Financial Feasibility of a Yukon Koyukuk Borough...Enaa neenyo (I'm glad you came)! 1.Why 2.What...

version 2 ‐ YKSD‐Sheinberg August 17, 2018 Presentation

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Financial Feasibility of a Yukon Koyukuk Borough …and more…

August 17, 2018

Yukon Koyukuk School District

presentation by

Sheinberg Associates

Yukon‐Koyukuk School DistrictEnaa neenyo (I'm glad you came)!

1. Why

2. What

3. Comments on a few Matters of Concern (what changes, what does not change, and more)

4. Revenue & Property Tax

5. Property Tax Exemptions

6. Funding: Schools, Borough, Communities, Tribes

7. Land Entitlement

8. Voting

9. Next Steps


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1. Why?

Borough or Census Area Median Household Income Median Family Income Per Capita IncomeBristol Bay Borough $88,000 $101,875 $41,420Juneau City and Borough $87,436 $104,831 $40,592Aleutians West Census Area $86,964 $91,250 $35,083Valdez‐Cordova Census Area $82,511 $99,926 $35,457Denali Borough $81,302 $101,806 $38,337Anchorage Municipality $80,862 $94,369 $37,864Matanuska‐Susitna Borough $73,908 $86,831 $30,078Fairbanks North Star Borough $73,831 $88,869 $34,182Kodiak Island Borough $73,068 $92,639 $32,066North Slope Borough $72,027 $77,330 $49,982Sitka City and Borough $70,160 $82,301 $35,655Yakutat City and Borough $66,875 $76,875 $31,084Aleutians East Borough $65,926 $73,661 $31,025Kenai Peninsula Borough $64,891 $82,242 $32,556Skagway Municipality $64,853 $81,250 $39,412Ketchikan Gateway Borough $64,162 $81,136 $32,694Petersburg Borough $63,940 $79,931 $34,788Southeast Fairbanks Census Area $63,713 $75,147 $30,757Northwest Arctic Borough $61,341 $57,750 $21,028Dillingham Census Area $56,055 $57,039 $23,520Hoonah‐Angoon Census Area $54,091 $66,667 $31,451Bethel Census Area $53,296 $53,370 $18,231Haines Borough $53,125 $58,750 $32,673Wrangell City and Borough $52,986 $62,188 $29,782Prince of Wales‐Hyder Census Area $51,887 $63,073 $25,564Nome Census Area $51,563 $51,138 $20,033Lake and Peninsula Borough $43,864 $46,786 $22,684Yukon‐Koyukuk Census Area $38,451 $47,750 $20,812Kusilvak Census Area $38,160 $38,293 $11,701


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1. Why?To Answer our Question: Would a borough mean better and more predictable school funding?

• We are tired of financial uncertainty.

• We want to control our own destiny.

YES, more predictable and robust education funding IF….

There is a borough property tax

and

the borough gives at least half of the maximum allowed (“the cap”) to support

education.


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2. What?

• Is a Borough?

• Is Process to form a borough? (year+)

• How to pick Borough Boundary?

• A few Borough A-B-Cs

State’s 1997 Model Borough Boundaries

Yukon FlatsYukon‐Koyukuk

Iditarod

Yukon Koyukuk BoundaryStudied


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BOROUGHFairbanksNorth Star

Denali Mat‐Su HainesNorth Slope

North‐west Arctic

HypotheticalYukon

Koyukuk Borough

Type 2nd class Home Rule

2nd classHome Rule

Home Rule

Home Rule

?

Strong… Mayor Mayor Manager Manager Mayor Mayor ?

Pop (2016) 98,957 1,810 102,598 2,466 9,803 7,944 2,565

# cities (1st & 2nd)

2 1 3 0 7 10 10

# CDP or communities

15 4 26 6 2 2 9

# Schools(16‐17)

354

(1 corr)47 4 11 13

16(2 corr)

FY 17 School Enroll(PK‐12)

13,840 879 18,935 269 2,145 2,131 6,172

Sq Mi. Land 7,361 12,750 24,682 2,343 88,817 35,898 64,000


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We, the people of the Northwest Arctic Borough, exercising the powers of home rule granted by the Constitution of the state of Alaska, in order to provide for local government responsive to the will and values of the people and to the continuing needs of the communities within the borough hereby establish this home rule charter.

