City Council Work Session – Property Tax Exemption Options Under HB13 – August 4, 2026
City Council Work Session – Property Tax Exemption Options Under HB13 – August 4, 2026
This work session was held on August 4, 2026, to discuss municipal property tax exemption options authorized by House Bill 13 (HB13), which allows municipalities to exempt some or all of a homeowner's primary place of abode from property taxes. The council considered exemption percentages, impacts on revenue, and related adjustments to the economic development tax exemption and housing incentives. No votes were taken; the session was intended to frame a draft ordinance for the next meeting.
Discussion Items
- Primary Home Exemption (Primary Place of Abode): City staff (Nate) presented the core discussion: whether to exempt a portion or all of a primary home's taxable value after existing exemptions. The average single-family home assessed value in Valdez (excluding mobile homes) is approximately $313,000. The current primary residence exemption is $79,505. Proposed additional exemptions ranged from 77% to 100% of the remaining taxable value. The 77% rate (0.77 multiplier) was tied to the actual amount the city has paid into schools over the past 10 years, while the 87% rate (0.87 multiplier) corresponds to the mandatory school mill levy of 2.65 mils. A 100% exemption would eliminate tax bills for primary homeowners. Foregone revenue estimates ranged from $2.6–$2.8 million (77%) to $3.4–$3.7 million (100%) annually. Staff noted that the city's current $72 million annual budget could absorb this reduction without significant hardship, and that the exemption could be adjusted annually by ordinance without a public vote.
- Councilmember Positions: Several council members (Whitty, Devons, Stitts, Olivia, Jimmy, Lester) expressed support for a meaningful exemption. Councilmember Olivia advocated for “skin in the game” and favored tying the exemption to school funding. Councilmember Jimmy argued for a maximum reasonable exemption (up to 90%) to keep residents on the tax roll for administrative and civic engagement reasons, preferring the 0.77 multiplier. Councilmember Lester supported the 0.77 multiplier. Councilmember Devons noted that the 0.77 multiplier would still yield a tax bill roughly half of what she paid in Missouri. Councilmember Foster expressed openness to 100% exemption, citing the Permanent Fund draw as a potential offset. Councilmember Sites warned against offsetting the tax cut with increases in other fees (e.g., water/sewer).
- Economic Development Tax Exemption: Staff proposed expanding the geographic scope of the existing 10-year, 100% exemption on improvements from the downtown core to all city limits. This change was supported by the council.
- Housing Incentive Replacement: The current three-year residential tax abatement for new single/dual-unit homes (part of the economic development exemption) was recommended for removal. In its place, staff proposed increasing the existing housing incentive from $10,000 to $25,000 per unit (or possibly $40,000 per Councilmember Jimmy's suggestion, based on 10% of average new home construction cost). Council members generally agreed with this approach.
- Application Process: The new primary home exemption would require a one-time application (due by January 15th) to verify primary residence, with no annual renewal. Other exemptions (senior, disabled veteran) would remain annual per state statute.
Key Outcomes
- Draft Ordinance Direction: The city manager will prepare a draft ordinance for the next work session using a 77% (0.77 multiplier) exemption as the baseline. The council can adjust the percentage upward (up to 100%) before final adoption.
- Economic Development Exemption Expansion: The geographic limit will be removed to cover all city limits.
- Housing Incentive Adjustment: The residential tax abatement will be eliminated, and the housing incentive will be increased to at least $25,000 per unit (final amount to be discussed).
- Next Steps: The council will review the draft ordinance in the next work session, consider other HB13 options (e.g., assistance for renters and commercial properties), and seek public input. The law takes effect September 20, 2026, so changes will apply to 2027 tax bills.
