3.70.040 Local exemptions and exclusions.
A. The following property is exempt from general taxation:
1. Business inventory and items held for resale;
2. All motor vehicles which are subject to the motor vehicle registration tax described in Chapter 3.85 HBC.
B. The assembly may by ordinance exempt or partially exempt from taxation privately owned land, wetland and water areas for which a scenic, conservation, or public recreation use easement is granted to the borough. To be eligible for a tax exemption, or partial exemption, the easement must be in perpetuity. However, the easement is automatically terminated before an eminent domain taking of fee simple title or less than fee simple title to the property, so that the property owner is compensated at a rate that does not reflect the easement grant.
C. Temporary Exemption for Improvements. The increase in assessed value of improvements to real property shall be temporarily exempt from taxation if an increase in assessed value is directly attributable to either:
1. An alteration of the natural features of the land or to new maintenance, repair or renovation of an existing structure, and if the alteration, maintenance, repair, or renovation, when completed, enhances the exterior appearance or aesthetic quality of the land or structure.
An exemption may not be allowed under this subsection for the construction of an improvement to a structure if the principal purpose of the improvement is to increase the amount of space of occupancy or nonresidential use in the structure or for the alteration of land as a consequence of construction activity. An exemption provided in this subsection shall continue for four years from the date the improvement is completed, or from the date of approval for the exemption by the assessor, whichever is later; or
2. Improvements made for the development of a subdivision of a single parcel of property into three or more lots which adhere to the long plat requirements. An exemption from taxation allowed under this section shall be limited to a maximum of five years. The exemption is terminated immediately for each lot upon sale of the lot in the subdivision, or when a residential or commercial building is built on the lot in the subdivision. The exemption continues for the unsold, undeveloped lots in the subdivision for a maximum of five years; or
3. Improvements made for economic development purposes.
a. The exemption for economic development purposes must provide economic benefit to the borough; and
(1) The exemption will provide measurable public benefits commensurate with the level of incentive granted; and
(2) The property owner is in compliance with all Alaska municipal and state of Alaska tax obligations; and
(3) The location of the trade, industry or business is compatible with land use and development plans of the borough; and
(4) The exemption is necessary to allow adequate time for improvements to be completed.
b. For purposes of this section, “economic development property” means real or personal property, including developed property conveyed under 43 U.S.C. 1601 through 1629e, Alaska Native Claims Settlement Act, to which one or more of the following apply:
(1) Has not previously been taxed as real or personal property by the borough.
(2) Is used in a trade or business in a way that:
(a) Creates employment in the borough; or
(b) Generates sales outside of the borough of goods or services produced in the borough; or
(c) Materially reduces the importation of goods or services from outside the borough.
(3) An exemption on the property enables a significant capital investment in physical infrastructure that:
(a) Expands the tax base of the municipality; and
(b) Will generate property tax revenue after the exemption expires.
(4) Has not been used in the same trade or business in another municipality for at least six months before the application for deferral or exemption is filed. This subsection does not apply if the property was used in the same trade or business in an area that has been annexed to the municipality within six months before the application for deferral or exemption is filed. This subsection does not apply to inventories.
c. The exemption for improvements made for economic development purposes is limited to a maximum of 10 years.
d. Application. A completed borough-approved application must be submitted by the property owner prior to submission of a final plat. Applications submitted after construction begins shall be rejected. Applications for an exemption under this section must be addressed to the assessor. The assessor must forward a completed application to the clerk with a recommendation for approval or denial within 14 days of receipt. If the assessor recommends approval, the clerk shall prepare an ordinance for placement on the next agenda. In addition to any information required by the assessor, the application shall contain:
(1) A map or other proof that the entire property is within the Haines Borough boundary;
(2) Documents describing how the investment will create employment in the borough and expand the tax base of the borough; and how it will generate property tax revenue after the exemption expires;
(3) A review by the borough planning commission;
(4) An acknowledgement by the applicant that the parcels will be taxable when the parcels are no longer eligible for tax exemption under this chapter.
e. This exemption may be repealed by the voters through referendum.
