City of Nenana - Sheinberg Associates

Transcription

NENANA AREA
BOROUGH OPTIONS STUDY
(DRAFT) FINAL REPORT
March 2014
prepared for
City of Nenana
prepared by
www.SheinbergAssociates.com
TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................................... 1
Project Purpose and Process .................................................................................................................................1
Figure 1- Borough Options Investigated ........................................................................................................2
Borough Basics .......................................................................................................................................................3
Impact to Subsistence Status, Community Governments, and Native Corporations...................................4
Planning, Platting, and Land Use Regulation ....................................................................................................6
Borough Land (municipal entitlement)...............................................................................................................8
Voting ......................................................................................................................................................................8
Schools .....................................................................................................................................................................9
Assessing Financial Impacts ............................................................................................................................... 10
Summary of Effects by Borough Option Investigated .................................................................................... 11
1 PROJECT PURPOSE .................................................................................................................... 21
2 BOROUGH OPTIONS INVESTIGATED IN THIS REPORT ........................................................... 21
3 BOROUGH AND ANNEXATION BASICS .................................................................................... 22
3.1 What are Boroughs? ....................................................................................................................................... 22
Figure 2 – State’s Model Borough Boundaries ............................................................................................ 23
3.2 Who Can Propose to Form a Borough, or, Annex Territory into an Existing Borough? ...................... 25
3.3 Who Makes the Decision on Borough Formation/Annexation? .............................................................. 28
3.4 Criteria for Approving a Borough Formation or Annexation.................................................................. 28
3.5 Process to Form a Borough or Annex Territory into an Existing Borough ............................................ 30
4 REQUIRED AND OPTIONAL BOROUGH SERVICES ................................................................. 34
4.1 The Three Mandatory Borough Services .................................................................................................... 34
4.2 Optional Services and Duties ....................................................................................................................... 35
5 HOW A BOROUGH AFFECTS CITIES, UNINCORPORATED COMMUNITIES, TRIBAL
GOVERNMENTS, AND SUBSISTENCE STATUS ............................................................................ 39
5.1 Effect of Borough Formation (or annexing into a borough) on Cities .................................................... 39
5.2 Effect of Borough Formation (or annexing into a borough) on Unincorporated Places and Tribal
Governments ........................................................................................................................................................ 41
5.4 Effect of Borough Formation on Federal Subsistence Status .................................................................... 44
6 EFFECT OF A BOROUGH ON REGIONAL AND VILLAGE NATIVE CORPORATIONS .............. 45
7 STATE LAND DUE TO A NENANA AREA BOROUGH .............................................................. 46
7.1 Borough Land Entitlement............................................................................................................................ 46
Figure 3-Full Study Area/State Entitlement Land ....................................................................................... 51
Figure 4 – Nenana Area/State Entitlement Land ......................................................................................... 52
Figure 5 – Tanana Area/State Entitlement Land ......................................................................................... 53
Figure 6 – Minto Area/State Entitlement Land ............................................................................................ 54
Figure 7 – Manley Hotsprings Area/State Entitlement Land .................................................................... 55
Figure 8 – Stevens Village Area/State Entitlement Land............................................................................ 56
Figure 9 – Rampart Area/State Entitlement Land ....................................................................................... 57
Figure 10 – Livengood Area/State Entitlement Land ................................................................................. 58
8 BOROUGH EFFECT TO LAND PLANNING AND PERMITTING ................................................. 59
8.1 The Comprehensive Plan .............................................................................................................................. 59
8.2 Platting and Zoning ...................................................................................................................................... 60
8.3 Borough Planning and Zoning and the Federal Government ................................................................ 61
8.4 Borough Land Planning and Zoning and Native Allotments or Townsite Parcels ............................. 62
8.5 Future Growth and Development Questions ............................................................................................ 63
9 EFFECT ON MAJOR FEDERAL AND STATE REVENUES TO COMMUNITIES AND REGION ..... 64
9.1 Federal Payment in Lieu of Taxes (PILT) .................................................................................................... 65
9.2 State Community Revenue Sharing ............................................................................................................. 65
10 DEVELOP REALISTIC BOROUGH BUDGETS FOR THE OPTIONS BEING STUDIED. ................. 68
10.1 Introduction .................................................................................................................................................. 68
10.2 Scenario 1 – No Borough (the status quo) ................................................................................................. 69
10.3 Scenario 2 – Greater Nenana Area Borough Forms (and City of Nenana dissolves).......................... 69
10.3 Scenario 3 - The “Greater Nenana Area” is annexed into Denali Borough. ......................................... 76
10.4 Scenario 4 – The “Greater Nenana Area” is annexed into the Fairbanks North Star Borough. ........ 79
10.5 Scenario 5 – A “Middle Tanana-Yukon” Borough forms. ...................................................................... 83
10.6 Other: Municipal Bankruptcy .................................................................................................................... 86
11 OPTIONS FOR RAISING LOCAL REVENUE ............................................................................ 87
11.1 Property Taxes Trans-Alaska Pipeline System......................................................................................... 89
11.2 Property Tax: Other Oil & Gas Fields........................................................................................................ 92
11.3 Property or Excise Tax Revenue from Mining ......................................................................................... 93
11.4 General Property Tax ................................................................................................................................... 94
11.6 Property Tax Exemptions ............................................................................................................................ 98
11.7 General Sales Tax ....................................................................................................................................... 104
11.8 Lodging Tax ................................................................................................................................................ 107
11.9 Sales Tax on Alcohol .................................................................................................................................. 108
11.10 Employment Head Tax............................................................................................................................ 110
12 IMPACT OF BOROUGH FORMATION ON AREA SCHOOLS ................................................. 114
12.1 Overview of Education Funding .............................................................................................................. 114
12.2 Snapshot of the Region’s School District Revenues and Expenditures .............................................. 118
12.3 Impact of Borough Formation or Annexation on Schools ................................................................... 121
12.4 Impact on Formula-Based School Funding if a Borough Formed ....................................................... 122
13 LEGAL OPTIONS FOR ASSEMBLY APPORTIONMENT (VOTING) ........................................ 127
13.1 Electing the Borough Assembly ............................................................................................................... 129
REPORT SOURCES ...................................................................................................................... 131
Executive Summary
Project Purpose and Process
The City of Nenana commissioned a study to analyze four borough options in the area and
compare them to the status quo or no borough option. The purpose is to assist the City of
Nenana, its residents, and other communities understand more about the opportunities
challenges, budgets (surpluses or deficits), education effects, revenues and taxes, land
planning, land acquisition, voting, and other change that “borough-ization” could mean.
The goal is to be armed with information so the area can be proactive in case an option has
merit, if the Legislature or State ever revisits the idea of imposing borough formation, or if a
group proposes a borough or an annexation.
The process to prepare this report included:
•
Soliciting questions that residents wanted addressed, concerns about the study, and
issues related to forming a borough, through answers to an online survey in MarchJune 2013, via questions raised at community meetings and in letters and emails.
•
Obtaining and using reports, audits, and data from the communities, schools and
school districts, and several state and federal agencies.
•
Conducting dozens of interviews with area businesses, residents, and community
officials.
•
Presenting information and hearing questions during community meetings hosted
in Nenana, Tanana, Minto, and Manley Hot Springs and a meeting with some
residents from Rampart (meetings occurred in March, November and December
2013 and March 2014); and in meetings with Tanana Chiefs Conference staff and
Doyon Limited staff.
This report investigates five borough options (Figure 1):
1. Scenario 1 – No borough (the status quo)
2. Scenario 2 – “Greater Nenana Area” Borough forms. Under this scenario, the City of
Nenana would dissolve and become the Nenana Home Rule Borough. Four Mile
Road would remain an unincorporated community in the Nenana Borough. There
would be about 1,448 square miles in the borough (a little smaller than Municipality
of Anchorage) with 660 people.
3. Scenario 3 – The “Greater Nenana Area” is annexed into Denali Borough. This is the
same physical area as in Scenario 2, but here the area is annexed into another
borough. The City of Nenana remains as is and Four Mile Road remains an
unincorporated community; both would now be within the Denali Borough.
NENANA AREA BOROUGH STUDY – March 2014 (draft) Final Report
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4. Scenario 4 – The “Greater Nenana Area” is annexed into the Fairbanks North Star
Borough (FNSB). The City of Nenana remains as is and Four Mile Road remains an
unincorporated community; both would now be within the FNSB.
5. Scenario 5 – A “Middle Tanana-Yukon” (MTY) Borough forms. Under this scenario
all cities and communities remain as is, but are now within the MTY Borough. The
most significant difference is with schools. The schools in Nenana, Tanana, Minto,
and Manley Hot Springs (and any future schools in Rampart, Stevens Village, and
Livengood) would be part of the MTY School District. The MTY Borough would be
about 25,407 square miles (a little bigger than the Mat-Su Borough) with about 1,427
people.
Figure 1- Borough Options Investigated
Scenario 1- No Borough
Scenario 5 is both areas outlined in blue
Scenario 3
Scenario 2
Scenario 4
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The City of Nenana identified these boundary options based on where development is
occurring around the Nenana area, conversations about boroughs that have occurred over
the years in the region, and the “model borough boundaries” that the State identified in the
1990s.
Chapter 3 of the full report explains process “nuts and bolts” for incorporating a borough or
annexing territory into an existing borough, including:
•
That it is “petitioners” who can propose to form a borough (or annex territory into
an existing borough);
•
Identifying the six types of petitioners, and when signatures of residents are and are
not required in order to submit a petition (section 3.2);
•
Explains that it is the State’s appointed Local Boundary Commission (LBC) who
makes decisions on proposed borough incorporations and annexations (followed
most commonly by a local vote);
•
Identifies the criteria against which the LBC judges petitions; and
•
Describes the process, which typically takes a full year after a petition is submitted to
the LBC, and includes at least one public hearing in the region.
Borough Basics
Alaskan boroughs are formed to provide regional services to people living in larger
geographic regions. Both cities (community government) and boroughs (regional
government) are political subdivisions of the State of Alaska. All boroughs provide the
following three mandatory services, and, to prevent duplication of services perform these
duties instead of cities:
1. Education (through a borough school district)
2. Planning, platting, and land use regulation (can delegate this to cities in borough)
3. Taxing authority (collects any borough or city taxes and must pass 100% of city taxes back
to cities)
If a new borough formed in the area, the borough would provide the three services listed
above to the region. If the “Greater Nenana Area” was annexed into either Denali or
Fairbanks North Star Borough, the existing borough would provide these services to the
newly annexed territory. Boroughs have broad latitude to take on other powers and duties
if desired and the assembly and voters approve. A borough can offer services Areawide
(everywhere in the borough), only in places outside of cities (Non-Areawide) or in a Service
Area that forms just to offer a service (can include parts of cities if desired).
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There are four types of boroughs in Alaska; 1st and 2nd class General Law boroughs, and
unified and non-unified Home Rule boroughs. There are now 19 boroughs; four are Unified
Home Rule, seven are Home Rule, one is 1st class, and seven are 2nd class boroughs. The
main difference between General Law and Home Rule boroughs is that Home Rule
boroughs have more leeway in establishing the rules under which they operate because
they write and adopt their own Charter that spells out the borough’s purpose, powers, and
duties. General Law boroughs have broad capabilities and powers too, but their rules of
operation are established in statute (primarily Alaska Title 29). A Charter is written by a
Charter Commission and must be submitted with the borough incorporation petition to the
state Local Boundary Commission. For a new Home Rule borough, there are no
requirements about who is on the Charter Commission or how they are chosen.
Impact to Subsistence Status, Community Governments, and Native
Corporations
Borough formation in and of itself does not affect federal subsistence status. However, for
scenario 4 (Greater Nenana Area annexed into Fairbanks North Star Borough) there could
be an impact. The Fairbanks North Star Borough (FNSB) is classified as a non-rural area as
are all the communities connected by road within it. If the Greater Nenana Area was
annexed into FNSB it is likely that the area being annexed would be classified non-rural.
The potential effects to both regional and village Native Corporations due to borough
formation are two-fold: the impact that local planning and land use regulation could have
on use of their land, and, the impact of any borough taxes. These are the same concerns that
other landowners will have.
Nenana and Tanana are the two cities in the study area. For cities, when a borough forms,
the city councils and city mayors remain and continue as is and city governments continue
as is except that who provides and funds the three mandatory services (education,
planning, taxation) shifts from the city to the borough. If in the future, if a borough took on
additional areawide duties that a city now provides, the borough could relieve the city of
that responsibility. Note that under scenario 2, the City of Nenana would dissolve and be
replaced by a Nenana Borough that included a larger area and more people.
Financial impact to cities would be that federal payment-in-lieu-of-taxes (PILT) revenue
would go to the borough rather than to the cities. Therefore, a determination would be
needed about whether those revenues are supporting a service provided by the city or by
the borough; the answer to this should determine whether the borough transfers the
revenue back to the cities or keeps it. In FY 14, PILT provided $98,997 to Nenana and
$53,893 to Tanana. In February 2014, PILT payments for one more year (to be received
around July 2014) were funded; however, the program seems very likely to end after this.
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Unincorporated communities (UC) with a community association or council in the area are
Four Mile Road with a community council and Manley Hot Springs with a community
association; both would continue as is and remain the governing body for these two
unincorporated communities if a borough formed. Assuming a borough only provided the
three mandatory services, the community councils and associations would continue to
provide the services that they do now, such as road maintenance (Four Mile) and
community water system, landfill, fire service and more (Manley).
Area tribal governments are the Nenana Native Council, Native Village of Tanana, Minto
Village Council, Manley Springs Traditional Council, Stevens Village IRA Council, and
Rampart Village Council. If a borough formed, tribal governments would function as they
always have, the government-to-government relationship between tribes and the federal
government would not be affected, and tribal government responsibilities and services
would not be affected. The two ways that borough formation will affect unincorporated
communities and tribal governments are: (1) a financial hit with a reduction or potential
loss of state Community Revenue Sharing (CRS) payments; and (2) with a borough being
the state’s recognized regional planning authority, the need to coordinate and communicate
on land and resource planning matters would be important. Depending on how borough
planning is exercised and one’s perspective, this could end up challenging or empowering
resident, community, and tribal voices. It would be important for the borough planning
commission to have diverse and representative members.
As mentioned, state CRS payments would go to the borough rather than directly to the
tribal councils or unincorporated communities; and, payments to tribal councils or
unincorporated communities within a borough are reduced to a fixed amount. If a borough
existed in FY 14 the fixed payments to UCs and tribal councils in Alaska was $20,200, which
would be 39-54% less than the area’s UCs and tribal government received (see Table 9.1 in
full report for reduction by community). It should be noted that when a borough forms it
also receives an annual state CRS payments, which if either the Greater Nenana Area
Borough or Middle Tanana Yukon Borough existed in FY 14, have been estimated at
$511,000 and $421,000 respectively.
Some boroughs pass the state’s CRS payments through to the UCs and tribal councils. The
sample Middle Tanana Yukon (MTY) budget prepared for this report does this so that UCs
and tribal councils are not harmed financially by borough formation. The sample MTY
Borough budget shows that this can work, but the decision to do so would need to be
agreed upon by the borough and the communities.
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Planning, Platting, and Land Use Regulation
Landowners, land managers, and boroughs need to coordinate on land planning. Boroughs
are responsible for regional land planning under state law. Coordination and
communication is required for success. Many tribal councils have planners or
environmental coordinators and are actively engaged in planning, commenting about, and
managing activities on their traditional tribal lands. For example, the Nenana Native
Council in is engaged in land, parks, wildlife, and related planning for activities on lands its
traditional land and territory, and has an environmental coordinator who deals with land
and water based resource quality and subsistence, among other issues. There is already
some overlap among these entities so coordination occurs fairly regularly because now (or
recently) in Nenana three City Assembly members are also on the Nenana Native Council
including one City Assembly member who is the planner for the Native Council. Similarly,
Doyon Limited has a lands department with several staff actively engaged in managing its
land and resource assets including oil and gas drilling and exploration in the Nenana and
Stevens Village areas. Several village corporations in the region have active businesses
utilizing their resources and land. The state and federal agencies also have adopted plans
for management of their land in the region.
A borough Comprehensive Plan, platting, and zoning would apply to all land within the
borough including state land (general, University of Alaska, and Alaska Mental Health
Trust land), Native Corporation land, and other private and municipal land. The exceptions
are federal land, any Native townsite parcels, and the hundreds of certified Native
Allotments in the region.
Within two years of borough incorporation, a borough Planning Commission would
oversee creation of a borough-wide Comprehensive Plan. The Comprehensive Plan
typically includes borough residents’ vision and goals, future growth maps, and actions to
guide the borough’s physical, social, and economic development. To be successful, a
Greater Nenana Area or Middle Tanana Yukon Borough Comprehensive Plan would
require borough planners and tribal planners to share information and the plan would
include tribal knowledge about traditional land, territory, and activities. Likewise, it would
be important to work with Doyon Limited, and the Toghotthele, Tozitna, Seth-De-Ya-Ah,
Dinyea, Baan OYeel Kon, and Bean Ridge Corporations, as well as state and other
landowners to develop a compatible vision for land use and development to the maximum
extent possible. The Comprehensive Plan can help develop a unified vision and prioritize
regional infrastructure investments and other actions.
There is a good deal of flexibility on both what is in the Comprehensive Plan and on how
land use regulations work to implement it work. A zoning system that makes sense for the
area, and is not overly burdensome would be needed. If a new borough formed one model
is Denali Borough where most land is zoned “Unrestricted” and there are no prohibitions
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on land development (Denali does have scenic corridor zoning along the highway near the
park and industrial zoning by the Healy airport). The Denali Borough zoning code states:
“….the maintenance of a rural lifestyle is of utmost importance to borough residents;
and whereas, the borough consists of distinct communities with differing interests,
the borough assembly finds that it is in the best interests of the residents of the
Denali Borough to make land use decisions as much as possible on a local or
community basis.”
The federal government exempts itself from local planning. The advantage of a borough
Comprehensive Plan is that it gives added weight and influence to local comments. For
example, it is typical when preparing the borough Comprehensive Plan to look carefully at
adopted federal and state plans for the area and work to ensure the borough plan is
compatible. However, if there are situations where local planning preferences are different
from the state or federal plan, the borough can document the rationale and data in support
of its management preference in its Comprehensive Plan. Federal plans (such as the BLM’s
Central Yukon Management Plan or USFWS Yukon Flats National Wildlife Refuge) for
federal land will still take precedence. However, local preference with well documented
rationale in a publicly adopted borough Comprehensive Plan provides a strong basis and
gives increased weight to local comment (or other action) on proposed federal projects,
actions, or plan revisions.
Several questions were raised by residents about what would happen if oil and gas fields
were developed nearby in the future. “If the population should grow, let's say due to oil or
gas being found and the boom that could ensue, how would this impact Nenana as a city or
borough? What could be done about a possible uptick in crime in the area? What could be
done if the increase in population resulted in slum/tent camps? Could water and sewer as it
is meet this need? Would one or the other be best for this situation?”
At the heart of these questions are matters such as what are the ways to deal with land use,
social, utility, and infrastructure issues that could accompany development that is close to,
but outside of a community. For example, as the Totchaket Road is developed it will
provide access not only to oil and gas drilling areas, but also to land for agriculture,
recreation, subsistence and personal use harvesting and gathering, logging, bio-mass,
gravel extraction, settlement, and other activities. A significant amount of state land here is
also available for municipal selection if a borough formed (see Figure 4). Similar
opportunities will be linked to the Manley-Tanana Road, to a road extension to Rampart (a
top community goal), or if a mine is developed near Livengood.
The simple answer to these types of questions is that services can be provided, revenue
collected to help fund those services, and rules enforced most easily if the area is within a
city or borough, but there are several options; see section 8.5 in the report. Planning for
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orderly future economic development, infrastructure and service needs, settlement, and
land use is the purpose of Comprehensive Planning.
Borough Land (municipal entitlement)
New boroughs in Alaska are entitled to select 10% of the state land within the borough that
the state has classified as Vacant Un-appropriated and Unreserved (VUU). The state
adopted an updated Yukon Tanana Area Plan (YTAP) in January 2014 that reclassified land
in this region.
Based on the newly adopted YTAP, a Greater Nenana Area Borough could select 31,460
acres or 49 square miles (see Figure 5). A Middle Tanana Yukon Borough could select
232,690 acres or 364 square miles (see Figure 4). Chapter 7 includes has eight maps that
show the land available for selection around each community. New boroughs have up to
two years to identify the land they want conveyed (final conveyance of the land in the
future requires surveying). Annexations do not entitle a city or borough to additional
entitlement land.
Voting
A borough Assembly (and school board) composition and apportionment must be
consistent with the equal representation standards of the Constitution of the United States.
A borough determines which election options it wants to use. State law (AS 29.20.050-320)
allows Assembly member elections using three methods, by:
METHOD 1
Election at-large by all voters throughout the borough.
METHOD 2
Election by district (sometimes called seats or residency areas), including:
A. A requirement that candidates live in a specific election district to run for a seat,
but, the election is held at-large so all voters throughout the borough vote for all
seats. If the election is at-large so that all voters get to vote seats regardless of
where they live (in or out of the Residency Area), then the Residency Areas do
not have to split population evenly1.
1
See Sonosky, Chambers, Sachse, Miller & Munson, LLP; Legal memorandum No. 2J-2013 on “Equal
Protection Issues Related to Use if “Residency Districts” in At-Large Voting Systems. March 29, 2013.
Sonosky, Chambers, Sachse, Miller & Munson, LLP; Legal memorandum No. 18J-2006 on apportionment,
December 28, 2006.
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B. A requirement that candidates live in a specific election district, and the election
is only by voters that live in that election district. In this case, Residency Areas
must split population evenly.
METHOD 3
Election by a combination of the above options – some seats at-large and some by
district.
Section 13.1 in the full report lays out specific choices for each borough option studied.
Schools
Education is one of a borough’s three mandatory powers. This means change in all
scenarios studied except for the no borough/status quo option in scenario 1.
Under scenario 2, the Nenana City School District would dissolve and a Nenana Borough
School District would form. Under scenarios 3 and 4, the Nenana City School District
would dissolve and education provided to the area by either the Denali Borough or
Fairbanks North Star Borough School District.
Under scenario 5, both the Nenana City and Tanana City School Districts would dissolve
and the Minto and Manley Hot Springs Schools would leave the Yukon Koyukuk School
District, and all these schools would be part of the new Middle Tanana Yukon (MTY)
School District. It would have five schools and 1,060 pupils. If Stevens Village, Rampart, or
Livengood had schools again they too would be part of the MTY School District. A new
borough has up to two years to work out the transition with the assistance of existing
schools, school boards, and superintendents before it must assume school powers. The
petition’s Transition Plan would spell out the process and timing desired.
Under scenario 2,3,4 or 5, once the School District change had occurred, the day-to-day
“school life” of students would not be significantly different than it is now - there would
still be separate schools with their own principals and the same school names, sports teams,
bands, and rivalries. School sports would compete in the same Alaska School Activities
Association (ASAA) leagues as they do now. For scenarios 3-5, formal Advisory School
Boards for communities should form to advise the Denali, Fairbanks North Star, or MTY
Borough School District Board.
Tanana is stretched thin financing a small school district so a disproportionate share of its
resources goes to school administration rather than the classroom. Being part of a larger
school district would allow pooling and sharing of administrative and teacher resources,
supplies, and curriculum.
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School revenue to the region now comes from multiple sources including the federal, state,
and local governments, grants, and sometimes user fees. The primary funder is the state,
which provides 70% to 97% of each school district’s total funding (FY 12 audits). Following
this are federal sources, which directly provides from 0% (Nenana, Denali) to 11% (Yukon
Flats) of school support. Direct local government contributions vary from 0% (Yukon Flats
and Yukon Koyukuk REAAs) to 1-3% (Cities of Nenana and Tanana), to 23-24% (Denali and
Fairbanks Boroughs). Because a primary duty of boroughs is to provide education, it is not
surprising that 62% of Denali Borough’s operating budget and 51% of Fairbanks North Star
Borough’s operating budget is spent on education (FY12). The Cities of Nenana and Tanana
spend 10% and <1% (respectively) of their operating budget on school support.
The Alaska Department of Education and Early Development (DEED), Division of School
Finance, provided estimates of total education revenue under the various borough
formation (or annexation) scenarios. Results depend on estimates of the full and true value
(FTV) of property in the borough prepared by Sheinberg Associates and documented in
chapter 11 of the report. The other assumption that determines how much state and federal
formula-based education revenue is received is how much additional local contribution
(ALC) beyond the required contribution (RC) that the borough government gives to
support schools. (REAA school districts do not receive a local government contribution and
communities within REAA school districts are not required to make one.) An assumption
made for projecting education revenue is that communities would increase local financial
support for education if finances allowed it. Accordingly, both a 4-year average of ALC was
used when projecting education revenue, and, a higher level ALC was used if the borough
budget showed this was possible.
Analysis shows that formula-based education funding would increase if the Greater
Nenana Area is annexed into the Fairbanks North Star Borough (scenario 4), or if a Middle
Tanana Yukon borough formed (scenario 5). For scenarios 2 and 3, total formula-based
school revenue will increase only if a large additional local contribution (ALC) to support
education is given by the local government. If the average level of ALC giving continued,
education revenue would decrease (see row 23 on Table 1). More detailed explanation is in
this report’s chapter 12.
Assessing Financial Impacts
Sample borough budgets and projected education revenue in this report (Table 1, and in
full report on Tables 10-1 to 10-6 and Table 12-5) are a “snapshot in time.” This technique
allows a focus on the changes to revenues and expenses that are due only to borough
formation or annexation. This is done by using a recent audited budget and assuming that
nothing has changed except now a borough exists (or annexation occurred) and then
highlighting the changes to revenues and expenses as a result.
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While this allows the effect of borough formation (or annexation) to be identified and
isolated, it also is somewhat misleading because of course, revenue and expense dollars
shift every year. However, the types of changes and trends will generally stay the same
assuming there are no significant changes to major funding sources. The budgets in the
tables in chapter 10 consider this by showing one column in each borough budget that
assumes PILT payments have ended and does not include the three-year borough
formation grant revenues.
In this report chapter 10 develops realistic budgets for each borough scenario with details,
chapter 11 reviews methods used to prepare local tax estimates, and chapter 12 explores
school funding in detail. The information in these chapters is summarized here and the
financial changes due to borough formation (or annexation) are seen on Table 1. Table 1
shows the change to local government budgets and formula-based education revenue due
only to borough formation or annexation.
On Table 1, row 10 shows total added expenses due to borough formation or annexation.
This includes the change to the Required Contribution (RC) on row 6, and the RC plus
Additional Local Contribution (ALC) for education on row 7, and finally the total borough
contribution to education (not just that due to borough formation) on row 8.
Row 18 on Table 1 shows total added revenue due to borough formation or annexation.
Row 19 shows the resulting surplus or deficit due just to borough formation or annexation.
Row 23 shows the change to formula-based education revenue.
Summary of Effects by Borough Option Investigated
Scenario 1-No Borough
There would be no change to current conditions under scenario 1, maintaining the status
quo. No borough formation or annexation would occur. All cities, school districts,
unincorporated communities would remain as is with no change to finances.
Scenario 2-Greater Nenana Area Borough Forms
Under Scenario 2, the City of Nenana would dissolve and a larger Nenana Home Rule
Borough and Nenana Borough School District would form (see figure 1). This larger
Nenana Borough would have approximately 660 people (62% more) and 1,448 square miles
(a bit smaller than the Municipality of Anchorage). For comparison, in the City of Nenana is
6 square miles. A challenge to obtaining LBC approval would be the presumption, unless
the petition proves otherwise, that a borough should have a minimum of 1,000 people.
Arguments would be based on the current and likely future growth and settlement
activities west of the current city and the related need for regional services and planning.
page 11
The assets and liabilities of the former city and city school district would transfer to the new
borough and borough school district. A new borough mayor, assembly members and
school board would be elected and those running for office could live anywhere within the
borough. Either the current method, where all can run for all seats would continue, or if
desired Residency Areas for seats could be established to ensure representation from all
geographic areas.
No services or powers would change but the area covered and number of citizens would be
larger, and the borough budget would include added costs and revenue from the larger
territory within the municipality. The former city would most likely become Service Area 1
and areas outside it become Service Area 2. The budget presumes that people along the
road system in Service Area 2 would now be served by Fire and EMS and receive some
level of Public Works/Roads, and Public Safety services. Residents of the full borough
would receive education, planning, taxation, library and other community services, and
benefit from maintenance of port, airport, road, and utility infrastructure in Service Area 1
(former city). Taxes for current City of Nenana residents would not change but these (not
borough) taxes would be extended throughout the borough though it is assumed that those
in Service Area 2 would have a 6 mill (rather than 12 mill) property tax.
The Nenana Borough would be entitled to select about 31,460 acres (49 square miles) of
state land (see Figure 2) for its municipal land entitlement. The Totchaket Road west of
Nenana will open up a lot of territory for multiple purposes and much of this land is
available for municipal selection by the new borough. It would be important to continue or
increase communication among Nenana Native Council, Toghotthele Corporation, Doyon
Limited, and the Nenana municipal government on land planning.
Table 1 uses Nenana’s FY 11 budget as a baseline and looks only at changes due to borough
incorporation. Forming a borough would bring in $752,000, but almost half is due to the
one-time (3-year) borough formation grant. The added costs to provide services to new
residents and territory would be $185,000 (table 1, rows 1-3). A combination of increased tax
revenue and increased state CRS revenue would allow more funding to support education.
The required contribution for education due to forming a borough and adding new
territory would increase by about $35,860 (row 6), but the sample budget shows a large
increase (from FY 11’s $88,000 to $488,000) for local education support.
Assuming an increased local contribution to support education of about $488,000, the total
formula-based revenue to the school district would increase by $340,000. However, this
increase comes from the higher local government support because state aid actually
decreases by $35,000. If the new borough was only able to give its average of about $130,000
total to education support, total formula-based revenue to the schools would decrease by
$30,000 (FY 12).
page 12
In the full report, Table 10-1 looks at this financial scenario more fully, and there column D
also shows the effect if the borough formation grant is not counted and if federal PILT
funding has ended. Under those circumstances, there would be a very small net surplus
(using FY 11 as base year for analysis) as long as state CRS remains steady but it is likely
that a large increase to education support (like $488,000) could not be sustained.
Scenario 3-Greater Nenana Area annexed to Denali Borough
Under Scenario 3, there is no change to the City of Nenana and Four Mile Road community,
but they and the surrounding area are annexed into the Denali Borough. The City of
Nenana would still provide city services (utilities, roads, EMS/fire etc.) to Nenana city
residents. The Nenana City School District would dissolve and education would be
provided for the area by the Denali Borough School District. Denali Borough would also
provide regional planning services and collect taxes (passing City of Nenana taxes back to
Nenana, unless other agreements were made). The larger Denali Borough would have
approximately 2,531 people now (35% more) and 14,147 square miles (11% bigger).
The assets and liabilities of the Nenana City School District would transfer to Denali
Borough School District. Nenana area residents, including the 214 living up and down the
road in the Greater Nenana Area, would be eligible to run for borough school board seats
and for borough assembly or mayor. Since Denali Borough has seats based on population,
either it would add 3 more seats to both the school board and assembly, or, the area
included for each seat would change to cover the residents of the annexed area (in this case
the population for each Denali Borough assembly and school board seat would increase
from 203 to 276 people).
The Denali Borough budget would go up by about $117,000 (10%) to include added costs to
serve the larger territory and people within the municipality (see Table 1, column B, row 1).
