Tax break considered to encourage removal of beetle-killed timber

Posted: Sunday, September 01, 2002

The danger that a catastrophic wildfire could one day erupt in the beetle-infested forests of the Kenai Peninsula is a reality with which borough residents have lived for several years, and one they will continue to live with for many more.

One strategy for reducing that danger is to harvest dead and dying trees, or in some cases, cut healthy stands likely to become infested with spruce bark beetles.

But harvesting trees has a price beyond the cost of the operation itself -- increased property taxes.

Under current borough tax law, property values increase when land is cleared, because clearing is considered an improvement. That fact may discourage property owners from clearing hazardous trees, thus leaving the fire danger in place.

In an effort to provide incentive to harvest insect-infested timber, the Kenai Peninsula Borough is expected to pass Ordinance 2002-30, a measure that would exempt property owners from paying any tax increase linked to timber clearing where that timber clearing is done to reduce the fire hazard.

Also exempted would be any improvements to the property and any personal property attached to those improvements if the improvements were necessary for the harvest of the infested timber.

In a further provision, the proposed ordinance recognizes a complication posed by the 1971 Alaska Native Claims Settlement Act. Under that federal law, the removal of timber converts otherwise exempt Native corporation land into "developed" or taxable property.

Native corporations asked last year for a borough ordinance exempting land cleared of infested timber from being considered as taxable property.

However, Alaska law did not permit municipalities to grant such an exemption -- that is, until the Legislature enacted House Bill 358 this year, granting such authority. The proposed ordinance would exempt Native land cleared to reduce fire danger from increased taxation.

Ordinance 2002-30 defines a "significant infestation" as a "widespread and intensive attack that will result in mortality of timber resources or has already caused large scale tree mortality."

To be considered at risk, land must have a forest susceptible to significant insect infestation, and a significant population of insects must be immediately adjacent or within close proximity of the forested land.

To be considered harvested, the timber cannot just be cut, it must be removed, the proposed ordinance says.

Landowners would be required to submit a formal written application to the borough and a detailed plan of operation to the Alaska Division of Forestry.

The ordinance also would provide for retroactive exemptions for the 2001 assessment year if a completed application were filed with the assessor by Jan. 15, 2003, the deadline for filing an application for the 2002 assessment year.

Exemptions from the taxes associated with higher assessments would only be granted for the year of the harvest. That is, landowners harvesting property in, say 2002, would be free from the increase in taxes for that year, but would be required to pay the higher tax in succeeding years, according to Shane Horan, borough tax assessor.

In the case of Native land, ANCSA provides that Native land is considered "developed" and taxable only during the harvest year. After a harvest is over, the land reverts, under the federal law, to an un-taxable, exempt status.

So, in the circumstance of the borough's desire to get fire-hazard trees removed, the proposed ordinance would forgive the year's worth of taxes the borough would otherwise be entitled to assess on ANCSA land.

Unlike in the case of non-Native property owners who must pay the tax increase in subsequent years, Native land under ANCSA will revert to a non-taxable status, Horan said.

The ordinance has a sunset date of Dec. 31, 2007. That is, it will automatically expire then unless the assembly changes the date.

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