Tax break benefits property owners

Assembly OKs ordinance for 4-year exemption

Posted: Tuesday, November 14, 2000

A new ordinance passed unanimously by the Kenai Peninsula Borough Assembly provides for a four-year property tax exemption for landowners constructing habitat protection projects along rivers and streams.

Soldotna assembly member Pete Sprague, who authored the ordinance, said the need to ease the burden on property owners whose taxes increase due to projects that protect anadromous stream habitat areas, or areas that contribute to the living requirements of fish, was brought to his attention after hearing John Mohorcich, borough resource planner and also director and resource planner of the Kenai River Center, address the assembly earlier this year.

Mohorcich reported some property owners were hesitant to use the borough's habitat restoration tax credit program because they didn't want their property assessments to go up. Further discussions with area residents made the need for an exemption even clearer to Sprague.

"This fall I was talking to a property owner, and he said he had done a project which cost in the neighborhood of $20,000, and he said his assessed value had gone up a corresponding amount," Sprague said. "So I wanted to see if there was anything we could do to provide relief for these property owners."

In the memo accompanying the ordinance, Sprague said he believed "restoration projects benefit all of us" and asked that the borough allow exemptions to the fullest amount allowed by state statute, which is four years.

The ordinance goes into effect 30 days after the Oct. 24 enactment and allows the four-year exemption only for projects meeting all three of the following criteria:

n An increase in assessed value is directly attributable to alteration of the natural features of the land or new maintenance, repair or renovation of an existing structure;

n The alteration, maintenance, repair or renovation, when completed, enhances the exterior appearance or aesthetic quality of the structure; and

n The work meets the criteria for a fish habitat and restoration project as described in borough code.

To qualify, claimants must submit a written application to the assessor who may, in turn, require the information necessary to verify compliance. Applications must be filed on or before Jan. 15 of the assessment year for which the exemption is sought.

Once granted, the exemption is good for four years from the date the improvement is completed or four years from the date of approval by the assessor, whichever is later.

From his Kenai River Center vantage point, Mohorcich has an eagle view of projects along the Kenai River. The center gathers under one roof the borough, state and federal agencies responsible for permitting Kenai River projects. Mohorcich said there are 2,000 parcels along the Kenai River's 75 miles. During the year 2000, he said 200 projects could have qualified for the exemption.

According to borough code, eligible areas include the Kenai River and its tributaries (Beaver Creek, Slikok Creek, Soldotna Creek, Funny River, Moose River, Killey River, Upper Killey River, Russian River, Quartz River, Trail River), Swanson River, Kasilof River, Ninilchik River, Deep Creek, Stariski Creek, Anchor River, Fox River, Seldovia River, English Bay River, Bradley River, Bishop Creek, Chickaloon Creek, North Fork of Anchor River and Seven Egg Creek.

Shane Horan, borough assessor, said he foresees no problems in administering the new ordinance.

"State statute clearly allows for this four-year exemption," Horan said. "I think Mr. Sprague was hearing from people that the expense and increase in value on some of these walkways, decks, docks, light-penetrating stairways and walkways that people place on riverfront properties are relatively expensive and the assessed value goes up accordingly when they make those improvements," Horan said. "This was Mr. Sprague's avenue as provided in state statute to take advantage of this four-year tax exemption."

Horan used the example of a project that cost a property owner $50,000 in actual hard costs.

"The assessment in reality may only reflect $20,000 or $30,000 ... because the market doesn't support the full true invested costs necessarily in those restoration or improvement projects," Horan said. Under this exemption, the assessed value directly attributable to qualifying projects would not appear on the assessment for the four-year period.

Horan stressed that application must be made to the borough assessor's office to determine eligibility.

"If they don't apply, then they're not eligible," Horan said. "If we come upon the improvement, we'll assess it. In order to receive the benefit of the exemption, I encourage people to come in and apply."

Mary King, fish biologist with the Alaska Department of Fish and Game, looked beyond the immediate tax exemption and saw additional value in addressing subjects like projects along rivers and streams.

"When you start talking about these issues, anything that will make people think about habitat and the health of the river has to be a positive contribution," King said. "The problem is that when you start talking about issues around these fisheries, you tread on how people can develop their lands. They bought the land because they value the river as a resource. If they can take care of that resource, that's a priority and you can help them think about whether or not that use is positive or negative."

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