All Boroughs MUST1. Education (instead of REAAs and cities)

2. Land Planning & Regulation3. If Taxes, Levy and Collect (help cities too)

Boroughs MAY Economic development Landfill, recycling Road maintenance Public safety Water & sewer Many other options….


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Yukon Koyukuk Borough - a Home Rule Borough

1. Education (new Borough School District)

2. Land planning & regulation (cities keep)

3. Property tax assessment and collection (help cities too)

4. Economic planning, development, advocacy (including bonds if desired)

3. Comments on a few matters

that are of concern…


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What Changes and What Does Not Change

1. Cities and City Councils– Cities, City Councils, Mayors stay the same. – Have all the same duties ‐ except funding education, collecting any taxes

2. Tribes, Tribal Councils, Chiefs– No change to tribes, chiefs, tribal councils. – Tribe’s government‐to‐government relationship with feds not affected.

– Have all same services & duties, but must work together on land planning.

3. Community Associations– No change, have all the same duties.


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4. School District– YKSD, City of Tanana SD, City of Galena SD dissolve and

transfer liabilities & assets to– NEW Yukon‐Koyukuk Borough School District. New

School Board elected, hires staff. – Up to 2 years to make transition. Old and new school

boards and administrators work together. Work funded by borough formation grant.

– Community School Advisory Councils remain. – Predicted to be less state funding, but more local

funding, for overall gain in revenue.

5. Federal Subsistence Status– No change, due to borough forming, not affected unless now an urban area (not expected).

6. Regional Planning– Borough does planning & zoning for all land within Borough Boundary

– For success, must be a cooperative effort involving other land owners – including Doyon, tribes, state/feds

7. Strength of Region’s Voice– Increases

8. Borough Mayor & Assembly are elected


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A bit more about Land Planning and Region’s Voice

“The Northwest Arctic Borough would like to thank the North Slope Borough for coming to Kotzebue and are looking forward to continue the partnership between the regions.” May 2018


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Who does land planning in region?

Borough does planning & zoning for all land within Borough Boundary

For success, must be a cooperative effort involving other land owners – including

Doyon, tribes, state/feds


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NAB Zoning /9.04.030 Geographic scopeUnless prohibited by state law, this title applies to all private, state, borough and municipally owned lands and waters within the borough’s boundaries.

It also applies to federal lands, waters, tidelands or submerged lands within the borough’s boundaries, unless preempted by federal law.

This title does not apply to federally restricted townsite lots or allotments, except as may be allowed by federal law.

This title does not apply to any lands within the municipal boundaries of the city of Kotzebue.

Except on borough lands, a permit granted under this title does not allow activity on other lands without the further permission of the affected landowner.

Land Planning & Zoning


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Pink = ANCSAGreen/yellow = federalBlue = state

Example: Land Ownership Northwest Arctic Borough


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Example: Zoning Map Northwest Arctic Borough


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4. Revenue & Property Tax

118 miles

84 miles

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202 miles of TAPS = assessed value of approx. $1.44 Billion

State collects 20 mills (2%) of property tax on TAPS

= $28.8 million to State General Fund every year from this region’s 202 miles

118 miles

84 miles

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$221 million “lost” to region over last 20 years…

Property Tax• How does it work?

• What would it mean for YK‐Borough, for you?

• How to offer maximum protection to residents.


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• Property is assessed (valued for tax purposes) at “fair market value”.

– What property would sell for in an open real estate market.

• Millage rate (mill) is the amount of the property tax levy.

– 1 mill = 1/1000 = 0.001

– 10 mills = 10/1000 = 0.01 = 1%

• Property tax is calculated by multiplying the assessed value of taxable property by the mill rate.

5. PROPERTY TAX EXEMPTIONS

There are REQUIRED and OPTIONAL property tax EXEMPTIONS in Alaska.


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But first…here’s why its important to understand all this….

Estimated Locally Assessed Value of Property $99.1 million

Estimated Value of Pipeline in the Borough $1.4 billion

Total, Locally Assessed Value $1.5 billion

at this Mill Rate….Estm Annual Property Tax

Revenue to Y‐K Borough

5.3 $8.2 million

6.0 $9.2 million

7.0 $10.8 million

8.0 $12.3 million

9.0 $13.8 million

10.0 $15.4 million13.456 (like Fairbanks NSB) $20.7 million

18.50 (like North Slope) $28.5 million

20.0 (like City of Valdez) $30.8 million

Other development over time


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• With this annual revenue, no tax beyond property tax is needed.

