Legislature(2007 - 2008)BELTZ 211

04/17/2007 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 136 MUNICIPAL ROAD SERVICE AREAS TELECONFERENCED
Moved SSSB 136 Out of Committee
+= SB 3 COMMUNITY DIVIDEND PROGRAM TELECONFERENCED
Moved SB 3 Out of Committee
Bills Previously Heard/Scheduled
             SSSB 136-MUNICIPAL ROAD SERVICE AREAS                                                                          
                                                                                                                                
CHAIR OLSON announced SSSB 136 to be up for consideration.                                                                      
                                                                                                                                
SENATOR THOMAS read the following statement to the committee:                                                                   
                                                                                                                                
     Senate  Bill  136 provides  boroughs  with  a means  of                                                                    
     altering  existing  road  service  area  boundaries  to                                                                    
     ensure  taxpayer fairness  among  residents of  service                                                                    
     areas. A  service area is a  taxing jurisdiction within                                                                    
     a borough that has  been established to provide special                                                                    
     services such  as road maintenance or  fire protection.                                                                    
     These  services are  requested and  approved by  voters                                                                    
     residing  within a  specific  area.  State law  permits                                                                    
     borough residents living outside  a service area to use                                                                    
     service area  roads for their sole  or legally required                                                                    
     access. These  residents derive a direct  benefit equal                                                                    
     to  residents within  the service  area,  yet they  can                                                                    
     refuse to  contribute to the  costs of  construction or                                                                    
     maintenance  of   these  roads   by  voting   down  any                                                                    
     annexation  attempt.  These  state-mandated  annexation                                                                    
     votes typically  fail as  individuals are  reluctant to                                                                    
     join a service area when  they can use these maintained                                                                    
     roads for free.  SB 136 amends state law  by allowing a                                                                    
     service area to annex property  that uses its roads for                                                                    
     their sole  or legally  required access without  a vote                                                                    
     by the owners of property to be annexed.                                                                                   
                                                                                                                                
     A  second issue  arises  where residents  of a  service                                                                    
     area pay  into a service  area even though they  do not                                                                    
     utilize  the service  area roads  for  access to  their                                                                    
     property. Service  areas, however, are  often reluctant                                                                    
     to  vote  to  remove  property from  the  service  area                                                                    
     because it  effectively raises  taxes on  the remaining                                                                    
     property owners. SB 136 amends  state law by allowing a                                                                    
     borough assembly to exercise  its judgment to alter, by                                                                    
     ordinance,  a  service  area   boundary  to  exclude  a                                                                    
     property that  does not use  service area roads  as its                                                                    
     sole or legally required access.                                                                                           
                                                                                                                                
4:01:10 PM                                                                                                                    
CHAIR OLSON asked if there is a problem the bill seeks to solve.                                                                
                                                                                                                                
SENATOR THOMAS  said there are  areas where people  have property                                                               
that is serviced but they are  not contributing to it. And others                                                               
could not get out  of a service area even if  they were not using                                                               
the roads.  It allows the borough  to remove or add  those people                                                               
to the service district. It is about fairness, he said.                                                                         
                                                                                                                                
SENATOR WAGONER said his borough has no problem with the bill.                                                                  
                                                                                                                                
SENATOR THOMAS said service districts  are self sufficient, so it                                                               
will have no impact on state money.                                                                                             
                                                                                                                                
SENATOR KOOKESH asked  about the use of the word  "annex," and if                                                               
it could mean being annexed into a borough.                                                                                     
                                                                                                                                
SENATOR THOMAS  said not a borough,  just in or out  of a service                                                               
district. He believes all service districts are in boroughs.                                                                    
                                                                                                                                
4:03:57 PM                                                                                                                    
RENEE  BROKER, Attorney,  Fairbanks North  Star Borough,  said SB
136 was  unanimously supported  by the  borough. It  allows local                                                               
governments to address  an inequity in the  road taxation system.                                                               
It  is  not  just  property  owners using  the  roads  for  free.                                                               
Businesses  also use  the roads.  A gravel-hauling  business, for                                                               
example,  can tear  up roads  but  the businesses  can refuse  to                                                               
contribute  to maintenance.  She noted  that Anchorage  is having                                                               
similar  problems.  This  bill establishes  fair  standards  that                                                               
local governments  can use to  determine whether  property should                                                               
be  in  or  out of  a  road  service  area,  she stated.  If  the                                                               
government can  put property into  a service area,  then fairness                                                               
says  property  can also  be  excluded.  The legislation  doesn't                                                               
require that  any property ultimately  be placed  in or out  of a                                                               
service  area.   The  decision  will   only  be  made   by  local                                                               
governments  after input  from people.  This  bill preserves  the                                                               
right of  the service  area to  vote on  adding any  property. It                                                               
would  be the  service area,  not the  assembly, doing  the cost-                                                               
benefit analysis. It is a big step forward in fair taxation.                                                                    
                                                                                                                                
