City shuns changes on property tax exemptions

Community-purpose groups' tax breaks appear safe for now

Posted: Tuesday, November 29, 2005

Organizations such as the Juneau Gun Club, Perseverance Theater and Filipino Community Inc. won't have to start paying property taxes - at least for now.

Without opposition Monday night, the Juneau Assembly indefinitely postponed a proposed ordinance change that would have repealed the city's existing property tax exemption for nonprofit properties serving a community purpose.

Brian Buck, the gun club's president, said the decision was a relief to his organization. Having to pay property taxes, he said, "would affect how you do business."

Assembly member Jeff Bush made the motion to indefinitely table the proposal after "much wrangling" in the last week, since the Assembly first discussed the proposed change.

"I'm hoping there will be some clarification from the state," he said. "We are not the only municipality struggling with this exemption."

Among the groups represented at Monday's special Assembly meeting was the Glory Hole, a downtown soup kitchen and shelter which would receive a property tax exemption under state law because it is a charity.

City Finance Director Craig Duncan said at least half of those receiving the city's community-purpose exemption would still receive the state's mandatory exemption that applies to charitable or religious groups. Bush said the number of groups eligible for the state exemption could be as high as 60 percent.

The state also allows the city to broaden its exemption criteria to include property of nonprofit groups that are not organized for business or profit-making purposes and are used exclusively for community purposes.

"Under the existing law, it's not clear where you draw the line," Duncan said after the meeting.

But the exemption comes at a price, he said. Not only does it remove properties from the tax base, but it also increases the amount the city must pay to support its public schools, because the municipality has to make up for the money the exempted organizations would be paying.

"We still have to contribute into this pot," he said.

While there is a question of fairness for taxpayers, the actual effect on taxpayers is small, Duncan said. In a city with property on the tax rolls assessed at more than $3 billion, there is about $20 million in exempted valuation, he explained.

Using the state's narrower definition for assessments, about $8 million to $10 million would be added to the tax base, he said.

Still, that doesn't make it a small issue, Duncan said. "Does a taxpayer want to pay one-half percent more tax?"

For the gun club, paying property taxes wouldn't be a small thing, Buck said.

"We have a lot of education and training programs," he said. "There was going to have to be a charge for things that are now gratis.

"It would have been a big issue," he said.

• Tony Carroll can be reached at tony.carroll@juneauempire.com



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