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Tax break may also include seniors' boats

Posted: Tuesday, October 28, 2003

Senior citizens living in mobile homes that are their primary residences are entitled to a property tax exemption provided by borough law, just as their neighbors living in permanent homes are.

But seniors who would otherwise qualify for the tax break who happen to make a boat their permanent abode cannot receive the exemption because under borough law, boats are personal property, not real property.

That glitch could be wiped away if the Kenai Peninsula Borough Assembly adopts Ordinance 2003-44, which is up for introduction at Tuesday's regular meeting in Soldotna.

State law currently exempts the first $150,000 of assessed value of real property owned and occupied by qualifying seniors and disabled vets from taxation. A borough law (KPB 5.12.105), approved by voters, extended that exemption to an unlimited amount.

According to Shane Horan, borough assessor, the department of assessing received a request for a senior exemption on a boat used as a primary residence that met all the criteria for the exemption -- except for how boats are defined under current borough code.

"The department was not able to approve the request because the (state) statute authorizing certain property to be classified as real property for tax purposes applies only if the property is not expressly classified as personal property by ordinance," Horan said in a memo to the assembly. "KPB 1.08.040(P) classifies a boat as personal property."

Horan pointed out that the principal distinction between a boat and a mobile home is that the boat rests on water instead of land. Thus, if a boat is a primary residence occupied by a senior citizen or disabled veteran, it should receive the same exemption given a mobile home, he said.

The ordinance would amend appropriate portions of the borough tax code, among other things, adding a clause exempting boats granted an exemption as a primary residence in a section detailing the tax levies on different sized boats.

Horan said the borough had received only the one request from a boat owner.

"We think there could be probably a handful more who may or could potentially come forward to apply," he said.

If successfully introduced, Ordinance 2003-44 would get a public hearing Dec. 16.

The assembly also is expected to introduce another ordinance add-ressing an assessing matter.

Ordinance 2003-43 would authorize the borough to assess so-called Low Income Housing Tax Credit Projects based on the actual income derived from the property.

State law requires the borough to base the value of such low-income housing existing as of Jan. 1, 2001, by the income they produce for their owners.

According to Horan, this can result in a value less than "full and true value," the criteria used for other real property. To qualify, such properties must meet strict federal tax code standards.

The low-income tax credit was a result of a 1986 income tax reform act, which created the voluntary program where investors and developers can earn tax credits distributed over 10 years in exchange for agreeing to restrict rents charged to tenants. By providing affordable rental housing, investors get a dollar-for-dollar reduction in their federal tax liability.

In Alaska, the tax-credit program is administered by the Alaska Housing Finance Corporation. According to the borough assessing department, the Bayview Apart-ments, an 18-unit building in Seward, received the benefit of the restricted rent income approach to value in 2001, 2002 and 2003. The owners of two other projects, the 26-unit Parkview Apartments in Soldotna and the proposed 32-unit Pacific Park project in Seward, have expressed interest in receiving the restricted rent valuation.

According to Horan, state law allows the borough to decide which of three options it wants to use to assess the two newer projects. It could extend the preferential assessment based on the restricted rents, assess the buildings at traditional full and true value or choose the method of taxation on a case-by-case basis.

The proposed ordinance would choose the restricted-rent income method for all such low-income housing tax credit properties.

If adopted, the measure could lead to increased availability of affordable housing, Horan said.

In other business, the assembly is expected to:

n Introduce Ordinance 2003-19-25, providing $32,000 for the purchase of a van for the Nikiski Senior Service Area.

n Consider Resolution 2003-118, requesting that the Alaska Board of Fisheries hold its next Upper Cook Inlet area meeting on finfish in the Kenai-Soldotna area. The majority of finfish proposals considered by the board pertain to the Kenai, Kasilof and other central district salmon runs and the commercial, sports and personal-use fisheries that depend on those runs, said Borough Mayor Dale Bagley in a memo to the assembly. The board last held a meeting in the central peninsula area in 1999.

n Consider Resolution 2003-115, awarding the contract for radio broadcasting of assembly meetings to Kachemak Bay Broad-casting Inc. (KBBI), which submitted the highest-ranking proposal. The contract would begin with the Jan. 6 meeting and run through June 30, 2004, with an automatic extension until June 30, 2005. KBBI would be paid $550 per meeting.



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