On the heels of a report showing the city's finances are in good order, the Homer City Council Monday approved a $20,000 property tax exemption for city residents.
The exemption applies only to the city's property tax and only for owner-occupied permanent residential property.
Under the current city property tax rate of 4.5 mils, qualifying property owners will see a tax break of $90.
"It gives the break to the property owner. I think it's targeted so it can be helpful," said council member Dennis Novak. "I feel it's the right thing to do."
This tax break idea has been floating around council chambers for years and was first introduced in 2005. Novak re-introduced the ordinance in October of 2006 and it was postponed until Monday so that the council could look at the city's annual financial report.
That report, given at Monday's meeting by John Bost of Mikunda, Cottrell and Co., showed the city had a good year financially in 2006.
The general fund balance increased a little more than $1 million for the year, property tax revenues increased roughly $300,000 and the water and sewer fund and the port and harbor fund both had solid years, Bost said.
Total revenues came in almost $1 million better than projected, Bost said, which was primarily the result of the increase in the sales tax and higher property tax assessments.
That money gives the city roughly 4 to 5 months worth of reserves in the fund balance in case of emergency.
"That's pretty healthy," he said. "But you wouldn't be there if you hadn't raised that 1 percent in (sales) taxes."
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While the tax reduction raised little public concern Monday, the council's action on two sewer improvement and assessment districts did.
The problem with the projects called the Ocean Drive Loop and Ocean Drive Loop Petersen Addition Sewer Improvement Districts is their fairness, or lack thereof, several people said Monday.
These districts, also called LID's or Local Improvement Districts, charge property owners a portion of the overall cost of a project, which, in this case brings sewer services to residents in the area.
The rest is paid for by Homer Accelerated Water and Sewer (HAWSP) funds.
Area resident Lance Petersen said the LID system itself is flawed.
"Much of the confusion and messiness is based on a flawed process," he said. "It inequitably distributes cost."
Land owners in the area were charged a set amount per lot, regardless of size or value. Those who had multiple lots were charged multiple times, unless they replatted or combined their lots.
That occurred in both LIDs as the number of lots was reduced from 60 to 53 in the Ocean Drive Loop LID and from 16 to 9 in the Peterson LID.
In September of 2006, the council passed an ordinance that eliminated the ability of property owner to reduce the number of lots within a LID by combining them after an LID has been created.
And at least a couple lots didn't get sewer drops, despite being charged for them.
"I feel somewhat misled," said area resident, Mary Lou Kelsey.
Others agreed.
"It's absolutely ridiculous to charge for services they didn't put in," said Homer resident Steve Smith.
Council members passed the ordinance without objection, but noted that the process wasn't as smooth as it should have been.
"I know this has been going on a long time. We're trying to serve everyone in the area," Novak said. "The point is it's been worked a lot, but it can be done better (in the future.) This one, I think, is as good as it gets."
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In other news the council:
* passed a resolution supporting public education discouraging the removal of native plants and marine plants in Kachemak Bay.
* approved travel for council member Francie Roberts to attend the ICLEI-Local Governments for Substainability Saving Energy and Saving Money Conference in Fayetteville, Ark.
* Approved the purchase of a microwave repeater from ProComm Alaska for the city's public safety radio system.
* Introduced ordinances for a $106,000 upgrade to the parking lot at the base of the Homer Spit, appropriating $425,945 to the City Hall Depreciation Reserve Account and accepting a $2 million grant for the New Homer City Hall Town Plaza Project. Public comments will be accepted and final action will be taken at the next council meeting on June 25.
Ben Stuart can be reached at ben.stuart@homernews.com.
