The Anchorage Assembly is considering a proposal from Mayor Dave Bronson to give a property tax break to homeowners who build accessory dwelling units on their properties.
If passed, the proposal would largely exempt property owners for 10 years from paying taxes on newly constructed ADUs, which are commonly called “mother-in-law units.” These dwellings are added to single-family homes, built as an apartment attached to the home or as a separate cottage on the same lot.
Bronson has said the tax exemption would help increase low-cost housing, encourage economic growth and benefit homeowners. Proponents of ADUs say they can simultaneously increase property values and help keep rent prices down in neighborhoods by increasing the housing supply.
Some Assembly members say the ordinance needs additional work, though some say they are largely in favor of the effort to increase housing options in Anchorage and give a tax break for ADUs.
During a meeting Tuesday, the Assembly postponed voting on the proposal until March 15.
Several people at the meeting testified in support of Bronson’s idea, while others mostly supportive of the idea also called for the city to further consider the idea and add regulations on how the tax break could be used.
Assembly member Meg Zaletel, who is also the interim executive director of the Anchorage Coalition to End Homelessness, said she is working on a substitute version of Bronson’s proposal and is coordinating with the administration and the Assembly’s Community and Economic Development Committee to bring her new version forward by March 15.
Zaletel said she believes the updates included in the new version will help address concerns brought forward by the community members at Tuesday’s meeting.
One testifier, Mike Edgington, said the proposal would have a disproportionate impact in Girdwood. Edgington is co-chair of the Girdwood Board of Supervisors, which oversees road, fire and other services in the area, but was speaking in his personal capacity at the meeting.
Girdwood has a much higher percentage of rental units used for short-term housing, such as Airbnbs, than the rest of Anchorage, he said. That has had a “disastrous impact” on its rental market, Edgington said, and he asked the city to consider including regulations around using tax-exempt ADUs as short-term rentals.
He also said that the tax exemption would apply differently in Girdwood because the area is taxed differently from much of the municipality. There, property owners pay mostly service area tax levies and the Anchorage School District tax levy, he said — both of which would not be included in the exemption, according to Bronson’s proposal.
“It actually won’t provide much of an exemption in Girdwood,” he said.
The proposal is a “good idea in principle,” Edgington said. “The actual impact of it will be quite different in different parts of the municipality and I really would like to see more analysis, care and thought go into those issues.”
Nancy Pease, who testified representing the Rabbit Creek Community Council, cautioned that city should do something to ensure that the ADUs are used as living spaces. The council suggests including an annual certification that the ADU is operating as a separate occupied home, she said.
“We do generally appreciate the ability of accessory dwelling units to add to the housing base, but we want to make sure that there is public benefit by ensuring that the ADUs are rented out to residents and are not just tax-free home expansion,” she said.
Clarification: This story has been updated to note that Mike Edgington, co-chair of the Girdwood Board of Supervisors, was speaking in his personal capacity at the meeting. The Girdwood Board of Supervisors has not taken an official position on short-term rentals or the ADU tax exemption.