Denali Borough’s lodging tax and excise tax on minerals would be extended, but since there
are not that many lodging establishments in the greater Nenana area the tax would only
bring in an estimated $14,600. There would also be revenue from the 5 cents per cubic yard
excise tax on gravel extraction, but an estimate of this tax revenue was not prepared.
Nenana Gravel LLC, a subsidiary of Toghotthele Corporation, would be affected by this tax.
Given the Denali Borough’s tax structure, there would be about $500,000 more in expenses
associated with the newly annexed territory and people than revenue received (Table 1,
row 19). However, if less was contributed to support education the size of the negative
balance due to annexation could be reduced. There would not be any municipal entitlement
lands or any borough formation grant.
There is a Denali Borough planner and planning commission, and seats would be added (or
area each seat represents expanded) for residents from the new territory including Nenana.
(The borough can delegate planning within the City of Nenana back to the city if desired.) It
page 13
would be important for there to be good communication between Nenana Native Council,
Toghotthele Corporation, and Denali Borough on land planning (there are some Ahtna
Corporation lands within the Denali Borough). The amount of CRS that Four Mile
community would be entitled to would be reduced (39% compared to what Four Mile
would have gotten in FY 14 if it had applied) and it would go to Denali Borough now
presumably for distribution to Four Mile).
The number of students in Denali Borough Schools would approximately double, most
coming from the Cyberlynx correspondence school. Since Denali Borough Schools also has
a correspondence school (PEAK) it is likely that the two distance education schools would
merge into one. Annexation into the Denali Borough would not change base student
allocation funding from state, nor would it change funding to Nenana’s student Residential
Living Center. The minimum local contribution to support education would increase by
about $110,000 (table 1, row 6; the sample borough budget shows increased support for
education of $430,000 (row 7).
If the total local contribution to schools is only able to increase to $2.1 million, then Denali
Borough Schools would lose $205,000 in overall formula-based school revenue. If the total
local contribution to schools increased by $430,000 (to about $2.5 million total) then the
Denali School District would gain $205,000 in overall formula-based school revenue.
However, this increased funding would come from increased local government support not
from increased state or federal aid. (Table 12-5 in the full report shows DEED projections of
the change to formula-based revenue for each borough formation scenario.)
Scenario 4-Greater Nenana Area annexed to Fairbanks North Star Borough
Under Scenario 4, there is no change to the City of Nenana and Four Mile community, but
they and the surrounding area are annexed into the Fairbanks North Star Borough (FNSB).
The City of Nenana would still provide city services (utilities, roads, EMS/fire etc.) to
Nenana city residents. The Nenana City School District would dissolve and education
would be provided for the area by the Fairbanks Borough School District. FNSB would also
provide regional planning services and collect taxes (passing City of Nenana taxes back to
Nenana, unless other agreements were made). The larger FNSB would have approximately
100,343 people now (<1% more) and 8,809 square miles (20% bigger).
The FNSB Borough budget would go up by about $480,000 (<1%) to include added funding
for planning and to manage the Nenana library (libraries is an areawide service that FNSB
provides) (see Table 1, column C, row 1).
The FNSB’s property, lodging, alcohol, and tobacco taxes would be extended to the Greater
Nenana Area, generating at least $400,000 for the FNSB. The property tax burden for
Nenana city residents would increase because of annexation into FNSB, potentially
page 14
doubling if there wasn’t a reduction to the city mill levy. A critical issue for Nenana under
this scenario would be that within the City of Nenana, both the city’s 12.00 mill and the
FNSB’s 12.971 mill levy would apply, for a total of 24.97 mill levy property tax in Nenana.
Since the City would no longer manage the library ($75,000) or make a contribution for
education ($125,000) some services and funding burden could be relieved and a reduction
in the Nenana mill rate could be possible.
Even with the tax contribution from the Greater Nenana Area, the reasonable costs that the
FNSB would bear to serve the new area exceed the revenues it would gain by
approximately $174,000 (Table 1, row 19). In addition, there would not be any municipal
entitlement lands or any borough formation grant.
There is a FNSB planning department and planning commission. (The borough can
delegate planning within the City of Nenana back to the city if desired.) It would be
important for there to be good communication between Nenana Native Council,
Toghotthele Corporation, Doyon Limited, and FNSB on land planning (there are already
Doyon Corporation lands within the borough). The amount of CRS that Four Mile
community would be entitled to would be reduced (39% compared to what Four Mile
would have gotten in FY 14 if it had applied) and it would go to FNSB now (presumably for
distribution to Four Mile).
The assets and liabilities of the Nenana City School District would transfer to FNSB School
District. Nenana area residents, including the 214 living up and down the road in the
Greater Nenana Area, would be eligible to run for borough school board seats and for
borough assembly or mayor. Since FNSB seats are all open (anyone can run for any seat)
Nenana area residents would simply be added to the pool of those eligible to run. Given
this, the Nenana area should form an Advisory School Board to offer a local perspective to
the FNSB School Board on Nenana area educational matters.
The number of students in FNSB School District would increase by 7%, most coming from
the Cyberlynx correspondence school. Annexation into the FNSB would not change base
student allocation funding from the state, nor would it change funding to the Nenana
student Residential Living Center. The required local contribution to support education
would increase by about $110,000, which is insignificant in face of the $46-47 million
Fairbanks Borough contributes locally to its school district. The sample borough budget
only increases education funding by the required $110,000.
If total local contribution to schools increased by $110,000 to about $46.5 million (FY 12),
then the FNSB School District is projected to gain $1.15 million in overall formula-based
school revenue. (Table 12-5 in the full report shows DEED projections of the change to
formula-based revenue for each borough formation scenario.)
page 15
Scenario 5-Middle Tanana Yukon Borough and School District Form
Under Scenario 5, a new borough, the Middle Tanana Yukon (MTY) Borough incorporates
and a MTY Borough School District forms. The new borough would include both areas
outlined in blue on Figure 1 and would be about 24,407 square miles (a little larger than the
Mat-Su Borough). It would have 1,427 residents. Within the MTY Borough would be the
City of Tanana, City of Nenana, and communities of Manley Hot Springs, Minto, Rampart,
Stevens Village, and Livengood. The MTY borough evaluated in this study includes parts,
but not all, of the Yukon Koyukuk and Yukon Flats REAA School Districts. If a petition for
a MTY Borough went forward the merit of the proposed boundary and why other villages
and parts of the REAAs were not included would need to be discussed. If a MTY Borough
formed there would still be about 110 miles of the Trans-Alaska Pipeline in this area that
would not be in any borough and thus ‘available’ for up-river communities to include in a
borough to levy a tax against to raise revenue in the future.
The only services the MTY Borough would provide are education, planning, and taxation
(unless the assembly and voters desire that it offer solid waste/recycling technical assistance
or some other service). The cities, unincorporated communities, and tribal governments in
the borough would remain as is and provide the same ‘local’ services they do now
(community services, roads, utilities, ports, EMS/fire, solid waste/recycling, Head Start,
VPSO, etc.).
A Middle Tanana Yukon Borough (Scenario 5) would be eligible to select 232,695 acres or
364 square miles of state land for its municipal land entitlement (see Figure 5 and all eight
figures in chapter 7). Often a borough will identify the municipal entitlement lands it wants
as it prepares a Comprehensive Plan since this is a good time to identify logical places for
future economic development, infrastructure, settlement, subsistence, agricultural, cultural,
recreation, and other land uses.
The importance of coordination among the borough and tribal council planners, and
regional and village Native Corporation land managers, as the Comprehensive Plan is
prepared has been discussed earlier in the Executive Summary. A diverse and
representative Planning Commission can help make sure this occurs.
The MTY Budget would total $5.9 million, of which almost three-quarters (72%) would be
local support for education (Table 1, row 10, and Table 10-6 in full report). There would be a
$1.8 million surplus that would allow a $1.5 million contribution to a Borough Permanent
Fund and another $250,000 to be set aside for a property tax hardship/relief (as North Slope
Borough has).
This MTY Borough budget would support an elected assembly and school board that guide
budgeting, education, planning, and taxation including making a required and additional
page 16
contribution to schools. The budget provides stipends and travel for the mayor, assembly,
borough planning commissioners and wages and benefits for seven professional staff. An
assumption based on comments made during this study was that communities would not
want to be harmed financially due to borough formation or annexation. Therefore, the
budget includes almost $690,000 for revenue sharing with communities in the borough
(Table 1, row 9) so they are not harmed financially by borough formation through reduction
or loss of CRS or PILT funding and also to provide capital grants for communities. The
MTY Borough would make a $4.25 million in local contribution for schools, about $1
million more than the estimated $3.1 million required (rows 7 and 8).
It is important to remember that this rosy picture is a snapshot in time and is based on FY
12 budgets. The primary source of revenue to support the borough and school district
would come from a 6-mill property tax on Trans-Alaska Pipeline (TAP). This would raise
about $6,680,000 (FY 12). A concern was raised during this study about relying so heavily
on potential tax revenue from TAP due to the uncertainty over its assessed value, ongoing
litigation, and decreased oil production. The TAP pipeline is depreciating in value due to its
age and the amount of oil it is transporting. This must be weighed against the reality that it
provided $371 million in property tax revenue to a handful of municipalities in 2012 and
$416 million in 2013 (and $111 million and $99 million to the state those same years). See
section 11.1 of this report for information on value, litigation, and taxation of TAP.
It is important to realize that for a MTY Borough, because the TAP is within the borough
the state will includes the value of TAP when it determines the minimum that the borough
must contribute to support education. This is estimated at $3.1 million. Because this is so
high and the ability to raise revenue to support schools is limited currently (without a mine
or other oil and gas infrastructure) the MTY Borough essentially has no choice but to levy a
property tax on TAP (and thus on other property in the borough). In addition to TAP,
between $156,000 and $323,000 (depending on exemptions put into place by borough, see
chapter 11) would come from property tax on homes and businesses, and State CRS would
add $421,000. Adding in the 1st of a 3-year borough formation grant from the state brings
revenues to $7.7 million (FY 12).
The property tax burden for Nenana city residents would increase if the MTY Borough
formed, just as it would if the Greater Nenana Area was annexed into FNSB (scenario 4).
The MTY Borough’s 6-mill property tax would be areawide and thus in addition to the City
of Nenana’s 12-mill tax. Since the City of Nenana would no longer need to make a
contribution for education ($125,000) a reduction in the Nenana mill rate might be
warranted.
Under scenario 5, the Nenana and Tanana City School Districts would dissolve and the
Minto and Manley schools would leave the Yukon Koyukuk REAA School District. These
schools would be administered by the Middle Tanana Yukon School District. Related assets
page 17
and liabilities would transfer. There currently are no schools in Rampart, Stevens Village,
and Livengood, but if there were schools again in these communities, they would now be
part of the MTY School District (no longer part of the Yukon Flats REAA School District). A
MTY School Board would be elected, following the same voting scheme chosen for the
borough; there could continue to be advisory school boards in each community if desired.
Location of new MTY School District administration would need to be determined; it can,
but does not have to be, in the same community as the Borough assembly and
administrative offices are located. Some have suggested that putting the borough and
school administrative offices in different communities is important to help spread jobs and
economic benefit around a MTY Borough.
Based on the estimated full true value of property within the MTY Borough, the projected
required local (borough) contribution to education would be $3.1 million. If the total
contribution to support schools was $3.7 million, formula-based revenue to schools
(excluding grants) would increase by $835,000 compared to the total that the six schools
(included Stevens Village in 2012/2013) got that year. If the total local contribution to
support schools was $4.25 million, formula-based revenue to schools (excluding grants)
would increase by $1.4 million compared to 2012/2013 (see Table 12.5).
page 18
Table 1. Summary-Financial Changes Due Only to
Borough Formation or Annexation
See report chapter 10 and Tables 10-1, 10-4, 10-5 and 10-6 for details &
assumptions
A
SCENARIO 2
Changes to Nenana
operating budget (FY
11) due to city
dissolving & Nenana
Borough forming
7
OPERATING BUDGET EXPENSES
General Govt - Administration, Assembly, Mayor, staff wages &
$143,000
salaries (manager, clerk, finance, planning, library etc)
(finance, planner)
Public Safety
$24,218
Public Works
$17,750
Travel, rent, utilities, other
Bond Payment (Nenana Student Learning Center)
Change to Local Required Contribution for Education (RC) $35,860
Contribution for Education (RC+ALC)
$400,000
8
9
Revenue Sharing with Communities
1
2
3
4
5
6
Total borough contribution to education (avg. & high) See Table 12-5 $488,314 or $130,619
10
TOTAL ADDED EXPENSES
OPERATING BUDGET REVENUES
Property tax –TAPS
12 Property tax –other
13 Lodging tax
14 Sales tax
Other tax
B
SCENARIO 3
Changes to Denali
Borough operating
budget (FY 12) due
to annexation of
Nenana area
C
SCENARIO 4
Changes to FNS
Borough operating
budget (FY 12) due to
annexation of
Nenana area
$116,814
$480,276
(planning, library)
18
19
20
State Community Revenue Sharing
State Borough Formation Grant
TOTAL ADDED REVENUE
Excess of revenues over expenditures
$109,674
$430,280
$109,674
$109,674
$2,500,000 or $2,089,318
$47,469,064 ***
$4,250,000 or $3,748,582
$584,968
$547,094
$590,040
$55,908
$14,655
$371,360
$16,748
Coal, gravel excise
– unk.
$20,118
$12,754 (alcohol)
Tobacco –unk.
$15,138
$34,773
-$512,321
$416,001
-$174,039
$5,901,579
$6,679,406
$323,051
$2,000
$394,661
$300,000
$752,569
$167,601
Transfer out to Borough Permanent Fund
Transfer out to Homesteader Fund (for property tax hardship)
22 Ending Operating Fund Balance (using audits w/ change on row 17)
FORMULA-BASED SCHOOL DISTRICT REVENUE See report section 12.4 for details and Table 12-5
Change: $340,323
Change: $205,963
Change calculated to formula-based school funding (local, state,
Change: $1,152,964***
(or -$29,217)
(or -$205,461)
23 federal aid) assuming RC & ALC (row 7) and higher level of
FY 12 current total:
support (row 8).
$186,545,956
$6,705,550
$14,969,092
21
$655,800
$687,499
15
17
Middle Tanana
Yukon Borough
operating budget
$167,000
$141,280
$3,150,069
$4,250,000
11
16
D
SCENARIO 5
$420,993
$300,000
$7,723,450
$1,821,871
$1,500,000
$250,000
$71,871
Change: $835,737
(or $1,375,061)
$9,206,914++
Sources: 22 -State DEED; 15-State DCCED); 9- State oil & gas assessor; other: FY 11 and FY 12 city, borough,
and school audits, NSB finance director, Sheinberg Associates
*** Borough audit shows $47.4 million in FY 12 local contribution for education; DEED lists $46.5 million.
DEED revenue estimate (and calculation of change in funding in this study if annexation occurred) is
based on $46.5 million. These types of differences are not uncommon due to differences in fiscal years for
accounting or in how borough versus state DEED accounts for certain charges.
++ This is the amount of state/federal funding the formula attributes to Minto, Manley & Stevens Schools
(part of total Y-K and YF REAAs) plus funding to Nenana and Tanana
page 20
1 Project Purpose
The City of Nenana is investigating borough formation options 2 to assist the City, its
residents, and other communities understand more about the opportunities challenges,
budgets (surpluses or deficits), education effects, revenues and taxes, land planning, land
acquisition, voting, and other change that “borough-ization” could mean. The goal is to be
armed with information so the area can be proactive in case an option has merit, if the
Legislature or State ever revisits the idea of imposing borough formation, or if a group
proposes a borough or an annexation.
The process to prepare this report included:
•
Understanding the questions residents want addressed and their concerns about the
study and forming a borough, through answers to an online survey in March-June
2013, and reviewing questions raised at community meetings and in letters and
emails.
•
Obtaining and using reports, audits, and data from the communities, schools and
school districts, and several state and federal agencies.
•
Conducting dozens of interviews with area businesses, residents, and community
officials.
•
Presenting information and hearing questions during community meetings hosted
in Nenana, Tanana, Minto, and Manley Hot Springs and a meeting with some
residents from Rampart (meetings occurred in March, November and December
2013 and March 2014); and in meetings with Tanana Chiefs Conference staff and
Doyon Limited staff.
2 Borough Options Investigated in this Report
This report investigates five borough options (Figure 1, page 2):
2
•
Scenario 1 – No borough (the status quo)
•
Scenario 2 – “Greater Nenana Area” Borough forms. Under this scenario the City of
Nenana would dissolve and become the Nenana Home Rule Borough. Four Mile
Road would remain an unincorporated community in the Nenana Borough. There
would be about 1,448 square miles in the borough (a little smaller than Municipality
of Anchorage) with 660 people.
This issue has been periodically investigated since the 1993.
page 21
•
Scenario 3 – The “Greater Nenana Area” is annexed into Denali Borough. This is the
physical area as in Scenario 2, but here the area is annexed into another borough.
The City of Nenana remains the City of Nenana, and Four Mile Road remains an
unincorporated community; both would now be within the Denali Borough.
•
Scenario 4 – The “Greater Nenana Area” is annexed into the Fairbanks North Star
Borough (FNSB). The City of Nenana remains the City of Nenana, and Four Mile
Road remains an unincorporated community; both would now be within the FNSB.
•
Scenario 5 – A “Middle Tanana-Yukon” (MTY) Borough forms. Under this scenario
all cities and communities remain as is, but are now within the MTY Borough. The
most significant difference is with schools. Now the schools in Nenana, Tanana,
Minto, and Manley Hot Springs (and any future schools in Rampart, Stevens Village
and Livengood) would be part of the MTY School District. The MTY Borough would
be about 25,407 square miles (a little bigger than the Mat-Su Borough) with about
1,427 people.
These options were chosen based on where development is occurring around the Nenana
area, conversations about boroughs that have occurred over the years in the region, and the
“model borough boundaries” that the State identified in the 1990s.
None of the options investigated in this report are the state’s model borough boundary,
which generally conform to the Yukon Flats Rural Educational Attendance Area (REAA)
and Yukon-Koyukuk REAA. The state’s model borough boundaries were identified in the
1990’s (Figure 2) and are one factor that the Alaska Local Boundary Commission may
consider when reviewing a borough petition. Other borough boundary options beyond
those investigated in this study are also possible. It is the “Petitioners,” presumably through
regional conversations, who decide what option and boundary is desired (see section 3.2 in
this report).
3 Borough and Annexation Basics
3.1 What are Boroughs?
Boroughs are units of government formed to provide regional services to people living in
larger geographic regions. Boroughs are similar to counties in the Lower 48. Article X of the
Alaska Constitution is about providing for maximum local self-government with a
minimum of local government units, and to prevent duplication of tax-levying jurisdictions.
This occurs though creation of city and borough governments to provide essential public
services. Cities are community-based municipal governments. Boroughs are regional
municipal governments. Both cities and boroughs are political subdivisions of the State of
Alaska.
page 22
Figure 2 – State’s Model Borough Boundaries (white is Unorganized Borough)
Source: Model Borough Boundary Study, Alaska DCCED/DCRA, revised June 1997
page 23
Article X also states that Alaska is to be divided into boroughs, either organized or
unorganized. To carry out this mandate, the 1961 State Legislature passed a law providing
that all areas not within an organized borough are within a single, unorganized borough.
An elected assembly governs boroughs, the Alaska Legislature is the local governing body
over the unorganized borough. Alaska has four types of organized boroughs:
• 1st and 2nd class General Law boroughs, and
• Unified and non-unified Home Rule boroughs.
Alaska’s 19 organized boroughs are listed on Table 3-1; those in Interior Alaska and a few
of their characteristics are on Table 3-2.
Table 3-1 Types of Boroughs in Alaska
Type of
Borough
Unified
Home Rule
Home Rule
1. Anchorage
3. Sitka
1. Denali
3. Lake & Peninsula
5. Northwest Arctic
7. Yakutat
Where
2. Juneau
4. Wrangell
2. Haines
4. North Slope
6. Petersburg
•
•
•
Notes
Has Charter.
“Unified” - there can be no cities in
the borough.
Has Charter.
No Charter.
First Class
1. Skagway
Can exercise a power outside of city
(non-areawide) by ordinance.
1. Aleutians East
2. Bristol Bay
• No Charter.
Second
3. Fairbanks North Star 4. Kenai Peninsula
• Must have vote of people to exercise a
Class
power outside of cities (non5. Ketchikan Gateway
6. Kodiak Island
7. Matanuska-Susitna
areawide).
Sources: 2013 Alaska Municipal Officials Directory and 2012 Alaska Taxable
•
•
The main difference between these types of boroughs is that Home Rule boroughs have
more leeway in establishing the rules under which they operate compared to General Law
boroughs 3. This is because Home Rule boroughs write and adopt their own Charter that
spells out the borough’s purpose, powers, and duties. With a few exceptions, a Home Rule
borough can provide any service or duty and set the desired rules of operation it wishes to
as long as it is not a matter that is specifically prohibited by Alaska law. General Law
boroughs also have broad capabilities and powers, but their rules of operation are
established by Alaska law (Title 29 primarily). Denali Borough is a Home Rule Borough;
Fairbanks North Star Borough is a 2nd class Borough.
There are other differences too, such as whether certain taxes and new duties or services must be
approved by the voters, or can be approved by Assembly ordinance. A detailed list of differences is
available upon request.
3
page 24
Home Rule Boroughs and Charter
If a new borough will be a Home Rule borough it must prepare a Charter, written by a
Charter Commission, and submitted with the borough petition to the LBC [AS
29.05.060(13)]. For a new Home Rule borough, there are no requirements about who is on
the Charter Commission or how they are chosen (unlike unification of municipalities into a
new borough, or changing from a general law to a home rule city or borough).
Writing a charter can be a “tool” for regional discussion about a possible borough. For
example, when the Icy Strait region in Southeast Alaska was considering forming a
borough, one representative from each community came together to write the draft Charter
and to bring it back to their governing councils for discussion. (Later, the area dropped
pursuing a borough.)
Residents have asked various questions about what restrictions or limitations can be put on
a borough and its elected assembly through a Charter. Specifically, can a Home Rule
borough charter require a balanced budget or ban bond issuance and the acquisition of
debt? The answers are yes, a borough charter could contain both of these provisions.
However, it is important to note that there is nothing that prohibits a borough from
amending its charter in the future (requires a vote) to change, add, or remove provisions.
3.2 Who Can Propose to Form a Borough, or, Annex Territory into an Existing
Borough?
“Petitioners” are who submits a petition to the Alaska Local Boundary Commission (LBC)
asking to incorporate (form) a borough or annex territory into a borough. Petitioners can
be 4:
1. The Legislature, or
2. The DCCED Commissioner, or
3. A person designated by the LBC under certain conditions 5, or
Alaska statutes or regulations that govern each petitioner option: 1- 3 AAC 110.410(a)(1). 2 - 3 AAC
110.410(a)(2). 3- 3 AAC 110.410(a)(3) and 3 AAC 110.410(d). 4- 3 AAC 110.410(a)(4). 5- 3 AAC
110.410(a)(5). 6A - 3 AAC 110.410(a)(5). 6B – (a): 3 AAC 110.410(a)(7) (b): 3 AAC 110.410(a)(8)(A).
4
5
3 AAC 110.410(d): A person designated by the commission may initiate a petition if the commission
1. determines that the action proposed will likely promote the standards established under the
Constitution of the State of Alaska, AS 29.04, AS 29.05, AS 29.06, or this chapter, and is in the
best interests of the state; and
2. directs the designated person to prepare a petition by a motion approved by a majority of the
appointed membership of the commission.
page 25
4. A political subdivision of the state (e.g., City of Nenana or City of Tanana), or
5. An regional educational attendance area (e.g., Yukon Flats or Yukon Koyukuk
REAA School Districts), or
6. Residents of the area, with the following number of signatures:
a. For Borough Incorporation - Based on the number who voted in the respective
areas in the last general election: 15% of voters from home rule or 1st class
(Tanana or Nenana) in area of proposed borough AND 15% of voters in the area
of the proposed borough outside of home rule and first class cities.
• Scenario 2: 33 (from Nenana) and 10 (outside of Nenana) = 43 total
• Scenario 5: 46 (from cities) and 29 (from outside cities) = 75 total
b. For Annexation to a Borough – (a) at least 10% of the persons registered to vote in a
political subdivision or an REAA OR (b) at least 10% of those registered to vote
in the area proposed for borough annexation
• Scenario 3: 174 from Denali Borough or 60 from Greater Nenana area
• Scenario 4: 7,054 from FNSB or 60 from Greater Nenana area
Petitioner(s) decide what borough, borough boundary, taxes, etcetera that they are
proposing. During the public review process, the LBC also can change the proposed
boundary.
page 26
Table 3-2 Alaskan Boroughs Around Nenana, Interior, North Alaska or Similar
Hypothetical
Hypothetical
Greater Nenana Middle Tanana Yukon
Borough
Borough (Scenario 5)
(Scenario 2)
??
??
??
??
660
1,427
1
2
Fairbanks
North Star
Denali
Mat-Su
Haines
North Slope
Northwest
Arctic
Type
Strong…**
Pop (2012)
# cities (1st & 2nd)
# CDP or
communities
2nd class
Mayor
100,343
2
Home Rule
Mayor
1,871
1
2nd class
Manager
93,801
3
Home Rule
Manager
2,620
0
Home Rule
Mayor
9,727
7
Home Rule
Mayor
7,716
10
15
4
26
6
2
2
1
6
# Schools (FY 12)
35
4
(1 corresp)
716
(487 corresp)
12,750
45
4
11
12
2
(1 corresp.)
955 (FY 13)
(~748 corresp.)
1,448
6
(1 corresp.)
1,072 (FY 13)
(~748 corresp.)
25,407
BOROUGH
FY 12 Total School
14,277
17,338
307
1,599
1,803
ADM (students)
Sq Miles Land
7,361
24,682
2,343
88,817
35,898
# FTE Borough
416
10
242
52
829
?
Same as city +2
8-10
Employees
Borough 2012 Budget:
General Fund
$115,920,351
$3,788,165 $108,686, 759 $3,740,625
$170,383,183
$3,549,833
$1,240,426
$5,130,250
Operating Rev
Sources: Alaska DCCED DCRA Detailed Community Information at www.commerce.state.ak.us/dca/commdb/CF_BLOCK.htm; Alaska Municipal League
Salary Survey; Acres from Project GIS; FY 12 ADM - rounded to nearest whole number, from DEED Foundation Program FY 1988 through FY 2012 ADM
PDF. FY 13 ADM- rounded to nearest whole number, from DEED Pupil Counts to Determine State Aid. Number of Correspondence from DEED, Assessment
and Accountability, District Enrollment as of October 1, 2012.
** Cities and boroughs establish whether they will operate with a “strong manager or mayor.”
•
•
Under the “Strong Mayor” system, the Mayor is the chief executive and the Borough Assembly or City Council is the legislative body. This
system is modeled after the Federal Constitution structure of government. Under this system, the mayor is not a member of the Assembly or
City Council, appoints department directors, and has veto authority.
Under the “Strong Manager” System, the Borough Assembly or City Council is the legislative body and an appointed Borough or City
Manager is the Chief Executive. This system is modeled after the corporate structure of governance. The mayor is the Assembly or City
Council chairperson under this system.
page 27
3.3 Who Makes the Decision on Borough Formation/Annexation?
The Alaska Local Boundary Commission (LBC) was established by Article X of the Alaska
Constitution to ensure that arguments for and against proposals to create or alter municipal
governments (cities, boroughs, unified municipalities) are analyzed objectively, and take
areawide and statewide needs into consideration. There are five Local Boundary
Commissioners appointed by the Governor, one from each of Alaska’s four judicial
districts. The chair is appointed at large. The state Department of Commerce, Community
and Economic Development (DCCED) department’s Division of Community and Regional
Affairs (DCRA) is LBC staff.
Among its duties, the LBC receives, reviews, and makes decisions on petitions to
incorporate cities or boroughs, and on annexation of land to cities or boroughs.
If the LBC approves a petition for borough incorporation (scenario 2 or 5) or to annex
territory into an existing borough (scenario 3 or 4), then after LBC approval there is (most
often) a local vote and a majority must approve. Alternatively, the Petitioners can ask for
Alaska Legislative approval (see report section 3.5).
3.4 Criteria for Approving a Borough Formation or Annexation
It is important to choose a boundary that Petitioners believe will meet the criteria for
borough formation (or annexation). DCCED DCRA staff can provide advice on this. While
the regulations and review criteria are clear, there is actually a good deal of latitude and
judgment that staff and the LBC can exercise in their reviews and analyzes. This can make it
hard to predict the likelihood that a borough or annexation petition will be approved by the
LBC. The petitioners make their best case in the petition showing how the proposed
borough formation or annexation meets state criteria. Without going into detail (if detail is
desired, please refer to the statutes and regulations cited) the requirements are:
Borough Formation Criteria
Alaska Statute (AS) 29.05.031 governs incorporation of a borough or unified municipality.
The proposed borough must be an area that meets the following standards:
1. The population of the area is interrelated and integrated as to its social, cultural, and
economic activities, and is large and stable enough to support borough government;
2. The boundaries of the proposed borough or unified municipality conform generally
to natural geography and include all areas necessary for full development of
municipal services;
page 28
3. The economy of the area includes the human and financial resources capable of
providing municipal services; evaluation of an area's economy includes land use,
property values, total economic base, total personal income, resource and
commercial development, anticipated functions, expenses, and income of the
proposed borough or unified municipality;
4. Land, water, and air transportation facilities allow the communication and change
necessary for the development of integrated borough government.
State regulations at 3 AAC 110.045 to 065 also apply. For each regulation there are several
relevant factors the commission may consider. This is what provides the flexibility in
decision-making and latitude for the LBC, also making it difficult to predict with certainty
what likely would and would not be approved. Certainly the petitioners should address all
factors in their petition.
Some Challenges to Meeting Borough Incorporation Criteria
Regulation 3 AAC 110.050 on Population states in (7)(b) that, when determining whether
the population of a proposed borough is sufficiently large and stable to support the
proposed borough government, the LBC will presume that a minimum of 1,000 permanent
residents is required unless specific and persuasive facts are presented showing that a lesser
number is adequate. Petitioners to form a Greater Nenana Area Borough would run the
risk of LBC denying the borough incorporation petition unless they can make a specific
and persuasive showing that 660 people would suffice for the borough.
Regulation 3 AAC 110.060 on Boundaries lists a number of factors that the LBC may (not
must) consider when reviewing a proposed borough’s boundary. At (b)(1-6) some of factors
include model borough boundaries for the area; regional boundaries including REAA
boundaries; federal census area boundaries; Native Corporation boundaries; whether the
proposed borough will embrace an area and population with common interests to the
maximum degree possible; and whether the proposed borough boundaries are the
optimum boundaries for that region in accordance with art. X, sec. 3, Constitution of the
State of Alaska. Reading the list give a sense of the latitude the LBC has when it makes
borough formation decisions. As seen on Figure 2, the Middle Tanana Yukon Borough
evaluated in scenario 5 includes part of two REAAs. If a petition for this borough went
forward the petition would need to discuss the merit of the proposed boundary and why
some of the factors in 3 AAC 110.060 (b)(1-6) are not relevant.
One thing reviewed as part of this study was whether a Middle Tanana Yukon (MTY)
Borough would include all the TAPS pipeline in the area that was not already within a
borough (and thus subject to property tax and revenue generation for a borough). About
110 miles of TAPS pipeline would remain in the unorganized borough between the south
page 29
boundary of the North Slope Borough and the north boundary of the hypothetical MTY
Borough. This means that “up river” communities would have the option of raising
revenue from that segment of the TAPS pipeline if they choose to form a borough in the
future.
