Kenai Peninsula mayor tells Senate: 70% tax cut workable, 90% too much

Kenai Peninsula Borough Mayor Peter Micciche told the Alaska Senate Finance Committee Wednesday that the borough can accept a 70% property tax reduction for the proposed Alaska LNG facility, but the original 90% cut would have left local taxpayers subsidizing a global project.

The facility's footprint

The Alaska LNG facility would represent 42.7% of the project's value located in Kenai Peninsula Borough, Micciche said. The facility would occupy 900 acres with three liquefaction trains, two storage tanks, terminal facilities, and two berths in Cook Inlet, moving up to 2.5 billion cubic feet of gas per day.

The project will nearly double Nikiski's population during four years of construction and is nearly nine times the footprint and 13 times the production capacity of similar projects the small community has experienced in the past, Micciche said. It will require the relocation of the highway since two-thirds of the facility footprint is located on the east side of the highway, one-third on the west side.

"I placed my hand on the Bible for 62,000 souls that call the Kenai home and to ensure that we receive enough so that senior citizens and families from Nikiski are not covering the cost or subsidizing a giant global project," Micciche said.

Tax calculations and borough costs

At standard nine-mill rates, the facility would pay between $212 million and $215 million annually based on the project's estimated $23.6 billion to $28.4 billion cost, Micciche told the committee. Under the House bill's alternative volumetric tax, the project would pay in the low-to-mid 30% range of what neighboring taxpayers pay.

"At the 12 cents plus the community impact fund in the House version, the project will be paying in the low to mid-30% range of all other Nikiski taxpayers. Approximately a 70% reduction. That's okay. 90% was too much. 70 is in the ballpark," Micciche said.

The borough has collected data on approximate costs for solid waste, general government, education, roads, fire, EMS, hospitals, recreation, and regulatory tasks required by AKLNG's federal permitting and U.S. Coast Guard Marine Terminal Response Plans, Micciche said. The borough knows there will be capital costs for fire and EMS equipment upgrades.

"We always knew that property tax discussions had to occur. Wish they'd started earlier. They didn't. That's water under the bridge. But the original governor's bill left us woefully short on the Kenai," Micciche said.

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