(a) - An order confirming plan was filed on July 21, 1993 (Docket No. 43), providing in paragraph 5 that the debtor would surrender the collateral securing the Kenai Peninsula Borough's Proofs of Claim Nos. 3 and 4 for $26.92 and $1,172.67 respectively in full satisfaction of the claims. The reason for this treatment, which came up at the confirmation hearing, was that the debtor did not address these claims in the plan. The borough filed a motion for reconsideration on August 3, 1993 (Docket No. 47), asking that the claims be allowed as secured claims with interest at 12%. Debtor responded on August 9, 1993 (Docket No. 49) that the claims could be paid out of some money that was freed up by the withdrawal of a Municipality of Anchorage claim.

(b) - The court will only allow the small claim and not the large one. The small claim (POC No. 3) for $26.92 is for personal property taxes, and the large claim (POC No. 4) is for prepetition real property taxes.

Under Alaska law, the taxpayer is not personally liable for real property taxes which are in rem charges against the land. See, AS 29.45.300 and .320 and Libby , McNeill & Libby v City of Yakutat, 206 F2d 612, 613-14 (9th Cir 1953). Thus, it seems inappropriate to pay the real property tax claim in a chapter 13 case where the debtor no longer any interest in the real property and the borough can presumably recover its claim in a tax foreclosure.

Also, the borough is not entitled to interest on its priority tax claim. No interest is due on a priority tax claim in chapter 13 (except, possibly, in the unusual case of a completely solvent estate). In re Hageman, 108 BR 1016 (Bankr ND Ia 1989) and In re Quick, 152 BR 902, 906 (Bankr WD Va 1992).

Therefore, IT IS ORDERED that,

1. Proof of Claim No. 3 - Reconsideration is granted concerning Proof of Claim No. 3 which is allowed for $26.92 as a priority tax claim under § 507(a)(7) of the Bankruptcy Code (i.e., not a secured claim) to       3 ABR 231  be paid without interest before the general unsecured claims.

2. Proof of Claim No. 4 - The court denies the motion to reconsider Proof of Claim No. 4 since the borough appears to be in first position on real property and can foreclose and recover that under real property tax collection procedures. The borough shall receive no distribution from the trustee for Proof of Claim No. 4.

DATED: August 12, 1993.

HERBERT A. ROSS
U.S. Bankruptcy Judge