August 16, 2012 | Volume 42, No. 33

Borough, Kluwan at odds over taxes

The Haines Borough is countering a claim by Chilkat Indian Village that the tribe owes no taxes on the former Chilkat Cruises Dock that it bought last year.

The borough is out about $10,000. Manager Mark Earnest and attorney Brooks Chandler have refused to provide borough legal correspondence on the matter, which is not the subject of a lawsuit.

The small-ship dock and adjoining beachfront lots are assessed at $810,000 and formerly provided tax revenue to the borough when they were held by village Native corporation Klukwan, Inc., according to borough staff.

In a letter to the borough last year, tribal president Kimberley Strong said tribal governments like the village are sovereign legal entities, similar to state governments.

“They have all the rights and attributes of a sovereign entity such as a state. They have a constitutionally guaranteed status as sovereign entities. They are not subject to tax based on this,” Strong wrote.

The borough has received correspondence from Chandler, its attorney, concerning the matter. The issue surfaced at this week’s assembly meeting when the Chilkat Valley News repeated a two-week-old request to see the correspondence.

Assemblywoman Debra Schnabel said at the meeting that the matter had not been shared with her.

“It’s an issue. It’s a legal issue that was forwarded to the attorney. It’s very complex,” said manager Mark Earnest.

“We are working toward a resolution that would be collection of property tax. There’s correspondence that lays out case law and potential legal strategy for pursuing a variety of options. If there’s a potential for litigation – which I can certainly provide to the assembly in executive session – but I think we’re moving toward a resolution that I think will be public.”

Earnest continued: “I know there’s a lot of interest in the particulars of the situation… It’s something we’re working on. Based on the opinion of our attorney, he believes the correspondence falls under attorney-client protection. That’s how this is being treated.”

Schnabel said the issue was broader than the dock dispute and held long-range implications for the borough government.

“The whole issue of tribally owned and Native-owned land and tribally owned land and taxation is important specifically to our borough, not just looking at this one issue. The fact that we have so many allotments that in our generation are starting to change hands and be developed commercially… I think that the question of how those are interpreted goes far beyond the BIA’s interpretation of how they should be handled. As a community, we have to be very vested in the whole question of taxation of commercial land.”

Member Steve Vick asked Earnest to answer yes or no to, “you’re in negotiation to have potential litigation prospects to it and until there’s a resolution to it, you’re not sure about whether we can release information or we have a resolution…”

“We’re sending a letter,” Earnest replied. “Actually, not we. This is not a manager decision. This is an (assessor) decision and that’s how it’s being dealt with, through the assessor.”

CVN publisher Tom Morphet told the assembly that if the newspaper incurred legal fees acquiring public documents, it would bill those costs to the borough.

In related news, the borough was notified Aug. 3 that ownership of the dock property was moving from the tribe to Klukwan, Inc.’s general income trust. Klukwan, Inc. officials weren’t available at press time to say whether the corporation would resume property tax payments.