Section 29.45.050. Optional exemptions and exclusions.

   (a) A municipality may exclude or exempt or partially exempt residential property from taxation by ordinance ratified by the voters at an election. An exclusion or exemption authorized by this subsection may be applied with respect to taxes levied in a service area to fund the special services. An exclusion or exemption authorized by this subsection may not exceed the assessed value of $50,000 for any one residence except that a municipality may, by ordinance, annually adjust their voter-authorized exemption by the amount calculated by the State Assessor to reflect the increase, if any, in the annual average cost of living, using the U.S. Department of Labor CPI-U for Anchorage.
   (b) A municipality may by ordinance
        (1) classify and exempt from taxation
             (A) the property of an organization not organized for business or profit-making purposes and used exclusively for community purposes if the income derived from rental of that property does not exceed the actual cost to the owner of the use by the renter;
             (B) historic sites, buildings, and monuments;
             (C) land of a nonprofit organization used for agricultural purposes if rights to subdivide the land are conveyed to the state and the conveyance includes a covenant restricting use of the land to agricultural purposes only; rights conveyed to the state under this subparagraph may be conveyed by the state only in accordance with AS 38.05.069(c);
             (D) all or any portion of private ownership interests in property that, based upon a written agreement with the University of Alaska, is used exclusively for student housing for the University of Alaska; property may be exempted from taxation under this subparagraph for no longer than 30 years unless the exemption is specifically extended by ordinance adopted within the six months before the expiration of that period;
             (E) a residential renewable energy system that is used to develop means of energy production using energy sources other than fossil or nuclear fuel, including windmills and water and solar energy devices located in the municipality;
        (2) classify as to type and exempt or partially exempt some or all types of personal property from ad valorem taxes.
   (c) The provisions of (a) of this section notwithstanding,
        (1) a borough may, by ordinance, adjust its property tax structure in whole or in part to the property tax structure of a city in the borough, including but not limited to, excluding personal property from taxation, establishing exemptions, and extending the redemption period;
        (2) a home rule or first class city has the same power to grant exemptions or exclude property from borough taxes that it has as to city taxes if
             (A) the exemptions or exclusions have been adopted as to city taxes; and
             (B) the city appropriates to the borough sufficient money to equal revenues lost by the borough because of the exemptions or exclusions, the amount to be determined annually by the assembly;
        (3) a city in a borough may, by ordinance, adjust its property tax structure in whole or in part to the property tax structure of the borough, including but not limited to exempting or partially exempting property from taxation.
   (d) Exemptions or exclusions from property tax that have been granted by a home rule municipality in addition to exemptions authorized or required by law, and that are in effect on September 10, 1972, and not later withdrawn, are not affected by this chapter.
   (e) A municipality may by ordinance classify and exempt or partially exempt from taxation privately owned land, wet land and water areas for which a scenic, conservation, or public recreation use easement is granted to a governmental body. To be eligible for a tax exemption, or partial exemption, the easement must be in perpetuity. The easement is automatically terminated before an eminent domain taking of fee simple title or less than fee simple title to the property, so that the property owner is compensated at a rate that does not reflect the easement grant. The municipality may provide by ordinance that, if the area subject to the easement is sold, leased, or otherwise disposed of for uses incompatible with the easement or if the easement is conveyed to the owner of the property, the owner must pay to the municipality all or a portion of the amount of the tax exempted, with interest.
   (f) A municipality may by ordinance exempt from taxation all or part of the increase in assessed value of improvements to real property if an increase in assessed value is directly attributable to alteration of the natural features of the land, or new maintenance, repair, or renovation of an existing structure, and if the alteration, maintenance, repair, or renovation, when completed, enhances the exterior appearance or aesthetic quality of the land or structure.  An exemption may not be allowed under this subsection for the construction of an improvement to a structure if the principal purpose of the improvement is to increase the amount of space for occupancy or nonresidential use in the structure or for the alteration of land as a consequence of construction activity. An exemption provided in this subsection may continue for up to four years from the date the improvement is completed, or from the date of approval for the exemption by the local assessor, whichever is later.
   (g) A municipality may by ordinance exempt from taxation all or part of the increase in assessed value of improvements to a single-family dwelling if the principal purpose of the improvement is to increase the amount of space for occupancy. An exemption provided in this subsection may continue for up to two years from the date the improvement is completed, or from the date of approval of an application for the exemption by the local assessor, whichever is later.
   (h) A municipality may by ordinance partially or wholly exempt land from a tax for fire protection service and fire protection facilities and may levy the tax only on improvements, including personal property affixed to the improvements.
   (i) A municipality may by ordinance approved by the voters exempt from taxation the assessed value that exceeds $150,000 of real property owned and occupied as a permanent place of abode by a resident who is
