Legislature(2003 - 2004)

04/23/2004 08:42 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 241                                                                                                            
     An Act relating to optional exemptions from municipal                                                                      
     property taxes on residential property.                                                                                    
Representative  Chenault  MOVED  to  ADOPT  Work  Draft  #23-                                                                   
LS0851,  Version  S,  Cook, dated  4/22/04.  There  being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
REPRESENTATIVE MIKE CHENAULT,  SPONSOR, explained that HB 241                                                                   
contains three  different provisions. The first  provision in                                                                   
Section  1 gives  municipalities  the  option  to provide  an                                                                   
exemption  of  up to  $25  thousand on  residential  property                                                                   
taxes. This must be done by ordinance  within a municipality.                                                                   
Currently,  five  municipalities  take  advantage  of  a  $10                                                                   
thousand  tax  exemption,  and  this bill  would  provide  an                                                                   
option   of  increasing   it  to  $25   thousand.  The   five                                                                   
municipalities  are  Bristol  Bay  Borough,  Kenai  Peninsula                                                                   
Borough, Fairbanks  North Star  Borough, North Slope  Borough                                                                   
and the City of Valdez.                                                                                                         
Representative  Chenault  said  that  Section  2  deals  with                                                                   
municipalities' ability by ordinance  to partially or totally                                                                   
exempt all types of deteriorated  property from taxation. The                                                                   
properties  would be  exempt only  if located  within a  city                                                                   
center  or an  urban  center  identified in  a  comprehensive                                                                   
Representative  Chenault noted  that he  has an Amendment  #1                                                                   
relating  to  the  third  section   of  the  bill.  The  bill                                                                   
currently reads  that a municipality could exempt  within its                                                                   
boundaries  up to  $10  thousand of  the  assessed value  for                                                                   
property owned  and occupied  in a high  crime area by  a law                                                                   
enforcement officer.                                                                                                            
Representative Stoltze  asked the protections for  a property                                                                   
owner who  has to  pay the  insurance rates  in a high  crime                                                                   
area.  Representative  Chenault  noted  that it  is  not  his                                                                   
section of  the "catch-all bill."   He explained  the wording                                                                   
change in Amendment #1 removing  a high crime area because of                                                                   
concern  that the terminology  would lead  to insurance  rate                                                                   
increases.  The language  was changed  to "an eligible"  area                                                                   
and  a subsection  in  Amendment #1  deals  with an  eligible                                                                   
REPRESENTATIVE  RALPH  SAMUELS  spoke  to  Section  2  giving                                                                   
municipalities the choice to offer  tax rebates as additional                                                                   
options  in  financing  mechanisms to  implement  their  town                                                                   
centers. The language is straightforward  and gives the mayor                                                                   
and the assembly leeway to move forward with a town plan.                                                                       
STEVE  VANSANT,   STATE  ASSESSOR,   DIVISION  OF   COMMUNITY                                                                   
ADVOCACY,  DEPARTMENT OF  COMMUNITY  & ECONOMIC  DEVELOPMENT,                                                                   
VIA  TELECONFERENCE,  ANCHORAGE,  discussed  that  the  State                                                                   
assessors  found  Section  2  of  the  Work  Draft  confusing                                                                   
because  it appears  to give  two  different exemptions.  The                                                                   
primary change  seems to extend  the exemption to  ten years.                                                                   
If that  were true, he suggested  that the first  sentence be                                                                   
entirely removed, and to replace  the words "five years" with                                                                   
words "ten years" on line 9.                                                                                                    
Mr. Vansant agreed  with all the other changes.  He supported                                                                   
the  change  in  Section  3 regarding  the  high  crime  area                                                                   
because  it  could  have  increased  insurance  premiums  and                                                                   
decreased the values in that area.                                                                                              
HOWARD  LEVINE,  VIA  TELECONFERENCE, stated  that  the  bill                                                                   
would  be a  catalyst  for  redevelopment. Changing  the  tax                                                                   
abatement  period   from  five  to  ten  years   would  allow                                                                   
developers and  property owners to invest capital  into prime                                                                   
redevelopment  areas that  would otherwise  be too costly  to                                                                   
develop. This  unique community  revitalization would  not be                                                                   
possible without the additional tax abatement.                                                                                  
JEFF  JUDD,  DIRECTOR  OF  OPERATIONS,   COOK  INLET  HOUSING                                                                   
AUTHORITY,  VIA  TELECONFERENCE   stated  that  the  regional                                                                   
nonprofit  strongly  supports  the provisions  of  the  bill,                                                                   
especially  the ability  for  local municipalities  to  abate                                                                   
property  taxes  for  deteriorated  property for  up  to  ten                                                                   
years.   This   would   promote   urban   revitalization   in                                                                   
underutilized, deteriorated property.  The amendment would be                                                                   
beneficial  to the  efforts of  local  government, profit  or                                                                   
nonprofit organizations  to revitalize  these areas.  He said                                                                   
that  these   revitalization   efforts  are  extremely   cost                                                                   
prohibitive without  substantial State support,  with the end                                                                   
result generally that quality  development cannot take place.                                                                   
The  ultimate  long-term  gain  is  in  assessed  values  and                                                                   
property taxes.   The bill is about economic  development and                                                                   
creating  healthy  neighborhoods  and     Mr.  Judd  strongly                                                                   
recommended its passage.                                                                                                        
PETE ECKLUND,  STAFF TO REPRESENTATIVE WILLIAMS,  referred to                                                                   