Annexation of Territory to an Existing Borough Criteria
"Annexation to a borough" means to add territory to the boundaries of a borough
government's authority. Annexation results in the extension of borough services, including
education and planning, voting privileges, and taxing authority to the annexed area.
Borough annexation regulations at 3 AAC 110.160-210 require that after annexation, the
borough boundaries conform to natural geography, environmental factors, regional
transportation and communication patterns, and ethnicity and culture. As for borough
formation, for each criterion there are several relevant factors the Local Boundary
Commission may consider. This is what provides the flexibility in decision-making and
latitude for the LBC, also making it difficult to predict with certainty what likely would and
would not be approved.
3.5 Process to Form a Borough or Annex Territory into an Existing Borough
The process to incorporate (form) a borough or annex land into an existing borough is
lengthy and generally takes a year to accomplish after the Petition is prepared, required
signatures are gathered, and it has been submitted to the State LBC. The process, outlined
below, has four phases:
ONE: Prepare the Petition (time to do varies)
Make a series of decisions about the desired borough boundary, what services the borough
would provide, what the budget would look like and whether any local taxes would be
levied, and so on. The petition follows a form that the state provides, which is designed to
address the State statutes and regulations that govern borough formation or annexation.
Among other things, decisions that must be made and stated in the petition include:
• The type of borough proposed (and if Home Rule, include the Charter), or, the area
described for a boundary change (annexation).
• The reasons for the proposed change.
• The boundaries of the proposed borough or proposed change to a borough or
(annexation) and why these were chosen.
• The services/powers the borough will offer, or, how services will be extended to the
new territory to be annexed.
• A proposed 3-year budget for the borough to demonstrate that it has the financial
wherewithal to support itself - so decisions on proposed borough tax types and rates
page 30
•
•
must be clear. For annexation, the change in valuation and change in services and
budget to the borough.
The type of voting districts/seats that the borough will use, or how this would
change if annexation.
A Transition Plan that lays out how an orderly transition of services and powers will
occur 6 (a good deal of focus would be on education services).
TWO: If Needed, Gather Signatures on the Petition (time to do varies)
If the Petitioners are residents, then after the Petition is prepared, it is circulated to obtain
the signatures (section 3.2 lists how many signatures must be gathered).
THREE: State LBC and Public Review, including an In-Region Public Hearing, and LBC
Decision-Making (takes about one year)
• Public notice is given and the LBC collects comments on the Petition.
• LBC conducts a Public Meeting.
• LBC staff distributes draft Report & Recommendation on the Petition for public
review. The report and recommendations will evaluate how well the petition meets
borough incorporation standards outlined in 3 AAC 110.045-110.067 and
procedures for petitioning the LBC outlined in 3 AAC 110.410 -110.700
• Public can comment on draft Report & Recommendation.
• LBC staff issues the final Report & Recommendation on the Petition.
• Following a 30-day Public Notice period, the LBC conducts a Public Hearing in the
region on the Petition and its staff’s final Report & Recommendation.
• People may testify at the hearing.
• LBC issues their verbal decision, they can approve, amend or approve the petition
(including adding areas in or withdrawing them from the proposed borough), or
deny the petition.
• LBC issues a Written Decision; there is an opportunity to reconsider.
• If petition is denied, process ends. (Note that LBC decisions are subject to judicial
appeal.)
Any powers and duties exercised by cities, service areas, and school districts that are succeeded to by a
newly incorporated borough and school district continue to be exercised by the cities, service areas, and
school districts until the new borough assumes the powers and functions, which may not exceed 2 years
after the date of incorporation. A new borough shall give written notice of assumption of all rights,
powers, duties, assets, and liabilities of the former service provider. The ordinances, rules, resolutions,
regulations, procedures, and orders of the service areas remain in force in the perspective territories until
superseded.
6
page 31
FOUR: Local Vote (within 30-60 days after State Division of Election orders it occur)
If petition is approved by LBC, it notifies the State Division of Elections, which orders an
election on borough incorporation/mayor/assembly and school board members; or on
annexation.
If the proposal is to dissolve a city and incorporate a borough (scenario 2), there would be
two separate questions on the ballot because there are different people that need to vote on
them. Only City residents would vote on the dissolution question, but all residents of the
proposed borough7 would vote on the incorporation question. The dissolution would be
made contingent upon the incorporation, partly because there must be an entity that would
take over the obligations of the former city.
If a borough formation petition is approved (scenario 5), an election (by those registered to
vote within the area of the proposed borough 8) is held within 30-60 days of election order.
A majority of votes must be cast in favor in order to approve the borough incorporation and
elect the mayor, assembly, and school board.
If a petition to annex territory into an existing borough is approved (scenario 3 or 4), an
election (by those registered to vote in the existing borough and the area proposed for
annexation) is held within 30-60 days of election order. It must be approved by a majority of
votes cast in the municipality petitioning to annex, and by a majority of votes cast in the
area proposed for annexation (per AS 29.06.040(c)(2) and 3 AAC 110.210).
As an alternative to having a local vote, a petition for borough formation or to annex
territory into an existing borough can ask to be approved by Legislative Review (if and after
LBC approves it). Legislative Review requires tacit approval by the State Legislature. Tacit
approval means the action is approved unless specific action is taken to deny within a set
period of time. Legislative review is initiated when the LBC files a recommendation for the
borough formation or annexation with the Alaska Legislature. Such recommendations may
be filed only during the first 10 days of a regular session of the legislature. The
recommendation is rejected only if the legislature adopts a concurrent resolution to deny
the action within 45 days of the date that it was filed. Otherwise, the proposal is tacitly
approved by the legislature.
7
8
It is not property owners; it is registered voters of the area.
It is not property owners; it is registered voters of the area.
page 32
Table 3-3. Number of Signatures Needed to Submit Petition, and, How Many Voters to Needed Approve
If residents are Petitioner (see pg. 26), how many
If approved by LBC and up for vote, who
Scenario
signatures required:
votes on it:
1
n/a
n/a
No borough (the status quo)
2
Based on the number who voted in the respective areas in
1. A majority of votes cast in City of Nenana
“Greater Nenana Area” Borough forms
the last general election: (a) 15% of voters in home rule and
to dissolve the city. Dissolution would only
(City of Nenana dissolves and becomes
first class cities in the area of the proposed borough AND (b) happen if the borough was approved.
the Nenana Home Rule Borough). Four
15% of voters in the area of the proposed borough outside
2. A majority of votes cast in the proposed
Mile Road remains an unincorporated
home rule and first class cities.
borough must approve borough
community in Borough.
incorporation.
• 33 must sign from Nenana AND 10 from outside of
Nenana = 43 total
3
(a) At least 10% of the persons registered to vote in a
A majority of votes cast in the area to be
The “Greater Nenana Area” is annexed
political subdivision or an REAA, OR (b) at least 10% of
annexed AND a majority of votes cast within
into Denali Borough. City of Nenana and those registered to vote in the area proposed for borough
Denali Borough.
Four Mile Road stay as is.
annexation.
• 299 voters (from Greater Nenana Area)
• 872 voters (from Denali Borough)
• 174 from Denali Borough must sign OR 60 from Greater
Nenana Area
4
(a) At least 10% of the persons registered to vote in a
A majority of votes cast in the area to be
The “Greater Nenana Area” is annexed
political subdivision or an REAA, OR (b) at least 10% of
annexed AND a majority of votes cast within
into the Fairbanks North Star Borough.
those registered to vote in the area proposed for borough
FNSB.
City of Nenana and Four Mile Road stay
annexation.
• 299 voters(from Greater Nenana Area)
as is.
• 35,270 from FNSB)
• 7,053 from FNSB must sign OR 60 from Greater Nenana
Area
5
Based on the number who voted in the respective areas in
A majority of votes cast within the proposed
A “Middle Tanana-Yukon” Borough
the last general election: (a) 15% of voters in home rule and
borough.
forms. Under this scenario all cities and
first class cities in the area of the proposed borough AND (b)
communities remain as is, but are now
15% of voters in the area of the proposed borough outside
within a new borough.
home rule and first class cities.
• 46 must sign from either Tanana or Nenana AND 29
must sign from outside of those 2 cities = 75 total
Sources: Alaska Division of Elections; Alaska DCCED DCRA
page 33
4 Required and Optional Borough Services
4.1 The Three Mandatory Borough Services
All boroughs must provide three mandatory services:
1. Education
2. Planning, platting and land use regulation
3. Taxing authority
There is concern that having cities and communities and a borough could create duplication
and extra layers of government. However, cities and boroughs have different purposes and
should be complimentary, not duplicative. While there are exceptions, a general “rule” is
that either a city or a borough, not both, provides a service or duty. Who provides it
depends on whether it makes fiscal sense to offer it at the community or regional level.
To avoid duplication for the three mandatory borough powers, this means that:
1. One school district forms to provide education services in the borough. (See Chapter
12 on Schools for a review of the implications.)
2. The borough is responsible for regional planning, platting and land use regulation. If
a city that exercises planning and zoning (such as Nenana and Tanana do now)
wishes to continue to do so and the borough agrees, the city and borough can sign a
Memorandum of Agreement delegating planning within the city boundaries to the
city. (See Chapter 8 on Planning for a review of implications.)
3. It is the borough’s duty to levy and collect both any borough and city taxes. When
the borough collects city taxes levied within a city, it must return 100% of the
revenue collected to the city (AS 29.35.170). This relieves cities of some financial
burden. (Cities can levy whatever taxes they see fit and the borough must collect
them, unless the two sign an agreement to allow the city to continue collecting the
tax rather than the borough.) There is no requirement to levy taxes if a borough
forms; for example the Northwest Arctic Borough relies its payment-in-lieu-of-taxes
agreement with Red Dog Mine for rather than a general tax. However, a borough
formation petition must demonstrate a way to raise revenue to meet its financial
obligations.
Along with the ability to levy and collect taxes comes the opportunity for boroughs
to issue bonds to fund infrastructure, facility, and economic development projects in
borough.
page 34
Under scenario 2 or 5, a new borough would form and it would provide these three
services. In scenario 3 or 4, both the Denali Borough and Fairbanks North Star Borough
provide these three services, so if the Greater Nenana Area was annexed into one of those
boroughs, either the Denali Borough or Fairbanks North Star Borough would provide these
services in the newly annexed territory.
4.2 Optional Services and Duties
Boroughs have broad latitude to take on other powers and duties if desired and the
assembly and voters approve. A borough can offer a service Areawide (everywhere in the
borough), only in places outside of cities (Non-Areawide), or in a Service Area that forms
just to offer a service (can include parts of cities if desired). Services and powers can be
established when a borough forms or added later.
Three Ways Boroughs Can Exercise Powers/Offer Services
Areawide Powers. Areawide means
throughout the entire Borough—inside
and outside of cities.
Non-Areawide Powers. Non-Areawide
means in that part of the borough
outside of cities
Service Area Powers. Service Areas
are parts of the borough receiving
higher levels of services; a service
area may include a city.
The most common additional services provided by boroughs in Alaska that are similar to a
Nenana area borough (multiple communities and schools in a geographically spread out
borough) are (see Table 4-1):
page 35
•
•
•
•
•
•
Economic development, capital projects & grant writing
Emergency management & hazard planning
Health, hospitals or clinics
Parks & recreation
Roads & road maintenance
Solid waste & recycling
The budget for a Middle Tanana Yukon Borough includes an option for providing some
regional solid waste & recycling services. The theoretical borough budget in Chapter 10
discusses this option.
Both the Denali Borough and Fairbanks North Star Borough provide some of these
additional services. If the Greater Nenana Area was annexed into one of those boroughs, it
is assumed that the existing borough would provide these services in the territory just
annexed in (which would increase costs in the existing borough). The incremental effect on
existing boroughs’ budgets is seen in Chapter 10 on the budget table.
What Services Would those Living in Remote Places Receive?
Residents in the area have asked, “What services would those who live in remote places get
from a borough?” All residents would receive the three required services. Education would
be the primary service provided by the borough under all scenarios being considered (over
half the borough general fund budget in Denali Borough and Fairbanks North Star Borough
goes to education). Any borough or city taxes would be levied and collected by the
borough. Here, as in other rural boroughs, tax dollars would primarily be going to support
education.
Sometimes a resident concern is that they don’t have children in the school system and
don’t need education services. The response to this is two-fold:
• First, Alaska law expects that residents will make a minimum contribution to
support education. It is the inequality that some residents must make a financial
contribution (through their local government) and others do not was the driver
behind past efforts to require borough formation or levy a statewide education tax.
This is also behind Ketchikan Borough’s recent lawsuit (that Fairbanks North Star
Borough is now supporting), that calls into question the state’s requirement that
cities and boroughs must make a financial contribution for education.
• The second explanation is that the public, through taxes, in most cases has been a
partial payer for your parents or children’s education, so regardless of where an
individual or family is in the youth-education cycle, education is considered a
shared common good and responsibility.
page 36
Residents in remote areas would also receive planning, platting, and land use services (for
example, local plats would be approved by the borough platting authority, not the state,
before recording) and a Comprehensive Plan would prioritize and promote regional
development and conservation areas and efforts.
If a borough exercises economic development services (often an adjunct to planning
services), residents could benefit from more economic activity or infrastructure investments
near or in their community. If the borough assisted with developing and maintaining solid
waste and recycling services then residents could benefit from the technical assistance and
economy of scale that borough solid waste expertise or service could provide.
A Question about Firearms
Residents have asked whether they would be required to disarm if they were in a borough.
No, there can be certain restrictions on the right to discharge a firearm, but not on the right
to own a weapon. Article 1 of the Alaska Constitution, Section 19, is on the Right to Keep
and Bear Arms, and states that…”the right of the people to keep and bear arms shall not be
infringed. The individual right to keep and bear arms shall not be denied or infringed by
the State or a political subdivision of the State.”
Alaska Statute 29.35.145 addresses regulation of firearms and states that, “(a) The authority
to regulate firearms is reserved to the state, and, except as specifically provided by statute, a
municipality may not enact or enforce an ordinance regulating the possession, ownership,
sale, transfer, use, carrying, transportation, licensing, taxation, or registration of firearms.”
Municipalities may enact and enforce ordinances that:
• are identical to state law, or
• restrict the discharge of firearms in any portion of their boundary where there is a
reasonable likelihood that people, domestic animals, or property will be jeopardized
- as long as it does not abridge the right of individuals guaranteed by the
Constitution of the State of Alaska, or
• prohibit the possession of firearms in restricted access areas of municipal
government buildings.
In Fairbanks North Star Borough the municipal code specifically states that the borough
shall not restrict the right to own or possess firearms within a residence or transport
unloaded firearms, except in accordance with AS 29.35. The Denali Borough code does not
mention firearms. In some urban parts of Alaska, firearm discharge is restricted within (for
example) one-quarter mile of any public street, road or highway except in cases where
firearms are used in self-defense or in the discharge of official duty, or in the case of a
justifiable homicide.
page 37
Table 4-1 Review of Some Boroughs’ Powers and Services
Fairbanks
North
Kenai
Lake &
Denali
Star
Haines
Peninsula Peninsula
Borough Borough
Borough
Borough
Borough
Mat-Su
Borough
Northwest
Arctic
Borough
MANDATORY
Education
X
X
X
X
X
X
X
Planning & Land Use
X
X
X
X
X
X
X
Regulation
Taxation
X
X
X
X
X
X
X
OPTIONAL
Air Pollution Control
X
X
Ambulance/Emergency Med.
SA
SA
X
Animal Control & Protection
X
X
Building Safety & Inspections
Child Care or Youth
X
X
Development
Economic Development, Cap.
X
X
X
X
X
X
Projects, Grant Writing
Emergency Management/
X
X
X
X
Hazard Planning
Fire & Emergency Services
SA
SA
NAW
X
Fisheries & Natural Resources
X
Flood Control & Mitigation
X
SA
Health, Hospital & Clinic
SA
NAW
Historic Preservation
X
X
Library
X
X
Parks & Recreation
X
X
SA
X
Perpetuation of Inupiaq
X
Language
Ports & Harbors
X
NAW
x
Public Transportation
X
NAW
X
Roads and Road Maintenance
SA
SA
SA
NAW
Search & Rescue
X
X
Senior Services
X
SA
Sewer
SA
Solid Waste & Recycling
X
X
SA
X
Street Lighting
SA
X
Utility Line Extension LIDs
X
NAW
Visitor Center
X
X
Water
SA
X = service provided Areawide
NAW = service provided Non Areawide
SA =service provided in Service Area
Sources: 2013 Alaska Municipal Officials Directory and 2012 Alaska Taxable
page 38
5 How a Borough Affects Cities, Unincorporated
Communities, Tribal Governments, and Subsistence
Status
This chapter is an overview of the effect of borough formation or annexation into another
borough to entities already providing some services in the region. The three services
affected are education, planning, and taxes. More detail is available for planning in in
chapter 8, for community revenue sharing payments in chapter 9, for borough budgets in
chapter 10, for tax options in chapter 11, and for education in chapter 12.
5.1 Effect of Borough Formation (or annexing into a borough) on Cities
Nenana and Tanana are the two cities in the study area. For cities, when a borough forms,
the city councils and city mayors remain and continue as is and city governments continue
as is except that who provides and funds the three mandatory services (education,
planning, taxation) shifts from the city to the borough. If in the future, if a borough took on
additional areawide duties that a city now provides, the borough could relieve the city of
that responsibility. Note that under scenario 2, the City of Nenana would dissolve and be
replaced by a Nenana Borough that included a larger area and more people.
Financial impact to cities would be that federal payment-in-lieu-of-taxes (PILT) revenue
would go to the borough rather than to the cities. Therefore, a determination would be
needed about whether those revenues are supporting a service provided by the city or by
the borough; the answer to this should determine whether the borough transfers the
revenue back to the cities or keeps it. In FY 14, PILT provided $98,997 to Nenana and
$53,893 to Tanana. In February 2014, PILT payments for one more year (to be received
around July 2014) were funded; however, the program seems very likely to end after this.
A scenario-by-scenario review of the effect to cities is now presented.
Scenario 2
Under Scenario 2, the City of Nenana would dissolve and the Home Rule Borough of
Nenana form, with the assets and liabilities of the former city transferring to the borough. A
new Borough mayor, Assembly members and School Board would be elected and those
running for office could live anywhere within the new Home Rule Borough. No services or
powers would change, and the revised budget would include added costs and revenue
from the larger territory within the municipality.
page 39
The former city would most likely become Service Area 1 and areas outside it become
Service Area 2. The budget presumes that people along the road system in Service Area 2
would now be served by Fire and EMS and receive some level of Public Works/Roads, and
Public Safety services. Residents of the full borough would receive education, planning,
taxation, library and other community services, and benefit from maintenance of port,
airport, road, and utility infrastructure in Service Area 1 (former city).
Scenario 3 or 4
Under scenario 3 or 4, the City of Nenana would remain as is, except planning and taxation
services would transfer to either to the Denali Borough or Fairbanks North Star (FNS)
Borough. There would still be a locally elected Nenana City assembly and mayor. Many of
the typical “city” duties that Nenana provides would continue as is. Nenana area residents
would be eligible to run for seats on the Denali or FNS Borough School Board and borough
Assembly.
Both Denali and Fairbanks Boroughs have planners, a planning commission, and a zoning
system (though rural Fairbanks and most of Denali Borough’s zoning is very unrestrictive
and Denali Borough requires no building permits). If the borough did not delegate
planning services within the City of Nenana back to Nenana a change would be the need to
get land use permits (and for Fairbanks some building permits) from the borough. FNS
Borough also provides areawide library services so it is assumed that administration of the
library under scenario 4 would transfer to FNS Borough unless it contracted with Nenana
to continue to local administration.
Either the Denali or FNS Borough would now be responsible for levy and collection of taxes
(and must pass back 100% of revenue collected from within the city to the city). However,
under scenario 3, Denali Borough does not collect property taxes so it would make sense for
Nenana to retain this (with Denali Borough consent). Most of the typical “city” duties that
Nenana now provides would continue as is.
The Nenana City School District would dissolve and its assets and liabilities would transfer
to the Denali or FNS School District, which would now provide education services in
Nenana and surrounding area.
Scenario 5
Under scenario 5, the City of Nenana and City of Tanana would remain as is, except
planning and taxation services would transfer to either to the Middle Tanana Yukon (MTY)
Borough. There would still be a locally elected Nenana and Tanana city councils and
mayors. Most of the typical “city” duties that Nenana and Tanana now provide would
page 40
continue as is. Nenana and Tanana area residents would be eligible to run for seats on the
MTY Borough School Board and Assembly.
The MTY borough would have a planner/grant writer and a planning commission; it is
presumed that the zoning system would be very simple (like Denali) with one General
Zone where most or all uses are allowed without a permit. There would be work on a
Borough Comprehensive Plan to guide future development, land use, conservation,
infrastructure, etcetera. If the borough did not delegate planning services within the cities
of Nenana and Tanana back to those cities, it would mean getting land use permits from the
borough.
The MTY Borough would be responsible for levy and collection of taxes (and must pass
back 100% of revenue collected from within the city to the city). However, the example
borough budget does not include a sales tax so it may make sense for Nenana and Tanana
to continue to collect this.
The Nenana and Tanana City School Districts would dissolve and their assets and liabilities
would transfer to the MTY School District, which would now provide education services in
the borough.
5.2 Effect of Borough Formation (or annexing into a borough) on
Unincorporated Places and Tribal Governments
Unincorporated communities (UC) with a community association or council are the Four
Mile Road community council and Manley Hot Springs community association; both would
continue as is and remain the governing body for these two unincorporated communities. If
the borough only provides the three mandatory services, the community councils and
associations would continue to provide the services that they are now, such as road
maintenance (Four Mile) and community water system, landfill, fire service and more
(Manley).
Area tribal governments include the Nenana Native Council, Native Village of Tanana,
Minto Village Council, Manley Springs Traditional Council, Stevens Village IRA Council
and Rampart Village Council. If a borough formed, tribal councils would function as they
always have, the government-to-government relationship between tribes and the federal
government would not be affected, and tribal government responsibilities and services
would not be affected.
The two ways that borough formation will affect unincorporated communities and tribal
governments are: (1) a financial hit with a reduction or potential loss of state Community
Revenue Sharing (CRS) payments; and (2) with a borough being the state’s recognized
page 41
regional planning authority, the need to coordinate and communicate on land and resource
planning matters would be important. Depending on how borough planning is exercised
and one’s perspective, this could end up challenging or empowering resident, community,
and tribal voices. It would be important for the borough planning commission to have
diverse and representative members. Both are reviewed now. Also see chapter 9 for more
information on CRS and chapter 8 for more information on regional land planning.
State Revenue Sharing to Borough not UCs or Tribes
There would be a negative financial hit to Unincorporated Communities (UCs) and Tribal
Governments that now receive state Community Revenue Sharing (CRS). State CRS
payments would go to the borough instead of directly to UCs or tribal councils, and,
payments to these entities within a borough are reduced to a fixed amount. If a borough
existed in FY 14 the fixed payments to UCs and tribal councils in Alaska was $20,200, which
would be 39-54% less than the area’s UCs and tribal government received (see Table 9.1 for
reduction by community).
agreed upon by the borough and the communities. Residents in both cities and
unincorporated communities will want a clear understanding of these matters and options;
talking together is needed to make decisions (possibly while writing a charter).
Boroughs Responsible for Regional Land Planning
Landowners, land managers, and boroughs need to coordinate on land planning. Boroughs
are responsible for regional land planning under state law. Coordination and
communication would be required for success.
Many tribal councils have planners or environmental coordinators and are actively engaged
in planning, commenting about, and managing activities on their traditional tribal lands.
For example, the Nenana Native Council in is engaged in land, parks, wildlife, and related
planning for activities on lands its traditional land and territory, and has an environmental
coordinator who deals with land and water based resource quality and subsistence, among
other issues. There is already some overlap among these entities so coordination occurs
fairly regularly because now (or recently) in Nenana three City Assembly members are also
on the Nenana Native Council including one City Assembly member who is the planner
for the Native Council. Because city councils and tribal governments have access to
different types of funding it is not uncommon for there to be annual joint identification of a
page 42
top community priority and support each other’s funding requests (as happened recently
for both the Totchaket Road and Manley-Tanana Road).
Under all of the borough scenarios, the borough would prepare a borough-wide
Comprehensive Plan and enact some type of land use regulation. When developing a
borough Comprehensive Plan it would be critical for the borough planners and tribal
government planners to work closely, and to incorporate the tribe’s knowledge about
traditional land, territory, and activities. See section 8.1 in this report for more information
about this.
Tribal governments would continue to offer comments to the federal government on
activities proposed on their traditional lands and territory. Due to their government-togovernment relationship these comments are given special consideration and weight. This
would not change due to borough formation.
One question residents asked during this study was, “How would borough formation
impact 14C3 land for municipalities?” Forming a borough would not affect ANCSA 14C3
land requirements or options or already adjudicated land between village corporations and
the local cities in their area.
Additional Services Borough Could Offer
Finally, a third possible effect could be if a MTY Borough provided some added services,
such as solid waste/recycling management that some tribal governments or community
associations now offer. There are several options for how to cooperate and avoid
duplication. Nenana Native Council, Native Village of Minto, Stevens Village IRA Council,
Rampart Village Council, and Manley Hot Springs Community Association all offer some
type of landfill and solid waste services. The idea of the MTY Borough offering some solid
waste-landfill-recycling services came up because it might be helpful to have a paid person
working full time on providing technical assistance on these matters for the region, writing
grants, and possibly sharing some services or facilities. To provide complementary (not
competing) services, a borough can:
A. No Borough Involvement: Not take on these services or not be involved with a
particular community. For example, Minto may wish to continue its own services as
is even though there is a borough. Even if the borough provided some non-areawide
solid waste management, it could exclude Minto if desired.
B. Borough Involvement through a Service Area: The borough could form one or more
Solid Waste Service Areas. Sometimes the borough could do the work with borough
equipment, other times the borough could contract with locals to do the work.
page 43
C. Borough Involvement through Contracting: In this option, the borough would offer
solid waste services non-areawide and could contract with a non-profit corporation
(like a community association) or a for-profit corporation or tribal council to provide
services. (AS 29.35.101 allows all Alaskan municipalities to expend money for a
community purpose, facility, or service for the good of the municipality.)
D. Borough Involvement through Granting (if revenues allow): In this option, the
borough does not take on this service, but provide “grants” to entities that want to
provide services, such as solid waste and recycling, in different areas.
5.4 Effect of Borough Formation on Federal Subsistence Status
Borough formation in and of itself does not affect federal subsistence status.
On federal land in Alaska, the U.S. Fish and Wildlife Service (USFWS) Subsistence
Management Program and the Federal Subsistence Board determine which areas are rural
and thus have priority for subsistence over non-rural areas.
For scenario 4, the Fairbanks North Star Borough (FNSB) is classified a non-rural area as are
all the communities connected by road within it. If the Greater Nenana Area was annexed
into FNSB it is likely that the area being annexed would be classified non-rural.
All of the cities and communities in the study area are considered rural and under Scenario
1, 2, 3, and 5 this would not change.
On state land in Alaska, there is a priority for all state residents for subsistence over other
uses. The Alaska Boards of Fisheries and of Game determine what catches and harvests in
areas are subsistence and the specific seasons, catch limits, timing etcetera. Borough
formation will not affect this.
Borough acquisition of state entitlement land will not reduce the pool of federal lands upon
which residents enjoy rural subsistence priority.
page 44
6 Effect of a Borough on Regional and Village Native
Corporations
Native Corporations own and manage large blocks of land in the Nenana and surrounding
region. Doyon Limited is the area’s Regional Native Corporation; area Village Corporations
are Toghotthele Corporation (Nenana), Tozitna Limited (Tanana), Seth-De-Ya-Ah
Corporation (Minto), Dinyea Corporation (Stevens Village), Baan OYeel Kon Corporation
(Rampart), and Bean Ridge Corporation (Manley Hot Springs). In 1971, the Alaska Native
Claims Settlement Act (ANCSA) provided that each Village Corporation receive title to
approximately 23,055 acres of surface estate, which is primarily in the study area (Doyon
Limited owns the subsurface). Doyon Limited has a land entitlement of approximately 12.5
million acres.
Both village and regional Native Corporations are profit-making entities and generally seek
to use their land and assets to generate revenue for shareholders. Local village and regional
Native Corporations are engaged in many land and resource activities in the Interior Alaska
including, but not limited to, oil and gas exploration and development, sand-gravel-rock
sales, government contracting, tourism services, drilling, remote facilities and services,
construction, land sales, rentals, house timbers, cabin kits, timber services, mineral
exploration, placer gold, and more.
The Borough’s Comprehensive Plan and any land use regulations it chose to enact would
apply to most land in the borough including Native Corporation land. This is already true
in Fairbanks North Star and Denali Boroughs. Native Corporations, like other large
landowners, would therefore be concerned about the effect of borough planning and any
land use regulation on corporation land and its use. When the borough develops its
Comprehensive Plan, it would be critical for borough planners to work closely with Doyon
and other Native Corporation staff (as well as the USFWS, State and other large
landowners) to develop a compatible vision for land use and development to the maximum
extent possible.
The other concern of Native Corporations would be the impact of any borough taxation.
Native Corporation (ANCSA) land cannot be taxed unless it is subdivided, leased, under
active development (and then only for the time that the development or lease is in effect), or
sold. If a lease is for mineral exploration, it is not subject to taxation. The 1991 ANCSA
amendments also clarified that only the approximate area where timber is actually cut can
be taxed. Any borough taxes therefore (sales, property, excise or other), would only apply
to ANCSA land if it were subdivided, under lease, or being developed.
page 45
Doyon Limited staff is aware that producing oil and gas fields and related infrastructure are
an attractive asset for municipal taxation. They recognize that if their exploration program
is successful a nearby municipality (city or borough) would likely annex the producing
fields and surrounding basin to levy a property tax, presumably with a link to
infrastructure used and services available.
The two tax options that would be of greatest concern are property taxes (scenarios 2, 4, and
5) and an excise tax (scenario 3).
7 State Land Due to a Nenana Area Borough
7.1 Borough Land Entitlement
New boroughs in Alaska are entitled to select 10% of the state land within the borough that
the state has classified as Vacant Un-appropriated and Unreserved (VUU). The state
adopted an updated Yukon Tanana Area Plan (YTAP) in January 2014 that reclassified land
in this region.
Based on the newly adopted YTAP, a Greater Nenana Area Borough could select 31,460
acres or 49 square miles. A Middle Tanana Yukon Borough could select 232,690 acres or 364
square miles. New boroughs have up to two years to identify the land they want conveyed
(final conveyance of the land in the future requires surveying). Annexations do not entitle a
city or borough to additional entitlement land. Figures 3 to 10 are maps for each community
that show nearby state land that would be eligible for municipal selection if a borough
formed.
Table 7-1 Summary: Acres of Municipal Entitlement Land (per 2014 Yukon Tanana Area Plan)
Number of VUU
State Land to New
eligible Acres
Borough its Entitled to
Borough Scenario
Receive
Scenario 1-Status Quo/No Borough
n/a
0 acres
Scenario 2- Greater Nenana Area Borough
314,631 acres
31,463 acres (49 sq. mi.)
Scenario 3- Greater Nenana Area annexed to FNSB
n/a
0 acres
Scenario 4 - Greater Nenana Area annexed to Denali Borough
n/a
0 acres
Scenario 5- Middle Tanana Yukon Borough
2,326.945 acres
232,695 acres (364 sq.
mi.)