        (1) 65 years of age or older;
        (2) a disabled veteran, including a person who was disabled in the line of duty while serving in the Alaska Territorial Guard; or
        (3) at least 60 years old and a widow or widower of a person who qualified for an exemption under (1) or (2) of this subsection.
   (j) A municipality may by ordinance approved by the voters exempt real or personal property in a taxing unit used in processing timber after it has been delivered to the processing site from up to 75 percent of the rate of taxes levied on other property in that taxing unit.  An ordinance adopted under this subsection may not provide for an exemption that exceeds five years in duration.  In this subsection, "taxing unit" means a municipality and includes
        (1) a service area in a unified municipality or borough;
        (2) the entire area outside cities in a borough; and
        (3) a differential tax zone in a city.
   (k) A municipality may by ordinance approved by the voters exempt from taxation pollution control facilities that meet requirements of the United States Environmental Protection Agency or the Department of Environmental Conservation.  An ordinance adopted under this subsection may not provide for an exemption that exceeds five years in duration.
   (l) A municipality may by ordinance exempt from taxation an interest, other than record ownership, in real property of an individual residing in the property if the property has been developed, improved, or acquired with federal funds for low-income housing and is owned or managed as low-income housing by the Alaska Housing Finance Corporation under AS 18.55.100 - 18.55.960 or by a regional housing authority formed under AS 18.55.996. However, the corporation may make payments to the municipality or political subdivision for improvements, services, and facilities furnished by it for the benefit of a housing project, and this subsection does not prohibit a municipality from receiving those payments or any payments in lieu of taxes authorized under federal law.
   (m) A municipality may by ordinance partially or totally exempt all or some types of economic development property from taxation for up to five years. The municipality may provide for renewal of the exemption under conditions established in the ordinance. However, under a renewal, a municipality that is a school district may only exempt all or a portion of the amount of taxes that exceeds the amount levied on other property for the school district. A municipality may by ordinance permit deferral of payment of taxes on all or some types of economic development property for up to five years. The municipality may provide for renewal of the deferral under conditions established in the ordinance. A municipality may adopt an ordinance under this subsection only if, before it is adopted, copies of the proposed ordinance made available at a public hearing on it contain written notice that the ordinance, if adopted, may be repealed by the voters through referendum. An ordinance adopted under this subsection must include specific eligibility requirements and require a written application for each exemption or deferral. In this subsection, "economic development property" means real or personal property, including developed property conveyed under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act), that
        (1) has not previously been taxed as real or personal property by the municipality;
        (2) is used in a trade or business in a way that
             (A) creates employment in the municipality;
             (B) generates sales outside of the municipality of goods or services produced in the municipality; or
             (C) materially reduces the importation of goods or services from outside the municipality; and
        (3) has not been used in the same trade or business in another municipality for at least six months before the application for deferral or exemption is filed; this paragraph does not apply if the property was used in the same trade or business in an area that has been annexed to the municipality within six months before the application for deferral or exemption is filed; this paragraph does not apply to inventories.
   (n) A municipality may by ordinance classify as to type inventories intended for export outside the state and partially or totally exempt all or some types of those inventories from taxation. The ordinance may provide for different levels of exemption for different classifications of inventories. An ordinance adopted under this subsection must include specific eligibility requirements and require a written application, which shall be a public document, for each exemption.
   (o) A municipality may by ordinance partially or totally exempt all or some types of deteriorated property from taxation for up to 10 years beginning on or any time after the day substantial rehabilitation, renovation, demolition, removal, or replacement of any structure on the property begins. A municipality may by ordinance permit deferral of payment of taxes on all or some types of deteriorated property for up to five years beginning on or any time after the day substantial rehabilitation, renovation, demolition, removal, or replacement of any structure on the property begins. However, if the entire ownership of property for which a deferral has been granted is transferred, all tax payments deferred under this subsection are immediately due, and the deferral ends. Otherwise, deferred tax payments become due as specified by the municipality at the time the deferral is granted. The amount deferred each year is a lien on that property for that year. Only one exemption and only one deferral may be granted to the same property under this subsection, and, if an exemption and a deferral are granted to the same property, both may not be in effect on the same portion of the property during the same time. An ordinance adopted under this subsection must include specific eligibility requirements and require a written application for each exemption or deferral. An application for a deferral must specify when payment of taxes for each year of deferral will become due, together with an explanation of the reasons for each proposed date for consideration by the municipality. In this subsection, "deteriorated property" means real property that, either at the time of application for exemption or deferral or at the time of completion of the project for which an exemption or deferral is requested, is