• But, there must be a property tax to get this money.

• Key is, how to provide maximum protection to residents? ANSWER: follow the North Slope Borough model for property tax exemptions + a “Safety Net”

1. REQUIRED: Age 65+ or disabled veterans ‐ $150,000 off value of home (optional: higher amount, in NSB: $300,000)

2. Totally Exempt: a) ANCSA Corp land (undeveloped), Alaska Native Allotments, Alaska

Native land in restricted or trust status

b) City, borough, tribal, state, University, and federal land (unless leased)

c) property used exclusively for Nonprofit religious, charitable, cemetery, hospital, or educational purposes

OPTIONAL:

3. Everyone ‐ $50,000 off value of home

4. Fire fighter ($10,000 off) or Law enforcement ($150,000 off)

5. Low Income persons living on a property for 10 years

6. Low income housing built by AHFC or Regional Housing Authority if buyer still paying to housing entity

7. And more…..

Property Tax Exemptions 38


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EXAMPLE 1 $75,000 (house assessment)‐ $50,000 (exemption, everyone)$25,000 (taxable value)

If Property Tax Rate = 10 mills (1%)

Annual property tax would be:0.01 (1%) x $25,000 = $250

EXAMPLE 2 $325,000 (house assessment)‐ $300,000 (exemption, elder)$25,000 (taxable value)


Annual property tax would be:0.01 (1%) x $25,000 = $250


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EXAMPLE 3 $350,000 (house assessment)

‐ $300,000 (exemption, elder)$50,000 (taxable value)


Annual property tax would be:

0.01 (1%) x $50,000 = $500

Annual Income for couple is $45,000

QUALIFY for Borough’s Low Income Property Tax Relief Grant. Tax due= $0

North Slope Borough Examples


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Even with these exemptions…highest burden will be on:

1. TAPS

2. High-end residential homeowners

3. People with multiple properties in borough

4. Commercial property –store/business owners

EXEMPTION IF SET UP WHEN BOROUGH IS ESTABLISHED!

6. Funding: Education 48


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Local $ to City and Borough School Districts….

• REAA School Districts (like YKSD) have no required local financial contribution to schools

• If City or Borough School District, it must give a minimum to schools equal to 2.65 mill (0.00265) of assessed value of property in municipality

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The minimum that YK Borough would be required to give to schools annually is estimated at about $4.2 million.

But, YK Borough needs to give at least $7 million to schools to exceed pre‐borough school funding.

Bottom Line on School Funding


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ADM Local Total

State

Fed +

OtherTOTAL

Galena 4,126 $870,750 $29.4 m $5.5 m $35.8 m

Tanana 39 $35,382 $1.3 m $0.4 m $1.7 m

Yukon/

Koyukuk

REAA

1,456 $0 $17.4 m $6.2 m $23.6 m

Actuals:

Region

Totals

5,641 $906,132 $48.1 m $12.1 m $61.1 m

School Funding – STATUS QUO (FY 15)51

ADM Local Total State Fed +

OtherTOTAL

Galena 4,126 $870,750 $29.4 m $5.5 m $35.8 m

Tanana 39 $35,382 $1.3 m $0.4 m $1.7 m

Yukon/

Koyukuk REAA1,456 $0 $17.4 m $6.2 m $23.6 m

Actuals:

Region Totals5,641 $906,100 $48.1 m $12.1 m $61.1 m

If Boro $7.0 m $42.9 m $12.1 m $62.0 m

DIFF $6.1 m ‐$5.8 m $0 $871,000

If boro gives $7 million or Halfway to the “Cap” 52


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ADM Local Total

State

Fed +

OtherTOTAL

Galena 4,126 $870,750 $29.4 m $5.5 m $35.8 m

Tanana 39 $35,382 $1.3 m $0.4 m $1.7 m

Yukon/

Koyukuk REAA1,456 $0 $17.4 m $6.2 m $23.6 m

Actuals:

Region Totals5,641 $906,132 $48.1 m $12.1 m $61.1 m

If Boro $13.3 m $43.2 m $12.1 m $68.7 m

DIFF $12.4 m ‐$4.9 m $0 $7.5 m

If boro gives the Maximum or “Cap” of $13.3 million 53

6. FUNDING:Borough/Communities/Tribes

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Estimated Locally Assessed Value of Property $99.1 million