Methodology
In order to determine the amount of municipal entitlement land that a Greater Nenana Area
Borough or a Middle Yukon Tanana Borough would be allowed to select, state land that the
page 46
Alaska Department of Natural Resources (DNR) has classified, as VUU must be identified.
To do this methods included:
1. Import of state land parcels for Geographic Information System (GIS) analysis
2. Gathering additional information using the Alaska Mapper tool on the DNR website
3. Consultations with DNR staff
4. Review and discussion of the current Yukon-Tanana Area Plan (YTAP) plan revision
5. GIS spatial analysis of this data
All parcels of State land that are classified were identified and whether or not the
classification is considered VUU by the state (Table 7-2). DNR also clarified that if a parcel
has more than one classification and one is not VUU eligible, then none of the acreage can
be counted as VUU and available for municipal selection.
Table 7-2 VUU Eligible Classifications
State Land Classification
Abbreviation
Agriculture
Ag
General Use (Resource Management Classification)
Gu
Materials
Ma
Public Recreation - Dispersed
Rd
Settlement
Se
Coal
Co
Forestry
F
Habitat
Ha
Heritage Resources
Hr
Minerals
Mi
Public Facilities - Retain
Pr
Public Facilities – Transfer
Pt
Water Resources
Wr
VUU Eligibility
Eligible
Eligible
Eligible
Eligible
Eligible
Not Eligible
Not Eligible
Not Eligible
Not Eligible
Not Eligible
Not Eligible
Not Eligible
Not Eligible
For this analysis of entitlement acres:
•
•
•
“Area 1” corresponds to the Greater
Nenana Area Borough as outlined in
green to the right.
“Area 2” refers to the area outlined
in blue to the right.
“Total” corresponds to the Middle
Tanana Yukon Borough and is
outlined in both green and blue to
the right.
page 47
Table 7-3 lists the number of acres that are available for selection per the DNR 2014 Yukon
Tanana Area Plan management unit.
Table 7-3 Parcels of State Uplands that ARE Eligible for Municipal
Selection (colored orange on the Figures)
AREA 1 (scenarios 2, 3 and 4)
Region
Unit #
Classification VUU acres
Kantishna Region
K-25
Se
1,280
Kantishna Region
K-28
Se
23,158
Kantishna Region
K-32
Ag
148,502
Kantishna Region
K-35
Se
800
Kantishna Region
K-43
Se
6,533
Kantishna Region
K-64
Gu
80,328
Kantishna Region
K-65
Gu
1,895
Parks Highway
P-02
Ag
4,683
Parks Highway
P-04
Se
699
Parks Highway
P-05
Ma
36
Parks Highway
P-06
Se
640
Parks Highway
P-07
Ma
20
Parks Highway
P-09
Se
40
Parks Highway
P-10
Se
640
Parks Highway
P-13
Se
22,917
Parks Highway
P-14
Gu
15,024
Parks Highway
P-15
Gu
160
Parks Highway
P-16
Ag
3,840
Parks Highway
P-22
Se
2,280
Parks Highway
P-38
Se
1,116
Parks Highway
P-55
Ma
40
Area 1 Total Eligible Acres:
314,631 (31,463 to select)
AREA 2
Region
Unit #
Classification VUU acres
Kantishna Region
K-01
Gu
121,856
Kantishna Region
K-02
Gu
39,409
Kantishna Region
K-03
Gu
36,659
Kantishna Region
K-06
Gu
39,279
Kantishna Region
K-07
Gu
23,375
Kantishna Region
K-10
Gu
43,156
Kantishna Region
K-11
Se
12,409
Kantishna Region
K-13
Se
3,520
Kantishna Region
K-15
Rd
1,280
Kantishna Region
K-16
Se
1,280
Kantishna Region
K-18
Se
5,932
Kantishna Region
K-19
Gu
42,020
Kantishna Region
K-20
Gu
99,572
Kantishna Region
K-21
Rd
640
Kantishna Region
K-22
Gu
14,970
page 48
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Kantishna Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
Lower Tanana Region
K-23
K-24
K-25
K-38
K-46
K-47
K-48
K-49
K-50
K-51
K-55
K-56
K-59
T-01
T-02
T-07
T-11
T-12
T-16
T-17
T-30
T-32
T-36
T-39
T-42
T-45
T-48
T-49
T-51
T-54
T-55
T-56
T-61
T-64
T-65
T-67
T-77
T-78
T-79
T-81
T-82
T-83
T-85
T-88
T-89
T-92
Gu
Se
Se
Se
Se
Gu
Gu
Se
Se
Gu
Se
Gu
Se
Rd
Gu
Se
Se
Se
Se
Gu
Se
Gu
Se
Gu
Rd
Se
Se
Rd
Ag
Se
Gu
Gu
Se
Se
Ag
Gu
Gu
Se
Se
Ag
Gu
Rd
Se
Se
Gu
Ma
165,965
3,520
3,975
3,168
24,319
39,186
48,460
9,579
5,758
75,048
3,520
1,600
11,017
7,675
225,841
19,213
990
7,529
2,054
25,163
5,565
107,364
25,754
43,192
1,268
42,508
16,698
581
1,962
19,810
12,819
232,726
15,210
16,057
4,600
94,191
12,475
3,992
12,475
8,512
34,753
8,316
305
1,369
89,277
316
page 49
Lower Tanana Region
T-93
Lower Tanana Region
T-94
Lower Tanana Region
T-95
Lower Tanana Region
T-96
Lower Tanana Region
T-97
Little Melozitna Remote*
N/A
Area 2 Total VUU Eligible Acres:
ALL AREAS (Scenario 5)
Total VUU Eligible Areas 9
Ma
236
Ma
236
Ma
604
Ma
77
Ma
148
PVR
29,981
2,012,314 (201,231 to select)
2,326,945 (232,695 to select)
Unclassified Land (pink on maps)
Land that DNR has not classified is considered potentially available for municipal
entitlement. If a Greater Nenana Area or a Middle Tanana-Yukon-Nenana Borough
requested unclassified land for conveyance, the state would review the area to determine
the appropriate land classification and whether this can be conveyed to a municipality. If it
determined that it was in the State’s best interest to retain the land, then it would not be
available for selection by a borough.
Approximately 50 miles west of Tanana and north of the Yukon River, there is roughly
597,000 acres of unclassified land (shown in pink on Figures 3 and 5) that is not part of state
any area plan. There is also about 2,000 acres of state land in the northwest corner of the
borough study area near the Indian Mountain LRRS Airport that is not included in the
YTAP and currently unclassified.
Little Melozitna Remote is the only VUU eligible land parcel that falls within the boundaries of the
study area that is not included in the YTAP. This parcel is classified as private recreation, which is VUU
eligible.
9
page 50
Bettles
FIGURE 3
155°W
154°W
153°W
152°W
151°W
150°W
149°W
148°W
147°W
146°W
145°W
144°W
NenanaAreaBoroughOptionsStudy
BoroughEntitlement Land
oonn
aalltt
ss DD
m
mee
JJaa
_
^
Yukon-Koyukuk
Town
AreasStudied
Census
Area
Area 1
Area 2
yy
HHww
City or Census Place Boundary
Trans-Alaska Pipeline
State Highway
Stevens Village
_
^
ko
Yu
66°N
StateUplands
r
ive
R
n
Eligible for Municipal Selection
Not Eligible for Municipal Selection
Unclassified - Eligibility Unknown
´
_Livengood
^
_
^
_
^
Minto
na
na
Ta
iver
R
n
o
Yuk
El
lio
tH
wy
Manley Hot Springs
_
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Fai rbanks
North Star
Borough
r
_
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Project
Area
!
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ive
!
! Fairbanks
Anchorage
!
Borough
0
200
Gulf of
400 Miles
Al
ka
as
ee
oorrgg w
wyy
G
Gee ss H
kk H
PPaarr
Denal i
a Rive
Nenan
r
This data provides a spatial reference at a scale of
1:250,000 for the management units described in the
Yukon Tanana Area Plan (YTAP), as provided by Alaska
Department of Natural Resources, Division of Mining,
Land & Water, Resource Assessment and Development Section.
This data is for use in the Nenana Borough Options study and
should not be modified or distributed. Data should be reviewed
along with YTAP Public Review Draft, final Issue Response
Summary, and List of Approved Revisions. Source documents
remain the official record.
30 Miles
Date: 2/7/2014
Source Data:
State of Alaska Department of Natural Resources
USGS National Elevation Dataset
Projection: Alaska State Plane Zone 4
65°N
Notes: Unclassified state ownership data is
accurate to section level only. This map was
compiled from the best available data and is
for illustration purposes only. Data may have
discrepancies when compared to survey plats.
aR
an
Tan
Nenana
15
A
Tanana
7.5
AD
22
w
wyy
H
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ttee
SSttaa
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CA
Rampart
4°u
N
June6a
!
FI
GURE4-Nenana
150°W
149°W
on
t
l
Da wy
H
Source Data:
Notes: Unclassified state ownership data is accurate to section level only.
This map was compiled from the best available data and is for illustration purposes only.
Data may have discrepancies when compared to survey plats.
Note:
_
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Rampar
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8 Borough Effect to Land Planning and Permitting
Land planning, platting, and land use regulation is one of a borough’s three mandatory
areawide powers. A borough develops a plan to guide future development, conservation,
and investment (the Comprehensive Plan); becomes the platting authority to approve
subdivisions (rather than the State DNR); and develops some type (can be quite simple) of
zoning. If cities (like Nenana and Tanana) are already doing this, the borough and city can
agree to let the city continue planning duties within the city. Also, because it can regulate
land use, property within a borough (or city) can qualify for coverage under the national
flood insurance program.
The borough’s Comprehensive Plan, platting, and zoning would apply to all land in the
borough including state (general, University of Alaska, and Alaska Mental Health Trust),
Native Corporation land, and other private and municipal land. The exceptions are federal
land, Native townsite parcels, and Native Allotments, as explained in this chapter.
8.1 The Comprehensive Plan
Within two years after borough formation, a Borough Planning Commission would oversee
development of a borough-wide Comprehensive Plan. The commission has five or more
residents from both cities and unincorporated communities. There is flexibility about
exactly what is in the Comprehensive Plan, but typically it is a 20-year plan and establishes
a regional vision, identifies regional goals, looks at current conditions, forecasts population
change (and related housing and infrastructure needs), and charts a path to accomplish
future goals covering topics such as:
• economic development
• future land use
• community facilities
• transportation
• recommendations and actions for implementation
It is common for a new borough to spend some of the borough formation grant it receives
from the state on a professional planner to assist the planning commission accomplish this.
Often a borough will identify the municipal entitlement lands it wants from the state as the
comprehensive plan is being prepared, as this is the time to think through logical places for
future economic development, agricultural, settlement, cultural, recreational and other land
use.
Typically it takes just over a year to prepare a Comprehensive Plan and it involves several
planning commission work sessions, open to the public, that are usually organized by topic.
page 59
The effort often begins with a statistically valid community opinion survey to gauge the
majority opinion and desires of borough residents. To be successful, a Greater Nenana Area
or Middle Tanana Yukon Borough Comprehensive Plan would require borough planners
and tribal planners to share information and incorporate the tribe’s knowledge about
traditional land, territory, and activities. Likewise, it would also be important to work with
Doyon, Toghotthele, Tozitna, Seth-De-Ya-Ah, Dinyea, Baan OYeel Kon, and Bean Ridge
Corporations as well as state and other landowners to develop a compatible vision for land
use and development to the maximum extent possible.
8.2 Platting and Zoning
After a borough adopts platting authority, future land subdivision is approved by the
borough rather than the State DNR. In some places borough review and approval of land
subdivision has made this easier and quicker to accomplish.
There is a good deal of flexibility on both what is in the Comprehensive Plan and on how
land use regulations work to implement it work. A zoning system that makes sense for the
area, and is not overly burdensome would be needed. If a new borough formed one model
is Denali Borough where most land is zoned “Unrestricted” and there are no prohibitions
on land development (Denali does have scenic corridor zoning along the highway near the
park and industrial zoning by the Healy airport). The Denali Borough zoning code states:
“….the maintenance of a rural lifestyle is of utmost importance to borough residents;
and whereas, the borough consists of distinct communities with differing interests,
the borough assembly finds that it is in the best interests of the residents of the
Denali Borough to make land use decisions as much as possible on a local or
community basis.”
In order to change zoning in Denali Borough, 25% of the voters in an area or 25% of the real
property owners in the interested area can petition for a change. Depending on the process,
either the Assembly passes an ordinance making the change or it goes to the voters.
The type of developments that residents often want more information about are the larger
ones such as large land sales, University of Alaska or Alaska Mental Health Trust
subdivisions, tourist complexes near areas important to locals, and oil and gas
development, or mines. This is so that, for example, potential effects on investments
residents have made in their homes and businesses, or communities have made on
infrastructure or plans for future residential development, or impacts to locally important
fish runs or drinking water quality, can be evaluated and conditions assigned to minimize
impacts (through obtaining a borough zoning permit). Some say that this is the job of state
and federal regulators and is not needed; however, state and federal regulators sometimes
page 60
do not have local knowledge of area priorities and goals. This regulatory relationship can
encourage communication between the borough and developers. Again though, this type of
system is optional and not required.
If the land use regulation system put into place does include review of large developments
that require expertise that a Nenana Borough or a Middle Tanana Yukon Borough did not
have, rural governments often establish permit fees to support contracting with subject
experts to assist it in reviewing complex permits and projects.
Residents asked, “Can we not have zoning?” Legally, there must be zoning, but many rural
boroughs have followed the path that neighboring Denali Borough has taken, which is to
set up an extremely simple zoning district where essentially every use is allowed. The most
important thing to remember is that there is the flexibility to create land use regulations
that makes sense for the area, including one that is very simple essentially allowing all
activities with no review if that is what is desired.
8.3 Borough Planning and Zoning and the Federal Government
The federal government exempts itself from local planning. The advantage of a borough
Comprehensive Plan is that it gives added weight and influence to local comments. For
example, it is typical when preparing the borough Comprehensive Plan to look carefully at
adopted federal and state plans for the area and work to ensure the borough plan is
compatible. However, if there are situations where local planning preferences are different
from the state or federal plan, the borough can document the rationale and data in support
of its management preference in its Comprehensive Plan. Federal plans (such as the BLM’s
Central Yukon Management Plan or USFWS Yukon Flats National Wildlife Refuge) for
federal land will still take precedence, however, local preference with well documented
rationale in a publicly adopted borough Comprehensive Plan provides a strong basis and
gives increased weight to local comment (or other action) on proposed federal projects,
actions, or plan revisions.
Another more powerful option, that at least one municipality in Alaska is doing (City and
Borough of Wrangell), is to invoke “coordination authority” between the borough and
federal government after finishing a Comprehensive Plan (per federal Executive Orders
12866 and 12630). The City and Borough of Wrangell has done this and as a result it is now
a Cooperating Agency, equal in standing to state and federal agencies, on federal timber
sales. The City and Borough of Wrangell also now has quarterly meetings with the USFS to
discuss matters of mutual concern. This has allowed Wrangell to have conversations with
the primary federal agency in its region on activities in the area very early in the process
rather than waiting until scoping begins.
page 61
8.4 Borough Land Planning and Zoning and Native Allotments or Townsite
Parcels
Borough (or city) platting and zoning generally does not apply to Native Allotments or
Native Townsite parcels, unless the matter is an issue of public health, safety, or welfare.
Neither Townsite parcels nor Allotments can be taxed either (unless the restrictions on the
properties are removed). There are hundreds of conveyed Native Allotments in the study
area 10. The number of any Native Townsite Parcels is not known.
Native Allotments. In 1906, Congress adopted the first land grant to Alaska Native people
through Alaska Native Allotment Act. The Act entitled Alaska Natives to restricted land
entitlements of up to 160 acres of unappropriated, non-mineral land. Today, there are some
13,000-15,000 Native Allotments in Alaska. They are primarily located around the villages
and in hunting and fishing use areas.
Native Townsite Parcels. Townsite Acts were the way the cities in Alaska first got land from
the federal government. Congress passed the second land grant to Alaska Native people
through the 1926 Alaska Native Townsite Act, which was a special type of Townsite
designed to give Alaska Natives small lots under their homes in villages in a restricted
status. There was no payment for lots and they were to be nontaxable and inalienable,
meaning they could not be taken away or sold without approval of the federal government.
Some 106 Alaska Native Townsites were created. Some of the Native villages moved off
their townsites due to flooding and other issues, and many of the federally recognized
tribes in Alaska are no longer located on Alaska Native townsites.
Municipal policy makers and attorneys and Native rights policy makers and attorneys have
debated about whether zoning applies to Native Allotments and Townsite Parcels, based on
other court decisions but no court has directly dealt with the issue off a reservation. Today,
it is commonly held that the Bureau of Indian Affairs (BIA) regulations at 25 CFR 1.4 apply,
which state that zoning and other regulations are not applicable to property leased from,
held, or used under agreement with and belonging to any Indian or Indian tribe that is held
in trust by the United States or is subject to a restriction against alienation imposed by the
United States. Some suggest that regardless, depending on where it is located, it may be to
the Native Townsite parcel and Native Allotment owners benefit to comply with zoning, as
it may enhance the value of their land.
10
Native Allotments can be researched on the BLM Spatial Data Management System
http://sdms.ak.blm.gov/isdms/imf.jsp?site=sdms
page 62
8.5 Future Growth and Development Questions
Several questions were raised by residents about what would happen if oil and gas fields
were developed nearby in the future. “If the population should grow, let's say due to oil or
gas being found and the boom that could ensue, how would this impact Nenana as a city or
borough? What could be done about a possible uptick in crime in the area? What could be
done if the increase in population resulted in slum/tent camps? Could water and sewer as it
is meet this need? Would one or the other be best for this situation?”
At the heart of these questions is what are the ways to deal with land use, social, utility, and
infrastructure issues that could accompany development that is close to, but outside of a
community. For example, as the Totchaket Road is developed it will provide access not
only to oil and gas drilling areas, but also to land for agriculture, recreation, subsistence and
personal use harvesting and gathering, logging, bio-mass, gravel extraction, settlement, and
other activities. A significant amount of state land here is also available for municipal
selection if a borough formed (see Figure 4). Similar opportunities will be linked to the
Manley-Tanana Road, to a road extension to Rampart (a top community priority), or if a
mine is developed near Livengood. Planning for orderly future economic development,
infrastructure and service needs, settlement, and land use is the purpose of Comprehensive
Planning.
The simple answer to these types of questions is that services can be provided, revenue
collected to help fund those services, and rules enforced most easily if the area is within a
city or borough, but there are several options, reviewed below.
1. Under scenario 1, the no borough-status quo option, state statute AS 29.35.020 does
allow a municipality, by ordinance, to provide certain facilities or services outside its
municipal borders including the confinement and care of prisoners, parks,
playgrounds, cemeteries, emergency medical services, solid and septic waste
disposal, utility services, airports, streets (including ice roads), trails, transportation
facilities, wharves, harbors and other marine facilities, and the ability to protect its
water supply, and contain or clean up or prevent a release of oil or hazardous
substances that poses a threat (this does not allow regulation of mineral or oil
exploration or production outside its borders). However, none of this comes with the
ability to extend a tax to be compensated for the service provided outside its
borders. So for example a road could be built and maintained (as the City is doing
now west of Nenana) but some type of contract to pay for future road maintenance
would be required since taxes, which traditionally help pay for these services,
cannot be levied outside city limits.
2. Under borough scenario 2, where the city of Nenana dissolves and becomes the
Greater Nenana Area Borough, all former city/now borough codes and ordinances
page 63
would be applicable. Planning and economic development, orderly utility and road
extension, places best suited for (and not for) residential development could be
addressed through comprehensive planning. Also, taxes could be levied to help pay
for added road maintenance and community services demands.
3. Under borough scenarios 3, 4, and 5, the borough would exercise only the three
required powers. Planning and zoning issues, such as areas best suited (and not best
for) for a tent camp, residential development, and other development related
facilities could or could not be located and enforcement of violations, could be
addressed by borough planning. Traditional “city” services like utilities, public
safety, garbage pick-up, would not be borough duties as envisioned and not
available from the borough. These services could be provided by Nenana (see option
1 above) or it would be possible to form a borough “Service Area” in the
development area where a different and higher set of services was available, as long
as this was all authorized through ordinance or voting rules. Taxes could be levied
in the oil development area to help pay for planning and zoning services or others in
a Service Area.
9 Effect on Major Federal and State Revenues to
Communities and Region
There are a variety of state and federal grants that cities, tribes, unincorporated
communities, and other service providers in this area receive. This includes direct and
pass-through funding for capital improvement projects, transportation and road projects
and maintenance, health care, water-sewer-solid waste facilities, tribal courts, housing,
PERS payment assistance, environmental coordinators, and more. Typical grant funding
such as these would not be affected by borough formation.
Generally tribes and non-governmental organizations have different funding sources than
cities or boroughs and do not affect each other. For example, even though boroughs do
region-wide planning, this does not affect EPA IGAP funding that provides environmental
planners and coordinators for tribes.
The two major funding sources that would be affected by borough formation are State
Community Revenue Sharing and federal Payment in Lieu of Taxes (PILT) funding.
page 64
9.1 Federal Payment in Lieu of Taxes (PILT)
The primary federal source affected is the Federal Payment in Lieu of Taxes (PILT) program
that provides payments to local governments when certain federal lands are located within
their boundaries 11.
For FY 14 Nenana and Tanana together received almost $153,000 from PILT. If a borough
forms this revenue goes to the borough rather than the cities. A discussion to determine
whether this revenue is being used to support a service that the cities or the borough would
be providing would be needed to determine whether the borough keeps or passes this
revenue back to the cities. However, the PILT program is under serious threat of
discontinuation. In early February 2014 a one-year extension was as an add-on to the
USDA Farm Bill Reauthorization. Municipalities around the state will receive one more
PILT payment in July 2014 (for FY 15). No work in Congress is currently occurring on PILT
reauthorization. If PILT is indeed discontinued this will be a fiscal hardship for all
municipalities including Nenana, Tanana, Fairbanks North Star Borough, and Denali
Borough. The example budget for a Middle Tanana Yukon Borough does not include PILT
(Table 10-6).
9.2 State Community Revenue Sharing
The primary state funding coming to this region that would be affected by borough
formation is Community Revenue Sharing. Community Revenue Sharing (CRS) is a state
program to provide revenue to boroughs, cities, and unincorporated communities (UC) for
general governmental purposes. If a borough forms, funding to cities is typically reduced a
bit, the new borough gets an additional share, and funding to UCs is reduced. Also,
funding for UCs goes directly to the borough and the borough is responsible for its
distribution to the UCs.
PILT is based on the concept that local governments incur costs associated with maintaining
infrastructure on Federal lands within their boundaries but are unable to collect taxes on these
lands; thus, they need to be compensated for these losses in tax revenues. The payments are made to local
governments in lieu of tax revenues. The payments to municipalities are based on a formula that includes
the number of federally owned acres, population, and other factors. Federal law provides that PILT
payments may be used by the local government for any governmental purpose. PILT payments are made
by federal Department of Interior to boroughs and census areas. In Alaska, the state receives revenue for
census areas where there is no borough government and then distributes PILT funding to cities under AS
29.80.265. There are more federal acres in the Yukon Koyukuk census area than any other census area in
the State of Alaska.
11
page 65
CRS payments were higher in FY 12 and FY 13 because those two years the Alaska
Legislature appropriated an additional $20 and $25 million into the CRS Fund. Since then,
funding to the region’s communities declined by 30% back to the “status quo.” The “status
quo” is the state’s CRS fund, which is $180 million, from which one-third is distributed each
year ($60 million). The status quo assumes that the legislature replaces the $60 million each
year to bring the fund back up to $180 million. The funding level for Community Revenue
Sharing has remained flat since FY 09 (except for FY 12 and FY 13 as noted above) and is
expected to remain flat.
State DCCED DCRA staff helped estimate the effect to CRS payments under this report’s
borough formation scenarios using FY 14 as the base year. If a borough existed in FY 14
(municipal FY 13 payments), the amount of funding coming to the communities and region
from this source would change (see Table 9-1).
Comparing apples-to-apples under FY 14, overall CRS revenue to the region would increase
significantly under Scenario 2 and 5 because boroughs also get a share. A Greater Nenana
Area Borough would receive approximately $511,000 and a Middle Tanana Yukon
Borough’s share would be about $421,000. The region’s CRS total would experience a small
decline under both annexation scenarios. However, unincorporated communities would be
negatively affected under all borough formation or annexation scenarios because if within a
borough each would receive area reduced amount and CRS funding goes to the borough to
distribute to UCs rather than directly to the place or council. For example, in FY 14
unincorporated communities within boroughs each got $20,200. This would be a 39-54%
reduction for the study area’s UCs (see Table 9-1).
agreed upon by the borough and the communities.
page 66
Table 9.1 Change to Community Revenue Sharing if a Borough Formed
Place
Current FY 14 Community Revenue Sharing
City of Nenana
$116,363
City of Tanana
$107,085
Minto Village Council
$43,498
Manley Hot Springs Community Assn $37,981
Stevens Village IRA Council
$35,455
Four Mile Road Community Council
$0 (if they had applied est. about $34,070)
Rampart Village Council
$33,495
Livengood
$0
Fairbanks North Star Borough (FNSB)
$3,529,322
Denali Borough
$461,597
Estimated FY 14 Community Revenue
Borough Scenario
Sharing if Borough
/ % change
Change to Region as Whole
Scenario 1 - Status Quo
No Change
0%
No Change
Scenario 2 - Greater Nenana $511,024 for City/Borough of Nenana +339% Total Currently** = $150,433
Area borough (no city)
$20,200 for 4-Mile Road
-39% Total if Borough = $531,224
Scenario 3 - Greater Nenana Denali Borough =$473,506
+10% Total Currently** = $612,030
Area annexed to Denali
City of Nenana=$115,394
-1%
Total if Annexed = $609,100
Borough
Four Mile Road = $20,200
-39%
Scenario 4 - Greater Nenana FNSB =$3,538,467
0%
Total Currently** = $3,679,755
Area annexed to FNSB
-1%
Total if Annexed = $3,674,061
-39%
Scenario 5 - Middle YukonMTY Borough =$420,993
New $ Total Currently** = $497,947
Tanana Borough
-1%
Total if Borough = $744,162
City of Tanana =$106,966
0%
-39%
Minto = $20,200
-54%
Manley Hot Springs = $20,200
-47%
Stevens Village= $20,200
-43%
Rampart= $20,200
-40%
Source: L. Blood and D. Lindoff, DCCED, DCRA
** assumes that Four Mile had applied in FY 14 & received $34,070
page 67
10 Develop realistic borough budgets for the options
being studied.
10.1 Introduction
Sample borough budgets and projected education revenue in this report are a “snapshot in
time.” This technique allows a focus on the changes to revenues and expenses that are due
only to borough formation or annexation. This is done by using a recent audited budget
and assuming that nothing has changed except now a borough exists (or annexation
occurred) and then highlighting the changes to revenues and expenses as a result.
While this allows the effect of borough formation (or annexation) to be identified and
isolated, it also is somewhat misleading because of course, revenue and expense dollars
shift every year. However, the types of changes and trends will generally stay the same
assuming there are no significant changes to major funding sources. The budgets in this
chapter’s tables do consider this by including a column in each borough budget that
assumes PILT payments have ended and does not include the three-year borough
formation grant revenues.
This chapter includes realistic budgets for each borough scenario with details, chapter 11
reviews methods used to prepare local tax estimates, and chapter 12 explores school
funding in detail. Chapter 9 reviews anticipated state and federal revenue changes. This
chapter aggregates this data to focus on example borough budgets and finances.
Tables 10-1, 10-4 and 10-5 are organized as follows:
Column A—The operating budget from a recent city or borough audit.
Column B—The amount of added expense or revenue due only to borough
formation or annexation. This is the data that is shown for all scenarios at once on
Table 1 in the Executive Summary.
Column C—The new or enlarged borough’s operating budget including the new
territory.
Column D— The new or enlarged borough’s operating budget if there was no longer
federal PILT and not including the state’s borough formation grant revenue.
Since the Middle Tanana Yukon Borough would be entirely new, Table 10-6 only has one
column, a sample borough budget.
page 68
10.2 Scenario 1 – No Borough (the status quo)
There would be no change to current conditions under scenario 1, maintaining the status
quo. No borough formation or annexation would occur. All cities, school districts,
unincorporated communities would remain as is with no change to finances.
10.3 Scenario 2 – Greater Nenana Area Borough Forms (and City of Nenana
dissolves)
The Nenana Home Rule Borough would provide the same services that the (former) City of
Nenana provided. Table 10-1 shows the fiscal impact of becoming a Greater Nenana Area
Borough on local government finances. To prepare this, the City of Nenana audited FY 11
budget was used (column A). If a Greater Nenana Borough had existed in FY 11, additional
expenses and revenues due to being a borough are seen in column B. The total borough
expenses and revenues are shown in column C. This budget also assumes that residents
highly value education and increases the local contribution for school funding. Of course,
other choices could be made by the elected School Board or Assembly. Column D is
explained below.
Expenses. If the Greater Nenana Area Borough existed in FY 11, the operating budget
would increase by about $185,000 to pay salaries and benefits for a full time borough
finance officer and full time borough planner/grant-writer (arguably both positions could
be used by the city now) and an incremental addition to the assessor’s annual contract to
cover the new properties within the borough is shown. In addition, under the assumption
that support for education is a primary goal, the borough budget adds an additional
$400,000 to the local contribution made to support schools. (In FY 11, it was about $90,000
and it is allowed to be as high as $1.6 million). Added together this results in an FY 11
borough budget with approximately $585,000 more in expenses than the city’s FY 11
budget (Table 10-1, column B, row 8). Note that this shows a borough’s $141,000
contribution to make bond payments and retire the debt for the Student Living Center, just
as the city did in FY 11.
Revenue. On the revenue side, it is estimated that the additional territory and businesses
within the borough would result in an added $56,000 in property taxes 12 (at an assumed
rate of 6.0 mills for land outside the water/sewer system) 13, $2,000 in sales taxes, and a
$394,000 increase in state Community Revenue Sharing (per Alaska DCRA). In addition, the
This does not include added property taxes if economic quantities of oil or gas are found in the Greater
Nenana Area Borough where Doyon is drilling. The estimated value of an oil/gas field here if developed
is $20 million and at 6 mills this would yield $120,000 annually in property tax revenue.
12
Approximately 65 students currently living outside the city (and school district) boundary who attend
school in Nenana and receive school bus service would now be living within the school district boundary.
13
page 69
1st year of three years of state funding to support borough formation is shown ($300,000 in
year 1, $200,000 in year 2, $100,000 in year 3). Total additional revenue due to borough
formation if the Greater Nenana Area Borough existed in FY 11 would be just over
$752,000 14.
Net. In this scenario, given the increased support for education, the excess revenues over
expenditures (surplus) is $274,700 (Table 10-1, column C, row 29).
Column D. Column D on Table 10-1 is not an apples-to-apples comparison for FY 11
(which assumes no change except borough formation); column D instead takes the FY 11
budget, but does not include the $300,000 state borough formation grant and assumes that
PILT does not exist ($109,000 in FY 11).
With these assumptions, to balance the budget the level of support for education would
have to be reduced to $325,000 (still higher than city is currently able to do) rather than the
assumed $488,000 (Table 10-1, columns C and D, row 6). This would yield a $24,000 surplus.
This is possible because the area gets an additional state CRS share for being a borough.
As the budget shows, this includes $300,000 in state support that would be zeroed out after three years.
