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Home My WebLink About2026-08-19 Council Packet - Work SessionPage 1 / Kenai City Council - Work Session August 19, 2026 — 4:00 PM �. Kenai City Council Chambers 210 Fidalgo Avenue, Kenai, Alaska www.kenai.city KENAI ** Telephonic / Virtual Information on Page 1** Agenda A. CALL TO ORDER B. INTRODUCTION - Terry Eubank, City Manager C. DISCUSSION ITEM 1. Residential Property Tax Exemptions D. COUNCIL COMMENTS E. PUBLIC COMMENTS (Public comments limited to five (5) minutes per speaker) F. ADJOURNMENT The agenda and supporting documents are posted on the City's website at www.kenai.city. Copies of resolutions and ordinances are available at the City Clerk's Office or outside the Council Chamber prior to the meeting. For additional information, please contact the City Clerk's Office at 907-283-8231. Registration is required to join the meeting remotely through Zoom. Please use the following link to register: https://us02web.zoom.us/meetinq/register/npcYvU9SRgWSOtPLPSHI2Q Kenai City Council - Work Session Page 1 of 1 August 19, 2026 Page 2 KENAI CITY OF KENAI ORDINANCE NO. 3542-2026 Sponsored by: Knackstedt, Kisena AN ORDINANCE PROVIDING FOR THE SUBMISSION TO THE QUALIFIED VOTERS OF THE CITY OF KENAI, AT THE REGULAR ELECTION TO BE HELD ON NOVEMBER 3, 2026, THE QUESTION OF ENACTING KENAI MUNICIPAL CODE, SECTION 7.05.031- RESIDENTIAL PROPERTY TAX EXEMPTION, TO ESTABLISH A RESIDENTIAL PROPERTY TAX EXEMPTION IN THE AMOUNT OF $75,000. WHEREAS, Alaska Statutes 29.45.050(a) provides that a municipality may exclude or partially exempt residential property taxation by ordinance ratified by the voters at an election; and, WHEREAS, Alaska Statute 29.45.050(a) also establishes that exemptions authorized under this section may not exceed the assessed value of $75,000; and, WHEREAS, this ordinance proposes to amend Kenai Municipal Code to establish a residential property tax exemption in the amount of $75,000 in the City of Kenai subject to voter approval, for residents receiving the same exemption for Kenai Peninsula Borough property taxes; and, WHEREAS, the proposed code change and ballot language will grant the City's residential real property tax exemption only to those residents that apply for and receive the Kenai Peninsula Borough's residential real property tax exemption; and, WHEREAS, if approved, the exemption will provide additional property tax exemption to Kenai residents currently receiving the mandatory $150,000 senior or $150,000 disabled veteran exemption per Alaska Statute 29.45.030(e); and, WHEREAS, an estimated 1,435 property owners will be eligible for the proposed exemption exempting an estimated $101,655,600 in property value, including $3,346,500 of disabled veteran exemptions (49), $35,037,400 of senior exemptions (533), and $63,271,700 of eligible property exemptions that do not qualify for the senior or disabled veteran exemption (853); and, WHEREAS, the total financial impact to the City, at its current tax rate of 4.35 mills, is estimated to be $442,202 annually with the maximum savings to an individual property owner of $326.25 annually; and, WHEREAS, if approved by the voters, the exemption will take effect January 1, 2027, for Fiscal Year 2028. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, AS FOLLOWS: Section 1. That the following proposition shall be submitted to the qualified voters of the City of Kenai at the November 3, 2026, City of Kenai Regular Election in substantially the same form as set out hereafter: PROPOSITION NO. 2026-C RESIDENTIAL PROPERTY TAX EXEMPTION Enacting Kenai Municipal Code to Establish a Residential Property Tax Exemption in the amount of $75,000. New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3542-2026 Page 2 of 3 Page 3 Shall Ordinance No. 3542-2026 enacting Kenai Municipal Code Section 7.05.031 - Residential Property Tax Exemption, be ratified to establish a residential real property tax exemption of $75,000. YES [A YES vote means you approve enacting Kenai Municipal Code 7.05.031 to establish a residential real property tax exemption of $75,000.] NO [A NO vote means you oppose enacting Kenai Municipal Code 7.05.031 to establish a residential real property tax exemption of $75,000.] Section 2. That following the November 3, 2026, City of Kenai Regular Election, if the proposition substantially in the same form as set out above in Section 1 of this ordinance is ratified by the voters, the following section of Kenai Municipal Code would become effective on January 1, 2027. 