The Fairbanks North Star Borough Assembly is reinstating a voter-approved property tax exemption for farm structures that the body had repealed last year.
Assembly Presiding Officer Scott Crass sponsored the ordinance to bring back the tax break. He said in a report to the assembly Thursday that improving food security is a community priority, and that the ordinance is meant to encourage new investment in agriculture locally by decreasing costs.
“Agricultural infrastructure is … capital intensive. Property taxes increase operating costs for small farms and start up agricultural operations,” he said.
Borough voters first approved of the ag tax break when it appeared on the ballot in the 2023 municipal election as Proposition 2. Election results from that year show the proposition passed with support from more than three in every four voters.
The exemption was available for about a year and drew four successful applicants, according to the borough assessor’s office.
But it didn’t last long.
The assembly eliminated the exemption after the Alaska Legislature passed a bill, SB 179, in 2024, which expanded and tweaked statewide agricultural tax incentives. Preferential assessment of farm land was already mandatory under state law, and the 2024 bill added farm structures. The bill also changed some definitions and criteria for eligibility.
Also, per that section of state law, if a person stops using qualifying property for farming purposes, they have to pay back up to seven years-worth of deferred taxes.
The borough assembly in January 2025 adopted an ordinance to comply with the updated definitions and criteria in Alaska statute. But the ordinance also repealed the voter-approved exemption for farm structures, opting just to use the new state incentives that had changed to include structures.
A memo from the borough assessing department in December 2024 backed the repeal ordinance, which passed the assembly at the time unanimously. The memo said the preferential assessments – which reduce valuations and, therefore, property taxes – would “meet the intent of the prior optional farm structure exemption.”
Sam Knapp of Offbeet Farm said during public testimony Thursday that the results on the local ballot proposition in 2023 show voters want the full exemption to be intact.
“Clearly our community is food insecure, and clearly people want to support farmers by addressing that problem,” he said.
Qualifying structures must be used exclusively for farming activity, according to the ordinance reestablishing the exemption. The owner or lessee must also sell at least $2,500 in agricultural products in a given tax year, among other requirements. Unlike incentives in state law, people who get the exemption do not have to repay taxes if their property ceases to be used for farming.
According Borough Attorney Jill Dolan, the revived farm structure exemption mirrors what voters approved in 2023, save definitions and eligibility requirements updated to align with state law.
The assembly adopted the ordinance on a unanimous vote Thursday, and it goes into effect at the beginning of next year.