applications can be accepted until March 31.

The forms only need to be filed once, not yearly, so once it's on record owners are all set as long as they stay in the same house.

Holben needed to fill out the form.

When her son and daughter-in-law discovered this, around April of this year, they hoped Holben could simply file the form late and not miss out on another year's tax exemption.

"It sounded like it would be an easy process," Rick Holben, Holben's son, said.

It wasn't. Jean Holben did not want to be interviewed for this article.

A couple of years ago, it might have been. Each year, many residents filed for the exemption after the March 31 deadline. The assembly was allowed to accept or deny the overdue forms by resolution.

In 2008, the borough received 39 late-filed applications and had to decide if being in Mexico and not opening the mail were acceptable excuses for missing the deadline. Both excuses, the assembly decided, were valid.

But by March 2009, the assembly had enough and unanimously enacted an ordinance, introduced by Mayor Dave Carey, making it more difficult to receive the tax exemption after the filing deadline. Processing late applications was costing time and money, the ordinance said.

The ordinance changed the code so that late applications could still be permitted, but only by ordinance, not resolution, and only in the event that the applicant missed the deadline due to "a serious condition or extraordinary event."

"It just seemed that having a pretty strict standard is in order," Assembly President Pete Sprague said. "This exemption is a great tool that we do have, but folks need to understand that they have to apply for it."

Because of the March 2009 ordinance, Holben's personal situation is being vetted publicly.

At the assembly's Aug. 17 meeting, members went back and forth on whether an ordinance allowing the assessor to accept Holben's late form should even be introduced. The body ultimately decided, 7-2, that it should.

On Sept. 21, the assembly will hold a public hearing on the issue, a hearing that could entail debating the details of Holben's personal and financial life to determine if an exception is justified.

"Should it really take this much to help an elderly lady?" Rick Holben questioned.

That question gets at the heart of what this debate is about: local government. Where is the line between rules helping or hindering the citizens they're meant to protect?

"Why have a deadline if you don't enforce it?" Gary Knopp, Kalifornsky's assemblyman, said this week.

Sprague said the assembly must be careful with the Holben case, because it doesn't want to undermine the law that's currently on the books.

"If we do pass this ordinance, it opens up Pandora's box."

Assemblywoman Sue McClure, the East Peninsula's representative, said the assembly should look at the matter on an individual level.

"The issue is she wasn't doing her paperwork. It was an older-person issue, and her daughter-in-law discovered it and that's all it is," McClure said. "To me it seems like it should be a simple, little fix."

McClure said she would rather address the issue in a less public forum, but rules are rules.

"I wish there was another way," she said. "It seems a very ponderous thing."

Carey, who, with McClure, co-sponsored the ordinance that would allow the borough assessor to accept Holben's late form, sees value in the process because it allows for individual evaluation.

"I believe in people as compared to the machine," Carey said. "I don't question the letter of the law, but you've got to get to the spirit of it. The spirit of the law is the issue of cause. I don't think there's any question that this person meets the spirit of it."

That's a determination the assembly will need to make as the process continues for one family.

"It's just amazing how long it takes a piece of paperwork to go through an office," Rick Holben said. "It should be boom, boom, boom. It should take like, what, like two hours?"

Andrew Waite can be reached at andrew.waite@peninsulaclarion.com.

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