Legislature(2001 - 2002)
04/08/2002 01:40 PM Senate CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 352-MUNICIPAL TAXATION OF AGRICULTURAL LAND
WILDA RODMAN, aide to Senator Gene Therriault, read the following
sponsor statement into the record:
The State of Alaska has been careful to recognize that
there is a public purpose served when land used for
farming and other agricultural activities is classified
and restricted for agricultural use. One key element of
restricting land for agricultural use is that, so long
as it is so classified and restricted, the land should
be assessed and taxed at a rate that is based on farm
value, rather than on land sales that are often higher
than farm value.
The state recognized the need for assessing fee simple
land, used for agriculture, on its farm value and
provided a farm exemption under AS 29.45.060. The
statute did not specifically include state restricted
agricultural use lands, since these lands, by
definition, could only be used for agriculture.
Unfortunately, the assessment of state restricted
agricultural lands is subject to rising taxes as local
assessors increasingly use comparable sales to assess
these lands while ignoring the agricultural value of
these restricted use lands.
Often state restricted agricultural use land cannot
meet the requirements of AS 29.45.060. Yet, land sold
by the state and restricted to agricultural use can
only be used for agricultural purposes, therefore
precluding other uses of the land. Thus, assessments
should be based on the value of the crops that can be
produced, not on other perceived values or land sales.
SB 352 re-affirms the public purposes of the state's
designation of certain lands for agricultural purposes
only. It removes the requirement that owners of
agricultural land apply for and receive a determination
of agricultural use before receiving the farm exemption
assessment provided by AS 29.45.060.
MS. RODMAN said SB 352 is a companion bill to HB 455, which was
amended in a House committee. She provided members with copies of
the amendment.
SENATOR TORGERSON called for teleconferenced testimony.
STEVE VAN SANT, state assessor, said he was available to answer
questions.
CHAIRMAN TORGERSON asked him if he supported the bill as amended
in the House.
STEVE VAN SANT replied they didn't oppose it.
SENATOR PHILLIPS asked for the definition of "certain."
MR. VAN SANT replied the amendment applied to page 2, line 5
where "for farm use in accordance with this section" is deleted
and "based upon that restricted use" is inserted. The intent was
that land restricted to agricultural use would be assessed based
on that use. That doesn't mean that it would be based on farm us
because the land isn't required to be farmed. Some land is
required to be cleared but not farmed so the intent was that
those lands would be assessed based on what those lands are
selling for.
SENATOR PHILLIPS said he was referring to the title change in the
proposed amendment \A.1 in which "certain" replaces "farm or" on
page 1 line 1. He asked if this was defined by page 2, line 5.
MR. VAN SANT said the legal department changed the title, but it
was referring to the agricultural restricted lands.
CHAIRMAN TORGERSON asked for the status of HB 455.
MS. RODMAN replied it came over to the Senate that day and
received referrals to the Community and Regional Affairs and
Resources Committees.
CHAIRMAN TORGERSON announced they would take action on HB 455 at
a later meeting. They would take testimony on SB 352, but take no
action.
SENATOR AUSTERMAN said he didn't find reference to the last
sentence of the sponsor statement in the bill.
MS. RODMAN replied, "They receive that determination… where it
says, 'This subsection does not apply to a person with an
interest in land that is classified…."
SENATOR AUSTERMAN said he wasn't familiar with agricultural land
and was having difficulty reading that out of the bill itself. He
then asked whether it referred to the new language at the bottom
of page 1 and top of page 2 and that is what removes the
requirement.
MS. RODMAN said that is her understanding, but Ed Arobio was on
line and could address the question more specifically.
CHAIRMAN TORGERSON replied they would hear from him later.
ROB WELLS, Director of the Division of Agriculture testified in
support of the bill and said they have been working with the
assessor's office on this version of the bill. Their support is
based on interest from farmers who feel they should not be
required to fill out the application for farm use land since they
are restricted to agricultural use as conveyed by the state at
purchase.
JOHN TOBIN testified via teleconference from Fairbanks in support
of SB 352. He testified on HB 455 previously. His land assessment
has increased almost 500 percent in the last two years and the
added tax burden makes it difficult to make ends meet.
STEWART DAVIES testified via testified teleconference from
Fairbanks in support of SB 352. He purchased his land in 2000
knowing it had a restrictive agricultural covenant. His current
assessment is at $400.00 per acre and is based on comparable
sales in the borough. They don't acknowledge inherent differences
between fee simple title property and agricultural restricted
land. Filing yearly for the farm use exemption to get a reduced
assessment is redundant since the land already has an
agricultural restriction placed on it by the State of Alaska.
SENATOR AUSTERMAN asked why subsection (b) from page 1 couldn't
be deleted altogether.
ED AROBIO from the Division of Agriculture explained the statute
was originally set up for completely fee simple land that was
being used for farming so that is the reason for the other
sections of the bill.
SENATOR AUSTERMAN asked again whether subsection (b) couldn't be
eliminated.
MR. AROBIO didn't believe they would support that and the borough
probably wouldn't either because it applies to other land that is
being used for farming as well as the restricted land discussed
here.
CHAIRMAN TORGERSON asked Mr. Van Sant for his thoughts on
eliminating subsection (b).
MR. VAN SANT said, "First I nearly had a heart attack." The
subsection was included to take the pressure off farmers to sell
their fee simple farmland to developers by lowering the property
taxes. It is quite important.
CHAIRMAN TORGERSON asked him what the assessed value would be on
state agricultural land if the bill passed.
MR. VAN SANT replied it would be helpful to give a theoretical
explanation. A piece of fee simple land might be assessed at
$300.00 per acre based on farm use, but have a full value of
$1,000.00 to $3,000.00 per acre. Then there are state
agricultural restricted lands that are selling for $400 to $600
per acre that the assessor is assessing at that rate. Some people
are under the impression that the assessor is assessing that land
at values other than agricultural restricted land. You aren't
going to find land that you can buy in large chunks for $400.00
per acre in this state. That is the assessed value of
agricultural restricted land. This is a reiteration that the
assessor will assess this land based on the agricultural
restricted value of $400-$600 per acre or whatever it may be.
CHAIRMAN TORGERSON said his reading is that Section 1 exempts
them from subsection (b) then Section 2 subsection (f) is the
mechanism for assessing.
MR. VAN SANT agreed, based on the restricted use.
CHAIRMAN TORGERSON said the bill would be held and the committee
would act on the companion bill the following week.
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