Kenai City Hall on Feb. 20, 2020, in Kenai, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)

Kenai City Hall on Feb. 20, 2020, in Kenai, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)

Kenai council OKs new personal property tax exemption

The ordinance takes effect Jan. 19

The City of Kenai will begin offering a new personal property tax exemption next month following city council approval of the move — intended to support the city’s business community — during their Wednesday night meeting.

The ordinance, sponsored by all members of the Kenai City Council, amends the section of Kenai Municipal Code addressing how real and personal property are taxed. Effective Jan. 19, Kenai businesses and residents will be able to ask that the first $100,000 of their assessed personal property — other than aircraft, motor vehicles and watercraft — be exempt from city taxes.

Kenai City Manager Terry Eubank in a Nov. 7 memo accompanying the ordinance said the idea for the exemption came from a business owner in Kenai, who reached out to the city earlier this year about implementing an exemption program similar to those offered by the cities of Soldotna and Homer, as well as by the Kenai Peninsula Borough.

The exemption, Eubank wrote, would result in a maximum tax reduction of $435 for city businesses and cost the city about $35,000 annually in tax revenue. Still, Eubank said the city’s existing tax structure is “burdensome” to businesses and not consistent with other communities on the central peninsula. Further, Eubank said the exemption would support recent strides he said Kenai’s made in promoting economic growth.

“Enacting a $100,000 exemption will remove the reporting burden on many Kenai businesses and is consistent with the City’s mission to serve the citizens of Kenai through listening and leading; to promote growth, and continually improve services by balancing the wishes of the community with responsible management,” Eubank wrote.

Eubank told council members during Wednesday’s meeting that, although the ordinance exempts the first $100,000 of any personal property, the benefits will almost exclusively be felt by businesses. That’s because the State of Alaska already exempts an individual’s personal property, such as household belongings.

“This really doesn’t benefit a private individual, but it does benefit our businesses,” he said.

He further called the exemption an investment by the city in local businesses that puts Kenai on a “level playing field” with neighboring communities.

The Kenai Chamber of Commerce and Visitor Center threw its support behind the exemption in a Dec. 4 letter from Executive Director Samantha Springer, who called it “a significant and positive step for our local businesses and the community at large.”

“We firmly believe that by implementing this exemption, the City of Kenai will not only provide relief to local businesses but also stimulate economic activity and foster a more competitive business environment,” Springer wrote. “Moreover, the estimated maximum tax reduction of $435 per business … represents a strategic investment in our local economy and the prosperity of our businesses.”

The ordinance passed unanimously and takes effect in 30 days. Wednesday’s meeting of the Kenai City Council can be streamed on the city’s YouTube page.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.

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