Legislature(2003 - 2004)
04/23/2004 08:42 AM House FIN
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* first hearing in first committee of referral
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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
plan.
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
area.
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
adopted.
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
adopted.
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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