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HomeMy WebLinkAbout1960-08-09 Council Minutesj i Kenai City Council sting sst 9, 1960 i Minutes: Members of the Council met in the Civic Center Building. Roll callof members presents Mayor John Swanson, Carl Swanson, Dick Morgan,Helen,Jones A non -business meeting was held as a quarum was not present. Mr. Philip Hall, Tim Assessor of Anchorage, gave a very informative talk and answered questions of Council members and visitors. j The meeting adjourned at 10:30 P.M. Kenai City Council Meeting August 9, 1960 Visitors please sign-. I% Aon v- V - �t lily Extractions from Transcriutions of Council Nesting Kenai, Alaska August 9, 1960 The discussion did not follow lines of topical continuity, out was dictated by questions from the floor. it was substantially as follows: The council members were told that they were entitled oy law to start assessing taxes as of their incorporation date. it was agreed that the new City must have funds immediately in order to start functioning autroritatively. it was suggested, in order to get funds i:maedi:,tely, to send out a mimeographed letter, signed by the council members, including any or all of the following statements, worded by the council as they think most effectivei "Kenai is an incorporated jurisdiction as of (date, and is, under state statutes, allowed taxing autnority. For the taxing year 196U, in order to facilitate setting up a taxing system, we are going to assess a per capita rate on all citizens of U.uu. (Ur whatever amount seems reasonable to the council) Yon are hereby notified that this letter constitutes due notice that your real property is now subject to areal pro- perty tax lien commencing this date." it was pointed out here that at this point the decision would have to be made as to whether or not there was going to be just real property taxes, or both real and personal, and a discussion of the pro's and coats should be carefully weighed. in this first letter going out, the statement should oe included as to what kind of taxing is to be expected. The letter would be signed by the council members. After this letter is sent to the residents, and returned with the $5.uu per capita tax, - names could be taken from the polling list or wherever the best list of potential taxpayers can best be compiled with the most convenience and accuracy -it was suggested that officials of the cannery and oil companies be invited to an executive meeting. At this meeting they would be informed of the citiset newly acquired power as a taxing authority to be effective January let (at this point it was thought best to commence the year of the city of Kenai commensurately with the fishing season, around June) sad explain that taus authority was automatic at the time of their incorporation date. it could be suggested further to these officials that they make a $l,uuu donation (or some acceptable figure to be decided by council) which would be an pin lieu of taxes° payment, and such donation would be taken into consideration the following tax year. it was mentioned that thie was not ee to be construed as a definite promise to deduct the "donation-in-lieu-ofn from the next years' taxes, but could sct as an inducement. Upon receipt of the donation, it was suggested that this could be publicized in the local paper as an indication of the canneries, good will toward the city and benefits derived therefrom. it was pointed out that uot,u the cannery and the oil companies welcome the good will of the community and are anxious to maintain it. Publiei2ing their donations to the newly incorporated. city would indicate that good will was sought by both sides. '1'he procedure would oe the same for any other large (or modest) company relocating in Kenai. invite one of the executives to a board meeting and inform him of the eity's intention to set up a tax roll and soliciting donations to give im- petus to the formation of the city government. The question was asiced as to when the tax roll should begin, and the response was that that was a question to be determined oy the council. The visitor proceeded to elaocratc on the aoove discussion Page 2 � r Council Meeting Kenai, Alas{a August 9, 1960 These companies know, the vt you have tLe power to assess and t-.ey know tliyt you cPn, and they know you are going to do it. All t1ne tide Ian that was leased rt $494 an acre is going to be a leasehold interest tax figured by you. The state statutes of the State of Alaska define real property as the "land, improvements thereon or interest therein"; consequently, the oil companies have an interest in the land that is taxable. You will assess them on the leasehold interest just as if they owned the land, but in a lesser ctaFree. The interest value being less than the fee (title owner) value. (This leasehold interest formula, when established, will anable the city to derive an income from the land presently being used. This has to be based on a comparative land value as set by the land valuation board, always keeping an eye toward uniformity are. equality.) You will arrive at a formula which can be applied to the interest, which is less than the fee, tut not ,more than the fee. You will assess them on that interest just as if they owned the land. The city is perfectly right and legal in doing so. The large companies do not object to taxation, since it is 9 deductible item so far Ps income tax returns are concerned. They know also that payment of such constitutes the aforementioned good will. Taxed at so many acres at so much interest per acre. It was pointed out th.t an oil company, like other taxpayers, reserves the right of protest when they feel they are being dis- criminated against, and they 1da protest, unless taxes are levied uniformly and equit- ably. Emphasis was made on this point. The power to tax is also the power to destroy, and that all taxation must be applied sgainet a background of "equality and uniformity" All taxpayers, large companies or individuals, want to see the community thrive, and will do their share tax -vies and without _orotest, providing the above formula is apparent in their dealings with the community in which they have located. A question was interjected here: Then we actually can tax an oil lease? The answer was affirmative. You can not assess the oil companies interest in privately owned land. The only interest you can assess is the oil companios' interest in the land owned by a. tax exe=pt entity. You will have to :Love some sort of value set up for the oil companies' interest.... A question arose as to how often property should be evaluated. The answer was that it should be k9pt at current cost. Another question was, "Who is on the lsnd valuation board?" It was suggested that six or seven people be appointed from those .,.resent (or others) such as property owners, bank mortgage people, real estate people, etc. Between all sevennof them *'ley will come up with a figure commensurate with the value. Hors it was added that if you can show someone how his taxes were arrived at, you shouldntt have too many people taking offense. For the council to sit as a land evaluation board, all that is necessary is for someone to make a motion that the council sit as a board of equalization, and after the business is accomplished, revert back to council. Further questions and answers established that in taxation land and buildings were valued separately. Valuation was made by replacement cost less depreciation. For example, taking into account t ao type of roof, siding, etc. what would it cost to reproduce the building in which the meeting took place in the city at the present time. (Estimate was made of about $16 a square foot.) Everything is valued separately, the land, the buildin.