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Home My WebLink AboutORDINANCE 2040-2004Suggested by: Council Member Joe Moore CITY OF KENAI ORDINANCE N0.2040-2004 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KMC 7.05.010 TO PROVIDE FOR A FLAT TAX ON AIRCRAFT. WHEREAS, KMC 7.05.010 currently provides that all personal property within the corporate limits of the City is subject to an annual ad valorem tax; and, WHEREAS, creating a competitive tax structure for aircraft is expected to encourage owners of all types of aircraft, especially commercial operators, to locate and obtain services for their aircraft at the Kenai Municipal Airport; and, WHEREAS, the Kenai Peninsula Borough currently imposes a flat tax on aircraft, which provides a more favorable tax status for highly valued aircraft than does the City; and, ~~ WHEREAS, imposing a flat tax on aircraft situatedwithin the City is authorized by ,~ Alaska Statute 29.45.055. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA that KMC 7.05.010 is hereby amended to read as set out in Attachment A. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this fifth day of May, 2004. ATTEST: Carol L. Freas, City Clerk Introduced: Adopted: Effective: Apri121, 2004 May 5, 2004 June 5, 2004 (4/ 14/04 sp) ~: SECTION I. 7.05.010 Property subject to taxation. (a) All real and personal property not expressly exempt by law shall be subject to annual taxation at its full and true value based upon the actual value of the property assessed. This shall not applesproperty subject to a flat tax and exempted from the ad valorem tax in this chapter. (b) The rate of levy of tax shall be fixed by resolution of the City Council, but the aggregate thereof shall not exceed three percent (3%) of the assessed value of the property assessed. (c) In addition to exemptions presently authorized by the Kenai Peninsula Borough, the inventory of a business held for resale in the normal course of that business is hereby classified as personal property exempt from taxation for the City of Kenai. SECTION II. 7.05.080 Personal property tax--Assessments--Aircraft. (a) For purposes of taxation, aircraft_ that have been issued an N number by the Federal Aviation Administration ("FAA"„fib. January 1 of the tax year shall be totally exempted from ad valorem taxes and shall be taxed in accordance with the followin schedule. AIRCRAFT FLAT TAX SCHEDULE BASED ON (MGWIL) Manufacturers Gross Weight with an Internal Load Fixed Wing Rotorcraft/Rotary Wind Class Weight Annual Class Weight Annual Tax Tax 1~ Less than 2,000 lbs $0 ~1 Less than 1,500 lbs $0 2 2,000 to less than $0 2 1,500 to less than 3,500 $0 4,000 lbs 3 4,000 to less than $0 3 3,500 or more in weight $0 6,000 lbs 4 6,000 to less than $~ 12,500 lbs 5 12,500 or more in $~ weight 0 ~ ~ 0 ~ 0 (b) The owner of record of an aircraft that have been dismantled, destroyed or crashed and the FAA N number has been retained by the aircraft's owner of record may submit to the assessor on an approved form "Aircraft Statement of Condition" that would allow for ad valorem taxation of that aircraft if Ordinance 2040-2004 Attachment A Page 1 of 2 approved. Aircraft for which such registration or licensin , has lapsed or that has not passed the annual inspection required by the FAA shall not qualify on this basis alone for ad valorem taxation unless it has been dismantled, destroyed or crashed. Vic) Commercial aircraft operated under a regular schedule by a scheduled airline shall be exempt from the flat tax and shall be taxed on an ad valorem basis in accordance with the KPB landing schedule formula. The KPB landing schedule formula provides for the prorated calculation of scheduled aircraft by dividing the total hours per year into the total time aircraft operated b~ a scheduled carrier are in the KPB, and multiplying the result by the assessed value of each aircraft. ~d) Definitions. 