This also assumes ongoing federal PILT funding (just renewed for one year in Feb 2014 by congress) and
continued State Community Revenue Sharing (CRS), which needs a $60 million funding commitment by
the Legislature each year. (The funding level for CRS has remained flat since FY 09 and is expected to
remain flat. In FY 12 and FY 13 however, the Legislature added an extra $20-$25 million above the $60
million to the distribution.)
14
page 70
Table 10-1 SCENARIO 2: FISCAL IMPACT
Changes to Nenana Budget if a Greater Nenana Area Borough
Formed (Scenario 2)
A
FY 11 City of
Nenana
Operating
Budget
D
Scenario 2 Total FY
B
C
11 Nenana
Scenario 2 Total Scenario 2 Nenana Borough Budget
increment
Borough Operating
if no PILT or Boro.
if borough
Budget
Form. Grant
GENERAL FUND OPERATING EXPENSES
1 General Government – Nenana City Assembly and Admin
(also includes contracts for assessor, legal, accounting &
$279,116
$143,000
auditing). If Borough, add fulltime finance officer,
planner/grant-writer, and more for assessments.
2 Public Safety (facility upkeep, utilities). If Borough & based
$6,273
$2,141
on FY 12 budget have added 20% more for public safety
3 Public Safety (fire & EMS salaries, benefits, other). If
Borough & based on FY 12 budget, have added 20% more for
$107,994
$22,077
fire/EMS.
4 Public Works (salaries, benefits, building upkeep, utilities,
street lights, vehicle operations). If Borough & based on FY 12
$107,524
$17,750
budget, have added 20% more for Public Works.
5 Community Services (salaries, benefits, building upkeep,
utilities, books, supplies, advertising for library, library grant,
$199,933
$0
Visitor Center, Parks, Senior Center, Civic Center, Boat
Ramp, Youth Center, Cultural Center, Salmon Bake, IMLS)
6 Education Contribution to Schools. If borough est. Required
Contribution is $109,764; adding more local support because
$88,314
$400,000
capacity now higher to support education.
7 Education Debt Service (for Student Living Center revenue
$141,280
$0
bonds)
TOTAL
$930,434
$584,968
8
GENERAL FUND REVENUE
9 Property Tax (12-mills in city, assume 6- mills in borough
$297,907
$55,908
outside of former city)
10 Sales Tax (4%)
$126,980
$2,000
11 Penalties & Interest
$3,049
$0
12 Motor Vehicle Tax
$18,672
$0
13
subtotal local $446,608
$57,908
$504,516
14 Federal PILT
$109,903
$0
page 71
$422,116
$422,116
$8,414
$8,414
$130,071
$130,071
$125,274
$125,274
$199,933
$199,933
$488,314
$325,000
$141,280
$141,280
$1,515,402
$1,352,088
$353,815
$353,815
$128,980
$3,049
$18,672
$128,980
$3,049
$18,672
$505,516
$109,903
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
State Student Living Center Bond Payment
State School Reimbursement
State Electric & Phone Tax
State ILMS
State Library Grant
State Rural Fire Protection
State PERS Relief
State EMPG Grant
One time State Borough Formation Grant (3 years only)
Charges for Services
Leases & Rentals
Other Non-Admin City Revenue
TOTAL
30
31
32
33
34
Transfers In (General Fund)
Transfers Out (General Fund)
Net Change In Revenues Over Expenditures
Beginning General Fund Balance
Ending General Fund Balance
$141,645
$1,639
$2,851
$0
$6,300
$120,023
$4,000
$18,438
$3,000
$85,581
$69,436
$28,096
$1,037,520
$107,086
$0
$0
$0
$0
$0
**$407,074
$0
$0
$0
$300,000
$0
$0
$0
$752,569
$167,601
$30,469
-$31,743
$105,812
$591,581
$697,393
$141,645
$1,639
$2,851
$0
$6,300
**$527,097
$4,000
$18,438
$3,000
$300,000
$85,581
$69,436
$28,096
$1,790,089
$274,687
$141,645
$1,639
$2,851
$0
$6,300
**$511,024
$4,000
$18,438
$3,000
$269,965
$591,581
$864,994
$19,716
$591,581
$614,745
$85,581
$69,436
$28,096
$1,376,526
$24,438
Sources: Column A: FY 11 Nenana Audit, Columns B, C and D: Sheinberg Associates
** By FY 14 (without the added increment the Legislature put into CRS in FY 12 & FY 13) City of Nenana’s CRS had decreased to $116, 363. State DCCED DCRA
staff used FY 14 as the base year to project the effect on CRS of the borough formation scenarios. For FY 14, under scenario 2, the Nenana Borough’s CRS would
increase 439% to $511,024. Thus, the budget estimate on Table 10-1 also assumes a 439% increase for FY 11. Four Mile Road’s CRS would decrease by 40%. See
Table 9.1.
page 72
Debt Questions
Under Scenario 2 the Greater Nenana Area Borough forms and the City of Nenana
dissolves and its assets and liabilities – including debt— transfer to the borough, which
performs both city and borough services. A number of questions were raised about
Nenana’s debt during this study; this section attempts to address them.
When municipalities have predictable revenue (often from property taxes), they can issue
bonds in order to fund desired infrastructure and capital improvements. Annual payments
are made to retire the bond debt. According to the 2014 Alaska Taxable (Alaska DCRA) 33
municipalities in Alaska have issued General Obligation bonds.
In December 2001, the construction loan for the Nenana School District’s Student Living
Center was refinanced with a United States Department of Agriculture (USDA) $4.5 million
lease revenue bond issued to the City of Nenana. The original terms of the lease revenue
bond required semiannual payments of $141,480 including interest at 4.75%. Loan
payments began in June 2002 and were to end December 2031. However, beginning in June
2003, the City was unable to make the scheduled payments.
None of the City or School District officials that participated in the original agreements is
involved any longer; apparently the original intent was for the School District to provide
funding to the City to make the payments, but this has not occurred lately for a variety of
reasons. This uncertainty or difference of approach about whether it is the City or School
District’s responsibility is at least partly at the root of the late payments, as is the flat lining
of education funding recently and decline in federal and state revenue to cities.
Regardless, the City is in negotiations with USDA to modify the payment terms. The
current tentative agreement with USDA required semi-annual interest-only payments of
$5,000 beginning December 2003, which the City paid. During the years that ended June 30,
2006 through 2009, the City paid $481,480 to USDA, all of which was applied to interest.
During the years that ended June 30, 2011 and 2010, the City made payments on interest
amounting to $141,280, and $170,000, respectively. Table 10-2 is a summary of long-term
debt transactions for the City of Nenana for the year ended June 30, 2011.
If a Greater Nenana Area Borough formed, either the former city’s debt would be assumed
(along with assets) by the borough, or, a borough service area that was the former city
could form and the debt could stay an obligation of that service area. This would be
determined and discussed in the Petition for forming a borough.
page 73
Table 10-2 Summary: City of Nenana Debt
A. Governmental Activities/
Balance
Balance
Revenue Bonds
July 1, 2010
Additions
Retired
June 30, 2011
1. $4,500,000 USDA lease revenue
bond, interest rate is 4.75%;
minimum interest payments due
semi-annually of $5,000 until a new
lease is reached
$4,425,883
$4,425,883
Accrued leave
$26,878
$7,100
-$5,937
$28,041
TOTAL governmental activities
$4,452,761
$7,100
-$5,937
$4,453,924
Long Term liabilities related to governmental activities are liquidated by the General Fund
B. Business-Type (Enterprise
Funds) Activities
Loans Payable:
1. $256,080 ADEC loan #605011, due
in monthly installments of $1,067,
plus interest at 1.5%, through 2024
2. $262,734 ADEC loan #605021, due
in monthly installments of $1,095,
plus interest at 1.5%, through 2024
Accrued leave
TOTAL business-type activities
SOURCE: FY11 City of Nenana Audit
Balance
July 1, 2010
Additions
Retired
Balance
June 30, 2011
Due
within
one year
$28,014
$28,014
Due
within
one year
$165,378
-$12,792
$152,586
$12,802
$168,598
$32,789
$366,765
-$13,137
$6,831
-$19,098
$155,461
$32,407
$340,454
$13,137
$32,407
$58,346
$6,449
$6,449
One way to consider bonding capacity is look at a place’s full true value of property and its
debt, then divide both of these by the place’s population to identify per capita value and
per capita bonded debt. This gives a sense of capacity to support bonding. Table 10-3 does
this for General Obligation (GO), and is a reproduction of Table 19 from the 2014 Alaska
Taxable (State DCRA). Nenana’s debt is not on this table as it’s’ debt is from a revenue bond
(not a GO bond). However, two lines below Table 10-3 have been added by Sheinberg
Associates that use the same calculations to give a sense of value and capacity to pay for the
City of Nenana and the hypothetical Greater Nenana Area Borough. The sole purpose of
this section on debt and Table 10-3 is to provide some context and perspective to these debt
conversations. It does not affect the borough’s budget other than ensuring (as the City now
does) that it has the financial capacity to meet its debts.
page 74
Table 10-3 POPULATION, VALUATION AND G.O. BONDED DEBT (Table 19, 2014 Alaska Taxable)
2013 Per2013
2013 Per2013
2013 Full Value
Capita
Municipal
Capita
Municipality
Population
Determination
Full Value
G.O. Debt
Debt
Boroughs
Aleutians East Borough
City of Sand Point
Municipality of Anchorage
Fairbanks North Star Borough
City of Fairbanks
City of North Pole
Haines Borough
City & Borough of Juneau
Kenai Peninsula Borough
City of Kenai
City of Seward
City of Soldotna
Ketchikan Gateway Borough
City of Ketchikan
Kodiak Island Borough
City of Kodiak
Lake & Peninsula Borough
Matanuska-Susitna Borough
City of Wasilla
North Slope Borough
Northwest Arctic Borough
City & Borough of Sitka
Municipality of Skagway
City & Borough of Wrangell
Cities
City of Adak
City of Cordova
City of Craig
City of Dillingham
City of Hoonah
City of Nome
City of Petersburg
City of Unalaska
City of Valdez
3,240
983
298,842
100,343
32,070
2,162
2,620
32,832
56,756
7,132
2,754
4,299
13,938
8,291
14,041
6,431
1,673
93,801
8,207
7,725
7,716
9,084
961
2,448
$232,210,400
$88,713,200
$36,822,057,280
$10,501,572,030
$3,519,341,730
$368,185,060
$383,343,200
$4,892,381,900
$8,903,375,090
$960,259,120
$653,810,300
$672,501,200
$1,674,745,500
$1,024,117,700
$1,515,554,400
$761,210,400
$142,926,600
$9,804,746,930
$1,556,379,200
$19,302,423,290
$744,522,600
$1,162,987,200
$343,739,500
$204,671,000
$71,670
$90,247
$123,216
$104,657
$109,739
$170,298
$146,314
$149,013
$156,871
$134,641
$237,404
$156,432
$120,157
$123,522
$107,938
$118,366
$85,431
$104,527
$189,640
$2,498,696
$96,491
$128,026
$357,689
$83,607
$33,955,000
$3,029,322
$1,062,375,000
$114,120,000
$855,000
$1,020,000
$13,128,420
$138,660,000
$78,765,000
$1,775,000
$3,480,000
$2,330,000
$47,510,000
$19,153,842
$50,115,000
$8,000,000
$3,005,400
$276,610,000
$2,200,000
$353,985,921
$48,510,000
$31,020,000
$5,602,000
$2,180,000
$10,480
$3,082
$3,555
$1,137
$27
$472
$5,011
$4,223
$1,388
$249
$1,264
$542
$3,409
$2,310
$3,569
$1,244
$1,796
$2,949
$268
$45,823
$6,287
$3,415
$5,829
$891
321
2,316
1,243
2,406
777
3,759
3,269
4,768
4,144
$0
$305,272,290
$129,140,800
$206,017,600
$73,446,500
$378,886,400
$322,571,500
$562,628,000
$3,050,015,630
$0
$131,810
$103,894
$85,627
$94,526
$100,794
$98,676
$118,001
$736,008
$1,050,000
$1,525,000
$230,000
$12,505,000
$1,534,697
$4,654,154
$14,330,002
$9,870,000
$37,045,000
$3,271
$658
$185
$5,197
$1,975
$1,238
$4,384
$2,070
$8,939
Source: 2014 Alaska Taxable
City of Nenana
Greater Nenana Area Borough
2013
Population
2013 Full Value
Per Capita
Full Value
FY 11
Revenue
Bond Debt
Per Capita
Revenue
Debt
428
$29,288,300
$68,431
$4,453,924
$10,406
660**
$41,420,500
$67,758
$4,453,924
$6,748
Sources: Sheinberg Associates, 2014 Alaska Taxable. FY 11 City of Nenana Audit.
** Note that population estimate for borough is a mix of 2012 and 2010 values.
page 75
10.3 Scenario 3 - The “Greater Nenana Area” is annexed into Denali Borough.
(The City of Nenana remains the City of Nenana; Four Mile Road remains an
unincorporated community.)
Denali Borough provides education, planning, landfill, & tax levy/collection services (see
Table 4-1). If the Greater Nenana Area had been annexed into Denali Borough in 2012, Table
10-4 shows the incremental impact to the Denali Borough operating budget. To assess the
impact on local government finances, the Denali Borough audited FY 12 operating budget
was used (column A). If the Greater Nenana Area had been annexed into Denali Borough in
FY 12, estimated additional expenses and revenues as a result are seen in column B. The
enlarged Denali Borough’s expenses and revenues are shown in column C, assuming no
changes other than those due to borough formation. Column D is explained below.
Expenses. Denali Borough residents already contribute significantly more to education than
is required, the hypothetical borough budget (Table 10-4) after annexation carries this
forward with an increase of $430,280 to bring total local funding for schools to $2.5
million (FY 12). The number of students in the school district would double with the
majority of students’ part of the Cyberlynx distance education program. In addition, a 10%
increase ($116,814) is shown for Denali Borough Assembly, mayor, and administration
expenses. The rationale is that after annexation there will be about 35% more people, 23%
more homes, and 11% more acres in Denali Borough. In addition, election districts would
need to be modified to include the new territory and residents. Considering that services
already exist, an increased cost of 10% is assumed to accommodate these changes. Added
together the post-annexation FY 12 Denali Borough’s operating expenses are
approximately $547,000 higher compared to its FY 12 budget (Table 10-4, column B, row
7). 15
Revenue. In FY 12, an estimated $14,665 would accrue to the Denali Borough from the
collection of the borough’s 7% areawide lodging tax in the annexed territory. There is also
gravel extraction in the annexed territory that would be subject to the borough severance
tax, but the quantity extracted and projected tax revenue is not known. Denali Borough
does not levy a sales or property tax; the City of Nenana would still exist and these
revenues would continue to accrue to the City and be used to pay for City of Nenana
services. Under Scenario 3, if economic quantities of oil or gas are found in the newly
annexed land where Doyon is drilling, there would not be a property tax levied on these
It is assumed that the City of Nenana bond payment obligation for the Student Living Center would
remain an obligation of the City of Nenana. An argument could be made that this debt is intrinsically
linked to education, a service that Denali Borough would be assuming and that thus the debt should
transfer. This is something that would be determined and documented in the Transition Plan that is
prepared as part of the Petition to Annex submitted to the state (and voters).
15
page 76
assets as the Denali Borough does not levy a property tax. An estimated $20,000 increase in
state Community Revenue Sharing would also accrue to the Borough. 16 There would be
no borough formation grant from the state. If annexation had occurred in FY 12 the total
added revenue resulting is estimated at just over $34,773 (Table 10-4, column B, row 14).
Net. The excess revenues over expenditures (surplus) is just under $38,000 in this
scenario, which would result in over a $500,000 reduction to the FY 12 Denali Borough
surplus (compare columns A and C, row 15). The Denali Borough would incur about
$512,000 more in expenses than in revenue due to annexation. This is primarily because the
Denali Borough’s tax revenue comes almost entirely from its lodging tax (lodging
associated with Denali National Park) and the additional lodging tax that the Greater
Nenana Area would generate is small. The borough budget would balance but there would
not be enough surplus to make the $176,000 contribution to the Denali Borough Permanent
Fund or deal with most of the other transfers in and out in FY 12. To make a contribution to
the Permanent Fund the local contribution for education would need to be reduced.
(which assumes nothing changes except borough formation); column D instead takes the FY
12 budget and assumes that PILT does not exist ($301,000 in FY 12). With this further
reduction to the budget, to balance its budget, education funding can only increase by a
little more than the required extra due to the new territory (to a total of $2.2 million (Table
10-4, column D, row 5). The borough budget would balance but again, there would not be
enough surplus to make the $176,000 contribution to the Denali Borough Permanent Fund
or deal with other transfers in and out in FY 12, unless further reductions to education
support occurred (or new revenues were raised).
Column C assumes ongoing federal PILT funding (just renewed for one year in Feb 2014 by congress)
and continued State Community Revenue Sharing (CRS), which needs a $60 million funding commitment
by the Legislature each year. (The funding level for CRS has remained flat since FY 09 and is expected to
million to the distribution.) Column D removes PILT.
16
page 77
Changes to Denali Borough Operating Budget if Greater Nenana Area Annexed to
it (Scenario 3)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
A
FY 12 Denali
Borough
Operating
Budget
OPERATING EXPENSES
General Government – Assembly, Mayor, and Admin (If annexation, 35% more
people, 23% more homes, & 11% more acres in Denali Borough. Assume borough
$1,162,258
expenses increase by 10%.
Public Safety (fire, EMS, polices, facilities, utilities)
$0
Public Works
$0
Community Services
$0
Education Contribution to Schools
Required
$706,139
Additional
$1,363,581
Total
$2,069,720
If annexation, Required Contribution would increase by an est. $109,764
Borough Matching Grants
$5,882
TOTAL
$3,237,860
OPERATING REVENUE
Lodging Tax (7%)
$2,573,815
Severance Tax (5 cents/ton for coal, limestone, and per yard for gravel)
$110,898
subtotal local $2,684,713
Federal PILT
$301,199
$670,600
Other Revenue
$131,653
TOTAL
$3,788,165
$550,305
Operating transfers in (out)
Permanent investment fund
$176,000
School maintenance reserve
-$88,000
Capital projects-$151,000
Land enterprise
-$80,000
Landfill
-$10,000
Special revenue grant match
-$11,672
Excess (deficiency) of revenues over expenditures
$385,633
Sources: Column A: FY 12 Denali Borough Audit, Columns B, C, and D: Sheinberg Associates
page 78
B
Scenario 3
Increment
$116,814
C
D
Scenario 3 Total FY Scenario 3 Total FY
12 Denali Borough 12 Denali Borough
Operating Budget
if no PILT
$1,279,072
$1,279,072
$0
$0
$0
$0
$0
$0
$109,674
$320,606
$430,280
$2,500,000
$2,200,000
$547,094
$5,882
$3,784,954
$5,882
$3,484,954
$2,588,470
$110,898
$2,699,368
$301,199
**$690,718
$131,653
$3,822,938
$37,984
$2,588,470
$110,898
$2,699,368
**$690,718
$131,653
$3,521,739
$36,785
$176,000
-$88,000
-$151,000
-$80,000
-$10,000
-$11,672
-$125,688
$176,000
-$88,000
-$151,000
-$80,000
-$10,000
-$11,672
-$127,887
$14,655
Unknown
++$109,903
**$20,118
$34,773
-$512,321
** By FY 14 (without the added increment the Legislature put into CRS in FY 12 & FY 13) Denali Borough
CRS had decreased to $461,597. However, State DCCED DCRA staff used FY 14 as the base year to
project impact to CRS of the various borough formation scenarios. For FY 14, under scenario 3, Denali
Borough’s CRS would increase by 3% to $473,506. Thus, the budget estimate on Table 10-4 also assumes a
3% increase for FY 12. The City of Nenana’s CRS would decrease by about 1% and Four Mile Road’s
would decrease by 40%. See Table 9.1
++If in a borough, federal PILT goes to the borough not cities. This is the amount that Nenana received in
FY 11 that would now go to Denali Borough. However, because the ongoing funding of PILT is very
uncertain, it is not included in this accounting of the fiscal change due to borough formation or
annexation.
10.4 Scenario 4 – The “Greater Nenana Area” is annexed into the Fairbanks
North Star Borough. (The City of Nenana remains the City of Nenana; Four Mile Road
remains an unincorporated community.)
The Fairbanks North Star Borough (FNSB) provides assembly, mayor and general
administration, education, planning, economic development, taxation, air pollution control,
library, parks, and solid waste and recycling services on an areawide basis. It has several
services areas for fire and EMS, street lighting, or road maintenance (see Table 4-1). It is
assumed that the City of Nenana would continue to provide fire/EMS and roads services,
though if desired a service area could be formed for FNSB to provide this.
If the Greater Nenana Area had been annexed into Fairbanks North Star Borough (FNSB) in
2012, Table 10-5 shows the incremental impact to the FNSB operating budget. To assess the
impact on local government finances, the FNSB audited FY 12 operating budget was used
(column A). If the Greater Nenana Area had been annexed into FNSB in FY 12, additional
expenses and revenues as a result are seen in column B. The enlarged boroughs’ expenses
and revenues are shown in column C. Column D is explained below.
Expenses. Fairbanks North Star Borough residents already contribute significantly more to
education than is required. The hypothetical borough budget (Table 10-5) adds only the
increment of Required Contribution due to annexation of the Nenana territory. Which is
quite small compared to the $47 million already being contributed 17. No added funding is
assumed to FNSB for general government and administration, but the FNSB planning
It is assumed that the City of Nenana bond payment obligation for the Student Living Center would
remain an obligation of the City of Nenana. An argument could be made that this debt is intrinsically
linked to education, a service that FNS Borough would be assuming and that thus the debt should
transfer. This is something that would be determined and documented in the Transition Plan that is
prepared as part of the Petition to Annex submitted to the state (and voters).
17
page 79
budget is increased by 20% to account for 20% more acres and 1% more people within the
borough due to the annexed territory. Also, the library budget is increased by $74,000, the
same amount that the City of Nenana spent in FY 11 for library services (these expenses
would become the FNSB duties rather than Nenana, as FNSB provides areawide library).
Added together the post-annexation FY 12 FNS Borough’s operating expenses are
approximately $590,000 higher compared to its FY 12 budget (Table 10-5, column B).
Revenue. In FY 12, an estimated $400,863 would accrue to the FNS Borough from the
collection of the borough’s 12.97 mill property tax, 8% lodging tax, and 5% alcohol tax
areawide in the annexed territory 18. The annexed territory would also be subject to an 8%
tobacco excise tax, but the revenue this would generate is unknown 19. An estimated $15,000
increase in state Community Revenue Sharing would also accrue to the Borough. 20 If
annexation had occurred in FY 12 the total added revenue resulting is estimated at
$416,000.
Net. The excess revenues over expenditures (surplus) for FY 12 would be $36 million
(Table 10-5, column C, row 22); this would be a $174,000 reduction compared to before
annexation of the territory (Table 10-5, column B, row 22) because revenues are
reasonably expected to be less than expenses by this amount.
(which assumes no change except borough formation); column D instead takes the FY 12
budget and assumes that PILT does not exist ($420,000 in FY 12). It does not remove the
$742,000 in PILT for military housing because it is assumed that this comes from a different
program than ‘regular’ PILT. The FNSB surplus is large enough that this additional loss of
$420,000 does not require a further budget change. With PILT eliminated the surplus would
be $35.9 million.
Under Scenario 4, if economic quantities of oil or gas are found in the newly annexed land where
Doyon is drilling, there would be a property tax levied on these assets. The estimated value of an oil/gas
field here if developed is $20 million and at 12.971 mills this would yield $259,000 annually in additional
property tax revenue.
18
The City of Nenana would still exist and its city taxes would still accrue to the City and be used to pay
for City of Nenana services. However, unless the City of Nenana mill rate was reduced from its current
12.0 mills, city residents would pay 12.0 (city)+12.97(borough) = 24.97 mill total. There would likely be a
reason to reduce the city mill rate as City of Nenana would no longer need to make an education
contribution or fund the library.
19
Column C assumes ongoing federal PILT funding (just renewed for one year in Feb 2014 by congress)
and continued State Community Revenue Sharing (CRS), which needs a $60 million funding commitment
by the Legislature each year. (The funding level for CRS has remained flat since FY 09 and is expected to
million to the distribution.) Column D assumes PILT does not exist.
20
page 80
Changes to Fairbanks North Star Borough
Operating Budget if Greater Nenana Area Annexed to it (Scenario 4)
A
FY 12 FNSB
Borough
Operating
Budget
B
Scenario 4
Increment
C
Scenario 4 Total
Total FY 12 FNSB
Borough Operating
Budget
D
Scenario 4 Total
FY 12 FNSB
Borough
if no PILT
OPERATING EXPENSES
1 General Government – Assembly, Mayor, and Admin (If annexation: <1%
$19,380,741
$19,380,741
more people, 1% more homes, and 20% more acres in FNS Borough.)
2 Planning (assume 20% increase due to 20% more acres & 1 % more homes)
$2,029,598
$405,920
$2,435,518
$2,435,518
3 Library (This is FY 11 Nenana expenditure for library)
$5,036,011
$74,356
$5,110,367
$5,110,367
4 Parks and Recreation
$6,915,511
$6,915,511
$6,915,511
5 Public Works
$7,676,834
$7,676,834
$7,676,834
6 Emergency Operations
$1,814,132
$1,814,132
$1,814,132
Required
7 Education Contribution to Schools
$25,585,072
$109,764
$25,694,836
$25,694,836
Additional
$21,774,228
$21,774,228
$21,774,228
Total
$47,359,300
$47,469,064
$47,469,064
If annexation, Required Contribution would increase by an est. $109,764
8 Capital Outlay
$743,916
$743,916
$743,916
TOTAL
$90,956,044
$590,040
$91,546,084
9
$91,546,084
OPERATING REVENUE
10 Property Tax (12.971 mills FNSB rate is applied to territory to be annexed,
note that unless City of Nenana mill rate reduced it would become
12.0+12.971=24.96. However, there likely would be reason to reduce it as City
$94,342,616
$371,360
$94,713,976
$94,713,976
of Nenana would no longer need to make an education contribution or fund
the library)
11 Lodging Tax (8%)
$1,921,094
$16,748
$1,937,842
$1,937,842
12 Alcohol Tax (5%)
$1,044,069
$12,754
$1,056,823
$1,056,823
13 Tobacco Excise Tax (8%)
$1,503,265
Unknown
$1,503,265
$1,503,265
14 Interest, penalties
$3,412,372
$3,412,372
$3,412,372
15 federal PILT for military housing
$742,500
$742,500
$742,500
16
subtotal local $102,965,916
$400,863
$103,366,779
$103,366,779
17 Federal PILT
$420,248
$420,248
18 State Community Revenue Sharing
$5,045,901
**$15,138
**$5,061,039
$5,061,039
19 Other Intergovernmental Revenue including $10 M for aid to school
$16,195,884
$16,195,884
$16,195,884
construction
20 Other
$2,605,031
$2,605,031
$2,605,031
page 81
21
22
TOTAL
23
24
25
26
27
28
29
30
31
32
Operating transfers in (out)
Enterprise funds
Capital
General fund
special revenue
debt service
capital projects
Enterprise funds
General fund
Excess (deficiency) of revenues over expenditures and other financing sources
(uses)
$127,232,980
$36,276,936
$416,001
-$174,039
$127,648,981
$36,102,897
$127,228,733
$35,928,858
$11,464,740
$11,290,701
$1,000,000
$677
$755,049
-$230,874
-$14,484,800
-$442,735
-$6,828,620
-$4,406,854
$11,638,779
Sources: Column A: FY 11 FNSB Audit, Columns B and C: Sheinberg Associates
** By FY 14 (without the added increment the Legislature put into CRS in FY 12 & FY 13) FNSB CRS had decreased 31% to $3,538,467. However, State DCCED
DCRA staff used FY14 as base year to project impact to CRS of the various borough formation scenarios. For FY 14, under scenario 3, FNSB’s CRS would increase
by 0.3% to $3,553,605. Thus, the budget estimate on Table 10-5 also assumes a 0.3% increase for FY 12. The City of Nenana’s CRS would decrease by about 1% and
Four Mile Road’s would decrease by 40%. See Table 9.1
++ If in a borough, federal PILT goes to the borough not cities. This is the amount that Nenana received in FY 11 that would now go to FNSB.
page 82
10.5 Scenario 5 – A “Middle Tanana-Yukon” Borough forms.
(Under this scenario all cities and communities remain as is, but are now within a borough.
The most significant difference is that the new borough would provide education services
and become a borough school district.)
This section describes, and Table 10-6 summarizes, a sample budget for a Middle TananaYukon (MTY) Borough. This budget assumes that the MTY Borough only provides the three
required borough services - education, planning and taxation. It also assumes that the only
borough tax is a property tax because that is the way to obtain revenue from the TransAlaska Pipeline System (TAPS) that runs through this area. (See section 11.1 of this report,
which explains property taxation of the TAPS pipeline and discusses the value over time of
TAPS, litigation and what affects its valuation; and section 11.6, which outlines the
exemptions for resident to property taxes).
Expenses. If the MTY Borough existed in FY 12, the operating budget is estimated at
$655,800 for wage and benefits for the mayor and staff, and stipends for the Assembly and
Planning Commissioners; $167,000 for travel, training, contracts, rent, phone, supplies,
insurance, etc.; $141,280 for debt service for Nenana Student Living Center; $687,499 for
revenue sharing with communities in the borough so they do not lose CRS or PILT due to
borough formation and also to provide capital grants to communities; and $4,250,000 for
local support for education. This is $1 million more than is required for education support.
Added together the result is a FY 12 borough budget of $5.9 million of which 72% is local
support for education (Table 10-6, row 30).
Revenue. On the revenue side, it is estimated that TAPS would provide about $6,680,000 in
revenue from a 6-mill property tax and other property in the borough would bring in
between $156,000 and $323,000 (depending on exemptions put into place by borough). State
Community Revenue Sharing (per Alaska DCRA) would add $420,993. In addition, the 1st
year of three years of state funding to support borough formation is shown ($300,000 in
year 1, $200,000 in year 2, $100,000 in year 3). Total operating revenue to the MTY Borough
if it existed in FY 12 would be $7,723,450 21 (Table 10-6, row 36).
For a MTY Borough, because the TAP is within the borough, the state will include the value
of the pipeline when it determines the minimum that the borough must contribute to
support education, which is estimated here (required minimum for education) at $3.1
Table 10-6 includes $300,000 in state support that would be zeroed out after three years. This also
assumes continued State Community Revenue Sharing (CRS), which needs a $60 million funding
commitment by the Legislature each year. (The funding level for CRS has remained flat since FY 09 and is
expected to remain flat. In FY 12 and FY 13 however, the Legislature added an extra $20-$25 million
above the $60 million to the distribution.) Federal PILT is not included in this budget.
21
page 83
million. Because this is so high and the ability to raise this revenue to support schools is
limited currently in this area (without a mine or other oil and gas infrastructure) the MTY
Borough essentially has no choice but to levy a property tax on TAP (and thus on other
property in the borough).
Net. If a Middle Tanana Yukon Borough existed in FY 12, the excess revenues over
expenditures (surplus) would be $1,821,871 (Table 10-6, row 37). This would allow for a
$1.5 million contribution to Borough Permanent Fund and a $250,000( contribution to a
fund set up for property tax hardship/relief (like North Slope Borough has) (see Table 106, rows 38 and 39). The net surplus would be $71,871. If the state’s borough formation
revenue of $300,000 was not included in the budget, this would reduce the contribution that
could be made to the Borough Permanent Fund to $1.2 or $1.3 million.
