03/27/1998 03:28 PM House L&C

HB 324 - MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS                               
                                                                               
Number 0257                                                                    
                                                                               
CHAIRMAN ROKEBERG announced the committee's first item of business             
was HB 324, "An Act relating to liens for municipal assessments for            
certain utility improvements."  He asked the sponsor's                         
representative to briefly explain the differences between HB 324               
and the proposed committee substitute.                                         
                                                                               
Number 0260                                                                    
                                                                               
DAVE STANCLIFF, Legislative Assistant to Representative Scott Ogan,            
came forward to testify.  Mr. Stancliff said it was the sponsor's              
original intent to provide relief for people who could not afford              
to hook-up to a utility for various reasons.  He said it had been              
discovered in the last committee meeting [House Labor and Commerce             
Standing Committee meeting February 9, 1998], and after                        
conversations with municipal officials, that requiring                         
municipalities to grant complete exemptions could jeopardize the               
financing package and cause problems for the local improvement                 
district (LID) process.  He stated the proposed committee                      
substitute has been changed to simply grant, and make it clear in              
statute, that local governments can provide a deferment according              
to their terms and conditions for people who are elderly,                      
economically disadvantaged or otherwise unable to meet this cost.              
Mr. Stancliff emphasized that the deferment does not mean the debt             
goes unpaid.  It can be deferred as long as municipalities wish and            
that debt would still be liable when the property changed hands.               
He said the bill was much more friendly toward the municipal                   
governments.  The proposed committee substitute for HB 324, labeled            
0-LS1150\B, Cook, dated 3/25/98, read:                                         
                                                                               
     * Section 1.  AS 29.46.020 is amended by adding a new                     
     subsection to read:                                                       
          (d) A municipality may by ordinance provide for                      
     deferral of payment of all or part of the assessments on                  
     real property owned and occupied as the primary residence                 
     and permanent place of abode by a resident who is elderly                 
     or economically disadvantaged as determined under                         
     criteria established in the ordinance.  The assessment                    
     becomes due when the property ceases to be owned by the                   
     resident who qualified for the deferral.                                  
                                                                               
Number 0380                                                                    
                                                                               
CHAIRMAN ROKEBERG confirmed the deferred amount would attach to the            
title of the land and have to be satisfied upon the transfer of                
title.                                                                         
                                                                               
MR. STANCLIFF agreed that was correct.                                         
                                                                               
Number 0398                                                                    
                                                                               
REPRESENTATIVE JOHN COWDERY asked if the deferment had to be until             
the transfer of title, questioning whether this would work in a                
situation he knew of, where the wage earner had been in an accident            
and was "pretty stretched for a dollar" for a couple of years.                 
                                                                               
Number 0323                                                                    
                                                                               
MR. STANCLIFF indicated the municipalities could set up any systems            
they wanted to work with people who might be economically                      
disadvantaged for a couple of years in the situation Representative            
Cowdery described.  He added the examples of a single mother or                
elderly person.                                                                
                                                                               
Number 0458                                                                    
                                                                               
REPRESENTATIVE BILL HUDSON said the state of Oregon has "sort of"              
a senior property tax deferral, asking if this was similar.  He                
commented he was thinking a lot of seniors in Alaska could be in               
situations where what they had always considered to be their                   
retirement homes had become such valuable pieces of property that              
they could not afford the tax loads.  He gave the example of                   
seniors with beach-front homesteads on Fritz Cove Road in Juneau,              
mentioning changes in property value and tax mechanism.                        
Representative Hudson noted this could possibly solve some of these            
peoples' problems because the municipality could give them an                  
option to defer the taxes until their death.  He indicated this                
would allow them to stay in their homes, with the taxes due from               
any heirs.  Representative Hudson asked if that was what Mr.                   
Stancliff saw the proposed committee substitute for HB 324 doing.              
                                                                               
Number 0530                                                                    
                                                                               
MR. STANCLIFF replied, "Very much."  He said they had been offered             
some language from either Washington or Oregon, he believed, to do             
exactly that.  He said they used that generic approach here, and               
the drafter, Tamara Cook, put it into her style.  Mr. Stancliff                
indicated the problem in statute is a difference in interpretation             
of assessment for equal use, noting the Matanuska-Susitna (Mat-Su)             
Borough's attorney said the borough felt it needed something a                 
little clearer in statute to give the borough the ability.                     
                                                                               
Number 0566                                                                    
                                                                               
REPRESENTATIVE JOE RYAN asked the chairman, noting the chairman's              
real estate background, if the assessment would come due on                    
transfer of inherited property to the beneficiary or if they would             
have to wait for the sale of the property.                                     
                                                                               
Number 0595                                                                    
                                                                               
CHAIRMAN ROKEBERG said it was a very good question.  He indicated              
he thought it would come due on inheritance, based on his reading              
of the last sentence of the bill ["The assessment becomes due when             
the property ceases to be owned by the resident who qualified for              
the deferral."].  He commented on the wording, "ceases to own",                
noting he thinks there is a reason for that use of the words; it               
would account for various changes or transfer of title.  Therefore,            
he said, whoever came into title would assume that obligation,                 
which is normally a payment amortized over a period of years with              
accrued interest.  He stated, "So, I - I think that that would be              
the case.  It's like a - a covenant that attaches itself to the                
land ... and it goes with the land until it's satisfied.  It's a               
lien, actually, on the property and would show up on the title                 
report as a lien on the property."                                             
                                                                               
Number 0648                                                                    
                                                                               
REPRESENTATIVE RYAN said, "My only concern is that some sharper                
attorney may put a clause in there that the property would escheat             
to the governmental unit at the time."                                         
                                                                               
Number 0663                                                                    
                                                                               
CHAIRMAN ROKEBERG said he thinks this is a permissive type of                  
ordinance.  It grants an election to a municipal government and                
allows the government to make its decision; he thinks the municipal            
government could develop a construct around that.  He commented,               
"And we don't want to have no attorneys screwing with our laws that            
we make, how's that?"  With that, Chairman Rokeberg stated he would            
accept a motion to adopt the proposed committee substitute.                    
                                                                               
Number 0693                                                                    
                                                                               
REPRESENTATIVE HUDSON made a motion to adopt the proposed committee            
substitute for HB 324, Version B, for consideration.  There being              
no objections, Version B of HB 324 was adopted.                                
                                                                               
Number 0764                                                                    
                                                                               
REPRESENTATIVE HUDSON made a motion to move the proposed committee             
substitute for HB 324, Version B, out of committee with zero fiscal            
note and individual recommendations, asking unanimous consent.                 
There being no objections, CSHB 324(L&C) was so moved.