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HomeMy WebLinkAboutOrdinance No. 2603-2011the c,./ KENAI, ALASKA Suggested by: Council Member Marquis, Council Member Bookey, and Administration CITY OF KENAI ORDINANCE NO. 2603 -2011 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KENAI MUNICIPAL CODE CHAPTER 7.05, "TAXATION OF REAL AND PERSONAL PROPERTY" BY ADDING A NEW SECTION "PROPERTY TAX CREDIT - RESIDENTIAL SPRINKLER SYSTEMS," TO PROVIDE A TAX CREDIT TO OWNERS OF RESIDENTIAL STRUCTURES WHO INSTALL CERTAIN QUALIFYING SPRINKLER DEVICES. WHEREAS, the 2009 International Residential Building Code requires the installation of an NFPA (National Fire Protection Agency) 13D compliant sprinkler system in all newly constructed 1 and 2 family dwellings; and, WHEREAS, the City of Kenai has elected not to impose this requirement by amending the City's adopted local building codes; and, WHEREAS, the City understands the benefits of sprinkler systems and encourages that all new one and two family dwellings constructed in the City limits of Kenai to be sprinklered to a minimum standard that complies with the 2009 International Residential Building Code (or better); and, WHEREAS, in light of those benefits, it is in the best interest of the City to provide a property tax credit to the legal owner(s) of the qualified dwelling that is equal to the actual cost of installation or $2.00 per square foot of the dwelling (excluding attached garages), whichever is less, to be used to satisfy City of Kenai real property taxes for the subject property. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Form: This is a Code ordinance. Section 2. Amendment of Chapter 7.05 of the Kenai Municipal Code: The Kenai Municipal Code is amended by adding a new section, Property tax credit - residential sprinklers, to be numbered 7.05.075 which shall read as follows: 7.05.075 Property tax credit - residential sprinklers. (a) Credit. The owner(s) of a newly constructed one or two family dwelling who installs, and /or has certified, a compliant sprinkler system by a qualified installer may receive a credit against the City of Kenai property taxes. New Text Underlined; (DELETED TEXT BRACKETED Ordinance No. 2603 -2011 Page 2 of 3 (b) Amount of credit. The credit allowed under this section for a residential sprinkler system is the lower of the eligible cost to the owner of the property for the installation of the system or $2.00 per square foot of the dwelling (excluding attached garages). "Eligible cost" means the cost of the sprinkler system including labor and materials required to comply with the minimum standard established by code. (c) Carry Over. The amount of credit in any tax year must not exceed the amount of the City of Kenai property tax imposed on the property benefitted by the credit in that tax year. Any amount of a credit not taken in the tax year in which an application is approved may be carried over in subsequent years until the full credit is granted. [ANY UNAPPLIED CREDIT SHALL REMAIN WITH THE PROPERTY AND MAY BE UTILIZED BY SUBSEQUENT OWNERS, IN THE EVENT THE PROPERTY IS SOLD, UNTIL THE FULL CREDIT HAS BEEN APPLIED AGAINST TAXES OF THE PROPERTY.] (d) Application. (1) A property owner must submit an application for the tax credit to the Finance Department on or before the date that the Finance Department sets which date shall be no later than April 30 of each year. Applications filed after April 30, or applications that are incomplete as of the date set for filing by the Finance Department, will be retained and, once complete, evaluated for a tax credit for the next succeeding year. (2) An application must: (A) be on the form that the City requires; (B) demonstrate that the taxpayer is entitled to the credit; and, (C) include a certificate of occupancy from the City of Kenai's building official indicating that the system for which the credit is sought meets the requirements of the 2009 International Residential Building Code ([OF] or subsequent edition adopted by the City). (e) Appeal. If the tax credit is denied, or if less costs for the installation of the system are allowed than the applicant believes appropriate, the applicant may appeal that decision to the City Manager on a form provided by the City. Appeals shall be filed with the City Manager within fifteen (15) days of the date of any decision under this section. In reviewing an appeal, the City Manager shall consider whether the sprinkler system meets the requirements of this section; the costs were necessarily incurred to install the system in accordance with this section and applicable codes; and the application for the tax credit was timely filed. (f) The credit authorized by this section applies to any tax year beginning January 1, 2012. Section 3. Severability: If any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 2603 -2011 Page 3 of 3 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 4. Effective Date: Pursuant to KMC 1.15.070(f), this ordinance shall take effect one month after adoption. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day of January, 2012. ATTEST: PAT PORTER, MAYOR Introduced: December 7, 2011 Adopted: January 18, 2012 Effective: February 18, 2012 New Text Underlined; [DELETED TEXT BRACKETED] KENAI, A KA Village with a Past, C# with a Future" To: Rick Koch, City Manager 71 From: Terry Eubank, Finance Director Date: December 1, 2011 Re: Ordinance No. 2603 -2011 FINANCE DEPARTMENT 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907 - 283 -3014 The purpose of this memo is to analyze the financial impact of Ordinance 2603 -2011 on the City's property tax revenue. This analysis will not project potential future use of the proposed credit but will look at the maximum impact the credit could have had if available during calendar years 2007 through 2010. Maximum potential exposure for the City is $2.00 per square foot of new construction excluding garages. The following table shows by year the number of homes constructed, the