A bill passed in the State Senate today would allow cities or boroughs to offer tax incentives for economic development properties, and tax disincentives for owners of run-down properties.
The bill has two sections — the first part allows boroughs to give tax breaks to developers to create economic opportunities. It would remove a limitation on the size of the tax break a borough could provide for economic development properties.
The second part would allow municipalities to introduce a property tax on blighted, or run-down, properties. The bill limits the cost to no more than 50% of the property’s tax. It would be the responsibility of the cities or boroughs to clearly define what blighted means before levying any tax.
Municipalities could also offer a reduced tax rate for properties while they’re being fixed up.
The bill’s sponsor, Anchorage Democrat Forrest Dunbar, said it’s designed to spur economic growth in the state by encouraging developers and giving municipalities more options. He said some other states have blight taxes as high as two or three times the property tax, but he put a cap on the tax so it wouldn’t be abused.
Nikiski Republican Sen. Jesse Bjorkman voted against the bill today. Bjorkman, a former member of the Kenai Peninsula Borough Assembly. emphasized that the bill just introduces a local option, and doesn’t require anything of boroughs. He said the first part of the bill could do good to encourage economic development, but that boroughs have other options for reducing blighted properties, and he doesn’t imagine the Kenai Peninsula Borough will make use of the blight tax.
The borough has taken advantage of another tax break incentive in recent years. The assembly approved a tax exemption for renewable power producers last spring.
The bill passed in the senate today with multiple amendments from Palmer Republican Sen. Shelly Hughes. It will now need to pass the house and get a signature from the governor to become law.
This story was supported by the Alaska Center for Excellence in Journalism's Legislative Reporter Exchange Program.
