Soboleff-McRae Veterans Village officials don’t think property tax should be levied on the second floor of their building. The Haines Borough manager disagrees.
At manager David Sosa’s recommendation, the assembly last week declined to introduce an ordinance which, if passed, would have granted a “community purpose exemption” for the residential floor, relieving the facility of paying property tax.
The bottom floor of the building is slated to house offices for nonprofits. The second floor has 11 apartments.
Sosa said the upper floor of the Veterans Village, owned by Haines Assisted Living, doesn’t meet the state’s community purpose exemption standards because HAL’s definition of who can live in the apartments is too broad.
“The only definition that they provide to live within the veterans housing is that someone be a veteran. This means that a 25-year-old veteran of service with no medical needs, no financial needs, no needs of any kind, is qualified to be in there,” Sosa said.
Sosa said he asked the board to more narrowly define who can live in the apartments – for example, applicants who have a service-connected disability as rated by the Veterans Health Administration as 30 percent or more, who have a demonstrated and verified medical condition that requires a supported living environment, or who can demonstrate financial needs as defined by state and federal guidelines for poverty.
The HAL board refused to make Sosa’s adjustments.
“To their credit, all of the people living in there (presently) meet the threshold that I’ve identified. But they will not adopt that as the threshold of the organization,” Sosa said.
HAL board president Jim Studley said there are several reasons the board won’t narrow its definition, including that the $6.1 million the Veterans Village received from the Alaska Legislature in 2012 was for the benefit of all veterans, not just disabled or low-income ones.
The board also doesn’t want to have to deny a veteran in need.
“For us to start discriminating against one veteran or another, we’re not going to do that,” Studley said.
At last week’s assembly meeting, HAL community manager Vince Hansen urged members to at least introduce the ordinance and let the public weigh in on whether HAL should have to pay the $5,144 in property taxes for the building’s second floor.
Resident Lucy Harrell also asked the assembly to “make it possible for us to debate this matter and decide as a community how we feel about it.”
In response to a question by Mayor Stephanie Scott, Sosa clarified that giving HAL the exemption would in no way be illegal. The assembly can grant a community purpose exemption for anything it wants, Sosa clarified.
“Code does allow that. It is not illegal,” Sosa said. “In my opinion, it would be contrary to the established standards of the state assessor’s organization, it would be contrary to the advice of the borough attorney, and contrary to the advice of the borough manager.”
The $5,144 annual tax burden, when divided among the 11 apartments, would add another $468 in rent per year, per apartment, Hansen said.
“In renting apartments over the last couple of months, we have had residents who would not have been able to move in if their rent had been even an additional $25 per month. This may be surprising to some of us that (people in this community) live this close to the edge, but for some, every dollar of income is already dedicated to daily living expenses,” Hansen said.
However, the assembly sided with Sosa and postponed introduction of the ordinance until borough staff develops a policy on community purpose exemptions and the assembly approves it.
Assembly member Jerry Lapp said it would be unfair of the borough to relieve the building’s second floor of property taxes.
“That’s all this is: an apartment building. So they are competing with other apartments that have no exemption in the Haines area,” Lapp said.
Assembly member George Campbell agreed that HAL has been given the chance to revise their standards for residency, but simply chose not to do so.
“The organization that operates this facility has had the opportunity and could make changes to make this a very easy decision. But, presently, basically we are being asked to move forward with tax exempt status for an apartment house,” Campbell said.
In making his recommendation to deny the application for a community purpose exemption, Sosa relied on Alaska case law, borough attorney advice and information from the state assessor’s office.
Sosa said the borough’s policy on community purpose exemptions is flimsy for several reasons, including that it doesn’t require organizations to prove on an annual or semiannual basis that they still meet exemption requirements.
Sosa said staff is working on a draft policy modeled after Juneau’s. When the policy comes into place, organizations that are currently exempt under the old system will need to reapply.
The Southeast Alaska State Fair, Port Chilkoot Parade Ground, American Bald Eagle Foundation, Haines Animal Rescue Kennel, Charles Anway Cabin and Takshanuk Watershed Council currently hold community purpose exemptions.
To obtain a community purpose exemption in the borough, Sosa said the applicant has to meet all of three criteria: the property must be owned by a nonprofit, the rental income derived from the property can’t exceed the actual cost to the owner of the use by the renter, and the property must be used exclusively for community purposes.