1. "Aircraft" means any en ig ne powered contrivance invented, used, or designed to navi .ate, or fly in, the air and that is capable of bein.., manned and is required by the FAA to be registered and certified in order to be manned. 2. "Aircraft engine" means an en in~e used, or intended to be used, to propel an aircraft, except the tail rotor of a helicopter. 3. "Commercial aircraft" means any aircraft transporting_passen ers and/or cargo for some payment or other consideration, including money or services rendered. 4. "Crashed" means aircraft for which only parts remain that, due to their condition, can no longer be assembled to create andcontrivable aircraft. This shall be evidenced by a FAA accident report and/or copy of an insurance claim that determines the aircraft to be a total loss. 5. "Destroyed" means aircraft that have been lama e~ d by ale, weather, ne_ lect and/or external influences outside the owner's control, and only unusable parts remain that, due to their condition can no lon eg r be assembled to create any contrivable aircraft. This shall be evidenced by photographs and a ph, sical inspection by the KPB Assessing staff appraiser if deemed necessary by the borough assessor. 6. "Dismantled" means aircraft that have been voluntarily disassembled and onlyparts remain that can no longer be assembled to create any contrivable aircraft. Evidence such as photographs and a physical inspection by the KPB Assessin staff appraiser shall be provided or allowed if deemed necessary by the borough assessor. 7. "Scheduled airline." A "scheduled airline" is any individual, partnership, corporation or association: a. Engaged in air transportation under regular schedules to, over, away from, or within the U. S . ; and b. Holdin, a Foreign Air Carrier Permit or a Certificate of Public Convenience and Necessity, issued by the Department of Trans ortation pursuant to 14 CFR Parts 201 and 213. Vie) An aircraft owner may appeal the determination of the borough assessor under this section using the procedures set out in KPB 5.12.050 - 060. 7 Ordinance 2040-2004 Attachment A Page 2 of 2 SUPPORTING INFORMATION FROM ASSESSING DEPARTMENT REGARDING KPB ORDINANCE 2003-45 AIRCRAFT FLAT TAX SCHEDULE AIRCRAFT FLAT TAX SCHEDULE BASED ON (MGWIL) Manufactureres Gross Wei ht with an Internal Load Fixed Win Rotorcraft/Rota Win Class Wei ht Annual Tax Class Wei ht Annual Tax 1 Less than 3000 lbs $SO 1 Less than 15001bs $100 2 3000 to less than 5000 lbs $300 2 1500 to less than 3500 $600 3 5000 to less than 150001bs $600 3 3500 or more in weight $1,000 4 15000 or more in wei ht $1,000 (THIS FLAT TAX SCHEDULE WOULD EXCLUDE ALL CQMMERCIALLY SCHEDULED CARRIERS) Each class of aircraft is catagorized by weight for particular user groups FIXED WING 1 Primarily personal use aircraft 2 Light Commercial upper end personal 3 Commercial usage 4 Heavy Commercial & Private Jets ROTARY WING 1 Private Kits & light Comm 2 Mid range Commercial 3 Heavy Commercial 2004 FAA BREAKDOWN OF AIRCRAFT N#S IN THE KPB AIRCRAFT LOCATION ANCHOR POINT COOPER LANDING FRITZ CREEK HALIBUT COVE HOMER HOPE KASILOF KENAI MOOSE PASS NIKISKI NINILCHIK SELDOVIA SEWARD SOLDOTNA STERLING TOTAL # PLANES AIRCRAFT TYPE 18 9 3 4 162 12 46 22s 9 56 13 16 36 248 65 922 Fixed Wing 1 engine HOMER KASILOF KENAI MOOSE PASS NIKISKI SELDOVIA SEWARD SOLDOTNA STERLING Total HOMER HOMER KASILOF KENAI SEWARD SOLDOTNA Total HOMER SOLDOTNA SOLDOTNA 4 2 10 1 3 1 1 12 2 3~ Fixed Wing Multiple 2 Fixed Wing Multiple 1 3 1 7 19 Rotary Wing 4 2 ~6 Rotary Wing ~1 Glider 9s6 KPB A/C RECORDS AS REPORTED BY FAA Oklahoma Flat Tax Example Less than 1,750 $20.00 1,751 through 2,500 $35.00 2,501 through 3,500 $55.00 3,501 through 4,500 $75.00 4,501 through 5,500 $95.00 6,501 through 6,500 $115.00 6, 5 O 1 through 8, 5 00 $13 5.00 2,501 through 10,000 $185.00 10,001 through 13,000 $230.00 13,001 through 17,000 $265.00 17,001 through 20,000 $300.00 20,001 through 25,000 $375.00 25,001 through 30,000 $500.00 30,001 through 40,000 $625.00 40,001 through 50,000 $750.00 50,001 through 75,000 $1,000.00 75,001 through 100,00 100,001 and over $1,5 Juneau Alaska (Commercial only) Flat Tax Juneau Rotary Wing 0-2000 $540 2001-3000 $1080 3001-4000 $1630 4001-7000 $2160 7001-12500 $2750 0-999 $0 1000-1499 $160 1500-1999 $250 2000-2499 $330 2500-2999 $410 3000-3499 $480 3500-3999 $570 4000-4499 $650 4500-4999 $810 5000-5499 $980 5500-5999 $1030 6000-6499 $1070 6500-6999 $1110 7000-7499 $1150 7500-7999 $1190 8000-8499 $1240 8500-8999 $1280 9000-9499 $1320 9500-9999 $1360 10000-12500 $1440 Advalorum over 125001bs SUPPORTING INFORMATION FROM ASSESSING DEPARTMENT REGARDING ORDINANCE 2003-45 AIRCRAFT STATISTICS Taxable Airplane Count by TCA from 1998 to Current 2003 TCA 1998 1999 2000 2001 2002 2003 10 5 10 10 7 6 4 20 71 20 26 24 25 23 30 81 99 86 67 61 47 40 8 15 16 20 20 16 53 32 11 4 4 6 4 55 44 3 2 2 2 2 57 5 0 0 0 0 0 58 112 26 19 16 16 8 63 32 0 1 1 3 1 65 21 2 0 0 0 0 67 14 2 2 3 3 4 68 5 1 1 1 1 1 70 82 25 25 23 21 23 80 1 0 0 0 0 0 TOTAL 513 214 192 168 164 133 133 Taxable Aircraft in 2003 2004 FAA REPORTS 986 PLANES IN KPB 102 Fixed Wing single engine 922 Fixed Wing Single engine 6 Fixed Wing Twin Engine 36 Fixed Wing Multi engine 10 Rotary Wing 25 Rotary Wing 15 On Landing Schedule 1 Glider Plane Value Acct Value 2003 Tax $ 13,558,872.00 $ 15,262,604.00 $ 143,834.91 NEW $ 65,705.89 LOSS $ 78,129.02 25,000.E PROD LOSS $ 53,129.02 City Portions KPB FLAT (e) $ 39,764.62 $ 25,941.27 (City Plus new KPB Flat Tax) (Estimated Loss to KPB) ~~ (500 (e) new planes added @ $50) TCA AIRCRAFT TO REMAIN ON A LANDING SCHEDULE 30 $ 1,256.00 49440 ERA 30 $ 1,663,597.00 49440 ERA 30 $ 51,486.00 49440 ERA 30 $ 330,820.00 $ 2,047,158.00 $ 24,750.02 49440 ERA 20 $ 555,100.00 66830 ERA 20 $ 1,712.00 66830 ERA 20 $ 20,548.00 66830 ERA 20 $ 776,956.00 $ 1,354,316.00 $ 17,431.84 66830 ERA 30 $ 24,883.00 69028 FEDX 30 $ 17,184.00 69028 FEDX 30 $ 20,576.00 $ 82,028.00 $ 410.24 69028 FEDX 30 76972 EVERTS 30 76972 EVERTS 30 76972 EVERTS 30 $ 132,831.00 $ 897.26 76972 EVERTS 2003 LANDING SCHEDULE TOTAL $ 43,489.36 ttie u!y vf' KENIII. ALASI(A ~~!/'~~a e wit1~ a Past, Gi with a Futrare~~ .9~ ~' 210 Fidalgo Avenue, Kenai, Alaska 99611-7794 Telephone: 907-283-7535 /FAX: 907-283-3014 'If 1992 MEMORANDUM: To: City Council FROM: Larry Semmens, Finance Director ~a~~ DATE: April 30, 2004 SUBJECT: Flat Tax on Ai rcraft The Borough passed a flat tax on aircraft that uses the manufacturers gross weight to create various categories and flat tax rates. The ordinance is effective January 1, 2005 and will affect FY 2006 revenue. The proposed Gity Ordinance follows the same scheme as the Borough ordinance except that all of the categories have a flat tax of zero. Essentially, this will eliminate the ad velorum tax and replace it with a flat tax of zero. The Borough assessing department supplied me with information about the aircraft that are located in Kenai that would be affected by this ordinance. My estimate is that if the ordinance is enacted it would reduce FY 2006 revenue by $7,500. The FY 2004 tax was close to $20,000, however, a helicopter and a large account will not be on the 2004 roll so revenue will be reduced even if this flat tax ordinance is not enacted. I recommend that the Council consider options to the proposed ordinance that include a flat tax for each category. The amount does not have to be related to the Borough schedule at all, but the total tax on aircraft in the City should be competitive with alternative sites available to aircraft owners.