        (1) residential property located in a deteriorating or deteriorated area with boundaries that have been determined by the municipality, if the property is owned by an entity that owns at least two residential properties and eight or more residential units among those properties in that deteriorating or deteriorated area; or
        (2) commercial property not used for residential purposes or that is multi-unit residential property with at least eight residential units, and that meets one of the following requirements:
             (A) within the last five years, has been the subject of an order by a government agency requiring environmental remediation of the property or requiring the property to be vacated, condemned, or demolished by reason of noncompliance with laws, ordinances, or regulations;
             (B) has a structure on it not less than 15 years of age that has not undergone substantial rehabilitation, renovation, demolition, removal, or replacement, subject to any conditions prescribed in the ordinance; or
             (C) is located in a deteriorating or deteriorated area with boundaries that have been determined by the municipality.
   (p) A municipality may by ordinance partially or totally exempt from taxation a private leasehold, contract, or other interest held by or through an applicant or proposed applicant in any property, assets, project, or development project owned by the Alaska Industrial Development and Export Authority under AS 44.88. Nothing in this subsection prohibits a municipality from entering into an agreement and receiving payments in lieu of taxes authorized under AS 44.88.140(b).
   (q) A municipality may by ordinance partially or totally exempt from taxation land from which timber is harvested that is infested by insects or at risk of being infested by insects due to an infestation in the area in which the land is located. A municipality may provide that an exemption for land under this subsection applies only to increases in assessed value that result from the timber harvest. A municipality may by ordinance partially or totally exempt from taxation improvements to real property, including personal property affixed to the improvements, if the improvements are
        (1) located on land from which timber is harvested that is infested by insects or at risk of being infested by insects due to an infestation in the area in which the land is located; and
        (2) used for or necessary to the harvest of the timber that is infested by insects or in danger of insect infestation.
   (r) A municipality may by ordinance exempt from taxation an amount not to exceed $10,000 of the assessed value of real property owned and occupied as a permanent place of abode by a resident who provides in the municipality volunteer (1) fire fighting services and is certified as a firefighter by the Department of Public Safety, or (2) emergency medical services and is certified under AS 18.08.082. If two or more individuals are eligible for an exemption for the same property, not more than two exemptions may be granted.
   (s) A municipality may by ordinance partially or wholly exempt from taxation the real property owned and occupied as a permanent place of abode by a resident who is the widow or widower of a member of the armed forces of the United States injured serving on active duty while eligible for hostile fire or imminent danger pay who dies because of the injury or complications related to the injury or its treatment. The ordinance must include requirements for determining eligibility for the exemption and a procedure for applying for the exemption.
   (t) A municipality may by ordinance approved by the voters partially or totally exempt from taxation a farm structure used exclusively for farming activity, or purposes directly related to farming activity, if the farm structure is owned or leased by a person that is actively engaged in farming and that derives at least 10 percent of the person's yearly gross income from farming activity, and the structure is used for
        (1) the growing, storage, or processing of grains, fruits, vegetables, or other crops intended for human consumption and produced by the owner's or lessee's farming activity;
        (2) the storage or processing of
             (A) feed for livestock, poultry, or other animals used in the owner's or lessee's farming activity;
             (B) milk or milk products produced by the owner's or lessee's farming activity; or
        (3) stabling or milking the owner's or lessee's dairy animals.
   (u) A municipality may by ordinance classify and exempt or partially exempt from taxation all or a portion of privately owned real property rented or leased for use as a charter school established under AS 14.03.250.
   (v) A municipality may by ordinance exempt or partially exempt from taxation for up to 10 years property in a military facility zone that creates or supports industry, development, or educational or training opportunities beneficial to a facility. An ordinance adopted under this subsection must include specific eligibility requirements and require a written application for each exemption. In this subsection, "facility" and "military facility zone" have the meanings given in AS 26.30.900.
   (w) A municipality may by ordinance partially or wholly exempt from taxation all or a portion of the increase in assessed value directly attributable to the subdivision of a single parcel of property into three or more parcels and any improvements made to the property necessitated by its subdivision. An ordinance adopted under this subsection may not provide for an exemption that exceeds five years in duration. A municipality may also by ordinance provide that
        (1) the exemption is terminated when
             (A) a lot in the subdivision is sold; or
             (B) a residential or commercial use is established on a lot in the subdivision; or
        (2) the exemption continues for the unsold lots in the subdivision after
             (A) a lot in the subdivision is sold; or
             (B) a residential or commercial use is established on a lot in the subdivision.
   (x) In this section, "farming activity" means raising and harvesting crops; feeding, breeding, and managing livestock; dairying; or any combination of those activities.