Finally, there was a suggestion that in addition to the three mandatory borough services
(education, planning & taxation) it might benefit communities in the region if there was a
MTY Borough staff person who could provide solid waste-landfill-recycling technical
assistance, related grant-writing and possibly coordinating some sharing of services or
facilities. An added fulltime staff person to provide this assistance, with wages, benefits,
and travel expenses could increase the budget by $175,000. There could be an equal
reduction to the size of the contribution to the Borough Permanent Fund to provide this.
During this study a concern was raised about relying so heavily on potential tax revenue
from the Trans-Alaska Pipeline (TAP) due to the uncertainty over its assessed value,
ongoing litigation, and decreased oil production. The TAP pipeline is depreciating in value
due to its age and the amount of oil it is transporting. This must be weighed against the
reality that it provided $371 million in property tax revenue to municipalities in 2012 and
$416 million in 2013 (and $111 million and $99 million to the state those same years). See
section 11.1 of this report for information on value, litigation, and taxation of TAP.
page 84
Table 10-6
SCENARIO 5: FISCAL IMPACT
FY 12 MTY Borough
Operating Budget
Forming a Middle Tanana Yukon Borough (Scenario 5)
OPERATING BUDGET EXPENSES
1
Mayor (assume strong manager form of govt)
$6,000
2
Borough Manager (assume strong manager)
3
Borough Clerk/Office Manager
$150,000
$78,000
4
Treasurer
$78,000
5
Deputy Clerk/Accounts Payable
$60,000
6
Admin Asst
$60,000
7
Borough Planner/Grant-Writer
$70,000
8
Assessor
9
Assembly Compensation ($200/month per Assy)
$125,000
$19,200
10 Planning Commissioner Compensation ($100/mon x 8)
$9,600
General Government/Admin $655,800
11
12 Travel & Training: Assembly, Mayor, Staff, Commission
$25,000
13 Conferences, Dues, Fees
$6,000
14 Legal Assistance
$12,000
15 Lobbyist
$10,000
16 Phone, internet, supplies, copies, postage, etc.
$24,000
17 Building Utilities, Fuel
$40,000
18 Insurance
$10,000
19 Audit
$20,000
20 Contingency/Other
$20,000
21
travel, training, contracts, rent, phone, supplies, insurance, etc. $167,000
22 Education Debt Service (for Nenana Student Living Center)
$141,280
Community Distribution: State Revenue Sharing (FY 14, to Manley, Minto,
23 Rampart, Stevens, Four Mile so no fiscal harm to CRS from borough
formation)
$184,499
Community Distribution: PILT (to Nenana and Tanana so no fiscal harm to
PILT from borough formation)
$153,000
24
25 Community Distribution: Capital Grants ($50,000 to each of 7 communities)
$350,000
revenue sharing with communities in borough $687,499
26
27 Required Contribution Education
$3,150,069
28 Additional Contribution Education
$1,099,931
Subtotal education support $4,250,000
29
30
TOTAL
$5,901,579
OPERATING BUDGET REVENUE
31 Borough Property Tax (from TAPs at 6-mill)
$6,679,406
32 Borough Property Tax from Other (at 6-mill - does NOT include assumed
$50,000 off est. value of housing for all, which would lower to est. $156,000)
$323,051
33 State Community Revenue Sharing (FY 14)
$420,993
page 85
34 Federal PILT (est.)++
35 One time State Borough Formation Grant (3 years only)
$300,000
36
TOTAL
$7,723,450
37
$1,821,871
38 Transfers Out to Borough Permanent Fund
$1,500,000
Transfer out to Homesteader Fund (Like North Slope Borough, to assist with
39
$250,000
property tax hardship)
41 Ending Operating Fund Balance
$71,871
Sources: Sheinberg Associates, see section 11.1 for tax estimates; wage & benefits based on other boroughs; CRS etc.
from DCCED DCRA
++ Because (until this month) the PILT program had apparently ended, and it takes several months for
federal officials to estimate PILT payments to new boroughs, no inquiry was made. PILT was
reauthorized for one year in February 2014. There is great uncertainty that the program will continue. It is
therefore not included in this budget. In FY 14, Nenana and Tanana received collectively $153,000 in
PILT; if there is a borough this revenue goes to it rather than cities.
10.6 Other: Municipal Bankruptcy
Residents have asked what would happen if the borough went bankrupt? Who would be
stuck with any debt? 22 This question was discussed during the 2013 Alaska Legislative
session due to concerns over PERS liabilities. Bankruptcy is function that is guided by
federal rules. In order for a municipality to go bankrupt, the state must have passed a
statute allowing it to do so. Alaska has not, so a municipality in Alaska may not go
bankrupt. So, the question becomes what happens if a municipality cannot meet its
financial obligations. Most bonds have been backed by the state, so the state would be
liable. For operating expenses, it depends on the situation. There have been instances in
Alaska when a municipality ran out of money for payroll, in that case they shut down for
several months until funds were available (usually through Community Revenue Sharing).
The “bottom line” is that a municipality cannot get out of debt. If it is a municipality that
levies a tax, it may be that a trustee is appointed to collect revenue (taxes and other funds)
until the debt were paid.
A similar situation is if a municipality wanted to dissolve. Alaska statutes require that it be
free of debt. When Tuluksak, Newtok, and several other cities dissolved in the mid-1990's,
they stopped the city services and several years passed during which their share of State
Community Revenue Sharing was used to pay off debt. Once the debt was paid off, then
the certification of dissolution was completed; their debt was mainly payroll taxes.
22
Response to this question comes from personal communications with S. Ruby, director, DCRA, DCCED
page 86
11 Options for Raising Local Revenue
This chapter of the report estimates the revenue that could be generated locally though
taxes for the borough options being investigated. A tax by tax review is now presented. In
almost all cases two or three different methods to estimate the taxable amount are
employed, and the results are averaged. Assumptions made are those that would tend to
underestimate, rather than overestimate, tax revenue. These estimates are made at a point
in time using best available information and the conditions and rules in effect when the
estimates were prepared. If the region moves forward with any option revenues will
certainly vary from these estimates, but they provide an accurate sense of about how much
revenue is reasonable to expect from different taxation options and rates.
Table 11-1 shows they type and levy of each tax that the borough budgets in chapter 10
depend upon.
Table 11-1 Type of Tax Assumed per Borough Scenario Studied
Scenario
Borough Revenue Includes Tax On
Scenario 1-Status Quo/No
n/a
Borough
Scenario 2- Greater Nenana Area • Property (12-mill in Service Area 1 & 6-mill in Service Area 2)
Borough
• Sales (4%)
Scenario 3- Greater Nenana Area
• Lodging (7%)
annexed to Fairbanks North Star
• Extraction of gravel, rock & coal (5 cents/cy or ton)
Borough
• Property (12.971-mill)
Scenario 4 - Greater Nenana
• Lodging (8%)
Area annexed to Denali Borough • Alcohol (5%)
• Tobacco (8%)
Scenario 5- Middle Tanana
• Property (6-mill)
Yukon Borough
Table 11-2 summarizes all options investigated for raising local taxes.
This section begins with a review of possible property tax revenue from the Trans-Alaska
Pipeline System since this is a potential large revenue source for the area.
page 87
SALES TAX
Area 1 (scenario 2, 3,4)
Area 2
Total (scenario 5)
LODGING TAX
Area 1 (scenario 2,3,4)
Area 2
Total (scenario 5)
ALCOHOL TAX
Area 2
Total (scenario 5)
EMPLOYMENT TAX
Area 2
Total (scenario 5)
PROPERTY TAX
Table 11-2 Summary of Options for Raising Local Revenue
Taxable Sales per
Taxable Sales per
Taxable Sales per
simple business
areas sales tax per
capita
license
business license
$3,398,825
$3,249,500
$3,249,500
$2,672,137
$2,643,255
$2,662,915
$6,070,963
$5,892,755
$5,912,415
Taxable Lodging Sales
by Executive Interview
$209,355
$106,315
$315,670
Taxable Alcohol
Sales, by known sales Taxable Alcohol Sales,
applied to liquor
by known sales per
licenses
capita
**
**
**
**
$649,965
$678,583
Average Annual
Employees 2012
233
315
548
Property value using
Property value using
Property value per
Alaska Taxable and
ACS data for #
capita
state assessor data
occupied dwellings
Area 1 (scenario 2: 12-mill in
$29,391,451
$26,984,494
$29,520,786
service area (SA) 1 & 6-mill in SA2)
Area 1
$29,391,451
$26,984,494
$29,520,786
(scenario 4: 12.97-mill to FNSB)
Area 2 (at 6-mill)
$27,672,970
$22,291,987
$25,663,977
Total (scenario 5: at 6-mill)
$57,064,421
$49,276,481
$55,184,763
127 miles Trans Alaska pipeline (est. based on 2012 neg. rate) at 6-mill
Hypothetical oil & gas field w infrastructure, real & personal property, using Kenai oil & gas field as proxy
Hypothetical mine w infrastructure, real & personal property, using mid-size Alaska mines as proxy
page 88
Average of
methods
$3,299,275
$2,659,436
$6,008,486
4% sales tax could
annually generate:
$133,962
$106,377
$240,339
10% lodging tax could
annually generate:
$20,935
$10,631
$31,567
Average of
methods
**
**
$664,274
5% alcohol tax could
annually generate:
40% of total
60% of total
$33,214
$5/month/per head could
annually generate:
$13,980
$18,900
$32,880
Average of
methods
Property tax (per scenario
described in 1st column)
$231,771+$55,908=
$287,679
$28,632,244
$28,632,244
$25,209,644
$53,841,888
$1,113,234,375
$20,000,000
$177,000,000
$371,360
$151,258
$323,051
$6,679,406
@ 6 mill = $120,000
@ 6 mill = $1,062,000
11.1 Property Taxes Trans-Alaska Pipeline System
Context
The value of natural resources in the ground cannot be taxed, only the value of the real and
personal property and infrastructure associated with natural resources. The State levies a 20mill property tax (2%) on the Trans-Alaska Pipeline (TAP) and related infrastructure. If the
pipeline runs through a city or borough that levies a property tax, then the state (which
collects the full 20-mill tax on the pipeline) pays each municipality the amount of property tax
due to it from the portion of the pipeline and the pipeline facilities that are within its
boundary. The state then keeps the difference between its 20-mill rate and the municipal
tax. For the portions of TAPS that are not within any city or borough boundary, the state
keeps the full 20-mill property tax revenue. In 2012, the TAP contributed $371 million in
property taxes to the municipal governments through which the TAP pipeline crosses. 23
State law requires local governments along the pipeline route to use the state’s valuation in
imposing taxes on the pipeline.
The value of the Trans-Alaska pipeline is both complex and controversial, and determined
by a combination of the state’s oil and gas assessor at Department of Revenue, a 5-member
State Assessment Review Board, and the state Superior Court. The pipeline’s value, as set
by the Department of Revenue, the board and the courts, has fluctuated widely over the
years. This makes it difficult to estimate the value for the length of TAPS pipe that runs
through the study area.
For example, the oil producers -- primarily BP, Conoco and Exxon – argued that the 2012
value of the pipeline is $2.25 billion. The Alaska Division of Revenue stated its worth at $7.2
billion. The municipal governments, which collect property taxes on the pipeline just like
the state, claim the line is worth $13 billion. The review board set the value of the pipeline
at $11.87 billion. For 2011, the contesting parties, the pipeline owners, municipalities and
the Department of Revenue, simply agreed on a value of about $8.2 billion for purposes of
taxation (in order to save on legal costs).
Litigation between the TAPS owners, the state, and the municipalities that depend on tax
revenue from the pipeline will likely be ongoing, given that state statutes (AS 43.56) are
worded so that the assessed value is a subjective evaluation (rather than fixed), and the
pipeline owner as well as municipalities have appeal rights. Theoretically, municipalities
should save the tax revenue they receive from TAPS, pending outcome of litigation, but
they are not - they are spending the revenue and litigation has become an ongoing issue.
23
Alaska Taxable 2012
page 89
The ongoing litigation and uncertainty of TAPS valuations could pose a liability to the
municipalities that are collecting taxes based on this. If litigation results in a lower
valuation, local and state governments could be required to give back the tax revenues,
with interest. Caution is therefore required.
The state’s TAPS assessed value, as certified each year on the tax roll is listed below, unless
adjusted later by the Superior and/or Supreme Court, in which case that value is stated.
Except for 2006, which the Supreme Court just decided (February 2014), all TAPS values
listed below are subject to litigation and subject to change.
2006 - $9.98 billion
2007 - $8.94 billion
2008 - 9.64 billion
2009 - $9.25 billion
2010 - $9.64 billion
2011 - $8.25 billion
2012 - $11.87 billion
The TAPS pipeline is depreciating in value due to its age and the amount of oil it is
transporting. The original estimated life of the pipeline was 38 years and this has already
been exceeded. Variables that can slow down or even reverse the depreciation of the TAPS
pipeline value are investments that maintain or improve its condition or a large new oil
discovery that offsets the depleting reserves being carried by the pipeline. However, the
state oil and gas assessor does not speculate on this, as the department must only assess the
value of the pipeline for the current year—not what future value will be.
In February 2014, the Alaska Supreme Court ruled in favor of the state’s assessed value of
TAPS for 2006. Indications are that TAPS ultimate assessed values post 2006 could
reasonably be less than 2006 given that the court decision validated that depreciation
includes the age of the pipeline, that more than a billion barrels of proved reserves have
been produced and not replaced on the north slope, and that throughputs are down more
than 200,000 bbl per day.
Estimating TAPS value in hypothetical Middle Tanana-Yukon Borough using a Per
Lineal Mile Calculation
Estimated Value of Taxable Pipeline in Study Area: $1,113,234,375 (1.113 billion)
Area 1: $0
Area 2: $1,113,234,375
There are 127 miles of Trans-Alaska System Pipeline located within the hypothetical Middle
Tanana-Yukon Borough area, including two pump stations: pump stations 6 and 7.
page 90
The 2011 state’s assessed value of TAP of $8.25 million is used to estimate the value in the
hypothetical Middle Tanana-Yukon Borough (scenario 5), rather than the higher $11.87
billion in 2012. The State Petroleum Property Assessor sets the value the entire pipeline and
allocates value to various segments based on total rendered costs. While the State does not
have a breakout available for the section of TAPS in the study area, a simple methodology
to determine the value is to take the published value for the pipeline and subtract the value
of the Valdez Marine Terminal (VMT) at approximately 15% of the value of TAPS as a
whole. This permits a per lineal mile analysis, which can then be applied to the study area. 24
Table 11-3 TAPS Tax Estimate
Category
TAPS Value in Alaska
Value minus 15% for VMT
Value Per Lineal Mile
TAPS value in study area
Borough Scenario 5 Property Tax @ 10.0 mill
Borough Scenario 5 Property Tax @ 6 mill
2011 Department
of Revenue
$8.25 billion
$7.00 billion
$8.77 million
$1,113,234,375
$11,132,344
$6,679,406
2012 Department
of Revenue
$7.16 billion
$6.09 billion
$7.61 million
$966,152,500
$9,661,525
$5,796,915
2012 state tax
panel
$11.87 billion
$10.105 billion
$12.61 million
$1,601,708,125
$16,017,081
$9,610,249
According to this estimate the 2011 value of the pipeline in the study area would be $1.113
billion. At a 6-mill property tax rate, this would generate $6.7 million in annual revenue.
Assigning the borough mill rate (e.g. 6 mills) is a bit more complicated than this, but the
results are similar to just doing a straight-forward multiplication of mill rate x assessed
value. 25 This means a $100,000 house would be subject to a $574 annual property tax. Or,
assuming that the borough exempted the first $50,000 value of all homes, the tax would be
$287 for a $100,000 home. See section 11.6 for a list of required and optional exemptions to
property tax that the MTY Borough could enact to reduce the burden for residents.
Personal Communications with Alaska DOR (Mr. Jim Greely) July 2013: According to the cost study on
TAPS construction completed in 1977 by the Energy Transportation Division of the Aerospace
Corporation, the VMT was about 15% of the original cost of TAPS. One could use this factor to break out
the VMT from whatever value given TAPS in your analysis, and then factor the remaining value based on
the 800 miles, and then apply that mileage rate of value to the miles in your proposed borough.
24
Alaska State Statute AS 29.45.080-090 establishes a population based property “assessment cap” and
“revenue cap” for a municipality. The way this is applied (for example, North Slope Borough and City of
Valdez) is the borough’s budgeted revenue from property taxes is divided by the total assessed value of
property in the borough, to develop the effective mill rate. The effective mill rate is applied to all property
in the borough. For example, if a Middle Tanana Yukon Borough budget depended on $6.7 million in
property taxes and the estimated full true value of property (including TAPS) was $1.16 billion the
effective mill rate would be 5.74 mills.
25
page 91
11.2 Property Tax: Other Oil & Gas Fields
The value of natural resources in the ground cannot be taxed, only the value of the real and
personal property and infrastructure associated with natural resources. West of Nenana
Doyon Corporation is exploring for oil and gas on a combination of Doyon and state leased
land. To date drill results have shown excellent potential reservoirs with other positive
characteristics but non-commercial quantities. 26 In the event that this exploration program
within the “Greater Nenana Area” proves successful in the future, the tax implications were
reviewed with the state’s petroleum property assessor. Probably the closest proxy (similar)
oil and gas field to what might develop around Nenana if a commercial find was
discovered is the North Fork area in Kenai. It is a new (3-year old) field with 6 wells, a small
diameter 7-8 mile long pipeline, and a small production equipment inventory. The state’s
total assessed value for this field is $20 million. A 6-mill property levy on a $20 million
dollar field would generate $106,000 in annual tax revenue. Also in 2013, Doyon
Corporation conducted a seismic exploration program in a 52-square mile area around
Stevens Village.
26
Alaska Business Monthly, November 2013
page 92
11.3 Property or Excise Tax Revenue from Mining
A property tax based on the assessed value of the infrastructure and personal property can
be quantified and is less variable than an excise tax. In addition, when the mining is over
the infrastructure and personal property still has taxable value, though likely not as high as
when active mining was occurring. Property tax does not tax the value of the minerals in
the ground, which is not legal in Alaska.
There is clear, court-tested methodology for property tax assessment on similar hard rock
mines in Juneau at Greens Creek and Kensington (the latter had its first full year of
production in 2011). Averaging the 2012 property assessments of these two mines shows
taxable real property values of $118,100,000, and an average taxable personal property
value of $53,901,600, yielding a total taxable assessed value average of about $171,000,000.
This is a good figure to assume for the assessed value of a mid-sized hardrock mine in the
study area. If a mine this size had a 6-mill tax levy it would generate $1,062,000 in annual
revenue.
Severance Tax (or a negotiated Payment-in-lieu of-Tax) on Mines
Severance taxes are a type of excise tax, which levies a tax on the performance of an act, in
this case, the severing of natural resources from the place where they are located. This is
another option, rather than a property tax on mining.
The Denali, Yakutat, and Northwest Arctic Boroughs all levy a severance tax on mineral
extraction (severing from the borough) rather than a property tax. Denali Borough (Denali
Borough Code chapter 3.30) charges $0.05 per ton for gross production of coal and
limestone, and $0.05 per cubic yard for gravel. In 2012, it collected $32,299 from severance
taxes and $94,695 in 2013.
The City and Borough of Yakutat has a severance tax (Yakutat Code chapter 6.56) for
gravel, sand, rock, and coal at the rate of $0.15 per ton severed, and for copper, gold, silver,
zinc, lead, molybdenum, or other metallic mineral products, at the rate of 4% of gross
production value. However, Yakutat has not collected a severance tax on mining or
removal of these resources yet.
The Northwest Artic Borough, home to the Red Dog Mine, also has a severance tax
(Northwest Arctic Code, chapter 7.10) levied on extracting and mining of copper, gold,
silver, zinc, lead, molybdenum, or other metallic mineral product, compound, or
combination of mineral products, and, on mining, quarrying or sale of gravel, sand, gravel,
rock or coal. Their code is set up to levy on any severer of certain natural resources, an
excise tax, denominated as a severance tax. Unless the assembly, by July 1st, adopts an
alternative borough-wide mill levy, the tax rate is 30 mills, which is multiplied by the gross
page 93
production value of resources severed for the calendar quarter. The gross production value
is defined as the value per unit measured according to industry standards at the point of
severance multiplied by the number of recovered units of the natural resource sold during
the calendar quarter. Exemptions are allowed if the severer’s annual gross production does
not exceed $1,000,000 annually, or, if there has been execution of a payment-in-lieu-of-taxes
(PILOT or PILT) agreement between the borough and a severer, consistent with the terms of
the PILOT agreement.
Rather than use its severance tax, the Northwest Arctic Borough has always opted for a
PILOT agreement as the basis for its mining tax. The Red Dog Mine’s PILOT agreement has
provided the following revenue to the Northwest Arctic Borough:
2012
2011
2010
2009
2008
2007
$13 million
$9.7 million
$6.2 million
$6.7 million
$10.9 million
$7.7 million
The City of Delta Junction had a negotiated PILOT agreement with the Pogo Mine, which is
located 38 miles northeast of the City. This underground mine on state land employs about
315 people. The agreement was contingent on the area forming a borough. When residents
voted down borough formation the mine got 50% of the payments it had made back under
the terms of the agreement. There no longer is a formal agreement for revenue from the
mine to the City. However, the mine is a good corporate neighbor and for example, last
year made a $300,000 donation to the city, but this is not a revenue source that can be
depended upon.
11.4 General Property Tax
Of the 19 boroughs in Alaska, 15 levy a property tax and four do not. If a municipality
chooses to levy a property tax, it may only do so on property that is "taxable". All real and
personal property is taxable unless it is exempted from property taxation. Property taxes
are of concern to many because the ultimate consequence of not paying can be the taking of
property. This is especially a concern in areas with lower incomes, high poverty rates, or
people on fixed incomes, all of which are true in parts of this region. While there is no
escaping this, some areas, such as North Slope Borough, have put measures in place to help
residents in need with their property tax payment. Such measures are discussed in this
chapter. The local (and maximum) contribution that a city or borough must make to
support its schools is based on the full and true value (FTV) of all real and personal
property in the city or borough. However, a property tax is not required. For example,
page 94
Denali Borough has no property tax; the revenue it raises from a borough-wide lodging tax
is used to pay its school contribution.
Nenana is the only city in the study area that currently has a property tax. In 2011, its
assessed property tax roll was $28.7 million, which—at 12.0 mills—generated $322,479 in
property tax revenue. (Twelve mills equals 0.012, so for example the property tax due for a
$200,000 home would be $2,400.) Denali Borough has no property tax and Fairbanks North
Star Borough’s property tax is 12.97 mills.
Table 11-4 Property Estimate using Known Property Per Capita Assessment Model
Method
Locally Assessed Value (not FTV)
Per Capita Assessment
$57,064,421
School District Assessment
$49,276,481
Proxy Value Using US Census
$55,184,763
Average
$53,841,888
Sheinberg Associates used three different methods to determine what the locally assessed
property value and tax in a possible Nenana Borough would be. Using mid-range estimates
of these three methods, the areawide value of property is $53.8 million. All estimates are
based on current property so none include a mine.
Method One: Known Property Per Capita Assessment (Table 11-12)
The first method to estimate areawide property value uses known property values
provided by the state in the 2012 Alaska Taxable for Nenana and Tanana to develop a
borough-wide model. The Alaska Taxable estimates a Full True Value of real and personal
property for Nenana and Tanana. If a property tax were to be levied in a new borough, it
would be based on a Locally Assessed Value, a lower amount than FTV because it does not
include personal property or local exemptions. For Nenana, the ratio between the locally
assessed value of property and the state’s calculated full and true value of property is
67.35%. For this report’s calculations, this same ratio of 67.35% is applied to reduce the
state’s FTV for Tanana 27. The total assessed value is next divided per capita for these two
communities yielding a weighted average of $39,989 of property value per capita. This per
capita property value is then applied to the remaining population. Using this methodology,
the total locally assessed value of property for the study area would be $57 million (Table
11-5) 28.
The State Assessors office and a local appraiser note that this ratio is low and based on recent work
expect it to rise in the 2013 Alaska Taxable to approximately 75%.
27
28
Using the same ratios would yield an area wide FTV of $84.7 million.
page 95
Table 11-5 Per Capita Assessment Method
Place
2012 pop
Per capita value
Nenana city
Four mile road CDP
Other area 1 (2010 pop)
Total Area 1
Tanana city
Manley Hot Springs CDP
Rampart CDP
Minto CDP
Livengood CDP
Stevens Village CDP
Other Area 2 (2010 pop)
Total Area 2
Total
408
38
214
$47,339
$39,989
$39,989
233
116
29
223
12
67
87
$27,120
$39,989
$39,989
$39,989
$39,989
$39,989
$39,989
1,427
Total estimated
value real
property
$19,314,223
$1,519,582
$8,557,646
$29,391,451
$6,318,844
$4,638,724
$1,159,681
$8,917,547
$479,868
$2,679,263
$3,479,043
$27,672,970
$57,064,421
Method Two - School District Property Assessment (Table 11-6)
All areas within a city or borough school district are required to make a Local Contribution
to support education equal to 2.65 mills (0.00265) of the full and true value (FTV) of real and
personal property within the city or borough. Property values for Nenana and Tanana are
determined annually. Because REAAs do not make a payment, it is not a priority use of
State Assessor time to assess property value in REAAs, but occasionally DCCED does
prepare an estimate, and did one in 2008 that included Rampart, Stevens Village, Manley
Hot Springs, Minto and populated areas outside communities that equal about 20% of the
study area population. The FTV estimate by the state for areas without formal assessments
was determined using formulas that take into account average rural per parcel values, the
typical number of exemptions in rural areas for native allotments, homesite parcels and
other factors.
A weighted average of the change in FTV for property in Nenana and Tanana was 5.73%
between 2008 and 2012. To determine 2012 values region-wide for this methodology the
2012 actual values are used for Nenana and Tanana, and the 2008 estimated FTV for the
other areas is inflated using this 5.73% rate. As with the first method, property tax is based
on the locally assessed value, which is estimated to be approximately two-thirds (67.35%)
less than the state’s FTV29 in the area, or in this case, $49.2 million (Table 11-6, right
column).
The State Assessors Office and a local appraiser note that this ratio is low and based on recent work
expect it to rise in the 2013 Alaska Taxable to approximately 75%.
29
page 96
Table 11-6 Property Estimate Using Alaska Taxable and State Assessor Data
Locally Assessed
Property Taxable
Property Value
2012 ***
Full True Value*
Full True Value
2012**
Locally assessed
vs. full value ratio
Nenana
Four Mile
Other in Area 1
TOTALS Area 1
Tanana
Rampart
Stevens Village
Manley Hot Springs
Minto
Livengood
Other in area 2
TOTALS Area 2
$26,080,800
$1,526,317
$9,862,356
$37,469,473
$8,947,400
$939,272
$3,757,088
$4,696,360
$9,392,720
$821,863
$4,109,315
$32,664,018
$28,676,900
$1,526,317
$9,862,356
$40,065,573
$9,382,100
$939,272
$3,757,088
$4,696,360
$9,392,720
$821,863
$4,109,315
$33,098,718
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
67.35%
$19,314,223
$1,027,974
$6,642,297
$26,984,494
$6,318,844
$632,600
$2,530,399
$3,162,998
$ 6,325,997
$553,525
$2,767,624
$22,291,987
Total Taxable Property
Value
$70,133,491
$73,164,291
67.35%
$49,276,481
* 2010 data, 2008 dollars
** 2008 dollars increased by 5.73%) Nenana and Tanana are 2012 Alaska Taxable figures
***Nenana and Tanana values are from 2012 Alaska Taxable. The rest are calculated
Sources 2012 Alaska Taxable and State Assessor
Method Three – Proxy Value Using US Census ACS Occupied Dwelling Units
A third estimate used the value of occupied homes in the study area, as determined by the
US Census’s American Community Survey (ACS), as a proxy for total taxable property
value. 30 Because there are already known property estimates for Nenana and Tanana,
known data there is used in place of the proxy data. To determine the value of occupied
homes outside of communities or Census Designated Places, the weighted average of home
values for the rest of the study area was used—$98,254. This method, despite its simplicity,
can correspond closely with known property value. Using this methodology (Table 11-7),
the total taxable value for the study area would be $55.2 million.
The US Census does consider home value when it measures the economy; however, it now has
relegated property values to the American Community Survey (ACS), which is survey data, rather than
actuals. There were 305 surveys conducted in the study area over the past five years.
30
page 97
Table 11-7 Property Estimate Using Alaska Community Survey Data on Occupied Dwelling Units
Median Value
Total Occupied
per Occupied
Total Locally Assessed value,
Housing Units
Housing Unit
real property only (not FTV)
Nenana
171
$82,100
$19,314,223*
Four Mile Road
14
$132,500
$1,855,000
Other in area 1
85
$98,254
$8,351,563
Total Area 1
270
$29,520,786
Tanana
100
$109,400
$6,318,844*
Minto
65
$103,100
$6,701,500
Manley Hot Springs
41
$91,700
$3,759,700
Stevens Village
26
$156,300
$4,063,800
Rampart
10
$51,300
$513,000
Livengood
7
$110,000
$770,000
Other Area 2
36
$98,254
$3,537,133
Total Area 2
285
$25,663,977
Total
$55,184,763
Sources: Median Values - U.S. Census Bureau, 2008-2012 American Community Survey; # dwelling Units -2010
US Census; Nenana and Tanana vales - 2012 Alaska Taxable
11.6 Property Tax Exemptions
Residents have asked if there was a property tax, what exemptions are required and
allowed in order to reduce what is due.
This is an important to consider because under scenario 5, there would be 127 miles of the
Trans Alaska Pipeline (TAP) at an estimated assessed value of $1.1 billion within the
borough (so for example a 6 mill property tax could generate approximately $6.7 million in
revenue for the borough and its schools). But, to capture this revenue the borough must
levy a borough-wide property tax. Thus, property owners want to know what exemptions
could reduce their property taxes.
North Slope Borough Case Study
North Slope Borough (NSB) has a significant amount of taxable Trans Alaska Pipeline
within its borough. It is a good place to look at to understand how property tax could work
in a borough that taxes the TAPS pipeline (such as the scenario 5 Middle Tanana Yukon
Borough studied) and also has residents with lower income, fixed income, and seniors
whose welfare is of concern.
NSB levies an 18.5 mill property tax to which the pipeline and all property owners are
subject. Over the last few years, they have collected between $304 and $323 million
page 98
annually in property tax. Of this total, approximately 98% comes from tax on the pipeline,
and 2% comes from property tax on other properties 31.
All property owners are subject to the 18.5 mill levy (a house assessed at $200,000 would be
subject to $3700 in tax annually). NSB offers all required and most optional property tax
exemptions allowed by the State. This includes the 1st $50,000 of assessed property value for
all residents; the first $300,000 in assessed property value for seniors, disabled veterans, and
others eligible; 100% of the value of low-income properties owned by regional housing
authorities, and more.
To provide a “safety net” and avoid foreclosures and the taking of property, NSB
has also established a “Low Income Property Tax Relief Grant” for primary
residences. It is funded with non-property tax receipts and awards grants to
qualified applicants for the purpose of paying the applicant’s delinquent real
property taxes, including accrued penalty and interest on those taxes. To be eligible
for tax, penalty, and interest relief under this program, there are qualifications such
as income (a one-person household making $34,925 or less for full relief; a 4-person
household making $72,050 or less, etc.), have medical health problems, be absent for
military duty, or have another demonstrable hardships.