D. Community Purpose Exemption. The borough exempts from taxation the real property of an organization not organized for business or profit-making purposes and used exclusively for community purposes; provided, that income derived from rental of that property does not exceed the actual cost to the owner of the use by the renter.
1. In order to determine that a property qualifies for this exemption, the borough may consider various factors including, but not limited to:
a. The property’s availability to public use regardless of sex, race, creed, color, sexual orientation, or national origin;
b. That the applicant organization is an exempt organization under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code, as amended from time to time;
c. Whether any part of the net earnings of the applicant inures to the benefit of any private entity or individual;
d. No evidence of a dominant financial motive such as excessive charges, excessive employee compensation, or rental income that exceeds operating expenses;
e. No evidence that the property is being used to financially benefit any officer, trustee, director, shareholder, member, or contributor of the applicant;
f. Ensuring that the property is used for the actual operation of at least one community activity;
g. That the fees and charges for the use of such property and facilities thereon do not effectively deny to a significant portion of the borough the privileges and benefits provided by the property;
h. Determining that the applicant organization is governed by a volunteer board of directors;
i. The benefits provided to the community by the organization warrant the value of the exemption;
j. Considering whether substantially similar community benefits are available through other entities; and
k. Considering the degree to which the organization’s use of the property impacts the quality of life of borough residents.
The borough administration may adopt a written policy setting forth additional community purpose standards and requirements, including standards and requirements applicable to housing serving a community purpose. Such written policy will be approved by the borough assembly via resolution.
2. A property may be apportioned into community-purpose and noncommunity-purpose areas in order to calculate a partial exemption if appropriate. Only that portion of the property that is actually used exclusively for the purpose of providing a benefit to the community is eligible for the exemption.
3. The assessor may disregard insignificant noncommunity-purpose use.
4. “Actual cost to the owner” shall include any costs that, in the judgment of the borough assessor, the owner incurred in its calendar or fiscal year for the purpose of renting the property. The borough administration may adopt a written policy setting forth specific costs that may and may not be considered. Such policy will be approved by the assembly via resolution.
5. An exemption may be granted under this subsection upon written application on a form provided by the borough assessor. The assessor shall require proof as necessary, and may require additional proof under this section at any time. If the applicant fails to respond to a request for additional proof, the failure may be considered in determining whether to grant the exemption.
a. The claimant must file the application no later than March 31st of the assessment year for which the exemption is sought with a January 1st tax day. Once approved, claimants may retain the exemption for a period up to three years and must submit annual validation statements to the assessor no later than March 31st of each year in which the exemption remains valid. The claimant must file a separate application by March 31st in the year in which an exemption expires.
b. For the calendar year in which the ordinance codified in this section is passed claimants will have until 60 days after the adoption of the ordinance codified in this section to file an application. Organizations that have an exemption granted under the prior standard will retain their exemption for tax year 2015 but will be required to submit an application beginning with tax year 2016.
c. Upon receipt of an application the borough assessor shall evaluate the request and generate a report including all information collected by the assessor relating to the applicant’s governing structure and board members, its financial structure, IRS tax status, use of the property and operating bylaws. The assessor shall forward the report with evaluation of each application to the assembly for denial or approval within 30 borough business days.
6. If approved by the assembly, the assessor shall allow an exemption in accordance with the provisions of this section. If the claimant has already paid taxes for that year prior to approval of a timely application, the exempted tax amount, without interest, shall be refunded to the claimant.
7. A person may appeal the denial or approval of an exemption granted under this subsection to superior court within 30 days after final decision, following the procedures set out in AS 44.62.560 through 44.62.570.
