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Tax break for builders helps housing shortage

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The Fairbanks North Star Borough Assembly has approved a tax relief program to encourage housing construction.

An ordinance approved at a regular meeting last Thursday allows builders to apply for a break on borough property taxes for residential development in the cities of Fairbanks and North Pole and in a military facility zone.

The ordinance aims to address a housing shortage, primarily driven by an influx of additional personnel at Eielson Air Force Base. One of the ordinance’s sponsors: assembly member Tammie Wilson said Eielson housing is full.

Tax Break Family: “And if housing doesn’t become more available, they’ll do what they call: they’ll send the airmen or airwomen here without their family and then have to secure housing before the family can come and I don’t think there’s anybody who wants to see that happen.” 

Wilson added that tax relief is something the borough can do for local builders struggling to meet the demand for new housing amidst unusual conditions.

Tax Break Help: “We cant help them with building materials right and how they get here?  We cant really help with the labor force, and what the other was, was that the VA was still  having issues trying to get assessments done, appraisals in timely fashion. They could take 2 to 3 months to be able to do while the builder has to hold on to all those costs, so this sis something that we can do.”  

Under the ordinance, one-to-four-unit housing projects are eligible for 2-year exemptions from property taxes on the new housing units. Five or more-unit projects can get an up to ten-year exemption. Local banker Steve Lundgren was one of many who spoke in support of the ordinance. Lundgren says it’s a way to help ensure private sector housing development.

Tax Break Commander:  “The Pacific Air Force commander that met with me and local business leaders last month told us that in the eyes of the Air Force, were not meeting their housing needs and  if we cant meet their needs, they’ll be forced to consider building on base housing.”  

Lundgren who’s also on the Fairbanks Chamber of Commerce and Fairbanks Economic Development Corporation boards pointed to potential lost benefits if that happens, including to local utilities and businesses, as well as the borough tax base, as the exemptions will expire. North Pole resident Jeanne Olsen spoke against the ordinance, saying high real estate prices should be enough to spur new housing construction.

“I think right now, this is perfect storm for people to go: Boy you know my property assessments just went up and now you’re asking me to shoulder the burden of other people that may not have to pay property taxes for ten years?” 

The assembly made some amendments to the ordinance but ultimately passed it unanimously, despite concern it could run afoul of the borough’s voter-imposed tax revenue cap, which goes up with new construction. The assembly meeting ended abruptly as there were not enough votes to extend it. Members also could not agree on a time to reconvene the meeting to address remaining agenda including a time sensitive resolution asking the US Army Corps of Engineers to extend a February 13th public comment deadline for a permit for the proposed Manh Choh Mine.