Legislature(1999 - 2000)
04/07/2000 09:09 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 272
"An Act relating to the tax assessment by a home rule
or general law municipality of housing that qualifies
for the low-income housing credit under the Internal
Revenue Code; and providing for an effective date."
This was the first hearing for this bill in the Senate
Finance Committee.
JONATHAN LACK, staff to Representative Andrew Halcro,
testified that this bill would set into law, a formula for
accessing federally qualified low-income housing. He shared
that until 1998, local governments throughout the State Of
Alaska were assessing low-income housing based on a
federally restricted rental income, taking into
consideration deed restrictions and other covenants on the
properties that are required by the federal government. In
1998, he continued, the Municipality of Anchorage changed
its formula for accessing its low-income housing. He stated
the formula is now based on the market value of these units
without consideration of deed restrictions.
Mr. Lack remarked that unfortunately, because these units
have deed restrictions on the amount of rent that can be
charged, the non-profit organizations that sponsor these
housing units, couldn't raise rents to compensate for these
increased property taxes. In some cases, he shared; the
increase in property taxes through the difference in
assessment methods has been over 100 percent.
Mr. Lack stated that this bill places these low-income
housing units in jeopardy and places all units throughout
Alaska at risk. He explained that banks are refusing to
finance these projects anywhere in the state without a
uniform taxation policy. Additionally, he said, the City
and Borough of Juneau has tried to change its taxation
policy in the past, but fortunately, the non-profit
organizations were successful in their appeals to the local
boards of equalization.
Mr. Lack asserted that the bill follows the standards
approved by the "uniform standards of special appraisal
practices". He stated all Alaskan communities are affected
by the Municipality of Anchorage policy; Anchorage is the
only city affected by this legislation because other
communities properly assess their qualified low-income
housing.
Mr. Lack stressed the need to support low-income housing in
Alaska, saying that most rental housing in the state was
constructed during the pipeline days and targets single
adults. Today, he said there are more small families
looking for housing due to low-paying service industry jobs
that are replacing higher paying oil industry jobs.
Mr. Lack relayed that other states, including Washington,
Oregon, California and Hawaii, have exempted low income
housing from all property taxes. HB 272 does not go that
far, he stated. Instead, he said it only requires the
assessor take into consideration, the rent restrictions
that are on these properties. He added that this bill fills
the need for affordable housing.
ROBIN GILCRIST, President, Housing First, testified in
Juneau in support of the bill. She described the Juneau-
based non-profit housing development organization and the
need for the organization to annually appeal its
assessment. She stated that the assessment is based on a
market-value system rather than a rent restricted system.
DAN FAUSKE, CEO/Executive Director, Alaska Housing Finance
Corporation, testified in Juneau in support on bill and the
concept behind it. He thought this legislation would help
"level the playing field." He talked about the
corporation's low-income housing investments of
approximately $58 million statewide. He said this bill
would be a tool to use as the federal government is moving
away from public housing and toward more "Section 8" rent
subsidies.
Senator Donley wanted to know the public policy
ramifications. He gave a situation of a low-income family
in Anchorage that saved to buy or built a house, using AHFC
funding and is now paying a higher mortgage rate than those
living in rural areas.
Tape: SFC - 00 #80, Side A 10:44 AM
Senator Donley commented on how this bill will require low-
income homeowners to now subsidize the renters' portion of
public services. He noted that some low-income renter have
higher incomes than the homeowners do.
Mr. Fauske replied that this housing would not have been
built without some kind of "layered financing." He stressed
that building these low-income units brings in more tax
base, which eases the burden on the existing taxpayers
because there is more property to be assessed.
Senator Donley asked if those low-income residents wouldn't
have to live somewhere.
Mr. Fauske referenced a study done by the military at
Elmondorf Air Force Base, that found the number of low-
income units unacceptable. While he was not critical of
private landlords, he stated that without the input of new
stock, the state finds itself in a situation where demand
exceeds supply. He said this results in a lower quality of
units. He spoke of the large waiting list for the Section 8
program and the extensive work developers and financiers
must go through to build low-income housing.
Co-Chair Torgerson announced this bill would be brought up
at a future Committee meeting for more public testimony.
DAVID GUNDACKER SR testified via teleconference from
Anchorage that he is a retired disabled veteran living in
low-income rental housing. His biggest concern was that
banks would no longer finance housing units such as where
he lived if there were no tax break. He stressed this would
devastating for people like himself.
Senator Leman clarified that the bill would have just the
opposite affect of what the witness stated.
MIKE BURNS testified via teleconference from Anchorage to
defer his time to the next testifier.
DAVID LAWER, President, Alaska Bankers Association,
testified via teleconference from Anchorage in support of
HB 272. He referenced written testimony submitted by and
representatives from Alaskan banks. [Copies on file.]
JAN SIEBERTS testified via teleconference from Anchorage
stating that Mr. Lawer spoke on his behalf.
HUBERT GELLERT, Private Landlord, Former Chair, Board of
Equalization, Municipality of Anchorage, testified via
teleconference from Anchorage that he is currently
developing low-income housing units in Girdwood. He
supports the legislation. He challenged the appraisal
process in Anchorage, giving details of its faults.
MATT REAMS, resident of Spruce View low income housing
area, testified via teleconference from Anchorage
qualifying that he did not understand the legislative
process but did not want increased taxes that would hamper
the development of low income housing.
WILEY BROOKS, Property Manager, testified via
teleconference from Anchorage that he was not opposed to
affordable housing but he did not like special interest
legislation. He said no one was representing the small
property owners. He referenced written testimony. [Copy on
file.]
JEFF JUDD, Executive Director, Anchorage Mutual Housing
Association testified in Juneau about quality affordable
housing. His organization was in support of the bill. He
asserted that affordable housing was in a crisis situation.
Co-Chair Torgerson ordered the bill HELD in Committee.
ADJOURNED
Senator Torgerson adjourned the meeting at 11:04 AM.
SFC-00 (22) 04/07/00
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