Legislature(2017 - 2018)BARNES 124

03/28/2017 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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Audio Topic
08:02:42 AM Start
08:03:28 AM HB156
08:32:46 AM Presentation by Chris Rose, Reap and Bert Hunter, Connecticut Green Bank
09:42:13 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation by Chris Rose, REAP and Bert TELECONFERENCED
Hunter, Connecticut Green Bank
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         HB 156-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY                                                                     
8:03:28 AM                                                                                                                    
CO-CHAIR PARISH announced that the  first order of business would                                                               
be  HOUSE BILL  NO.  156, "An  Act relating  to  a municipal  tax                                                               
exemption or deferral for economic development property."                                                                       
CO-CHAIR PARISH opened public testimony on HB 156.                                                                              
8:03:51 AM                                                                                                                    
JOHN   MOOSEY,  Manager,   Matanuska-Susitna  (Mat-Su)   Borough,                                                               
Palmer, Alaska,  testified in  support of HB  156.   He mentioned                                                               
the state's heavy reliance on  oil and municipalities being asked                                                               
"to  share in  that burden."   He  said the  proposed legislation                                                               
would give  municipalities the tools other  states currently have                                                               
to compete in  a world market and have a  part in raising revenue                                                               
to  cover   governmental  costs   and  provide  jobs   for  their                                                               
8:05:11 AM                                                                                                                    
GEORGE  PIERCE  testified in  opposition  to  HB  156.   He  said                                                               
legislators have taken an oath  to represent all Alaskans, but he                                                               
opined that  instead of  doing so,  they instill  exemptions, tax                                                               
breaks, and  incentives for  "special people,"  corporations, and                                                               
non-profit  organizations.   He said  the City  of Soldotna  owns                                                               
prime acreage along the Kenai  River, yet its Chamber of Commerce                                                               
is allowed  extended time to get  enough funding to get  land and                                                               
build a  structure on it.   He questioned why, if  the city needs                                                               
financial support  from the  state every year,  it does  not sell                                                               
its prime  acreage.  Mr.  Pierce emphasized that  everyone should                                                               
pay equally, but  when special interest groups  are exempted, the                                                               
people pay the  price.  He stated, "It's a  revenue killer - it's                                                               
not a helper.  People who want  to invest in Alaska should not be                                                               
getting  special  treatment."   He  urged  the committee  not  to                                                               
support HB 156.                                                                                                                 
8:08:44 AM                                                                                                                    
JEREMY  PRICE,  Director,  Americans  for  Prosperity  -  Alaska,                                                               
testified in  support of HB 156,  which he said would  give local                                                               
governments greater  control over managing  long-term investments                                                               
that would  provide greater tax  revenue for municipalities.   He                                                               
opined that local governments should  have greater flexibility to                                                               
provide property tax  exemptions based on the  knowledge of local                                                               
elected  officials  who  often   have  firsthand  experience  and                                                               
knowledge  of development  projects  within their  jurisdictions.                                                               
He stated that the current  statute of five years seems arbitrary                                                               
and  unnecessary when  local  officials should  be  able to  make                                                               
decisions  at the  local level.   He  concluded, "Flexibility  is                                                               
needed  now more  than ever  for local  governments to  determine                                                               
where scarce resources  should be used and  how public investment                                                               
should be managed."                                                                                                             
8:09:53 AM                                                                                                                    
KEN SLAUSON  said that although he  is the chairman of  the Board                                                               
of  Supervisors  for  the  Central Mat-Su  Fire  Service,  he  is                                                               
testifying on behalf  of himself.  He said he  is concerned about                                                               
certain aspects  of HB 156.   He  stated that the  Central Mat-Su                                                               
Fire Service derives its entire  revenue for fire and life safety                                                               
operations  from  property taxes,  and  every  time a  commercial                                                               
structure  is  exempted, fire  service  is  provided without  any                                                               
revenue to cover  it.  He said, "We already  do this for schools,                                                               
for government  buildings, for  churches, [and]  for a  number of                                                               
other worthy  causes."  He  indicated that  HB 156 does  not have                                                               
