Fairbanks North Star Borough Mayor Grier Hopkins’ administration is proposing property tax exemptions for new, multi-family residential construction in hopes of accelerating housing development in the borough.
An ordinance that’s set to be introduced by the administration at Thursday’s Borough Assembly meeting would establish the tax breaks, if ultimately passed by the Assembly. The incentives wouldn’t be a novel way of trying to buoy the local housing market, but the proposal does tweak some elements of a previous borough program.
The ordinance calls for exempting certain types of new residential developments from borough property taxes for either three, five, or 10 years, depending on the size and other specifications of a developer’s plan.
Tom Hewitt, special assistant to the borough mayor, said it’s largely responding to an expected influx of servicemembers at Eielson Air Force Base and Fort Wainwright over the next couple years. That includes 400 active-duty personnel and their families at Eielson and 300-500 new soldiers at Fort Wainwright, according to the ordinance.
But Hewitt also said there’s already a need for more housing in the borough.
“We want it to happen as soon as possible because there is existing demand. And the quicker we can do that, the more it frees up places for people who are inbound between six months and two years out,” he said.
Vacancy rates for rentals in the borough have fluctuated significantly in recent years, hitting a high of about 18.5% in 2020 and dropping to a low of just over 4% in 2022. At the end of 2024, the rate sat at a little under 13%, according to the most recent borough data.
The Hopkins administration’s proposal lists a number of requirements applicants would need to meet to qualify for the tax breaks. For instance, to earn the longest exemption of 10 years, a planned development would need to have five or more units, with each unit containing at least two bedrooms.
New construction of studio or one-bedroom units, however, wouldn’t qualify for any exemptions outlined in the program, as it’s currently proposed. The ordinance says that’s because military personnel and the borough’s community planning department have identified greater demand for housing with multiple bedrooms.
Borough data shows average monthly rent for three-bedroom houses has grown from just under $1,500 in 2020 to almost $2,400 in 2024.
The new proposal in some ways mirrors tax breaks for new residential construction that were available for about two years during the tenure of former Borough Mayor Bryce Ward, which also exempted certain kinds of new housing developments from property taxes for up to 10 years. But there are notable differences between the Ward-era incentives and what the Hopkins administration is proposing.
Excluding construction of studios and one-bedroom residences from the exemptions is one difference. The new version would also remove a phase of the review process in which applications had to be sent to the borough’s economic development commission for its recommendation.
Hewitt said that step caused some friction last time and that taking it out is meant to speed things up for developers.
“In some cases, that delay pushed things out a whole construction season, which, in developer-land, is extremely consequential.” he said. “So, we wanted to make sure we could turn these around significantly more quickly than what happened last time around.”
Hewitt also says they’re trying to make the incentives a little less geographically restrictive. The ordinance says developments qualifying for the exemptions could be in a designated military facility zone, within the city limits of Fairbanks or North Pole, or any other place in the borough that’s “suitable for high density residential development.”
That’s similar to the previous incentives’ geographic boundaries, though the stipulation inclusive of any area “suitable for high density residential development” wasn’t applicable to every type of exemption included in the previous program.
If the current measure were to pass as written, the application period for the tax exemptions would close at the end of 2028. But the end date and the other details could still change, or the ordinance could fail to pass the Assembly entirely. The measure is currently scheduled to be referred to the Assembly Committee of the Whole before going up for public hearing at the Assembly’s Jan. 29 regular meeting.