Soldotna City Council members defeated a proposed property tax exemption for city residents on Wednesday.
If approved, the ordinance being considered would have exempted $50,000 of residential property value from the city’s property tax, starting in 2025. The city estimated the exemption would have saved the average resident $25 per year and cost the city about $15,000 in lost tax revenue.
City council member Jordan Chilson brough the exemption proposal forward. He told council members earlier this month the cost to the city would be minimal, and the exemption could provide relief to residents trying to enter Soldotna’s housing market.
“That’s a fairly small amount, but I believe that the benefits of this ordinance are more than fiscal,” Chilson said. “Really I believe it comes down to the principle of providing equity with what the borough provides. So, giving our residents the same level of exemption at the municipal level that they receive at the borough.”
The Kenai Peninsula Borough offers a variety of property tax exemptions and deferments for residents. In addition to a $50,000 residential property tax exemption, the borough offers a $300,000 exemption for senior citizens, an exemption for disabled veterans and a farm deferment, among others.
The exemptions apply to the assessed value of an applicant’s property. Soldotna doesn’t currently offer any residential property tax exemptions.
Council members considered the ordinance at a previous meeting. They postponed action to give the city time to clarify whether the Kenai Peninsula Borough would be willing to administer the exemption. Per Chilson, the borough said it would.
“Since that meeting, we have clarified that the communication with the borough has occurred,” he said. “There's no concerns at the borough with them collecting this exemption on our behalf.”
Council member Linda Farnsworth-Hutchings voted against the ordinance. She said she’s always concerned about new municipal tax exemptions. The one being considered, she said, wouldn’t go as far as the sponsors think, and would only benefit a subset of Soldotna’s population.
“That only affects 600 homeowners,” she said. “We have close to, what, 5,000 in the city? We have residents that live in apartment buildings year round that would not receive any benefit of this. But we want them to stay in our city and I really would like to see us not vote this in.”
Council members were split three-three, requiring Mayor Paul Whitney to cast a tie-breaker vote. His vote in opposition killed the ordinance.
The proposed exemption isn’t the first time the council’s sought to address housing insecurity in Soldotna. Council members approved a new housing type in 2022 that allows for multiple dwelling units on a single piece of property. At the same time, the council put some limits on use of those units as short-term rentals.
In 2022, KDLL reported that short-term rentals, like AirBNB and Vrbo, take up the greatest proportion of total houses on the Kenai Peninsula as compared to the rest of the state. At the time, there were more than 2,000 active short-term rentals on the peninsula, including more than 650 between Kenai, Soldotna and Nikiski.
