The city of Fairbanks has removed a consequence for having overdue property taxes on a home. The Fairbanks North Star Borough Assembly is considering doing the same.
Homeowners with overdue property taxes are no longer disqualified from receiving the city’s $20,000 residential property tax exemption, which shaves off hundreds of dollars on homeowners’ tax bills every year. At the borough, the residential exemption is even bigger, $50,000.
On Oct. 28, the Fairbanks City Council voted unanimously to remove the rule that took away exemptions from those behind on their taxes. It was a brief discussion.
Councilwoman Shoshana Kun encouraged council members to vote in favor of losing the rule, saying it would be great for the city to support the borough in “giving grace to those who are struggling.”
Councilwoman Valerie Therrien, who is a lawyer, said she had defended those who got behind on their taxes and that losing the exemption could be “a double whammy.”
Ordinance 2019-46 was introduced to the Borough Assembly on Oct. 24 and is scheduled for a public hearing on Nov. 14. Sponsors are borough Mayor Bryce Ward and Matt Cooper, presiding officer of the assembly.
In addition to relaxing the qualifications for the residential tax exemption, the borough measure allows volunteer firefighters and emergency medical services providers who are overdue on property taxes to keep their residential property tax exemption of up to 20% of their home’s value.
Cooper said losing the borough’s homeowner exemption is a bigger hit on the finances of people struggling to pay their property taxes than the penalty and interest imposed for paying late.
Delinquent property taxpayers in the borough are charged 1% of the principal for each business day the tax is unpaid, up to a maximum penalty of 5%, plus 8% annual interest, according to borough code.
Cooper wants to “make it easier for people to pay their taxes and make it so that people do not get into a hole that they cannot get out of,” he said.
Ward agreed. Losing the homeowner exemption adds to the financial burden of people already struggling to keep their homes, he wrote in an email.
“If we are going to do it to encourage homeownership and reduce the tax burden to individuals who own their own home, we should honor it even for properties in foreclosure,” Ward wrote. “If we have a way to still maintain our delinquency process, and make it even just a little easier for someone to keep their home, we have an obligation to do so.”
The mayor pointed out that overdue property taxes do not disqualify residents from receiving other property tax exemptions, such as the senior and disabled veteran exemptions, which are required by state law.
The penalties and foreclosure process for overdue property taxes in the borough would remain the same, Ward said.
Ward estimated that as many as 150 people have lost their borough residential exemption in past years due to overdue taxes.
Both Ward and Cooper did some quick calculations on the cost of losing the residential exemption. On a home worth about $250,000, the exemption is worth roughly $750 to $800.
“This has made it more difficult for folks to get out of foreclosure because they still have to pay all of the fees and penalties accrued each year,” Ward said.
The homeowner exemption disqualification has been in place since at least the 1990s, according to officials in the borough treasury office.
No one contacted at the borough knew why the practice was adopted.
Contact staff writer Amanda Bohman at 459-7545 and firstname.lastname@example.org. Follow her on Twitter: @FDNMborough. Contact staff writer Cheryl Upshaw at 459-7572 and email@example.com. Follow her on Twitter: @FDNMcity.