Sprinkler Incentives in Alaska Law
A new law in Alaska provides additional incentives for property owners to install fire protection systems. It should be a motivation to others to know that the initiative for the law came from within the local and state fire service.
Everyone in fire protection has heard the property owner lament, “I’d really like to put in sprinklers but I just can’t afford it.” While there are many, many advantages to automatic sprinkler systems that you could describe, it is still often true that some short-term economic obstacles exist, too.
If the owner just does not have the funds, then today’s record-high interest rates may make borrowing impossible. Yet without sprinkler protection, the end result is likely to be total disaster.
A couple of similar problems have been recognized as well. First, the value of fire protection equipment increases the assessed valuation of property, resulting in assignment of a higher tax. This higher tax cuts deeply into the savings from lower fire insurance costs. Secondly, many water utilities charge water standby charges to customers with sprinklered protection. In many cases this charge has been extremely high, again cutting into the balance of any insurance savings that the property owner might have received. The conclusion of too many who added up the figures: It just wasn’t worth it!
This was the case in Alaska, and no one was more aware of the problem than the Alaskan fire service.
Presentation made
Discussion moved from the local level to the state level when Fire Marshal Robert Shirnberg of the Nikiski Fire Department made a presentation to the Alaska Fire Chief’s Association and the Alaska State Firefighters Association in 1979 on the “Community Fire Protection Incentive Program.” His presentation described the real problems of the Alaska property owners in providing the needed built-in fire protection.
The presentation went on to outline some possible solutions and methodologies for solving the problems. James Evans, Alaska Fire Chief’s Association president, named Shirnberg to head a committee to develop a possible statewide solution to these problems. The Alaska State Firefighters Association pledged its support to these efforts.
The committee members went to work to spell out a philosophy that could be taken to the state legislature, where corrective action could be taken. In communications with legislators, the committee wanted them to understand some basic premises. It was believed by the committee that to provide an adequate fire protection system for any community, a joint effort among the property owners, local and state governments must be obtained. This system must be cost effective for both the property owner and the local government, they said, but penalties for improving the fire protection system must be replaced with rewards. Somehow a cost effective method for funding the installation of fire protection and alarm systems in private property must be developed, excessive water utility charges must be removed for the property owners who install a fire protection system, and other necessary incentives must be created to encourage the private sector in the installations of fire suppression and detecting systems.
Basic premise
Probably the most basic premise of the committee was that property owners should not be taxed for fire protection improvements, specifically sprinkler systems that have been installed in the property.
The committee then presented its case for making monies available through small business loans at interest rates and terms that are compatible with possible savings through reduced insurance premiums. Ideally, if the loans were at low enough interest they could be paid for through these reduced insurance premiums.
Next the unfair water charges were opposed. Property owners who have installed sprinkler systems and have reduced dramatically the required fire flow to service their property should not be penalized with excessive water utility rates because of such installations. Instead, they argued, the water utility fee should directly reflect the lesser demand on the water systems that such protected property presents. Since it was unlikely that water utilities would institute these savings, it should be accomplished through legislation.
After many hours of very hard work and considerable effort on the part of both the Fire Chiefs Association and the Firefighters Association, the legislation was drafted.
The proposed legislation was submitted to the Alaska Legislature, where it was well received and ultimately passed by both the House and Senate. Governor Jay Hammond’s signature made the law effective last Aug. 27.
The law provides, briefly, that 2 percent of the value of a structure shall be exempt from taxation if the structure contains an approved fire protection system. This means if a property owner has installed a sprinkler, or other fire suppression system, and it provides full building protection, the assessed value of the property may be reduced by 2 percent for taxation purposes.
The law further requires water utilities to provide reduced water rates for property owners who have installed sprinkler systems. This will eliminate the very expensive standby water charges, thus eliminating a disincentive.
Also, the law provides for the State of Alaska to make loans of up to $500,000 available through the Small Business Loans Program, and the Tourism Loan Program, to property owners at a rate not to exceed 9 percent, which can be used for the installation of fire protection systems, fire alarm systems, and fire suppression systems.
Goals accomplished
This law accomplishes the three goals set down by the Alaska Fire Chief’s Association and the Alaska State Firefighters Association: providing a tax incentive, reducing the water standby charges, and providing a low-cost funding source. Given the other obvious advantages of automatic built-in protection, these groups are very optimistic about seeing more installations.
The members of the sponsoring associations feel that this legislation is possibly the single most important legislation affecting the fire protection picture in the state since statehood.
A program is currently under way in all areas of Alaska to distribute information about the new law to the property owners. All fire departments have been encouraged to take the leadership role in assisting local property owners to take advantage of the provisions of the act. Getting the law passed was only half of the battle; all Alaskan property owners must take advantage of it. Only in this way will the goals of a truly firesafe community be met.
It will take several years to assess the true effectiveness of the legislation in the reduction of loss of life and property, but the fire service in Alaska feels that a significant step has been taken.
