The city of Hoonah, which is petitioning to incorporate as a borough that includes a large surrounding area that includes Glacier Bay and a few tiny communities. (Alaska Department of Commerce, Community, and Economic Development photo)

The city of Hoonah, which is petitioning to incorporate as a borough that includes a large surrounding area that includes Glacier Bay and a few tiny communities. (Alaska Department of Commerce, Community, and Economic Development photo)

Hoonah’s petition to create Alaska’s 20th borough opposed by state boundary commission staff

Xunaa Borough would rank 8th in size, 18th in population; final decision, public vote still pending.

A recommendation opposing Hoonah’s petition to create Alaska’s 20th organized borough, consisting of the city and a sizable surrounding area that includes a few tiny communities, was issued Tuesday by staff for the Alaska Local Boundary Commission.

The proposed Xunaa Borough would be the eighth-largest in Alaska at 10,403 square miles, but third-smallest in population with about 980 residents, according to a preliminary staff report. The reasons for recommending against the petition filed last November includes monetary considerations — what state resources will be allocated to affected Southeast areas, and who will be asked to pay for them through property taxes and other means — as well as which communities should be part of a new borough in the region.

“There exist substantive concerns about assumed areawide powers and the addition of fewer than 100 residents to the existing population fails to meet the LBC’s constitutional, statutory, and regulatory requirements for borough incorporation,” the report states.

“It essentially trades one local government for another. Further, the borough government would assume very little responsibility for services currently being delivered by the state, diminishing the benefit to the State from borough formation.”

A map shows the Xunaa Borough area sought in a petition by the city of Hoonah. Alaska Division of Community and Regional Affairs map)

A map shows the Xunaa Borough area sought in a petition by the city of Hoonah. Alaska Division of Community and Regional Affairs map)

A 40-day public comment period is scheduled before a final report will be issued, with the commission responsible for the final decision scheduled to be issued in October.

Hoonah City Administrator Dennis Gray Jr. said Wednesday he is disappointed with the preliminary report and disagrees with its findings, but believes a favorable final decision is possible based a similar initial recommendation against the Skagway borough before it incorporated in 2007 with the commission’s approval.

“It’s definitely a stumbling block, but we don’t think it’s a deal-killer at this point,” he said, adding a formal response to the staff’s recommendation will be issued by the city by July 8.

The petition by Hoonah city officials seeks to include natural areas including Glacier Bay and Chichagof Island — and small communities including Game Creek, Elfin Cove and Funter Bay — in the Xunaa Borough. It also notes the area includes “all of the Huna Tlingit’s historic territory” except for an area already incorporated into the Haines borough, and the proposed name is a closer match than Hoonah to the Tlingit language word for the community.

“Voluntary incorporation is preferable to the potential alternative of either having a different borough government imposed upon residents by the state or leaving this entire region, except the existing City of Hoonah, unorganized,” the petition states.

The boundary commission staff report suggests “a more compelling petition would include one or more of the neighboring municipalities of Gustavus, Tenakee Springs, and Pelican, as well as a plan to consolidate school districts, and apportion borough assembly representation to ensure a more equitable distribution of resources throughout the region.”

“There may be a growing desire and purpose for a regional form of government, as new opportunities for economic development continue to emerge,” the report states. “Forming regional governments is also consistent with, and in fact the intention of, Alaska’s Constitution, and is supported by Alaska statutes and regulations.”

However, Gray said boundary commission staff “have a circular argument going on” by arguing those other communities should have been included in the petition, but the petition cannot now be changed. Furthermore, he said the possibility has been examined over a period of years and there has been adamant opposition from other communities.

“We did an extensive outreach program with the former governor of Alaska, Sean Parnell, to include them in discussions and they all finally said no…so we didn’t see the point of including them if they were vehemently opposed to it,” he said, adding that opposition extends to the present day and petition.

The current petition received “142 written comments and two respondent briefs” during an initial comment period — with opinions sharply divided among people depending on the communities they lived in, according to the staff report.

“Nearly all of the comments from the residents of Funter Bay, Horse Island, Colt Island, and the Mansfield Peninsula were in favor of borough incorporation because of Hoonah’s stated intention to not implement a property tax,” the report states. The report also cited concerns about claims by Hoonah such as homes in Funter Bay being “just shacks” since commission staff found at least one $200 a night vacation rental in the community.

“Additionally, the enthusiastic response from the property owners on Northern Admiralty Island appears to be largely attributed to a desire to avoid being annexed by the City and Borough of Juneau and subject to that borough’s property tax,” the report states.

The areas where residents favor Hoonah’s petition were considered for annexation by CBJ in 2019, but a petition reviewed by commission staff was never accepted for filing. The Juneau Assembly in February approved a resolution opposing the inclusion of that area in Hoonah’s petition, but did not object to the remainder of the proposal.

However, there was strong opposition from Elfin Cove residents about being included in the new borough.

“LBC staff received 24 comments from residents or business owners from Elfin Cove,” the report states. “Additionally, LBC staff received a respondent brief from Elfin Cove. Not a single comment received supported borough government as proposed in the incorporation petition, and all recognized the community would be contributing tax revenue without receiving any services.”

Hoonah, in its petition documents, states boundaries and policies for the proposed borough’s remote residents, including Elfin Cove, were crafted to honor those residents’ wishes of “only limited services (and the corresponding freedom from local taxation such as a property tax).” If the current petition is approved Hoonah’s city government would be dissolved, although residents of that area would continue to pay an existing 6.5% sales tax — exempting residents in outlying areas — and a 1% seasonal sales tax would be implemented boroughwide.

However, there are also complications and unknowns if the commission’s staff suggestion for adding a broader range of communities to the borough is considered.

“Today, there does not appear to be consensus in the region for how such a regional government would operate if the municipalities of Gustavus, Pelican, and Tenakee Springs were included within the borough boundary,” the report states. “Though the residents would vote on the proposal, the petitioner’s draft charter does not account for the inclusion of either cities or town-site service areas in addition to the current community of Hoonah. If such a petition were proposed to include these additional three communities, the charter would also need to be amended to ensure balanced representation on a borough assembly and the appropriate delivery of area-wide services.”

The final commission staff report is due Aug. 4. That is scheduled to be followed by a public meeting in Hoonah on Sept. 10, a commission meeting about accepting the petition the next day and a formal written decision Oct. 11. If accepted, an election in the proposed borough would occur between 31 and 120 days after the written decision.

The most recent new borough in Alaska was Petersburg in 2013.

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.

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