7.05.031 - Residential Property Tax Exemption The first $75,000 of assessed valuation of a single parcel of residential real property, owned, or partly owned and occupied as a primary residence and permanent place of abode by a City resident, may be eligible for this residential real property exemption from the City's tax levy on real property within the City of Kenai. Only City residents that apply for and receive the Kenai Peninsula Borough's residential real property tax exemption under the Borough's code of ordinances as now enacted or amended in the future, will receive the City's residential property tax exemption. The Borough Assessor's determination of whether property in the City qualifies for the Borough's residential real property tax exemption will be determinative of whether the property qualifies for the exemption under the City's code of ordinances. Section 3. That the following proposition summary shall be submitted to the qualified voters of the City of Kenai in substantially the same form as set out hereafter: Proposition No. 2026-C: This proposition would enact a new section of Kenai Municipal Code establishing a residential property tax exemption of $75,000. Ballot Language: PROPOSITION NO. 2026-C RESIDENTIAL PROPERTY TAX EXEMPTION Enacting Kenai Municipal Code to Establish a Residential Property Tax Exemption in the amount of $75,000. Shall Ordinance No 3542-2026 enacting Kenai Municipal Code Section 7.05.031 - Residential Property Tax Exemption, be ratified to establish a residential real property tax exemption of $75,000. YES [A YES vote means you approve enacting Kenai Municipal Code 7.05.031 to establish a residential real property tax exemption of $75,000.] NO [A NO vote means you oppose enacting Kenai Municipal Code 7.05.031 to establish a residential real property tax exemption of $75,000.] Proposed Code Enactment: 7.05.031 - Residential Property Tax Exemption The first $75,000 of assessed valuation of a single parcel of residential real property, owned, or partly owned and occupied as a primary residence and permanent place of abode by a City resident, may be eligible for this residential real property exemption from the City's tax levy on real property within the City of Kenai. Only City residents that apply for and receive the Kenai Peninsula Borough's residential real property tax exemption under the Borough's code of ordinances as now enacted or amended in the future, will receive the City's residential property New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3542-2026 Page 3 of 3 tax exemption. The Borough Assessor's determination of whether property in the City qualifies for the Borough's residential real property tax exemption will be determinative of whether the property qualifies for the exemption under the City's code of ordinances. Implementation Date: If approved by the voters at the November 3, 2026, City of Kenai election, Kenai Municipal Code Section 7.05.031 - Residential Property Tax Exemption will be in effect on January 1, 2027, for Fiscal Year 2028. Fiscal Impact: Eligible property owners could see a reduction in their annual property tax liability due to a portion of their permanent place of residence assessed value being exempt from taxation. Summary of Amendment: If approved, the first $75,000 assessed value of qualifying residential real property would be exempt from municipal property taxes, reducing the taxable assessed value of eligible residence by $75,000. Page 4 Section 4. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 5. Effective Date: That pursuant to KMC 6.05.080, sections 1, 3 and 4 of this ordinance shall take effect immediately upon enactment. Section 2 shall only take effect if approved by a majority of eligible voters of the City of Kenai who vote on the question during the November 3, 2026, City of Kenai Election. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 2ND DAY OF SEPTEMBER 2026. ATTEST: Michelle M. Saner, MMC, City Clerk Henry H. Knackstedt, Mayor Introduced: August 19, 2026 Enacted: September 2, 2026 Effective: See Section 5 New Text Underlined; [DELETED TEXT BRACKETED] L I000, City of Kenai MEMORANDUM TO: K E N 4 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.75351 www.kenai.city Council Members FROM: Mayor Knackstedt and Council Member Kisena DATE: August 11, 2026 SUBJECT: Ordinance No. 3542-2026 - Providing for the Submission to the Qualified Voters of the City of Kenai, at the Regular Election to be Held on November 3, 2026, the Question of Enacting Kenai Municipal Code, Section 7.05.031- Residential Property Tax Exemption, to Establish a Residential Property Tax Exemption in the Amount of $75,000. During the August 5, 2026, City Council meeting, public testimony was provided requesting the City Council consider implementation of a $75,000 residential property tax exemption. After Council discussion a work session was scheduled for August 19, 2026, to discuss the issue further. We requested the administration prepare, for Council's consideration and discussion, the necessary legislation to place the issue on the ballot for voter consideration. Alaska Statutes (AS) 29.45.050(a) authorizes a municipality, by ordinance ratified by the voters, to exclude or partially exempt residential property from taxation up to a maximum of $75,000 of assessed value. Under the proposed code provisions within the Ordinance, the first $75,000 of assessed value of qualifying residential property would be exempt from the City's property tax levy. The proposed exemption would apply in addition to the mandatory $150,000 senior citizen or $150,000 disabled veteran property tax exemptions authorized by AS 29.45.030(e). The proposed exemption will provide tax relief to qualifying taxpayers who occupy the property as their primary residence. An estimated 1,435 property owners will be eligible for the proposed exemption exempting an estimated $101,655,600 in property value, including $3,346,500 of disabled veteran exemptions (49), $35,037,400 of senior exemptions (533), and $63,271,700 of eligible property exemptions that do not qualify for the senior or disabled veteran exemption (853). The total annual financial impact to the City, at its current tax rate of 4.35 mills, is estimated to be $442,202 with the maximum savings to an individual property owner of $326.25. In order to qualify for the exemption, residents must apply through the Borough for its residential property tax exemption, this includes those that are receiving the senior citizen or disabled veteran property tax exemption through the Borough that may not have previously applied for the residential property tax exemption. The Borough assessor's determination of qualification for its residential property tax exemption would apply to the City's residential property tax exemption. Page 5 / PUBLIC NOTICE NOTICE of WORK SESSION K E N A I August 19, 2026 at 4:00 p.m. Notice is hereby given; the Kenai City Council will be conducting a work session on Wednesday, August 19, 2026, for the purpose of discussing City of Kenai: Residential Property Tax Exemptions The work session will begin at 4:00 p.m. and will be held in the Kenai City Hall Council Chambers, 210 Fidalgo Avenue, Kenai, AK 99611. The public is invited to attend and participate. Virtual and telephonic options are available. Additional information is available through the City Clerk's Office or by visiting the City of Kenai website at www.kenai.cit� y. Shellie Saner, MMC, City Clerk Publish: 8/14/26 CERTIFICATE OF PUBLICATION & POSTING . I, Logan Parks, Deputy City Clerk of the City of Kenai, do hereby certify that on the 6th day of August 2026, 1 electronically mailed or caused to be published the foregoing Notice of Work Session to the Peninsula Clarion and requested that this Notice be published in the August 14, 2026 edition of their newspaper. On the 14th day of August, 2026, the full work session agenda was also posted at Kai City Hall and ojhe internet at _ _ arks, {yeputy City Clerk �� -- r s �a —�-• w wry„ �-P�- i n LT.4 .... • -ayt _ i� ... ,� k4. � �„ P: d �6+� ��.rvR� ,_ n. ..�+' �l� r�`.'S'x ,r .:W. \ •e � � ,. -5e'a �,�;m/7i ,Y �' � yfii,"+s .rya, a �, � ,, *s �,,� ,,. - �.,gi t w • �� ' ORDINANCE NO. 3542-2026 PROPOSED RESIDENTIAL PROPERTY TAX EXEMPTION K E N A I TERRY EUBANK, CITY MANAGER DAVE SWARNER, FINANCE DIRECTOR Who qualifies? City residents Who own or partly own and occupy the property as their primary residence and are deemed eligible for the Borough residential exemption. Eligibility is determined by the Borough Assessor. What approval is required? City Council approval of Ordinance 3542-2026 at the September 2, 2026 Public Hearing followed by voter approval at the November 3, 2026 City of Kenai regular election. When would it begin? January 1, 2027. Applies beginning FY2028. Assessed Value - Exemptions = Taxable Value $326.25 maximum annual City property tax reduction At the current 4.35-mill rate with a full $75,000 