Alaska Supreme Court shields Nome hospital's staff housing from tax

Nome cannot tax a seven-unit apartment building that Norton Sound Health Corporation uses to house its doctors and nurses, the Alaska Supreme Court ruled Friday. The building is exempt from city property tax, the court held, upholding a lower court.

The reason, Justice Borghesan wrote, is that the housing is "directly incidental to and vitally necessary" to the hospital. Staff recruited from outside the Bering Strait region have to answer emergencies on short notice, and Nome has almost no short-term housing to rent — so even though tenants live there privately, the building still qualifies as part of the hospital's tax-exempt operation.

Nome's assessor had denied the exemption in 2022, calling the staff housing convenient but not necessary, and the city's Board of Equalization agreed, noting that only a handful of employees live there, that the hospital ran for years without the building, and that the Legislature could have exempted staff housing if it had wanted to. Norton Sound — a tribally owned nonprofit — countered that the building sits within walking distance of the hospital, is 98 percent occupied by medical staff, and is listed as a required service in its federal funding agreement with the Indian Health Service.

The rent was a harder question. The corporation took in about $103,000 from the building in 2021 while calling the rent it charges new hires "nominal" — a description the court found hard to square with that total. But the justices ruled that rental income alone doesn't void the exemption, and because Nome never raised the rent issue before its own board, there was no record for the court to decide it on. The property, the court noted, appears to run at about a $200,000 loss.

The case drew filings from several boroughs, the State of Alaska, tribal health organizations and the federal government. Anchorage alone has flagged some 570 exempt properties for review, with about $811,000 a year at stake.