maximum credit that would have been available, the combined square footage which would have been available for credit had a qualified sprinkler system been installed, the current assessed value of those properties, and the estimated number of years it would take to exhaust the City's credit. Total Total Years to ITomes Maximum Eligible Assessed Exhaust Constructed Credit Square Footage Value Credit 2007 23 $ 88,168 44,084 $ 6,120,000 4.13 2008 22 75,316 37,658 5,265,700 4.09 2009 5 15,738 7,869 1,088,500 4.04 2010 7 22 394 11,197 1,596 200 4.13 Total 57 $201,616 100,808 $14,070,400 4.11 Assuming it takes four years to completely utilize the proposed tax credit and 100% participation (maximum potential impact), the amount of credit to be applied each year cannot exceed the total City tax due for that year, the following is a projected impact on property tax revenue by fiscal year for fiscal years 2008 through 2011. Keep in mind a credit applied for and granted in April of any year will not impact the taxes until the subsequent fiscal year. Tax Credit Year FY2008 FY2009 FY2010 FY2011 2007 $22,042 $22,042 $22,042 $22,042 2008 18,829 18,829 18,829 2009 - 3,935 3,935 2010 - 5,599 Total $22,042 $40,871 $44,806 $50,405 November 30, 2011 City of Kenai Rick Koch, City Manager 210 Fidalgo Ave. Kenai, AK 99611 Dear Rick, On behalf of the Board of Directors and members of the Kenai Peninsula Builders Association (KPBA), I'd like to thank the City of Kenai for their time and effort in developing and proposing a property tax credit in regards to residential sprinkler systems in residential dwellings (ORDINANCE NO. 2559- 2011). As an Association, we continue to be in strong support of any precautions a homeowner may take to better protect themselves from fire danger, which would include sprinkler systems, smoke alarms, and all other appropriate safety measures. The KPBA is a strong advocate of the homeowner's right to choose to install a sprinkler system, and will therefore continue to be in opposition of any proposed mandate. We sincerely thank the City for their efforts in offering this tax credit to our community, and appreciate the opportunity to voice our concerns regarding this important issue. Sincerely, Jeffrey vi. T. wait 2011/12 KPBA President Cc: KPBA Board of Directors P.O. .O. Box 1753 ® Kenai, Alaska 99611 phone: (907) 283 -8071 ® fax: (907) 283 -8072 0 email: kpba @ptialaska.net Terry Bookey / R an Marquis To: Mayor Pat Porter Council Members Mike Boyle, Brian Gabriel, Bob Molloy, Tim Navarre From: Vice Mayor Ryan Marquis, Council Member Terry Bookey Date: January 11, 2012 Re: Ordinance 2603 -201 1 – Property Tax Credit for Residential Sprinkler Systems Over 3,000 people lose their lives each year to fire in the United States. Of those, 8 out of 10 are in the home. According to the National Fire Protection Association (NFPA), if you have a reported fire in your home, the risk of dying decreases by about 80% when sprinklers are present. As a comparison, the NFPA reports smoke alarms reduce the risk of dying in a home fire by 50 %. Additionally, homes with sprinklers are protected against significant property loss — sprinklers reduce the average property loss by 71% per fire. Many of the new homes constructed use lightweight, engineered wood systems which burn faster than dimensional lumber. The National Research Council of Canada (NRC) tested the performance of unprotected floor assemblies exposed to fire. The findings of the study assert that these structures are prone to catastrophic collapse as early as six minutes from the onset of fire. Residential fire sprinkler systems respond quickly to reduce the heat, flames, and smoke from a fire; offering residents valuable time to get to safety, and protection to firefighters from major structural failures, like collapsing beams and floorboards. By passing Ordinance 2603 -2011, the City of Kenai recognizes these and the many other benefits of residential sprinkler systems, and offers incentives -- rather than mandates -- for citizens to use in constructing the most fire -safe homes possible. The City of Kenai has the opportunity to serve as a leader to other communities struggling to reconcile the proven benefits of residential sprinkler systems and the pressures against mandating such systems. The Council has heard differing points -of -view on sprinkler systems; the sponsors believe this ordinance represents the best interests of each of those points -of -view. We encourage your support of Ordinance 2603 -2011. Village with a Past, Gity with a Future" VIN;VIO: 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 TO: City Council \i\ic FROM: Rick Koch DATE: December 1, 2011 SUBJECT: Ordinance 2603 -2011 — Property Tax Credit for Residential Fire Sprinkler Systems The purpose of this correspondence is to recommend Council approval of Ordinance 2603- 2011. The 2009 International Residential Building Code (IRBC) requires installation of fire sprinkler systems in newly constructed one and two family dwellings. The requirement to install fire sprinkler systems in newly constructed one and two family dwellings has been met with strong opposition, primarily as a function of cost, from a variety of individuals and organizations. As a result of this opposition, the majority of municipalities nation -wide have chosen to eliminate the provision requiring fire sprinkler systems. 1992 The Administration, Fire Department, and Emergency Services recognize the value of fire sprinkler systems in newly constructed one and two family dwellings. Administration has prepared this ordinance establishing a property tax credit for homeowners that decide to install fire sprinkler systems. Attached is correspondence from the Finance Department estimating the future financial impact of the proposed ordinance. Fire sprinkler systems have been shown to provide protection for building occupants, the structure, and for emergency response personnel. Thank you for your attention in this matter.