Meeting Transcript
What is in HB13, what passed is the most relevant component is the primary what's it called? Primary place of abode, the primary home exemption. A lot of the other stuff that's in there would still be applicable with our economic development tax exemption, and so it would be the same and/or better with what we already have. So suffice it to say that the bulk of the conversation surrounded what does it look like from a primary home exemption perspective. Do you exemp all of uh primary home? Do you exempt a portion of it? What does that look like? Uh simply because the what the legislative text says, what the law says is that you can you can't exemple some or all of somebody's primary place of abode, and so on computers have a hard time firing up here. So that was some of the conversation. Uh what was stated at the time is uh if we're gonna not exemp all of it, perhaps a number that makes sense is to talk about how much how much of the tax is relevant to funding schools. There is a mandatory minimum for schools of 2.65 mils. Um so there was some conversation about what that looks like as it relates to a standard tax bill, and so long story short, we'll dive into some of that in more specific uh detail what it looks like for the primary home exemption. There's a couple of other topics that we may or may not get to tonight, but I think are worth having on your mind so that we can discuss it again uh in two weeks. Um we have the economic development tax exemption and what modifications or changes might be made to that and are worthwhile. Um Mr. Barnett came and mentioned of an expansion of rather than just the city core, it's all of the city limits. Um so that's certainly something that you all can consider. There is a portion of the economic development taxes exemption that we currently have that is specific to housing. Uh we had a conversation with the housing subcommittee on that last night. Um we didn't uh we didn't really dive into it too deeply, but we had the the beginnings of a conversation uh after sleeping on and talking with staff a little bit. I think I think what we would potentially recommend when we get to that point is perhaps looking at removing that specific piece and just using some of the other levers that we have for housing incentive programs in lieu of that specific tax exemption for single dual unit uh homes, duplexes, and whatnot. And so anyhow, long story short, uh I think there's there's a number of topics that are all relevant. Uh there is a tangentip with the something that you could do if you want to increase or decrease cost of living, is if somebody were to get this primary home exemption, perhaps you take the money that you would be giving for the energy assistance and not give it to them, and you add to other areas of energy assistance so you could help other areas of housing and/or businesses. That's not necessarily specific to the section of code related to taxes and tax exemptions, but I think they all play together into what can you do to make living in Valdez a little bit more affordable. Um I guess before I go any further, I would defer to the housing subcommittee, uh, Councilmember Whitty, Devons, and Stitts. If I missed anything or anything you want to add specifically to the general conversation. No, I think you laid that out eloquently. Um I think that we have a real opportunity here to make a generational impact for our town. Um, and we're looking at every avenue that we can use to be most effective. And so the housing subcommittee has been in great debate with staff and all of their amazing knowledge about code. Um, so I'm really uh I was really excited about tonight's meeting. So, what I think I'll do is uh without further ado, I'll plug in my laptop here. Hopefully, you all can see this. So the thought process was that I don't know if you can all see that very well or not, but the thought process was when it comes to the primary home exemption. So the current primary home exemption is a separate section of state statute. So you can leave it as it is and you can add this exemption on top of it because they're two different pieces of legislation. And so our thought was let's continue to do that. Um the thought was is that after all other exemptions, you would then take a percentage of the remaining taxable value that would be taxed. Um to run some numbers and the average home, not how did we phrase this? If you subtract the value of mobile homes, the average single family home price, taxable value is approximately three hundred and thirteen thousand dollars. Assessed value, excuse me. So if you plug that, if you plug that in here, as the average current resident, subtract 79,505, which is our current primary home exemption, uh, and then the next column over in the place of a senior, uh, you would subtract an additional 150,000. It leaves with a tax bill for the current resident, again, an average current resident of about 46, 4700. So somewhere between 4,000 and $7,000 a year is your average current tax bill for someone as a primary homeowner, right? From there, I've got this primary place of abode square. You can adjust this as whatever you want it to be. So we ran some numbers, and depending on how you slice the pie, uh it would either be a 23% tax or a 13% tax. Um that would fund the schools. So if you take the uh required contribution, you would make this a 0.87 multiplier. And so what that would do is you would take what is now a 4669 tax, would become a $607 annual tax.
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