the  3-page fiscal  note to  the original  bill, FN  #3.   He                                                                   
explained  that  the  estimated revenues  diverted  from  the                                                                   
State  General Fund  to municipalities  could be  up to  $1.6                                                                   
million  under the original  bill. The  revised fiscal  note,                                                                   
which hasn't been  received yet, should change  the figure to                                                                   
about $589 thousand.                                                                                                            
Representative  Croft  referred to  the  suggestion to  amend                                                                   
Section 2.  He asked Mr. Judd  if deleting the first sentence                                                                   
and changing  the "five" to "ten,"  on page 2, line  24 would                                                                   
carry  any collateral  problems.  Mr.  Judd  did not  believe                                                                   
there would be negative consequence  to the suggestion by the                                                                   
State  Assessor  to  amend  line 6.  The  first  sentence  in                                                                   
Section  2   targets  the  additional  abatement   period  to                                                                   
deteriorated properties specifically  located within an urban                                                                   
center identified  in a comprehensive plan or  other document                                                                   
adopted by  a municipality.  However,  he said that  it would                                                                   
open up  the ten-year abatement  period for any  deteriorated                                                                   
property not specifically located within the town center.                                                                       
Representative  Croft agreed that  Section 2 appears  to give                                                                   
two separate  and distinct  exemptions.  He  asked if  it was                                                                   
intended to be two different ones.   Mr. Judd said the intent                                                                   
was to  distinguish the period  of abatement possibility  for                                                                   
properties  either  inside  or   outside  of  a  city  center                                                                   
identified in  a comprehensive plan.   He was not  opposed to                                                                   
deleting the first sentence if  it didn't diminish the bill's                                                                   
support by local  governments.  Changing from five  to ten in                                                                   
the  current  law  wouldn't  deteriorate  local  governments'                                                                   
ability to  revitalize deteriorated  sites but he  questioned                                                                   
if  local  governments would  support  the  bill if  it  were                                                                   
opened  to any deteriorated  property  within or outside  the                                                                   
city center.                                                                                                                    
Representative Chenault  MOVED to ADOPT Amended  Amendment #1                                                                   
with conforming changes  as follows:  "Page 3,  line 2: Amend                                                                 
bill section  3 to read:"  [Page  1, line 11 to page  2, line                                                                 
4: Amend bill section 2 to read:]                                                                                               
There  being  NO  OBJECTION, the  Amended  Amendment  #1  was                                                                   
Sec. 2.  AS 29.45.050 is amended  by adding a  new subsection                                                                   
to read:                                                                                                                        
(s) A municipality may by ordinance  designate an area within                                                                   
its boundaries as                                                                                                               
 HIGH CRIME]  an eligible  area and  exempt from taxation  an                                                               
amount not  to exceed $10,000  of the assessed value  of real                                                                   
property  within the  area that  is owned and  occupied  as a                                                                   
permanent place  of abode by  a law enforcement  officer. The                                                                   
ordinance  must  include  a definition  of  "law  enforcement                                                                   
officer." A municipality that  adopts an ordinance under this                                                                   
subsection  may   not  request  state  funds   to  cover  any                                                                   
municipal budget  shortfall caused by the ordinance.  In this                                                               
subsection,  "eligible   area"  means  an  area   within  the                                                             
municipality  that would  be eligible  for designation  as an                                                               
urban  empowerment zone  under  the urban  empowerment  zones                                                               
program  of  the  federal department  of  housing  and  urban                                                           
development,  as a HUB  zone under  the HUB zone  empowerment                                                               
program  of  the federal  small  business  administration,  a                                                             
neighborhood  revitalization   area  as  designated   by  the                                                               
federal department of housing  and urban development or as an                                                               
eligible neighborhood under the  weed and seed program of the                                                               
federal department  of justice,  whether or  not the  area is                                                             
actually so  designated, or an  area within the  municipality                                                               
with a  statistically higher occurrence  of crime  than other                                                               
areas of the municipality.                                                                                                
Representative Croft proposed  a conceptual Amendment #2 that                                                                   
would  delete the  first  sentence on  page  1, lines  13-14,                                                                   
delete language  on page 2, lines  1-3 and part of  line 4 up                                                                   
to "municipality,"  and add the word "ten"  instead of "five"                                                                   
on page 2, line 24.                                                                                                             
There  being  NO  OBJECTION,   conceptual  Amendment  #2  was                                                                   
TAPE HFC 04 - 95, Side B                                                                                                    
Representative  Foster MOVED to  report CSHB 241(FIN)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note. There  being NO OBJECTION,  it was                                                                   
so ordered                                                                                                                      
CSHB 241(FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and  with  two  previously  published  fiscal                                                                   
impact notes.                                                                                                                   
The meeting was recessed at 9:33 A.M.                                                                                           
TAPE HFC 04-96, Side A                                                                                                      
House Finance  Committee reconvened at 10:11  A.M. with Vice-                                                                   
Chair Meyer  chairing the meeting.  All members  were present                                                                   
with the exception of Co-Chair  Williams and Co-Chair Harris.                                                                   

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