exemption. Example; $350,000 qualifying residence Assessed Value 1 $350,000 1 $350,000 City Residential Exemption — ($75,000) Taxable Value* $350,000 $275,000 City Property Tax at 4.35 mills* $1,522.50 $1,196.25 Tax Reduction $326.25 Illustrative example before other applicable exemptions. $101.7 million Estimated value removed from taxable base Senior and disabled veteran property owners may receive the proposed exemption in addition to applicable exemptions. SENIOR/DISABLED VETERAN EXAMPLE $350,000 Assessed value - $150,000 Existing Senior or Disabled Veteran exemption - $75,000 Proposed exemption 125,000 Taxable value $326.25 additional annual City tax reduction at 4.35 mills Property tax is the second-largest General Fund revenue source, representing 23% of FY2027 General Fund revenue Property Tax 23% Sales Tax 50% Other Property Tax $5,154,331 23.04% General Fund Sales Tax $11,197,390 50.06% Revenue 27% Intergovernmental Revenues $ 916,589 4.10% Other Revenues (licenses, fees, interest) $3,242,469 14.50% Charges & Transfers (charges to other funds) $1,855,900 8.30% PROPERTY TAX REVENUE Taxable Assessed Value X Mill Rate Total General Fund Revenue $22,366,679 100.00% The City Council establishes the mill )urce: FY2027 General Fund Budget rate annually. 2026 CERTIFIED REAL PROPERTY ROLL 1.665 billion Total Assessed Value 66% Taxable Value What Makes Up GovernmentProperty the Exempt Other Exemption Value? Categories WITH PROPOSED EXEMPTION 60% Taxable Value 34% Exempt Value 40% Exempt Value 21% The proposed exemption would reduce taxable assessed value by: $101.7 million 9.25% of the current taxable base $1013M X 4.35 mills Estimated reduction in Current City taxable assessed value property tax rate (0-00435) $442,202 ESTIMATED ANNUAL CITY PROPERTY TAX ASSOCIATED WITH EXEMPTED VALUE At the current 4.35-mill rate Reduces taxable value L Applies to qualifying property owners Provides targeted tax relief Fixed dollar amount Reduces the taxable property base Supports specific policy objectives Reduces the tax rate Applies to all property owners proportionally Provides tax relief to all taxpayers IReduction varies with taxable value Does not change taxable values Treats all taxable property uniformly The fundamental difference is who receives the tax relief and how the tax burden is distributed. EXAMPLE CITY BUSINESS PERSONAL PROPERTY EXEMPTION Ordinance No. 3382-2023 The City exempted the first $100,000 of qualifying business personal property from taxation. Purpose: Reduce the tax and reporting burden for qualifying businesses. Maximum tax reduction: $435 per business at 4.35 mills. Estimated Annual Revenue Reduction: $35,000 The City has sufficient financial capacity to absorb the estimated impact; however, the exemption may affect future budget decisions. Current Financial Capacity $2.o5M Current General Fund balance above the amount required by the Fund Balance Policy. Provides near -term financial capacity, but these are finite resources. 0 Potential Budget Effects -$442,000 annually Adjustments to ca At the current 4.35 mill rate, expenditures pital Future budget decisions • Adjustments to service levels may include: • Use of available fund balance Assessed Value Growth 4•8% Historical average annual growth in real property assessed value (2007-2025). Assessed value growth may increase the taxable base over time; however, the exemption would continue to reduce taxable value for qualifying properties. The revenue effect Will vary With assessed values and the mill rate. What Is Proposed? RESIDENTIAL EXEMPTION Up to $75,000 of assessed value for a qualifying residence would be exempt from City property tax, WHO WOULD QUALIFY City residents who own or partly own and occupy the property as their primary residence and are deemed eligible for the Borough residential exemption. VOTER APPROVAL The exemption would require voter approval at the November 3, 2026 City election. EFFECTIVE DATE If approved, would take effect January 1, 2027, beginning with FY2028. What Changes if Approved? City property tax would decrease by up to $326.25 annually at the current 4.35-mill rate, CITY TAX BASE An estimated $101.7 million would be removed from the taxable base, representing $442,202 in annual property tax revenue at 4,35 mills, TAXABLE SHARE The taxable share of real property assessed value would decrease from approximately 66% to 6o%. FUTURE BUDGETS Future property tax revenue would depend on assessed -value growth and mill rates. Questions & Discussion