Financial Feasibility of a Yukon Koyukuk Borough …and more… August 17, 2018 Yukon Koyukuk School District presentation by Sheinberg Associates Yukon-Koyukuk School District Enaa neenyo (I'm glad you came)!
1. Why 2. What 3. Comments on a few Matters of Concern (what changes and what does not change) 4. Revenue & Property Tax 5. Property Tax Exemptions 6. Funding: Schools, Borough, Communities, Tribes 7. Land Entitlement 8. Voting 9. Next Steps
1. Why?
Borough or Census Area Median Household Income Median Family Income Per Capita Income Bristol Bay Borough $88,000 $101,875 $41,420 Juneau City and Borough $87,436 $104,831 $40,592 Aleutians West Census Area $86,964 $91,250 $35,083 Valdez-Cordova Census Area $82,511 $99,926 $35,457 Denali Borough $81,302 $101,806 $38,337 Anchorage Municipality $80,862 $94,369 $37,864 Matanuska-Susitna Borough $73,908 $86,831 $30,078 Fairbanks North Star Borough $73,831 $88,869 $34,182 Kodiak Island Borough $73,068 $92,639 $32,066 North Slope Borough $72,027 $77,330 $49,982 Sitka City and Borough $70,160 $82,301 $35,655 Yakutat City and Borough $66,875 $76,875 $31,084 Aleutians East Borough $65,926 $73,661 $31,025 Kenai Peninsula Borough $64,891 $82,242 $32,556 Skagway Municipality $64,853 $81,250 $39,412 Ketchikan Gateway Borough $64,162 $81,136 $32,694 Petersburg Borough $63,940 $79,931 $34,788 Southeast Fairbanks Census Area $63,713 $75,147 $30,757 Northwest Arctic Borough $61,341 $57,750 $21,028 Dillingham Census Area $56,055 $57,039 $23,520 Hoonah-Angoon Census Area $54,091 $66,667 $31,451 Bethel Census Area $53,296 $53,370 $18,231 Haines Borough $53,125 $58,750 $32,673 Wrangell City and Borough $52,986 $62,188 $29,782 Prince of Wales-Hyder Census Area $51,887 $63,073 $25,564 Nome Census Area $51,563 $51,138 $20,033 Lake and Peninsula Borough $43,864 $46,786 $22,684 Yukon-Koyukuk Census Area $38,451 $47,750 $20,812 Kusilvak Census Area $38,160 $38,293 $11,701
1. Why? To Answer our Question: Would a borough mean better and more predictable school funding? • We are tired of financial uncertainty. • We want to control our own destiny.
YES, m ore predictable and robust education funding IF …. There is a borough property tax and the borough gives at least half of the maximum allowed (“the cap”) to support education.
2. What? • Borough boundary • Borough A-B-Cs
State’s 1997 Model Borough Boundaries Yukon Flats Yukon-Koyukuk Yukon Koyukuk Boundary Studied Iditarod
Hypothetical Fairbanks North- North Yukon BOROUGH North Denali Mat-Su Haines west Slope Koyukuk Star Arctic Borough Home Home Home Home 2 nd class 2 nd class Type ? Rule Rule Rule Rule Strong…** Mayor Mayor Manager Manager Mayor Mayor ? Pop (2016) 98,957 1,810 102,598 2,466 9,803 7,944 2,565 # cities 2 1 3 0 7 10 10 (1 st & 2 nd ) # CDP or 15 4 26 6 2 2 9 communities # Schools 4 16 35 47 4 11 13 (16-17) (1 corr) (2 corr) FY 17 School Enroll 13,840 879 18,935 269 2,145 2,131 6,172 (PK-12) Sq Mi. Land 7,361 12,750 24,682 2,343 88,817 35,898 64,000
We, the people of the Northwest Arctic Borough, exercising the powers of home rule granted by the Constitution of the state of Alaska, in order to provide for local government responsive to the will and values of the people and to the continuing needs of the communities within the borough hereby establish this home rule charter.
All Boroughs MUST 1. Education (instead of REAAs and cities) 2. Land Planning & Regulation 3. If Taxes, Levy and Collect (help cities too) Boroughs MAY Economic development Landfill, recycling Road maintenance Public safety Water & sewer Many other options….
Yukon Koyukuk Borough - a Home Rule Borough 1. Education (new Borough School District) 2. Land planning & regulation (cities keep) 3. Property tax assessment and collection (help cities too) 4. Economic planning, development, advocacy (including bonds if desired)
3. Comments on a few matters that are of concern to people!
What Changes and What Does Not Change
1. Cities and City Councils – Cities, City Councils, Mayors stay the same. – Have all the same duties - except funding education, collecting any taxes 2. Tribes, Tribal Councils, Chiefs – No change to tribes, chiefs, tribal councils. – Tribe’s g overnment-to-government relationship with feds not affected. – Have all same duties, but must work together on land planning. 3. Community Associations – No change, have all the same duties.