sufficient checks  and balances  to accommodate the  fire service                                                               
in  dealing with  large gas  facilities or  warehouses that  have                                                               
"substantial fire  exposure."  He  said while Mat-Su has  a large                                                               
service area,  he suspects that  the impact  [of HB 156]  on even                                                               
smaller service areas  would be worse, and he  warned that giving                                                               
exemptions to large  property operations would shift  the cost to                                                               
homeowners, which he said gives him concern.                                                                                    
8:12:34 AM                                                                                                                    
CO-CHAIR PARISH asked  if Mr. Slauson's concern is  shared by his                                                               
MR. SLAUSON  reminded Co-Chair Parish  that he was  testifying on                                                               
behalf of himself, but surmised the answer is yes.                                                                              
8:13:41 AM                                                                                                                    
DAN TUCKER testified that he is  a member of two local boards but                                                               
is testifying  on behalf of himself.   He said HB  156 has "snuck                                                               
up" in  such a  manner that  he and [Mr.  Clausen] have  not been                                                               
able to get  together to discuss its possible  ramifications.  He                                                               
indicated that  they had  spoken about  the legislation  that was                                                               
introduced during the Twenty-Ninth  Alaska State Legislature.  He                                                               
said  he  would  "speak  with the  same  knowledge  and  relative                                                               
awareness as  Mr. Clausen."  He  stated that he is  familiar with                                                               
efforts required to  maintain adequate roads.  He  opined that HB
156 does  not "take this into  consideration."  He said  there is                                                               
great potential  for increased  traffic, for  example, on  a road                                                               
that  carries  numerous vehicles  to  a  new facility,  but  [the                                                               
proposed   legislation   makes]   "no   consideration   for   the                                                               
maintenance of that road."                                                                                                      
MR. TUCKER  stated that he has  worked over 35 years  as a career                                                               
fire fighter  - 29 of  those years in  Anchorage.  He  noted that                                                               
Mr. Clausen  had made note of  structures that are tax  exempt or                                                               
tax-free,  such as  churches  and large  public  facilities.   He                                                               
added that those are the  buildings that demand the highest level                                                               
of fire service  response and for which  insurance companies deem                                                               
the  fire  stations  must be  adequately  equipped,  manned,  and                                                               
within close proximity.   He said, "That takes money."   He said,                                                               
"We're talking  about adding potential structures  that would tax                                                               
the limits  of the services  available without giving  any credit                                                               
to responding to that from a fiscal standpoint."                                                                                
MR.  TUCKER said  he does  not  know if  there is  much room  for                                                               
development in  the road service  area number nine  (RSA9), which                                                               
includes Wasilla,  but the upgrade  of the meridian in  that area                                                               
has cost his residential service  area $37,000 a year to maintain                                                               
a Seward  meridian.   He said he  does not view  that as  a local                                                               
road, and  if any more  structure or  "load" was added  onto that                                                               
road,  the maintenance  cost of  it would  rise.   He said  he is                                                               
familiar with the infrastructure  services pertaining to fire and                                                               
roads and realizes that "the fire  insurance rates for all of the                                                               
residents and  commercial structures are  based on being  able to                                                               
provide the  required, adequate  fire protection  - but  again it                                                               
costs money to keep that adequate."   Mr. Tucker stated that road                                                               
maintenance has a  significant effect on the ability  of fire and                                                               
emergency medical services (EMS) to respond.                                                                                    
8:18:01 AM                                                                                                                    
CO-CHAIR  PARISH asked  Mr. Tucker  what changes  would make  the                                                               
bill more palatable.                                                                                                            
MR.  TUCKER first  suggested a  time limit  of five  years on  an                                                               
exemption should allow the developer  a solid start on a project,                                                               
and  he opined  that after  five  years the  developer should  be                                                               
paying  taxes  like  everyone  else.   Second,  Mr.  Tucker  said                                                               
essential infrastructure services  - fire and EMS -  are not paid                                                               