Estimated Value of Pipeline in the Borough $1.4 billion

Total, Estimated Locally Assessed Value $1.5 billion

IF Mill Rate is ….Estimated Annual Property

Tax Revenue to Y‐K Borough

5.3 $8.2 million

6.0 $9.2 million

7.0 $10.8 million

8.0 $12.3 million

9.0 $13.8 million

10.0 $15.4 million13.456 (like Fairbanks NSB) $20.1 million

18.50 (like North Slope) $28.5 million

20.0 (like City of Valdez) $30.8 million

Example 1: Annual Yukon Koyukuk Borough Budget

REVENUE ‐ $16.7 million

~ $15.4 million, from 10 mill property tax

~ $1.3 million, from state + feds

EXPENSES ‐ $10 million

~ For Education: $7 million

~ To Tribes/Communities: $1.6 million

~ Borough operating: $1.4 million

SURPLUS ‐ $6.7 million

~ Borough PFD Fund, bond/debt service, more for schools or community CIP…

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Example 2: Annual Yukon Koyukuk Borough Budget

REVENUE ‐ $16.7 million

~ $15.4 million, from 10 mill property tax

~ $1.3 million, from state + feds

EXPENSES ‐ $10 million

~ For Education: $13 million

~ To Tribes/Communities: $1.6 million

~ Borough operating: $1.4 million

SURPLUS ‐ $0.7 million

~ Borough PFD Fund, bond/debt service, more for schools or community CIP…

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Also…a new Option for Economic Development would be Available: BONDS (Loans)

via the Alaska Municipal Bond Bank Authority

for School Improvements,

Economic Development Projects


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City of Unalaska School Construction

City & Borough of Sitka, Hydroelectric Expansion

Kodiak Island Borough High School Replacement

City of Seward Boat Harbor Float System

RecentAlaskaBondBank

Projects

7. Land Entitlement


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Land EntitlementNew Boroughs get 10% of the state land in the borough that is classified as Vacant Un-appropriated and Unreserved (VUU).

Big Picture Land Status from Tanana Chiefs Conference website

Approx Borough Boundary is Black Line


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YK Borough would get at least 233,000 acres (364 sq mi) of certain state land as Land Entitlement

Pink, orange, yellow = state landOrange IS available to select from.PINK MAY BE available.Yellow is NOT available.

8. Voting for Borough Assembly, Mayor, and School Board

Who will run the borough?

Who will have control?


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3 ways to Vote

1. One District ‐ All vote for all, can live anywhere to run. (like FNSB, Nenana, Tanana)

2. Multiple Districts (all vote for all) (like NWAB, NSB)

• Must live in a certain Residency Area to run for Assembly or School Board seat

• All vote for all.

3. Multiple Districts (only vote for person where you live) (like Denali , Y‐K REAA).

• Must live in a certain Residency Area to run for Assembly or School Board seat.

• Only those living in area vote for that seat. In this case, population in Districts must be equal.

ONE exampleResidency Districts - must live in district to run, but all vote for all, 2 elected from each district, mayor at large (can live anywhere)

District I – Wiseman, Coldfoot, Evansville, Bettles, Allakaket, Alatna, Hughes, Utopia Creek, Huslia

District II - Kaltag, Nulato, Koyukuk,

District III - Galena, Ruby

District VI – Tanana, Manley Hot Springs,

Minto, Rampart, Stevens Village, Livengood, Highway Area


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9. Next Steps + Timing

FALL / WINTER 2018

WINTER 2018

SPRING 2018

SPRING 2019

2019/2020

1. Talk about it in region

2. Make decision to proceed (to ask to form a borough) or not

3. If proceeding, prepare petition (YKSD, others?).

4. Submit petition asking to form borough to LBC, monitor, participate

5. If LBC approves, local vote on borough and elect officials within 60 days. If voters approve:

6. Year 1 ‐ Get borough up & running

7. Year 2 ‐ Collect tax, school transition


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thank you baasee’

tsin’aen dogedinhmahsi’ maasee’

chin’an

Discussion, Questions + Answers…

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Financial Feasibility of a Yukon Koyukuk Borough...Enaa neenyo (I'm glad you came)! 1.Why 2.What...

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