Another program the NSB does not have at this time but is investigating is one that
jurisdictions in the Lower 48 use for those on fixed incomes and others in owner occupied
homes. This is a Consent Agreement, signed by the property owner and taxing jurisdiction,
which allows property taxes to accumulate and become a very low interest lien on the
property that is not settled until the property is sold or no longer owned by the individual.
At the time when the property ownership changes the buyer, estate executor or other party
settles the outstanding lien.
Another tool NSB employs is offering a generous period of time before foreclosure
proceedings are initiated.
Like state and other local governments (FNSB, Valdez etc.) home to TAPs pipeline, NSB is also
involved in litigation now over the pipeline valuation.
31
page 99
Alaska’s Required Property Tax Exemptions
Alaska statutes require the following exemptions on assessed property values, which
reduce the property tax that individuals must pay 32.
Exempt the first $150,000 in value from the real property owned and occupied as the
primary residence by a resident who is:
(1) 65 years of age or older;
(2) a disabled veteran including a person who was disabled in the line of duty while
serving in the Alaska Territorial Guard; or
(3) is at least 60 years of age and the widow or widower of a person who qualified for
an exemption under (1) or (2) above. (AS 29.45.030)
100% exempt from property tax is property:
(1) Held by a public corporation of a municipality, state property, property of the
University of Alaska, Alaska Mental Health Trust property, or United States
(2) Used exclusively for nonprofit religious, charitable, cemetery, hospital, or
educational purposes
(3) Nonbusiness organization composed entirely of US armed forces veterans
(4) Natural resources in place, including coal, ore bodies, mineral deposits, and other
proven and unproved deposits of valuable materials from natural processes,
unharvested aquatic plants and animals and timber
Other parcels 100% exempt from property tax are Alaska Native Allotments; ANCSA land
that is not sold, subdivided, or under active development; and any parcels held in trust by
the BIA such as Native Village Townsite parcels.
Partly exempt from property tax is:
(1) 2% of the assessed value of a structure is exempt from taxation if the structure
contains a fire protection system approved under AS 18.70.081, that is in operating
condition
(2) Partial exemption for land that is subject to a conservation easement and used
consistent with the easement
(3) Farm and Agricultural land - land included in a farm unit and not dedicated or
being used for nonfarm purposes AS 29.45.060(a-f)
•
Municipalities are required to provide a partial exemption (although it is
commonly referred to as a deferral) for property within a farm unit. Depending
Required exemptions are not included in the state’s calculation of Full True Value (FTV) of property
when it determines the Required Contribution for education, but the optional exemptions are included in
the state’s FTV calculation.
32
page 100
on how a municipality structures its ordinance, a farm unit can be identified as
the property that each farmer uses (a single application identifying one or more
parcels), or on a parcel-by-parcel basis (requiring an application for each parcel).
Farm unit property is required to be assessed on the basis of full and true value
for farm use and may not be assessed as if subdivided or used for some other
nonfarm purpose. In 2012, the Kenai Borough valued 15 parcels of farm land at
$5,373,000 and deferred $5 million in property taxes on 1,250 acres; FNSB
deferred $8.4 million in property tax on 108 farm unit parcels that ranged in size
from ½ acre to 160 acres.
•
The partial exemption for farm use land is intended to offset free market forces
that drive the value of land up to the highest and best use, typically beyond the
value of land in a farm unit. The partial tax exemption, or deferral, is intended to
be a carrot and a stick, reducing the tax burden on farm land that is in
production and instituting a substantial penalty for land that is sold, leased, or
otherwise disposed of for an incompatible farm use purpose. In the Matanuska
Susitna Borough land values range between $400/acre - $30,000+/acre; in Kenai
Borough the range is $2,000/acre - $25,000/acre; and in FNSB the range is
$900/acre - $525,000/acre. The Matanuska Susitna and Kenai Boroughs are using
$350/acre as the value of farm unit land. FNSB uses a range of market value, up
to about 20%, to determine the value of farm unit land. If farm unit property
becomes incompatible with farm use purposes, the owner is liable to pay an
amount equal to the deferred tax, at the current mill levy, together with eight
percent interest for the preceding seven years, as though the land had not been
assessed for farm use purposes.
Alaska’s Optional Property Tax Exemptions
There are many optional property tax exemptions allowed by state law. Details on a few
that may be particularly of interest to area residents are provided first, followed by a list of
all optional exemptions.
(1) If the voters approve, up to $50,000 of the value of all residences can be exempted.
AS 29.45.050(a). The 2008-2012 American Community Survey estimates that of the
314 owner occupied homes in the study area, 17% (53) are worth less than $50,000, so
these homeowners would owe no property tax.
(2) Property Tax Options for Financial Hardship under 29.45.052(a-b). When property is
owned and occupied by an individual for at least 10 consecutive years as a primary
residence and their income is at or below US Dept of Health and Human Services
poverty guidelines.
page 101
•
A qualifying individual must apply to the municipality each year that the
property tax deferral is sought and provide proof of income eligibility. The State
Assessor’s office is not aware of any municipalities enacting this option (annual
reporting is required by the State).
(3) Exemption for more than the first $150,000 of assessed value for 65 years of age or
older, disabled veteran, or 60 years of age or older and a widow/widower of
qualified person 29.45.030(e-f)
• By ordinance, a municipality may, in the case of hardship, provide for exemption
beyond the mandatory state exemption. An eligible applicant may qualify for a
hardship exemption (beyond the first $150,000 of assessed value of real property)
if the amount of the applicant's tax bill is greater than two percent of the
applicant's gross household income. An exemption will be granted only for that
portion of the applicant's taxes in excess of two percent of the gross household
income. "Gross household income" means total annual compensation, earned
and unearned, from all sources, of all members of the household. In cases of
extreme hardship, an exemption up to 100 percent of the applicant's assessed
value of real property may be granted by a two-thirds vote of the governing
body.
(4) Low Income Housing - An interest, other than ownership, of an individual living on
a property developed, improved or acquired with federal funds for low-income
housing and is owned or managed as low-income housing by AHFC or by a regional
housing authority As 29.45.050(l)
•
There are a number of federal funding programs that have been made available
to AHFC and regional housing authorities to develop, improve, and acquire lowincome housing. Some of the programs are no longer is place, and new programs
are continuously being developed. Federal funding for housing is offered in a
wide range, including assistance for renters, first time home buyers, senior
citizen, initial down payment and closing costs, rehabilitation and
improvements, weatherization, options for lease to own, etc. under a variety of
program acronyms and guidelines, including NAHASDA, HOME, TEAM,
HOPE, HOP and tax credits. In the Fairbanks area there are low-income housing
options provided by AHFC, Interior Regional Housing Authority, Tanana Chiefs
Conference, and others. The State Assessor’s office has received reporting for this
optional exemption from Ketchikan Borough and FNSB, but has also seen
municipalities report low-income housing as a required exemption for
community purposes, under 29.45.030(a)(3).
page 102
Other optional exemptions include:
• Non-profit property used for community purposes that does not generate a net income
to the owner.
• Historic sites, buildings and monuments.
• Non-profit land used for agriculture if subdivision rights are conveyed to the state in
accordance with 38.05.069(c).
• All or a portion of private property used exclusively for UA student housing, per a
written agreement.
• A residential renewable energy system using sources other than fossil or nuclear fuel,
includes windmill, water, and solar devices.
• Private land, wetland, and water areas with a perpetual scenic conservation easement or
public recreation use easement granted to government.
• Improvements to real property, including natural features and improvements to an
existing structure that enhances the appearance or aesthetic quality of the land or
structure.
• Improvements to a single family dwelling that increases the livable square footage.
• Land used for fire protection service and facilities.
• Property used in processing timber after it has been delivered to the site.
• Pollution control facilities that meet EPA or DEC requirements.
• An interest, other than record ownership, of an individual residing in the property if the
property has been developed, improved, or acquired with federal funds for low-income
housing and is owned or managed as low-income housing by AHFC or by a regional
housing authority formed under 18.55.996.
• All or part of some economic development properties not previously taxed and used for
commerce in a way that creates local employment, generates sales outside of the
municipality for goods or services locally produced, or materially reduces the import of
goods and services to the municipality.
• Deteriorated commercial or multi-family residential property that is rehabilitated,
renovated, demolished, removed, or replaced.
• Private leasehold, contract, or other interest in any property, assets, project, or
development owned by AIDEA.
• Land and/or improvements where timber is harvested that is infested by insects or at
risk of infection.
• Property owned and occupied as a permanent residence by a resident that provides
volunteer fire fighter or EMS service to the municipality.
• Property owned and occupied as a permanent residence by a widow or widower of a
US service member who dies from injuries sustained during hostile fire or imminent
danger.
• Improvement that aids in protecting a river from degradation of fish habitat due to
public or private use, or restores fish habitat along or in a river that has been damaged
by land use practices.
• Improvements that aid in improving air quality in the municipality.
page 103
•
•
•
•
•
•
Subdivision of a parcel into 3 or more parcels and any improvement made to the
property required for the subdivision (all or a portion of taxes on the increase in
assessed value attributable to subdivision and subdivision improvements, not to exceed
5 years).
Property that is owned by an individual that has occupied the property for at least 10
consecutive years as a primary residence and whose income is at or below federal
poverty guidelines for the state as set by US Dept of Health and Human Services
(deferred taxes become payable when ownership of the property is transferred).
In a special eligible area, with statistically high crime rates, residential property owned
and occupied as a primary residence by a law enforcement officer (Up to $150,000 of
assessed value).
Farm and Agricultural land - land included in a farm unit and not dedicated or being
used for nonfarm purposes.
Airports located on private land and open for public use.
Unless expressly classified as personal property by ordinance, mobile homes, trailers
and similar property used or intended for use for residential, office or commercial
purposes and permanently affixed to land is classified as real property for tax purposes
100% exempt.
11.7 General Sales Tax
Estimated Annual Taxable Sales in Study Area:
• Area 1: $3.3 million (scenario 2, 3 and 4)
• Area 2: $2.7 million
• Full Study Area: $6.0 million (scenario 5)
For each 1% sales tax levied in area 1 could generate $33,000 in revenue, and, each 1% sales tax
levied in the full study area could generate $60,000 annually.
Alaska Statutes 29.45.650-710 authorizes the levy of sales and use taxes at the municipal
level. Sixty-two Alaska municipalities levy a sales tax, with rates ranging from a low of 1%
to a high of 7%.
In 2005, the sales tax laws in Alaska changed to allow a borough to exempt any source from
the borough sales tax if it is taxed by a city within the borough. This allows a borough to
ensure that an item in the city costs the consumer no more than it would in the borough.
This tends to “level the playing field” so taxes are can be equal when purchasing certain
items in the city or in the borough. Alternatively, if the combined borough and city sales tax
is not excessive, this may not be deemed a concern.
page 104
Three methods were used to estimate taxable sales within the study area. They all yield
similar results, which when averaged show the region has an estimated $6 million in
taxable sales annually.
Method One: Taxable Sales per Capita Method
This method uses the known taxable revenue data from area communities in the study area
that levy a sales tax, which was $4,165,100 in 2012 (from Nenana and Tanana). Then, based
on that population, an average per capita taxable sales value was generated and extended
to the full study area. For this method, Nenana was not included when determining the per
capita taxable sales calculation –because, as a center of commerce, it is likely to have greater
sales compared to outlying areas. The average sales per person from Tanana was instead
used as a proxy for the region. This value of $3,930 in taxable sales per person was
multiplied by each place’s population to generate a taxable sales estimate. Population in the
unorganized area was excluded from this analysis because business licenses in these areas
are attributed to the nearest community and thus per capita sales attributed to those places
(Table 11-9).
Based on these assumptions, the six communities of Manley Hot Springs, Rampart, Minto,
Livengood, Stevens Village, and Four Mile Road could generate an estimated $1,905,800
million in taxable sales annually; and the study area as a whole could generate $6,070,900.
Table 11-9 Taxable Sales Estimate Using Per Capita Method
Place
Communities with Sales Tax
Nenana
Tanana
Communities without sales tax
Manley Hot Springs
Rampart
Minto
Four mile road
Livengood
Stevens Village
Total
2012 pop
408
233
116
29
223
38
12
67
1,126
2012 Known Average 2012
Taxable Sales Taxable Sales
per capita
$3,249,500
$915,600
$7,965
$3,930
$3,930
$3,930
$3,930
$3,930
$3,930
$3,930
2012 known or
Estimated taxable
sales, per capita
method
$4,165,100
$3,249,500
$915,600
$1,905,863
$455,835
$113,959
$876,304
$149,325
$47,155
$263,284
$6,070,963
page 105
Method Two: Taxable Sales per Simple Business License Value
This method also uses the known taxable revenue data from area communities that levy a
sales tax–$4,165,100 in 2012. Based on the number of business licenses in those
communities, an average per business license taxable sales value was generated and
extended to the full study area. Using this methodology the five communities of Manley
Hot Springs, Rampart, Minto, Livengood, Stevens Village, along with Four Mile Road and
the unorganized area could generate an estimated $1.73 million in taxable sales annually
using this method. Combined, taxable sales could be $5.89 million for the study area (Table
11-10).
Table 11-10 Taxable Sales Estimate Using Business License Method
Average
Actual
Total
Taxable Sales
2012 pop
Taxable
business
Place
per business
Sales
licenses
license
Tanana
233
$915,600
10
$91,560
Manley Hot Springs
116
conf.
13
Rampart
29
conf.
3
Minto
223
conf.
3
Nenana
408
$3,249,500
62
$52,411
Four Mile Road
n/a.
0
Livengood
12
conf.
3
Stevens Village
67
conf.
2
subtotal, places
1,088
$4,165,100
301
Unorganized area (2011)
n/a
0
Total
1,389
$4,165,100
96
Avg. $71,986
Note: Taxable sales for categories with only one business are listed as confidential.
Taxable
Sales avg.
Business lic
method
$915,600
$935,813
$215,957
$215,957
$3,249,500
$$215,957
$143,971
$$$5,892,755
Method Three Taxable Sales per Business License Per Type
A third method to calculate potential sales tax used detailed Nenana and Tanana sales tax
data—broken out by business type—and applies current revenue streams per business type
to similar businesses in the study area, based on Alaska business license data. Since these
business licenses are in communities that are less likely to generate “spoke-and-hub traffic”
Sheinberg Associates reduced each business license value, by type, by one-third. The
business license value for each category was then multiplied by the number of business
licenses of that type for areas with unknown taxable sales. The total estimated sales for
communities with no sales tax is estimated at $1,747,315 using this methodology. The
resulting total estimate is $5,912,415 in taxable sales (Table 11-11).
page 106
Table 11-11 2012 Sales Tax Estimate using Existing Sales Tax Data
Estimated Taxable Sales Per
Avg. Value Taxable Sales
Business Type: Manley,
per Business Type based
Rampart, Minto, Livengood &
Business Type
on Nenana and Tanana
Stevens Village
22 – Utilities
$509,613
$679,484
42 – Trade (retail, wholesale)
$130,501
$435,003
48 - Transportation & Warehousing
confidential
$395,522
51 – Information
$25,083
$61,315
53 - Real Estate, Rental & Leasing
$18,946
$25,261
54 - Professional, Scientific & Technical Services
confidential
$2,246
71 - Arts, Entertainment & Recreation
confidential
$677
72 - Accommodation & Food Services
$42,274
$112,729
81 - Services
$17,080
$22,773
Other
$37,515
$12,304
Subtotal for Manley, Rampart, Minto,
Livengood & Stevens Village $1,747,315
Taxable sales for Tanana $915,600
Total for Area 2 (above two lines) $2,662,915
Total for Area 1 $3,249,500
Total
$5,912,415
11.8 Lodging Tax
A lodging tax is a consumer tax on the rental of rooms to transient occupants of hotels,
motels, lodges, bed and breakfasts, boarding houses, RV parks, and similar facilities.
Because the region attracts visitors, this could be a potential revenue source. Forty-three
communities in Alaska collect a tax on the sale of room rental transactions (a lodging tax),
with rates ranging from 4 to 12%. The average Alaska-wide is 6.8%.
Method: Executive Interviews and Data Extrapolation
To estimate what a lodging tax in the area could generate, lodging information from
executive interviews was used. Accommodations in the study area are available at
Fireweed Roadhouse at Denali, Denali View Lodge-Nenana, Rough Woods Inn, Bed and
Maybe Breakfast, Kristi's Quisine, Manley Roadhouse, D&S Hollingworth Cabin Rentals,
Tanakon Bed & Breakfast (Tanana Commercial), Minto Lake View Lodge, and Nenana RV
Park & Campground. Sheinberg Associates was able to contact six of the ten
accommodation establishments in the study area regarding cost per room per night,
average cost per room, and average annual capacity filled. Data on lodging nights, cost per
room, and revenue data is then applied to hotels and lodges where less information is
available (Table 11-12). This methodology yields an estimate of taxable lodging sales in the
study area of approximately $316,000 annually.
page 107
Some establishments are only open for summer. Every establishment outside the immediate
Nenana area remarked on a significant downturn in visitors coming to the area in the
summer of 2013. Some facilities, such as Minto Lake View Lodge, will rent out rooms on a
monthly basis or a nightly basis. For the purposes of this study, those rooms are considered
empty since longer terms rentals are not covered by lodging tax terms. Some facilities
include meals with the price of the room. For this analysis, just the price of the room—
without meals—is considered.
Table 11-12 Estimated Revenue from a Lodging Tax
Average
Avg. annual
Revenue at
Total Lodging
Total
Room Rate
capacity
Total Taxable
10%
Businesses
Rooms
per night
filled
Lodging Sales lodging tax
Area 1 (scenario 2, 3, 4)
$209,355
$20,935
Total = Area 1 + Area 2
$102.50
58
(scenario 5) 10 hotels,
(excluding
12%
$315,670
$31,567
(and 45
motels, lodges, inns, RV
RV)
RV)
parks, cabins, etc.
Sources: Executive interviews with the six largest accommodation facilities, aggregate data only listed
here.
11.9 Sales Tax on Alcohol
According to AS 04.21.010(c), 33 1985 was the last year a stand-alone alcohol tax could be
instituted in a municipality. Alcohol taxes in effect before that time were grandfathered-in
and remain in effect. However, cities, boroughs, and unified municipalities in the State of
Alaska may still levy an alcohol tax, as long as there is another sales tax (such as a lodging
tax or a general sales tax). In addition, the alcohol tax may not be higher than the other sales
tax levied. For example, if a borough levies a lodging tax of 5%, it may also levy an alcohol
tax of 5%. If a borough has a lodging tax and a general sales tax at different rates, the
alcohol tax may not be higher than the higher of the two taxes.
There are 10 boroughs and municipalities in Alaska (including Fairbanks North Star
Borough) now levying an alcohol tax, of between 3 to 6%, with an average alcohol sales tax
rate statewide of 5%. 34
According to AS 04.21.010(c) a municipality may not impose taxes on alcoholic beverages except a "(1)
property tax on alcoholic beverage inventories; (2) sales tax on alcoholic beverage sales if sales taxes are
imposed on other sales within the municipality; (3) sales tax on alcoholic beverage sales that was in effect
before July 1, 1985."
33
Data is from State of Alaska Corporations, Business, and Professional Licensing Online Filings,
Database Search, and Database Download http://commerce.alaska.gov/CBP/Main/.
34
page 108
Averaging the results of these two methods determines an estimated $664,274 in alcohol
sales in the study area annually. Based on this, total potential tax revenue in scenario 5
(areawide) for an alcohol tax would be $6,643 for each 1% of taxation, or $39,858 for a 6%
area wide tax. Remember that this tax can only be levied if there is also an areawide sales or
lodging tax at an equivalent or higher rate.
There are 12 liquor licenses in the study area (although two liquor licenses are inactive).
Seven businesses hold the remaining 10 licenses, including seasonal and year round
establishments. The facilities with alcohol sales include Manley Trading Post and
Lodge, Tamarack Inn, Monroe's Monderosa, Coghill's, Moochers, Rough Woods Inn
and Café, and Tanana Sand Bar.
Sheinberg Associates used two methods to calculate potential alcohol tax revenue. There
are no detailed data table details provided for the alcohol revenue estimates to protect the
confidentiality of the seven businesses with alcohol licenses.
Table 11-13. Alcohol Tax Estimate
Total Alcohol Licenses
12 (including 2 inactive)
Estimated Annual Taxable Sales
$664,274
Method One: Known Sales Extrapolated to an Average per Liquor License
The first method uses known data to extrapolate unknown data. The first step is to
determine average sales based on known sales. Of the seven businesses with liquor licenses
active in the study area, Sheinberg Associates was able to obtain actual sales for three
establishments, and partial information for three more. Using this known information, there
is an estimated $649,965 in alcohol sold annually in the study area.
Method Two: Known Sales Per Capita
The second method is a per capita assessment model. The first step is to determine an
average or per capita value for alcohol sales in communities in which all data is known.
This allowed researchers to determine per capita sales estimates for three communities in
the study area, and calculate the average alcohol sales for those communities at $736 per
person (since this is based on per capita averages, this applies to all residents, and not just
those of drinking age). Because Minto and Stevens Village ban the sale and importation of
alcohol, these residents are excluded from this analysis.35 Rampart residents are also
excluded from this analysis since there are no alcohol sales there. The per capita rate for
residents outside communities is discounted by half to account to account for reduced
35
http://www.iser.uaa.alaska.edu/Publications/formal/arsecs/arsec31map.pdf
page 109
access to the establishments that serve alcohol. Applied to the study area as a whole this per
capita method estimates $678,583 in alcohol sales in the study area.
The average of the two methods is $664,274, with approximately 40% being generated in
area 1.
11.10 Employment Head Tax
There are no communities in Alaska that currently levy an employment head tax. However,
in the 1980s Alaska levied a $5 per head employment tax annually, whose revenue was
dedicated to funding education. There are employment head taxes in many places in the US
and usually these taxes are levied per employee, per month.
The average annual employment for the study area was 448 in 2012, based on Alaska
Department of Labor statistics (Table 11-17). This includes 241 employees in the private
sector, and 307 employees in the public sector. Peak employment occurs in May, when there
are 629 employees working in the area.
Table 11-14. Employment Head Tax Estimate
Annual Average
Category
Employees
$5/month/per head
Area 1
233
$13,980
Area 2
315
$19,000
Total
548
$32,880
A $5 per employee per month head tax would therefore generate $32,880 in income for the
borough on an annual basis. A onetime annual levy in May of $10 per employee could raise
$6,290 (Table 11-14).
While not related to taxation or revenue per se, economic data obtained as part of this study
for the area is presented on the next three pages.
Nearly half (48%) of all employment in the study area is with local or tribal government.
Another 8% of all employment is with the state or federal government (state accounts for
6% of employment, while just two percent of jobs are with the federal government).
page 110
Federal
State
Local
Private
Total
Units
7
19
14
43
83
Table 11-15. Worker Data 2012, By Sector
Average
annual
Average
Wages
employment
Wages
% wages
$403,279
11
$36,662
2%
$2,083,834
31
$67,220
8%
$8,306,889
265
$31,347
32%
$15,407,679
241
$63,932
59%
$26,201,681
548
$199,161
100%
Table 11-16.
2010
2011
2012
% Change 20102012
Government
Private
Total
Government
Private
Total
Government
Private
Total
Government
Private
Total
Worker Data 2010-2012, By Sector
Average Monthly
Total Wages
Employment
$9,860,679
281
$10,695,278
206
$20,555,957
487
$10,191,860
280
$12,908,962
228
$23,100,822
508
$10,794,002
307
$15,407,679
241
$26,201,681
549
+9%
+9%
+44%
+17%
+27%
+13%
% employment
2%
6%
48%
44%
100%
Average Annual
Wages
$35,091
$51,919
$42,209
$36,400
$56,618
$45,474
$35,160
$63,932
$47,813
+0%
+23%
+13%
The large increase in private employment between 2010 and 2012 (an increase of 17% in
employment and 44% in wages) appears to be mostly from one large construction project in
the study area. Total employment in the Nenana area (including Four Mile Road) decreased
by 8% over the same period. Employment in the Manley Hot Springs and Minto area
decreased by 13% between 2011 and 2012. Employees working for this construction project
appear to be primarily non-resident.
page 111
Table 11-17. Worker Data 2012, by Month and Community
Four Mile
Road
Nenana
Four Mile
Road
Nenana
Total Area 1
(Scenario 2,3,4)
Livengood
Rampart
Stevens Village
Livengood
Rampart
Stevens Village
Manley Hot
Springs
Minto
Manley Hot
Springs
Minto
Tanana
Tanana
Total Area 2
Avg.
Monthly
Employmt
Avg.
Annual
Wages
$4,390,400
92
$47,939
143
$5,094,034
141
$36,256
215
218
$9,484,434
233
$40,706
CD
CD
CD
CD
CD
43
40
40
45
$1,648,451
35
$46,654
41
50
40
31
35
$888,874
44
$20,434
33
44
51
60
49
48
$1,241,110
47
$26,313
CD
89
CD
84
CD
111
CD
101
CD
108
CD
87
CD
85
CD
$2,810,407
CD
84
CD
$33,457
363
345
371
372
358
304
299
315
$52,750
Sector
Units
JAN
FEB
MAR
APR
MAY
JUN
JULY
AUG
SEP
OCT
NOV
DEC
Private
20
56
63
66
167
141
99
102
100
82
79
69
75
Gov’t
12
133
150
156
153
146
145
108
113
144
149
146
Area 1
Totals
32
189
213
222
320
287
244
210
213
226
228
Private
4
CD
CD
CD
CD
CD
CD
CD
CD
CD
Gov’t
9
28
30
28
32
40
33
32
33
Private
13
33
45
40
44
62
54
47
Gov’t
10
43
49
44
44
46
55
Private
Gov’t
Area 2
Totals
6
9
CD
68
CD
70
CD
71
CD
75
CD
82
59
232
261
270
286
342
Total
Wages
CD
$16,717,247
ALL
ALL
83
421
474
492
606
629
607
555
584
598
586
519
517
$26,201,681
548
(Scenario 5)
Source: Alaska Department of Labor and Workforce Development, Research and Analysis Section, Quarterly Census of Employment and Wages
[email protected]
Note: Data for Livengood, Rampart, Stevens Village, and Tanana was not confidential in 2011. CD= Confidential Data
page 112
$47,813
Number of Private Employers in Study Area by Type, 2012
Area 1: Nenana and 4 Mile Road
Area 2: Livengood, Rampart, Stevens Village,
Tanana, Manley Hot Springs, Minto
Retail Trade
8
5
Professional and Business Services
5
1
Leisure and Hospitality
1
4
Construction
2
2
Transportation and Warehousing
3
Natural Resources and Mining
2
1
1 1
Other Services
Education and Health Services
2
Financial Activities
2
1 1
Transportation, and Utilities
1
Manufacturing
0
5
10
Number of Private Employers
15
Source: Source: Alaska Department of Labor and Workforce Development , Research and Analysis
Section. (Analyst A. Abrahamson) QCEW: Quarterly Census of Employment and Wages.
page 113
12 Impact of Borough Formation on Area Schools
This section begins with a review of education financing in Alaska, followed by a look at
revenues and spending by local school districts in Fiscal Year 12. This chapter ends by
analyzing the effect of borough formation or annexation on school district revenue.
12.1 Overview of Education Funding
The amount of state and federal education revenue that a school district receives is
primarily formula-driven and mostly dependent on the number of pupils (and the state’s
base student allocation per pupil) and the amount of local (city or borough) contribution to
support education.
Funding for education in Alaska generally comes from three sources:
1. State education foundation entitlement program (State Aid)
2. Federal Impact Aid
3. Local support from 1st class cities and boroughs, in the form of Required and any
Additional Local Contribution
In addition to these three major revenues, school districts typically receive special revenue
and grant funding such as child nutrition program funds, 21st century learning community
grants, assistance with assessments, drug and violence prevention grants, special education
funding, pupil transportation funds, Teacher Retirement System support, Public Employee
Retirement System support and so on. These funds are in addition to annual formula-based
state, federal, and local operating revenue. Some school district’s that are successful at
obtaining grants can almost double their revenue. This report does not consider grant
funding because it varies widely and generally not affected by borough formation. (If
demographics shift significantly there could be an effect on grant revenue, but this analysis
sticks with predictable formula-driven revenue.)
The three major school revenue sources are now briefly described.
State Aid
State funding for schools is provided through the State Education Foundation Entitlement
Program (State Aid). The public school funding formula is defined in Alaska Statute 14.17.
The amount of State Aid funding received is based on a formula that includes
characteristics of a school district such as: the number of pupils (average daily membership
“ADM”); a district cost differential (an adjustment for cost of living in the area); number of
special and intensive needs pupils; amount of the Legislatively appropriated Basic Need
page 114
funding; quality schools funding (to help with assessments); the number of schools in the
district; amount of federal Impact Aid payments; the amount of the municipality’s
contribution to support its schools; and other variables. All these variables are entered into
a formula to determine the amount of State Aid. The largest factor is Basic Need, which is
the (adjusted) ADM multiplied by the base student allocation made available by the
Legislature.
In FY 12 the region’s school districts (Nenana, Tanana, Yukon-Koyukuk, and Yukon-Flats)
collectively received just over $23 million in State Aid, but this also includes several schools
in the two REAAs that would not be part of any of these borough options.
Federal Impact Aid
Federal funds for education are primarily provided through Title VIII Impact Aid. Impact
aid provides funds to school districts for children of parents living and/or working on
federal property “in lieu of local tax revenues.” Funds are allocated based on factors such as
the number of parents of students who reside or work on federally impacted property
including military land and Alaska Native Claims Settlement Act (ANCSA) land, and on
the number of Alaska Native students. Ninety percent (90%) of the eligible impact aid
funds are used in the calculation of state aid. Federal Impact Aid was about $2 million to
the region’s four school districts in FY 12. Just forming a borough school district does not
affect the amount of federal Impact Aid, but if the required and additional local
contribution to support education changes as a result, this does affect the amount of federal
Impact Aid; federal Impact Aid was reduced by 15% in FY 13 compared to FY 12 and is
scheduled for a further 15% reduction in FY 14.
Required Local Contribution and Additional Local Contribution
Except for REAAs (such as Yukon-Koyukuk and Yukon Flats), the local government within
which a school district is located must make a Required Contribution (RC) to support
education. The amount of the contribution is one variable in the State Aid formula. The
Required Contribution to support schools must be equal to the lesser of either 2.65 mills
(0.00265) times the value of personal and real property value (called the “full and true
value” or FTV) in the city or borough where the school district resides, or, 45% of Basic
Need (the state’s determined amount necessary to run the school district) 36.
Table 12-1 shows the effect of borough formation (or annexation) on the estimated FTV and
to the Required Contribution that the local government must make to support education.
36
Per State DEED Statute AS 14.17.410(b)(2).
page 115
Table 12-1. Effect of Borough Formation on Required Local Contribution For Education
A
B
2011 Full True Value
Required Local
Borough Scenario
(FTV)
Contribution
Scenario 1 Status Quo
Denali $245,278,600
$649,988
$25,585,072
FNSB $9,654,743,990
$74,326
Nenana $28,047,700
$9,279,000
$24,589
Tanana
n/a
Yukon Flats n/a
Yukon Koyukuk Schools n/a
n/a
Required Local
Assumed FTV
Contribution
$41,420,500
$109,764
Scenario 2 A
Nenana Borough
$61,420,500
$162,764
Scenario 2 B
Nenana Borough with new Oil & Gas
development
Scenario 3 A
$41,420,500
$109,764
Greater Nenana area annexed into Denali
+$245,278,600
$649,988
$286,699,100
$759,752
Scenario 3 B
$61,420,500
$162,764
Greater Nenana area annexed into Denali
+$245,278,600
$649,988
$306,699,100
$812,752
with new Oil & Gas
Scenario 4 A
$41,420,500
$109,764
Greater Nenana area annexed into FNSB
+$9,654,744,000
$25,585,072
$9,696,164,500
$25,694,836
Scenario 4 B
$61,420,500
$162,764
Greater Nenana area annexed into FNSB
+$9,654,744,000
$25,585,072
$9,716,164,500
$25,747,836
with new Oil & Gas development
$1,188,705,400
$3,150,069
Scenario 5A
Middle Tanana Yukon Borough forms
(includes TAPS)
$1,385,705,400
$3,672,119
Scenario 5 B
Middle Tanana Yukon Borough form
(includes TAPS) with new oils and gas
development and new mine
In addition to the Required Contribution, local governments are allowed to make an
Additional Local Contribution (ALC) for education up to the equivalent of a two mill tax
levy (0.002) or 23% of the district's Basic Need (whichever is greater) 37.
