Nome Common Council adopts housing incentive ordinances

By Peter Loewi
Monday night saw the Nome Common Council take on an ambitious agenda. Including a work session on developing new revenue streams and the final meeting of the Board of Equalization, the meeting ran for two and a half hours. The majority of the regular meeting was devoted to the second reading and passage of three ordinances designed to incentivize the creation of long-term rentals. All members of council voted yes on all three ordinances.
Council member Scot Henderson drafted and introduced the ordinances. Upon their passage he thanked the council, saying that tackling the Nome’s housing issues was one of the main reasons to run for a seat on the council.
The first ordinance provides a temporary property tax exemption for the renovation of deteriorated structures to be used for long-term rentals. The second ordinance provides a rebate for permitting fees following the completion of renovation or new construction of long-term rental rentals. The third ordinance gives a partial temporary property tax exemption for the development of multi-unit residential housing.
Ordinance one is designed to provide an incentive to those who “substantially rehabilitate, renovate, or replace” “deteriorated structures” located in a specific area. According to the ordinance, “for purposes of this exemption the Deteriorated Area of the City consists of all property within city boundaries.”
Owner occupied structures are not eligible for this property tax exemption, because the intent is to increase the number of rental units. Council members have said on a number of occasions that they intend to address home ownership in further ordinances. Potential renovators must fill out an application with the city’s assessor by February 1 of the year they wish to have exempted. State law limits the exemption to ten years.
The second ordinance is comparatively straightforward and had no amendments or edits from previous work sessions. Properties which qualify for the property tax exemption in the other two ordinances are also eligible for a rebate of permitting fees upon issuance of a certificate of occupancy. The question that was brought up in a previous work session was whether variance fees should be rebated or not. As variances require a public hearing, and thus require city staff to advertise the meeting, City Manager Glenn Steckman recommended that variance fees not be covered.
Ordinance three is intended to offer property tax exemptions for the construction or modification of long-term rentals. Following the debate of the first ordinance, most of the discussion was on ownership. As the intent of the ordinance is to increase rentals, if someone builds a triplex, lives in one and rents out the other two, should the entirety of the property be exempt, or only the value of the two rentals? Ultimately, the council decided to exempt the entirety of the value, but only for properties which are entirely for residential use. This means that newly constructed or fixed-up mixed-use buildings can only claim exemption on the portion which is for long-term rental housing. There is one loophole which council said they hope to amend out in the future: if someone built a large house for themselves and included a small rental unit, the entirety of the property would still be eligible for the exemption. The property tax exemption in this ordinance is only partial, because state law requires a portion be used to fund Nome Public Schools. Everything not levied for the schools can be exempted for up to 15 years.
The ordinances were first introduced by Henderson in a work session in late March. Since then, city staff, an attorney and the council have worked at them; the Nome Planning Commission has also discussed them. There were, however, no public comments on any of the three ordinances.
Having already completed a work session discussing new revenue streams and a Board of Equalization meeting finalizing business, council was eager to wrap up. Discussion on revenue streams was light and inconclusive, ranging from hotel development and tourism to online sales tax collection. The Board of Equalization adjourned quickly, adopting the Findings and Conclusions of Law in Norton Sound Health Corporation’s appeal of property taxes. The denial of all of NSHC’s appeals were affirmed.
In other business, the council approved an increase in funding for the schools to $3.15 million, as well as set aside money for a new ambulance. The mill rate for 2022 was set to 12 mills.
NJUS’s Ken Morton said that they are switching to summer mode, which he described as “standard stuff.” He also noted that the state legislature has finished their business for the session including a renewable energy fund and $2 million for NJUS to acquire a two-megawatt battery for the power plant.
In the City Manager’s report, Steckman reminded everyone that City Hall will be closed on Memorial Day. There will be a parade that day organized by the VFW. He also noted that they won’t be meeting for another three weeks, but hopes to have a work session on 3D-printed housing.
Finally, Steckman thanked the Nome Elementary School 4th graders for their cleanup of the tundra around the city’s landfill on the Beam Road. Mayor John Handeland said he will be sending them all ice cream.