-s, improvements, but all goes on the same "building card!' Taxes are computed on the total. The fnext Item entering into ;,he 1disccussion wiiac "rent saving factor.' This was explained whichl aaceterr�aed byhtheeamoua ofnren s�eingdseve dbyrtilet gs ati Eii �glease r' is Page 3 Co-aucil Meeting Kenai, Al2ska August 9, 1960 (continued) as opposed to whet he would be pa,/ing if he was leasing from a private owner. There are several formula's which are applicable to this particular item. It was asked if a post office could be assessed? The answer was that a federal post office could not be assessed unless it was ,privately owned. As a rule, more revenue is derived from privately owned land than from leasehold interest. It was also asked if federal installations, such as F.A.A. were taxable, and the answer was negative. Someone arced how airplanes were taxed in, on, or about a. field within the city limits, and the answer was that they were taxed as if they were sitting in the main intersection in the city downtown. It was brought out that when you are assessing leasehold interest of tax exempt land., it must cover federally owned lands, state owned lands. school owned lands, and city owned lands alike. After this discussion, the question of sales taxes and personal property taxes arose. Someone asked now the sales tax comes into effect. The answer was that the sales tax is instigated by council ordinance. It was mentioned that there is quite a bit of opposition to the personal property tax, and the question asked if it was compulsory to have one. The answer was that that was c question to be determined by council. It is not a compulsory form of taxation. Here it was brought out that the personal property tax is a difficult tax to administer properly. Some of those present indi- cated an interest in a sales tax instead of a personal property tax. The possibility and plausibility of a 2% sales tax wan discussed, with the inclusion of a personal property tax with a provision for a $5,000 exemption for home owners, if it was de- cided to have both a. sales tax and a personal property tax so as to assure that the transiont paid his fair share of tapes. The sales tax would bring in revenue fro:,, the transients, vacationers, seasonal workers, etc.; personal property would also bring in additional revenue from non -home owners who wouldn't be affected by the real property tax, but the $5,000 exemption (this was just a suggested figure) would ease the burden on the local home owner who pays real and personal. Most of them would be exempt from the personal property by the $5,000 exemption, while those who live in apartments, motels, trailers, etc. or any kind of rented home would be doing their share, too. If you exempt all personal property, it was noted, another way would have to be found to eventually get some returns from the many renters who will trickle in in the future, You will have to fiad some way to see that everyone pays their fair share. Inquiry was made as to how trailers are assessed and the answer given was that trailers are assessed as personal property as long as they are in a state whereby they could be hooked up and moved at a moments notice; whereas, if they have b:s: established, the wheels removed, and sitting on a foundation, they are assessed as im_orovements just as though they were a completed structure. Some- one wondered if trailer ;narks would then have a tendency to locate outside the city, but it was pointed out that they locate near power, sewers, etc. preferably. Additional methods of city revenue were discussed. One possibility advanced for con- sideration was that of a city business license. It was suggested that a list of all businesses in the city limits be made and sent to the state department in Juneau, requesting that these businesses be chocked to see that the city will receive its rightful share of monies back. (66 2/3 refund) The council, as an edininistrative body should keep as much control over what goes on in the city as they can. Keep track of every business here, it was urged. Page 4 Council I -looting Kenai, Alaska August 9, 1960 Everybody has to buy a business license. The city license fee could to $1, or whatever is established as a satisfactory fee for the majority. (Per year) This will affect everyone —especially during the fishing seasons. Even if you don't realize a large profit from the licenses in the beginning, you will still be retain- ing control of what is going on in the city, and this is what you went. (Here it was mentioned that any time there was a question as to the legality of any proposed orAinance or other city management issue, that a check should be made with Juneau.) Someone inquired if small businesses just starting out should have a tax incentive. The fact that somebody is going to have to pay taxes to support the city should govern the decisions of even temporary tax exemption, along with the inadvisability of granting too many exemptions which might later have to be rescinded. Taxation of churches wen brought into the discussion, rind a statute was mentioned which says, in effect, "all religious organizations will be exempt on property used exclusively for religious purpoeee." (Such as parking lots for the church members, etc.) The question as to the practicality of city -owned utilities was rained. It was noted that this would involve repairs, maintenance, equipment, etc* and that it should be carefully thought out and explored in all facets and ramifications. Sometimes, utility companies, privately owned and operated proved to be a good source of personal property tax income. The meeting concluded with a discussion of hiring someone to set up the system. The council was told that their first step was to get a map of sections and have someone put the city limits and boundaries on it. It was repeated that they needed to find some way to establish themselves financially right away, and they could investigate getting their refund back from the state on licenses. They might also investigate the possibility of some kind of fund set up to assist newly incorporated cities until they are able to establish an assessed valuation, or hold some sorb of bond election. Lt cc: Leo Obert, Planning Commission, Kenai John Swanson, Mayor, Kenai