Table 12-2 shows both the FY 13 and the four-year average required and additional local
contribution that local governments made to support schools in the study area. Note that
37
Per State DEED Statute AS 14.17.410(c)
page 116
the four-year average, of the percent contributed above what is required, was a factor this
study used to determine the estimated ”high” level of giving to support schools for the
borough scenario revenue estimates.
Table 12-2.
Local Contribution to Support Schools, FY 13 & 4-year Average
Required
Additional
Local
Local
Contribution
Contribution
Total Local
(RC)
(ALC)
Contribution
City of Nenana FY 13
$74,326
$50,010
$124,336
Nenana 4 year avg. (2010-2013)
$88,606
$15,006
$103,613
City of Tanana FY 13
$24,589
$0
$24,589
Tanana 4 year avg. (2010-2013)
$28,286
$170
$28,456
Fairbanks North Star Borough FY 13
$25,585,072
$20,944,728
$46,529,800
FNSB 4 year avg. (2010-2013)
$27,371,221
$18,350,655
$45,721,876
Denali Borough FY 13
$649,988
$1,989,718
$1,339,730
Denali 4 year avg. (2010-2013)
$691,305
$1,208,001
$1,899,306
Yukon-Koyukuk REAA FY 13
n/a
n/a
n/a
Yukon Flats REAA FY 13
n/a
n/a
n/a
Source: School District Audits and Alaska DEED
Percent
contributed
ABOVE what
is required
67%
17%
0%
1%
82%
67%
206%
175%
n/a
n/a
Relationship between Local Support and Federal Impact Aid
There is a relationship between how much federal Impact Aid a school district gets and
whether or not the municipality made an ALC to support education. The amount of State
Aid that a school district receives is decreased by the amount of federal Impact Aid that it
receives.
However, the federal program rewards school districts for making an ALC for education by
requiring less of a reduction in State Aid as the school district's ALC increases. For example,
if a school district contributes only the RC to support education, the state reduces State Aid
to that school district by 90% of the amount of federal impact aid it receives. Therefore, if a
school district makes an RC of $100 and receives its federal Impact Aid funding, the school
district's State Aid would be reduced by 90% of the amount of federal impact aid the district
received. If, however, a school district also makes an ALC for education, the reduction in
State Aid is based on the ratio of the RC and the total local contribution. Therefore, if a
school district is required to give $100, but gives $125, the amount of State Aid it receives
would only be reduced by 100:125 (80%) of the amount if federal Impact Aid the district
received, rather than 90% as in the example above.
page 117
12.2 Snapshot of the Region’s School District Revenues and Expenditures
Total school district support in the region for Fiscal Year (FY) 2012 varied from over $241
million to Fairbanks School District to $1.3 million to Tanana School District.
In FY 12 school district audits shows some significant variation in the type of revenue
supporting area school districts (see bar chart after Table 12-4):
• The two Borough school districts provide the highest percent of local support for
schools
• The amount of State support varies from a low of 65% (Yukon-Koyukuk) to a high of
89% (Nenana)of as a percent of total revenue for schools
• The amount of Federal support varies from a low of 3% (Denali) to a high of 24%
(Yukon-Koyukuk
Likewise, spending also shows variation:
• Spending on instruction varies from only 48% of all expenditures (Tanana) to a high
of 70% (Nenana).
• Spending on School District administration (not school administration) ranges from
a high (Tanana) of 24% to a low of 6% (Fairbanks).
Table 12-3.
General Fund Only Expenditures on
Instruction
All Funds Expenditures on
Instruction
Average Daily
Membership (ADM)
Expenditures per Pupil
for instruction General Fund Only
Expenditures per Pupil
for instruction - All
Funds
Expenditures Per Pupil FY 2012
Yukon
Koyukuk
School
District
Nenana
School
District
Tanana
School
District
Yukon Flats
School
District
Denali
School
District
Fairbanks
School
District
$5,880,862
$438,402
$9,695,667
$5,889,975
$5,560,243
$152,292,012
$6,501,852
$544,323
$13,968,109
$7,558,287
$5,818,325
$167,159,465
947.54
34.00
1,256.38
258.75
716.25
14,276.63
$6,206
$12,894
$7,717
$22,763
$7,763
$10,667
$6,862
$16,010
$11,118
$29,211
$8,123
$11,709
Sources: Expenditure Data from Fiscal Year 2012 School District Audits, Sheet: "All Funds Summary for an Entire Financial
Statement." ADM from DEED Foundation Program ADM FY 1988 – FY 2012
page 118
Table 12-4.
(from school district audits)
FY 12 School Districts
GENERAL FUND
Revenue & Expense Summary
Nenana Borough Study-Area School Districts, FY 2012 GENERAL FUND Revenue and Expense Summary
Nenana School
District
Tanana School
District
Yukon Koyukuk
School District
Yukon Flats
School District
Denali School
District
Fairbanks School
District
REVENUE
Local: City/Borough (11)
Local: Other (20, 30, 40, 41, 47)
$95,878
1%
$31,075
3%
$0
0%
$0
0%
$2,069,720
24%
$46,586,695
23%
$151,533
2%
$35,575
3%
$1,206,611
8%
$729,565
7%
$126,312
1%
$1,211,284
1%
$7,847,792
97%
$1,001,622
85%
$12,544,570
86%
$7,994,749
81%
$6,367,044
74%
$144,143,669
70%
Federal through State (150)
$5,958
0%
$0
0%
$0
0%
$0
0%
$12,848
0%
$0
0%
Federal (100, 190)
$6,538
0%
$110,463
9%
$877,774
6%
$1,102,119
11%
$7,830
0%
$14,051,688
7%
State (50-57)
TOTAL REVENUE
$8,107,699
$1,178,735
$14,628,955
$9,826,433
$8,583,754
$205,993,336
EXPENDITURES
Instructional (100-350)
School Admin (400-450)
District Admin (510-550)
Operations & Maintenance (600)
Student Activities, Transport,
Food, Trust (700-860)
Debt Service (850)
TOTAL EXPENDITURES
$5,880,862
71%
$438,402
45%
$9,695,667
66%
$5,889,975
58%
$5,560,243
66%
$152,292,012
74%
$486,659
6%
$108,853
11%
$1,194,477
8%
$566,062
6%
$584,881
7%
$13,654,689
7%
$589,559
7%
$252,727
26%
$1,212,439
8%
$1,026,791
10%
$673,939
8%
$12,357,386
6%
$1,185,851
14%
$169,558
17%
$2,503,693
17%
$2,632,492
26%
$1,389,590
17%
$25,959,798
13%
$138,761
2%
$14,487
1%
$45,905
0%
$115,643
1%
$89,970
1%
$2,657,168
1%
$0
0%
$0
0%
$0
0%
$0
0%
$109,188
1%
$0
0%
$8,281,692
$984,027
$14,652,181
$10,230,963
Source: Fiscal Year 2012 School District Audits, Sheet: "All Funds Summary for an Entire Financial Statement"
page 119
$8,407,811
$206,921,053
120%
100%
FY 12 GENERAL FUND
School District Revenue School District Expenses
80%
60%
40%
20%
0%
Local-Direct
Appropriation
Nenana
Local-Other
Tanana
State
Federal
Yukon Koyokuk
Spending on
Instruction
Yukon Flats
page 120
Spending on School Spending on District
Admin
Admin
Denali
Fairbanks
12.3 Impact of Borough Formation or Annexation on Schools
Quality of education is typically very important to residents and those evaluating borough
formation often state that the borough must either not harm or must enhance the quality of
their children’s education before they could consider a ‘yes’ vote on borough formation.
Scenario 2 is relatively straight forward, most students living in what would be the greater
Nenana Area borough that attend public school already go to school in Nenana.
Under Scenario 3 or 4 the City of Nenana School District would dissolve, its assets and
liabilities would transfer to the larger borough’s school district, and that borough would
run local schools. The Nenana school board would likely become an advisory school board
to the Borough’s School board. Area residents would be eligible to run to sit on the (Denali
or Fairbanks North Star) borough school board.
Under Scenario 5, within two years, a new Middle Tanana-Yukon School District would
form and the City of Nenana, City of Tanana, and two schools within the Yukon Koyukuk
REAA would join a new Middle Tanana-Yukon School District. The liabilities and assets of
these districts and schools would be assumed by the new Middle Tanana-Yukon (MTY)
School District. The MTY School District would operate under the authority of a newly
elected MTY School Board.
Once a MTY Borough School District was up and running, the day-to-day “school life” of
students would not be significantly different than it is now - there would still be separate
schools with their own principals and the same school names, sports teams, uniforms,
bands, and rivalries. School sports would compete in the same Alaska School Activities
Association (ASAA) leagues as they do now. It would be somewhat easier to share
administrative and classroom resources, supplies, curriculum, and facility assets because all
would now be under a common administrative umbrella.
The process to form a MTY Borough School District would take some time. It would
probably take a full year to outline and accomplish a well-thought out process to form a
MTY School District. Some needed conversations would include (1) identifying the wage
and benefit packages that would be offered, positions, and how seniority in the four current
districts would be handled. (2) Because Nenana and Tanana are used to having their own
elected school boards, a MTY School District should, in addition to the elected School
Board, establish Advisory School Boards in communities per AS 14.12.035 to help provide
page 121
input to the MTY School Board on ‘local’ school matters and retain a direct level of
involvement by these community’s parents and leaders in school administration 38.
The process to form a MTY Borough School District would be something like the following:
1. A Transition Plan is developed as part of preparing a borough formation petition. It
is an orderly list of activities and actions that must occur if a borough formed.
Current school administrators and school boards could outline the decisions and
conversations that the new school board/superintendent need to accomplish, and
provide written guidance.
2. Elect the MTY Borough School Board.
3. The MTY Borough Assembly directs the School Board to hire a superintendent.
4. The MTY School District superintendent and School Board accomplish the tasks set
out in the Transition Plan, including setting district policies, establishing/negotiating
wage and benefit packages, preparing the budget, etc.
In addition to the challenges, at issue is whether there are benefits that can result from
being part of a unified borough school district. One benefit is that a borough has the ability
to raise local revenue to support education, through taxes and fees on activities and land in
the borough. Given current and expected state and federal declines to education funding
this is not an insignificant benefit. A MTY Borough could issue bonds for school projects in
the region.
12.4 Impact on Formula-Based School Funding if a Borough Formed
Depending on the borough boundary/option, one to four school districts in the region could
be affected. For school districts, under each of the borough options being studied, this
would mean:
•
•
Scenario 1 - Status Quo / No Borough
No change to School Districts.
No change to need to make local contribution to schools (or lack of contribution for
REAA communities) or to the tax base supporting ability to raise a local contribution to
schools.
AS 14.12.035 Advisory School Boards in Borough School District. A borough school district board may
establish advisory school boards, and by regulation shall prescribe their manner of selection,
organization, powers, and duties.
38
page 122
•
•
•
•
•
•
•
•
•
•
39
Scenario 2 - Greater Nenana area Borough forms
Nenana City School District dissolves and Nenana Borough School District forms.
A new School Board is elected. School district assets and liabilities transfer. New school
superintendent/board determine if school personnel simply transfer or if new hiring and
contracts occur; determine this during “Transition” period.
Borough formation does not change base student allocation funding from state, nor does
it change funding to Residential Living Center funding.
If total local contribution to schools is $130,000, then would lose $30,000 in overall
school revenue. If total local contribution to schools is $500,000, then would gain
$340,000 in overall school revenue. (see Table 12-5)
o Using the estimated minimum required contribution to schools for the borough
($109,000) plus the same amount extra given recently for total local contribution
of $130,000, then revenue to schools (excluding grants) would decrease by about
$30,000 39. If amount of local contribution is able to increase to $500,000 due to
wider tax base, then total revenue to schools (excluding grants) increases an
estimated $340,000 (see Table 12-5).
3 - Greater Nenana area annexed into Denali Borough
Nenana City School District dissolves.
Schools become part of Denali Borough School District, subject to that school district’s
polices and contracts.
Highly likely that the two distance (cyber) school programs would merge into one.
Annexation into the Denali Borough does not change base student allocation funding
from state, nor does it change funding to Residential Living Center funding.
Nenana area gains 3 seat(s) on Denali School District Board or seats divided to include
residents from Greater Nenana Area. (see chapter 13 on voting).
If total local contribution to schools is $2.1 million, then would lose $205,000 in overall
school revenue. If total local contribution to schools is $2.5 million, then would gain
$205,000 in overall school revenue. (see Table 12-5)
o Assuming that the local contribution for schools is 175% more than required (the
4-year average of what Denali has given above the minimum) for the larger
Denali Borough ($2.1 million), then the total revenue to schools (excluding
grants) would decrease by about $205,000. If the amount of local contribution is
able to increase due to wider tax base to $2.5 million, then total revenue to
schools (excluding grants) increases about $206,000 if the greater Nenana area
was annexed into the borough (see Table 12.5).
Four year average is $104,000; analysis actually used $109,000 but result would be just about the same.
page 123
•
•
•
•
•
•
•
•
•
•
•
•
4 - Greater Nenana area annexed into the Fairbanks North Star Borough
Nenana City School District dissolves.
Schools become part of Fairbanks North Star School District, subject to that school
district’s polices and contracts.
Nenana residents compete to be elected to school board seats with all Fairbanks North
Star Borough residents. Possibly could form a local school advisory committee.
Using the amount that Fairbanks North Star Borough contributed to support its schools
in FY 13 ($46.5 million or 55% more than is required), revenue to schools (excluding
grants) would increase by $1.1 million if the greater Nenana area was annexed into the
borough (see Table 12.5).
5 - A Middle Tanana-Yukon Borough forms
The Nenana and Tanana City School Districts dissolve.
The Minto and Manley schools leave Yukon Koyukuk REAA School District.
There currently are no schools in Rampart, Stevens Village, and Livengood, but if there
were schools in these communities again, they would now be part of Middle Tanana
Yukon School District (no longer part of the Yukon Flats REAA School District).
All schools are joined in new Middle Tanana Yukon (MTY) School District. A MTY
School Board is elected, following apportionment scheme chosen for borough; there
could continue to be advisory school boards in each community if desired.
The estimated required local (borough) contribution to education is schools $3.1 million.
If the total contribution to support schools is $3.7 million, revenue to schools (excluding
grants) would increase by $835,000 compared to the total that the six schools (included
Stevens Village in 2012/2013) got that year. If the total local contribution to support
schools was $4.25 million, revenue to schools (excluding grants) would increase by $1.4
million compared to 2012/2013 (see Table 12.5).
Location of new School District administration would need to be determined.
As noted above, if a MTY Borough (Scenario 5) existed in FY 13, it would have received
between $835,000-$1.4 million more in revenue for education compared to the status quo
because the local contribution is high due to the estimated value of the TAPS pipeline in the
borough and resultant tax revenue.
Residents asked if there are guarantees that smaller schools in the MTY School District
would get their fair share of this revenue; there is concern that larger school districts would
get the “lion’s share.” The reality is that school districts do have some latitude in revenue
distribution among schools. For example, in Yukon-Koyukuk School District, pupil counts
in Manley would typically merit only one full time equivalent (FTE) teacher, but the
page 124
superintendent and school board’s policies are that no school should have less than two
FTE teachers. Other schools districts with a mix of small and large schools (e.g. Kodiak
Island) have similar policies to ensure smaller schools have adequate resources, but there
are no guarantees – it is up to the school board and superintendent to set the school
district’s policies. Residents of Rampart and Manley also wondered if the number of
students fall below 10, could a borough school district choose to fund the school even
though State Aid would be reduced or gone? Again, the answer is yes, though if State Aid
is not forthcoming for that school, unless the district had significant savings or thought
there was a good chance that students counts would increase the next year, it could be
difficult to afford this. In all cases, there is flexibility and the school district’s board and
superintendent set policy.
Impact on Funding for Cyberlynx School and Residential Living Center
The financial impact that borough formation would have is on formula driven school
funding (local, state aid and federal impact aid) that depends primarily on local enrollment
(including the cyber school student population) and the amount of the local contribution to
support education.
It would not affect the funding received per AS 14.16.200 for the Residential Living Center’s
88 resident students (FY 13). As an aside, of the 88 students living there in 2013, only two
are from communities that would be within the borough under Scenario 5.
page 125
TABLE 12-5 IMPACT OF BOROUGH
FORMATION ON SCHOOL FUNDING
Borough Scenario
Impact on Schools
Required
Local
Contribution
to Schools*
$649,988
$25,585,072
$74,326
$24,589
n/a
n/a
Assumed Total
Local
Contribution
to Schools*
$1,989,718
$46,529,800
$124,336
$24,589
$0
$0
Total Revenue
to School
District*
gain/loss: box
$8,263,542
$179,840,406
$6,705,550
$1,208,351
($457,254**) /
$7,117,450
($835,759**) /
$12,529,879
$6,676,333
-$29,217
Hi= $7,045,873
+$340,323
$14,763,631
-$205,461
Hi=$15,175,055
+$205,963
2
Greater Nenana
area Borough
forms
Nenana City School
District dissolves and
Nenana Borough
School District forms
Nenana Schools- 2
954.75
$109,764
$130,619
or
Hi=$500,000
State
Foundation Aid*
$6,260,299
$119,907,015
$6,580,891
$1,069,533
($350,536**) /
$7,010,732
($615,375 **) /
$12,307,495
$6,545,391
or
Hi=$6,545,550
3
Greater Nenana
area annexed
into Denali
Borough
4
Greater Nenana
area annexed to
the Fairbanks
North Star
Borough
5
A Middle
Tanana-Yukon
Borough forms
Nenana City School
District dissolves.
Schools become part
of Denali Borough
School District.
Nenana Schools- 2
Denali Schools- 4
6
954.75
854.65
1,809.40
$109,764
$649,988
$759,752
$2,089,318
or
Hi=$2,500,000
$12,660,465
or
Hi=$12,661,207
Nenana Schools- 2
FNSB Schools- 35
37
954.75
14,273.49
15,228.24
$109,764
$25,585,072
$25,694,836
$46,529,800
or
$127,765,206
or
$187,698,920
+$1,152,964
No high
No high
No high
$3,748,582
or
$5,797,709
or
$10,042,651
+$835,737
Hi=$4,250,000
Hi=$5,835,615
Hi=$10,581,975
+$1,375,061
1
Status Quo
(No borough)
No change.
Nenana City School
District dissolves.
Schools become part
of Fairbanks North
Star School District.
# Schools in School District
( 2012-2013 school year)
Denali Schools- 4
FNSB Schools- 35
Nenana Schools- 2
Tanana Schools- 1
Yukon Flats Schools- 7
Yukon Koyukuk Schools-10
# Students in
School
District
(2012/13 Pupil
Count)
854.65
14,273.49
954.75
48.50
256.55
1,401.65
Nenana and Tanana
Nenana Schools- 2
City School Districts
Tanana Schools- 1
dissolve. Minto and
Yukon Flats Schools (Stevens
Manley schools leave
Village)- 1
Yukon Koyukuk
Yukon Koyukuk Schools (Minto,
School District***. All
Manley)- 2
join in new Middle
6
Tanana Yukon School
District.
Sources: Required & Total Contribution: Sheinberg Assoc est. All other: Alaska DEED
954.75
48.50
12.65
41.80+14.00
1,071.70
$3,150,069
* This is the actual amount for Status Quo. For borough scenarios 2-5, this is the FY 13 estimated amount
of Foundation Aid and Total Revenue, prepared by Alaska DEED, based in part on assumed total local
contribution and estimated 2011 Full True Value as determined by Sheinberg Associates (see chapter 11
on estimated property values). No new oil and gas or mines are assumed. Total Revenue is for formula
based federal-state-local revenue and does not include grants.
** Amount attributable to Manley, Minto, and Stevens Village Schools
*** There currently are no schools in Rampart, Stevens Village, and Livengood, but if a school opened in
these communities, it would now be part of Middle Tanana Yukon School District (no longer part of the
Yukon Flats REAA School District).
13 Legal options for Assembly Apportionment (Voting)
If a borough formed it would be governed, like all boroughs, by an elected assembly, which
typically has 5 to 16 members and a mayor. The mayor is always elected at-large. A
borough school board would also be elected to operate the school district. City councils and
mayors would remain as is, because boroughs and cities manage/do different things. A
person can serve on both a city council and a borough assembly.
In order to vote a person must have lived in Alaska for 30 days and not be registered to
vote anywhere else (AS 15.05.010). If desired, a city or borough can by ordinance require up
to three years of residency before one is allowed to run for elected office (AS 29.20.140(b)).
Assembly composition and apportionment must be consistent with the equal representation
standards of the Constitution of the United States. A borough determines which elections
district options it wants to use. State law (AS 29.20.050-320) allows Assembly members to be
chosen using three methods, by:
METHOD 1
Election at large by the voters throughout the borough.
METHOD 2
Election by district, including:
C. a requirement that a candidate live in a specific Residency Area (election district)
to run for a seat, but, the election held at large by all voters throughout the
borough. If using Residency Areas but all voters get to vote for all candidates
regardless of where they live (in or out of the Residency Area) then the
Residency Areas do not have to be split evenly by population 40.
40
See Sonosky, Chambers, Sachse, Miller & Munson, LLP; Legal memorandum No. 2J-2013 on “Equal
Protection Issues Related to Use if “Residency Districts” in At-Large Voting Systems. March 29, 2013.
NENANA AREA BOROUGH STUDY – February 27, 2014 Final Draft Report
page 127
D. a requirement that a candidate live in a specific election district, and their
election is only by voters that live in that election district.
METHOD 3
Election by a combination of the above options – some at large and some by district.
In the region now all municipalities elect their councils/assemblies by at large voting--every resident votes for every seat. In all places except Denali anyone can run for any seat
no matter where you live, population is not a factor. This is so every elected
council/assembly person represents all voters. In Denali borough, even though everyone
votes for everyone, they feel it is important for all areas to be somewhat represented. There,
the voting area is divided up into five seats, based on population, and you must live in the
district to run for that seat. This is all summarized on Table 13-1.
Table 13-1. How Municipal Government Voting Works Now in Region
# Assembly
or Council
Municipality
seats
How Election Works
Nenana
6 seats &
• Method 1
mayor
• All voters vote for all seats
• Can live anywhere in city to run for any seat
Tanana
6 seats &
• Method 1
mayor
• Can live anywhere in city to run for any seat
Fairbanks
9 seats &
• Method 1
North Star
mayor
Borough
• Can live anywhere in borough to run for any borough seat
• There are 41 precincts, based on state system, they vary widely in
population and don’t govern rules to run for local office
Denali
9 seats &
• Method 2A
Borough
mayor
• There are 5 districts and you must live in the district to run for
that district’s seat. The districts are based on population:
o District 1-seat A (Cantwell)
o District 2-seat B (Denali)
o District 3-seat C, D, E and F (Healy)
o District 4-seat G (Stampede Rd/Ferry areas)
o District 5-seats H, I (Clear & Anderson)
Source: personal communications with G Pieknik, Denali Borough; S. Hill, Nenana; J. Grammer, Tanana; M.
Speegle, Region III State Elections Supervisor; and FNSB assistant clerk
Sonosky, Chambers, Sachse, Miller & Munson, LLP; Legal memorandum No. 18J-2006 on apportionment,
December 28, 2006.
page 128
13.1 Electing the Borough Assembly
There are several legal voting schemes for each borough. The preferred scheme is one of
the things that residents/those writing a petition to form a borough, must decide upon and
specify in the Petition. The most common choices are reviewed below.
Scenario 1-Status Quo/No Borough
• No borough assembly
Scenario 2 - Greater Nenana area Borough forms
•
Choice 1- Use Method 1 as follows: All seats on borough assembly (and school
board) are open to any resident of borough to run. All vote for all.
•
Choice 2 – Use Method 2A as follows: Identify Residency Areas for each assembly
(and school board) seat (e.g., N city of Nenana, S city of Nenana, Four Mile Road,
mile x to x on highway). Must live in the Residency Area to run for that assembly
seat, but all voters vote for all seats-regardless of where you live in borough. (If all
vote for all Residency Areas to not have to be split evenly by population.)
•
Choice 3 - Use Method 2B as follows: Identify Residency Areas for each assembly
(and school board) seat but based on equal population per seat. (e.g., N city of
Nenana, S city of Nenana, Four Mile Road area, mile x to x on highway). Must live
in the Residency Area to run for that assembly seat, and, only voters in that area vote
for the seat where they live.
Scenario 3 – Greater Nenana area becomes part of Denali Borough
•
Choice 1 - Denali Borough method is followed where Residency Areas exist based
on equal population, you must live in the Residency Area to run for that seat, but all
vote for all seats. After 2010 population’s counts, each of 9 Denali Borough assembly
seats has 203 population. Add 3 seats to assembly for the Greater Nenana area
residents.
•
Choice 2 - Use Method 2A as follows: Don’t add any new assembly seats, but divide
Residency Areas up in different way to account for new residents. Now, each
assembly seat (Residency Area) would have 276 population. This would likely mean
the greater Nenana area’s 660 residents would be split between two seats and
comprise one-third of a third seat. One way that this could work is that the 100
residents living east of and along the highway between Denali Borough and Nenana
become part of one seat with Denali residents, and the remaining 560 residents in the
greater Nenana area are split into two seats. One must live in area to run for seat, but
all vote for all.
page 129
•
Choice 3 - Use Method 2A as follows: As long as all vote for all, Residency Areas do
not have to be based on population, so use methods above but more flexibility in
how you draw boundaries.
Scenario 4- Greater Nenana area becomes part of Fairbanks North Star Borough
• Fairbanks North Star Borough method is followed: Any resident of the greater
Nenana area – which would now be part of the FNSB - can run for any borough
assembly (and school board) seat, and all voters in FNSB vote for all seats.
Scenario 5- Middle Yukon Tanana Nenana Borough forms
•
Choice 1- Use Method 1 as follows: All seats on borough assembly (and school
board) are open to any resident of borough to run. All vote for all.
•
Choice 2 – Use Method 2A as follows: Identify Residency Areas for each assembly
(and school board) seat based on a combination of community and general
population (e.g., N city of Nenana, S city of Nenana, four mile road area, mile x to x
on highway). Must live in the Residency Area to run for that assembly seat, but, all
voters vote for all seats-regardless of where you live in borough. (If all vote for all
Residency Areas to not have to be split evenly by population)
•
Choice 3 - Use Method 2B as follows: Identify Residency Areas for each assembly
(and school board) seat but based on equal population per seat. (e.g., N city of
Nenana, S city of Nenana, four mile road area, mile x to x on highway). Must live in
the Residency Area to run for that assembly seat, and, only voters in that area vote
for the seat where they live OR all voters still vote for all.
page 130
Report Sources
Personal Communications/ Interviews
Alfred Ketzler, Tanana City Manager
Amber Allen, Doyon Limited
Andrew Shemp, North Slope Borough
Ben Shilling, Tanana Chiefs Conference
Brandon McCutcheon, Alaska DNR
Brent Williams, DCCED, DCRA, Local Boundary Commission staff
Bruce Phelps, Natural Resource Manager, Alaska DNR
Cathy Silas, Minto Lake View Lodge
Carl Horn, Director of Finance, Nenana City School District
Celeste Engles, Tanana Chiefs Conference
Chuck Parker, President Manley Hot Springs Community Association
Colt Franklin, Denali View Lodge-Nenana
Cynthia Ericson, Tanakon Bed & Breakfast (Tanana Commercial)
D. Jenkins, USFWS, Office of Subsistence Management, Subsistence Policy Coordinator
Dan Crews, DNR Division of Agriculture
Danielle Lindoff, Local Government Specialist, DCCED, DCRA
Dave Zimmerman, City of Delta Junction bookkeeper
Diane Grammer, Tanana Sand Bar
Donna Folger, Mayor, Tanana
Elizabeth Sweeny Nudelman, Alaska DEED, Director of Finance
Floyd Green, Tribal Administrator Rampart
Gail Pieknik, Denali Borough
Gary and Valerie Dunnigan, Fireweed Roadhouse at Denali
Jason Mayrand, Mayor, Nenana
Jim Greeley, Alaska Dept of Revenue, State Petroleum Property Assessor
Jim Mery, Doyon Limited, Lands and Resources Vice President
John Eberhart, Tanana Chiefs Conference
Kathryn Greenway, Tanana Chiefs Conference
Kerry Boyd, Superintendent, Yukon Koyukuk School District
Lawrence Blood, Local Government Specialist, DCCED, DCRA
Lisa Jaeger, Tanana Chiefs Conference
Lisa Owens, Manley Roadhouse
M. Speegle, Region III State Elections Supervisor;
Marilyn Duggar, Coghill's General Store
Mindy Lobaugh, Alaska DEED, Division of School Finance
Michelle Speegle, Region III Election Supervisor, Alaska Division of Elections
Nicholas J. Monroe, Monroe's Monderosa
page 131
Norma Dahl, Tanana Chiefs Conference
Philana Miles, Land Use Planner, State of Alaska Department of Natural Resources
Ruth Coy, Roughwoods Inn
Sarah Obed, Doyon Limited
Scott Ruby, Division Direction, DCCED, DCRA
Staff, Tamarack Inn
Stephanie Ashcroft, Tanana Chiefs Conference
Steve Van Sant, State Assessor, DCCED
Susanne Hill, administrative assistance, City of Nenana
Tiffany Sweetsir, Tanana Chiefs Conference
Wendy Lawrence, State Assessor Office, DCCED
Select Reports and Publications
December 28, 2006, Sonosky, Chambers, Sachse, Miller & Munson, LLP legal memorandum
No. 18J-2006 to Sheinberg Associates on apportionment
March 29, 2013, Sonosky, Chambers, Sachse, Miller & Munson, LLP legal memorandum No.
2J-2013 on “Equal Protection Issues Related to Use if “Residency Districts” in At-Large
Voting Systems.
Alaska Taxable, 2011 and 2012. Alaska Department of Commerce, Community & Economic
Development
US Census Block Summary data analysis by Alaska Map Company. December 5, 2012. (All
population estimates in this section are derived from this analysis)
S US Census Block Summary data analysis by Alaska Map Company. December 5, 2012.
(All population estimates in this section are derived from this analysis)
2012 Zone employment; Select Zones. Data developed by Mali Abrahamson, Economist,
Alaska Department of Labor and Workforce Development, Research & Analysis Section.
Report developed by special request for this study.
State of Alaska Corporations, Business, and Professional Licensing Online Filings, Database
Search, and Database Download http://commerce.alaska.gov/CBP/Main/
U.S. Census Bureau, 2006-2010 American Community Survey.
Regional School District Audits and City Audits, Budgets and Financial Statements
ADNR Yukon Tanana Area Plan (July 2012 draft Update and January 2014 adopted)
page 132

City of Nenana - Sheinberg Associates

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