for out  of the general  fund but solely by  taxes.  He  said, "I                                                               
believe  those should  be exempted  from the  tax and  that those                                                               
services  should  be  covered  and  taxed  as  if  there  was  no                                                               
exemption at all."                                                                                                              
8:19:34 AM                                                                                                                    
MICHAEL SHIELDS  testified that  although he  is a  supervisor of                                                               
the Butte road service area  in Palmer, Alaska, and the secretary                                                               
of the  borough-wide local road  service area advisory  board, he                                                               
is testifying  on behalf of  himself.   He echoed the  comment of                                                               
Mr.  Tucker  that [HB  156]  "snuck  up on  us."    He said  road                                                               
service,  life/fire service,  and  emergency medical  technicians                                                               
(EMTs) are  funded by  property taxes  specific to  those defined                                                               
services areas.   He said HB  156 would add road  miles, which he                                                               
said  would probably  increase  traffic  and related  maintenance                                                               
costs, but it  would eliminate the funding source.   He said that                                                               
would  leave raising  the mil  rate on  residents in  the service                                                               
area as  the only option.   He said he would  like a cost/benefit                                                               
analysis   done   on  that   scenario   to   better  inform   the                                                               
legislature's discussion on HB 156.                                                                                             
MR. SHIELDS  posited that service  areas should be exempted.   He                                                               
concurred  with Mr.  Tucker that  a  time limit  on property  tax                                                               
exemption  should be  made;  he stated  his  preference that  the                                                               
limit be set at  5 years - at the most 10 years.   He opined that                                                               
if a  developer cannot afford  property taxes, which is  a normal                                                               
cost  of  doing business,  then  he/she  should  not be  in  that                                                               
business.   Mr. Shields  concluded that  Alaska is  notorious for                                                               
building "new  stuff" and not being  able to maintain it,  and he                                                               
expressed concern  that HB 156  would accelerate that trend.   He                                                               
added that  he does not  think the intent  of HB 156  could "pass                                                               
the red-face test."                                                                                                             
8:21:36 AM                                                                                                                    
REPRESENTATIVE SADDLER asked Mr. Shields  what the trend has been                                                               
in the assessed valuation in the Mat-Su Borough.                                                                                
MR. SHIELDS answered  that it has been "pretty flat"  in the last                                                               
few years.   He  explained that  raising the  mil rate  above the                                                               
existing tax  cap takes  a vote of  the people.   He said  he has                                                               
attempted that  twice with  no success.   He said,  "We're barely                                                               
holding  our  own  with  our   current  maintenance  load."    He                                                               
indicated that an attempt to  raise the mil rate could counteract                                                               
HB 156 but,  based on past history, he questioned  the success of                                                               
asking people to pay more taxes.                                                                                                
REPRESENTATIVE SADDLER  indicated that  he has heard  that Mat-Su                                                               
Borough  has been  growing  at  a rate  that  necessitates a  new                                                               
school  built every  year.    He said  he  assumes that  reflects                                                               
increased  residential construction.    He asked  Mr. Shields  to                                                               
confirm  that  he  had  said the  total  assessed  valuation  has                                                               
remained flat in recent years.                                                                                                  
MR. SHIELDS answered yes, but suggested  part of that may have to                                                               
do with how often the existing property can be reassessed.                                                                      
REPRESENTATIVE  SADDLER  said he  would  like  to hear  from  the                                                               
borough  about  this  issue, because  the  information  from  Mr.                                                               
Shields  seems to  run  counter  to the  basis  for the  proposed                                                               
MR.  SHIELDS added  that new  homes  are "going  for good  price"                                                               
while existing homes don't seem to be going for much.                                                                           
8:24:15 AM                                                                                                                    
CO-CHAIR PARISH,  after ascertaining that  there was no  one else                                                               
who wished to testify, closed public testimony on HB 156.                                                                       
[HB 156 was held over.]                                                                                                         

Document Name Date/Time Subjects
HB 156 Legal Memo 17-271dls.pdf HCRA 3/28/2017 8:00:00 AM
HB 156
Bert Hunter - Green Bank Presentation.pdf HCRA 3/28/2017 8:00:00 AM
GreenBankWhitePaper .pdf HCRA 3/28/2017 8:00:00 AM