4. School District – Biggest Change. – YKSD, City of Tanana SD, City of Galena SD dissolve and – NEW Y-K Borough SD forms. New School Board elected. – Community School Advisory Councils remain. 5. Federal Subsistence Status – No change, due to borough forming, not affected unless now an urban area (not expected).
6. Regional Planning – Borough does planning & zoning for all land in Borough, for success must be a cooperative effort involving other land owners. 7. Strength of Region’s Voice – Increases 8. Borough Mayor & Assembly are elected
Northwest Arctic Borough and North Slope Borough Meet Together, May 2018
Land Planning & Zoning
NAB Zoning /9.04.030 Geographic scope Unless prohibited by state law, this title applies to all private, state, borough and municipally owned lands and waters within the borough’s boundaries. It also applies to federal lands, waters, tidelands or submerged lands within the borough’s boundaries, unless preempted by federal law. This title does not apply to federally restricted townsite lots or allotments, except as may be allowed by federal law. This title does not apply to any lands within the municipal boundaries of the city of Kotzebue. Except on borough lands, a permit granted under this title does not allow activity on other lands without the further permission of the affected landowner.
4. Revenue & Property Tax
118 miles 84 miles 28
202 miles of TAPS = assessed value of approx. $1.44 Billion State collects 20 mills (2%) of property tax on TAPS 118 miles = $28.8 million to State 84 miles General Fund every year from this region’s 202 miles $221 million “lost” to region over last 20 years… 29
Property Tax • How does it work? • What would it mean for YK-Borough, for you? • How to offer maximum protection to residents.
• Property is assessed (valued for tax purposes) at “fair market value”. – What property would sell for in an open real estate market. • Millage rate (mill) is the amount of the property tax levy. – 1 mill = 1/1000 = 0.001 – 10 mills = 10/1000 = 0.01 = 1% • Property tax is calculated by multiplying the assessed value of taxable property by the mill rate.
5. PROPERTY TAX EXEMPTIONS There are REQUIRED and OPTIONAL property tax EXEMPTIONS in Alaska.
But first…here’s why its important to understand all this….
Estimated Locally Assessed Value of Property $99.1 million Other Estimated Value of Pipeline in the Borough $1.4 billion development Total, Locally Assessed Value $1.5 billion over time Estm Annual Property Tax at this Mill Rate…. Revenue to Y-K Borough 5.3 $8.2 million 6.0 $9.2 million 7.0 $10.8 million 8.0 $12.3 million 9.0 $13.8 million 10.0 $15.4 million 13.456 (like Fairbanks NSB) $20.7 million 18.50 (like North Slope) $28.5 million 20.0 (like City of Valdez) $30.8 million
• With this annual revenue, no tax beyond property tax is needed. • But, there must be a property tax to get this money. • Key is, how to provide maximum protection to residents? ANSWER: follow the North Slope Borough model for property tax exemptions + a “Safety Net”
Property Tax Exemptions 36 1. Age 65+ or disabled veterans - $150,000 off value of home (or more - in NSB: $300,000) 2. Everyone - $50,000 off value of home 3. Fire fighter or Law enforcement - $150,000 off value of home 4. Totally Exempt: a) Low Income persons living on a property for 10 years b) Low income housing built by AHFC or Regional Housing Authority if buyer still paying to housing entity c) ANCSA Corp land (undeveloped), Alaska Native Allotments, Alaska Native land in restricted or trust status d) City, borough, tribal, state, and federal land (unless it is under lease or contract) e) Property for nonprofit religious, charitable, cemetery, hospital, or educational purposes f) And more…..
EXAMPLE 1 $75,000 (house assessment) - $50,000 (exemption, everyone) $25,000 (taxable value) If Property Tax Rate = 10 mills (1%) Annual property tax would be: 0.01 (1%) x $25,000 = $250
EXAMPLE 2 $325,000 (house assessment) - $300,000 (exemption, elder) $25,000 (taxable value) If Property Tax Rate = 10 mills (1%) Annual property tax would be: 0.01 (1%) x $25,000 = $250
EXAMPLE 3 $350,000 (house assessment) - $300,000 (exemption, elder) $50,000 (taxable value) If Property Tax Rate = 10 mills (1%) Annual property tax would be: = $500 0.01 (1%) x $50,000 Annual Income for couple is $45,000 QUALIFY for Borough’s Low Income Property Tax Relief Grant. Tax due= $0
North Slope Borough Examples
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