Authorities

29.35.050;29.45.030;29.45.055

Notes

Recent Bills that will modify this

HB 146 MUNICIPAL TAX EXEMPTION
HB 338 MUNI. PROPERTY TAX EXEMPTIONS
HB 370 MUNICIPAL TAX EXEMPTIONS
SB 87 MUNI TAXES ON DETERIORATED PROPERTY
SB 183 MUNI SENIOR & VET PROPERTY TAX EXEMPTION

References

AS 29.35.050 Garbage and solid waste services.
AS 29.45.030 Required exemptions.
AS 29.45.055 Levy of flat tax on personal property.

History

(Sec. 12 ch 74 SLA 1985; am Sec. 1 ch 103 SLA 1985; am Sec. 5 ch 70 SLA 1986; am Sec. 1 ch 151 SLA 1988; am Sec. 2 ch 73 SLA 1989; am Sec. 1 ch 98 SLA 1989; am Sec. 15 ch 93 SLA 1991; am Sec. 107 ch 4 FSSLA 1992; am Sec. 1 ch 66 SLA 1993; am Sec. 1 ch 7 SLA 1994; am Sec. 1 ch 65 SLA 1994; am Sec. 1 ch 40 SLA 1995; am Sec. 1 ch 70 SLA 1998; am Sec. 1, 2 ch 8 SLA 1999; am Sec. 4 ch 117 SLA 2000; am Sec. 1 ch 54 SLA 2002; am Sec. 1 ch 64 SLA 2002; am Sec. 2, 3 ch 140 SLA 2004; am Sec. 40 ch 56 SLA 2005; am Sec. 2 ch 44 SLA 2006; am Sec. 1 ch 89 SLA 2008; am Sec. 10 ch 83 SLA 2010; am Sec. 1, 2012 Primary Election Ballot Measure 1; am Sec. 1 ch 66 SLA 2013; am Sec. 35 ch 15 SLA 2014; am Sec. 1 ch 57 SLA 2014; am Sec. 1, 2 ch 36 SLA 2015)