E. The borough exempts from taxation an interest, other than record ownership, in real property of an individual residing in the property if the property has been developed, improved, or acquired with federal funds for low-income housing and is owned or managed as low-income housing by the Alaska Housing Finance Corporation under AS 18.55.100 through 18.55.960 or a regional housing authority formed under AS 18.55.996.
F. Hardship Exemption. That portion of the property tax levied on the residence of a qualified senior citizen or disabled veteran who applies for the exemption described in HBC 3.70.030(A)(6) and meets the standards set forth in 3 AAC 135.040(b) and (c), which exceeds two percent of their gross household income.
1. In order to qualify for this exemption, the applicant must:
a. Have gross family income, from all sources in the prior year, which does not exceed 135 percent of the poverty guideline as established by the United States Department of Health and Human Services for a similar sized household in the state of Alaska for the year requested;
b. Be eligible for a permanent fund dividend under AS 43.23.005 for the same year or for the immediately preceding year;
c. Not own more than one parcel of real property in Alaska on the date of application, excluding an adjacent parcel that is necessary for the use of the primary residence; and
d. Have net worth as of the date of application of less than $250,000 including the first $150,000 of the market value of the principal residence of the applicant.
2. This exemption will be apportioned in the same manner and formula as applied to the standard senior citizen/disabled veteran exemption previously granted.
3. An exemption may not be granted under this subsection except upon written application for the exemption on a form provided by the borough assessor. The applicant must also submit an affidavit, supplied by the borough, attesting that the applicant meets the subscribed criteria. The assessor shall require proof, in the form the assessor considers necessary, of the right to and amount of an exemption claimed under this subsection, and shall require a disabled veteran claiming an exemption to provide evidence of disability rating. The assessor may require additional proof under this section at any time. If the applicant fails to respond to a request for additional proof, such failure may be considered by the assessor in determining whether to grant the exemption.
4. The claimant must file the application no later than March 31st of the assessment year for which the exemption is sought. The claimant must file a separate application for each assessment year in which the exemption is sought.
5. If an application is filed by the deadline, and approved by the assessor, the assessor shall allow an exemption in accordance with the provisions of this section. If the claimant has already paid taxes for that year prior to approval of a timely application, the exempted tax amount shall be refunded to the claimant.
6. If an otherwise qualified claimant is unable to comply with the March 31st application filing deadline, the claimant may submit an application to the assessor’s office for review by the assembly. If the claimant has submitted a valid application, the assembly may, by resolution, waive the claimant’s failure to file the application by the March 31st deadline, and authorize the assessor to accept the application as if timely filed. For purposes of this subsection, an inability to comply must be caused by a serious medical condition of the applicant or member of the applicant’s family, or an extraordinary event beyond the claimant’s control. No late applications can be submitted after July 31st of the qualifying year. This section does not create any private rights whatsoever, nor does it in any manner require the assembly to introduce or adopt any such resolution.
7. Upon receipt of the completed application, any additional proof required, and affidavit, the borough assessor shall evaluate the request and grant or deny the hardship exemption within 15 borough business days. If denied, the borough assessor shall specify the reasons for the denial.
8. A person may appeal the apportionment of a hardship exemption granted under this chapter or a denial of an application to the board of equalization in accordance with HBC 3.72.100 through 3.72.120. (Ord. 23-09-657 § 5; Ord. 22-06-620 § 5; Ord. 22-05-619 § 4; Ord. 22-01-603 § 4; Ord. 19-04-532 § 4; Ord. 15-02-401 § 3; Ord. 14-02-370 § 4; Ord. 12-10-308 § 6; Ord. 12-09-304 § 4; Ord. 10-12-251 § 4; Ord. 10-09-238 § 4; Ord. 10-08-236 § 4; Ord. 10-02-223 § 4; Ord. 09-08-213 § 4; Ord. 09-05-207 § 4; Ord. 07-10-171; Ord. 05-11-131; Ord. 05-09-122; Ord. 04-09-083)