4:07:27 PM                                                                                                                    
SENATOR WAGONER asked about gravel pits in road service areas.                                                                  
                                                                                                                                
MS. BROKER said  some gravel companies use the roads,  but if the                                                               
pit is not in the service area they don't pay anything.                                                                         
                                                                                                                                
ED  MAHONEY,  Chair, Service  District  1,  Kodiak, said  he  has                                                               
numerous issues with  the bill. Kodiak now  exempts property that                                                               
doesn't rely  on service  district roads for  access. He  said it                                                               
seems like  this is an  urban problem. In Kodiak  everyone drives                                                               
on the  service district roads.  By removing properties  it would                                                               
look like  hitting the map  with buckshot; "it would  punch holes                                                               
all through  it." He said it  isn't fair. The service  area is an                                                               
advisory to the  assembly, and has no power to  annex any parcel;                                                               
it can  only make a recommendation.  He asked if the  bill refers                                                               
to new areas or individual lots.  The language is not very clear,                                                               
he  stated. If  a parcel  has  a back  door access  but the  easy                                                               
access is through  the borough-maintained road, then  the bill is                                                               
not plugging any  loopholes. He said to be cautious.  He has been                                                               
working to get everyone in the  service district to pay, so it is                                                               
ironic that this bill comes up now, he concluded.                                                                               
                                                                                                                                
4:10:58 PM                                                                                                                    
SENATOR THOMAS asked about his concern regarding exemptions.                                                                    
                                                                                                                                
MR. MAHONEY said Kodiak has  an exemption for properties that are                                                               
in the service district but are accessed from the state road.                                                                   
                                                                                                                                
SENATOR THOMAS  said the bill won't  impact that. "If you  have a                                                               
primary access that  is not from the service  district road, then                                                               
you are not affected by this."                                                                                                  
                                                                                                                                
MR.  MAHONEY said  he doesn't  think it  will be  affected, given                                                               
what is  on the books. The  legality of right or  wrong should be                                                               
considered, he stated.                                                                                                          
                                                                                                                                
SENATOR  THOMAS  said  he  is only  talking  about  people  whose                                                               
primary or only access is in a service district.                                                                                
                                                                                                                                
MR. MAHONEY said  his problem is exempting parcels.  A state road                                                               
runs through his  service district, and if properties  are all of                                                               
a sudden removed, it will have a huge impact.                                                                                   
                                                                                                                                
SENATOR  THOMAS said  his intent  is for  people who  do not  use                                                               
those  service  district  roads  and   cannot  get  out  of  that                                                               
district. He would like to read Kodiak's policy.                                                                                
                                                                                                                                
MR. MAHONEY,  in response to  Senator Olson, said he  is speaking                                                               
as chair of his service district.                                                                                               
                                                                                                                                
CHAIR  OLSON  asked what  impact  it  would  have to  take  those                                                               
parcels out of his service district.                                                                                            
                                                                                                                                
MR.  MAHONEY  said  the  parcels are  already  exempted,  and  it                                                               
amounts to  $51,000 this year. It  is roughly a third  of what is                                                               
collected. There is a lot of concern that that isn't right.                                                                     
                                                                                                                                
4:14:37 PM                                                                                                                    
SENATOR  WAGONER  suggested  seeing   if  his  borough  ordinance                                                               
conflicts with state  law. Senator Thomas is  changing statute so                                                               
that conflict won't occur in Fairbanks.                                                                                         
                                                                                                                                
MR. MAHONEY  said Kodiak  is probably the  only borough  with the                                                               
exemption and is  probably out of compliance with  state law. The                                                               
bill will  bring Kodiak into compliance.  The exemption allowance                                                               
has been on  the books since the late 1990s.  It forces others to                                                               
pay more.  Everyone in  Kodiak uses  the service  district roads,                                                               
whether they are  going shopping or cutting across  town. He said                                                               
he is confused on how to rectify it.                                                                                            
                                                                                                                                
4:17:11 PM                                                                                                                    
SENATOR THOMAS  said that  was the  situation; people  were using                                                               
roads  that  they  weren't  paying  for,  and  that's  not  fair.                                                               
Kodiak's exemption  seems to be  the same as  is in the  bill for                                                               
people who  are not  using such  roads and could  opt out  of the                                                               
district. Kodiak may have a  different process, but it serves the                                                               
same  purpose, he  surmised.  The problem  was  that some  people                                                               
didn't  want to  let the  non-users out  of the  service district                                                               
because fees would go up for the remaining users.                                                                               
                                                                                                                                
MR.  MAHONEY said  he  concurs, but  in Kodiak,  it  is not  just                                                               
access  but  daily runs  to  church  and  stores as  a  shortcut-                                                               
sometimes six to eight times each  day. The dump trucks are tough                                                               
on the road, and it is unfair  to those with the burden of paying                                                               
for  maintenance. Regarding  the bill,  he is  "for number  3 and                                                               
against number 4."                                                                                                              
                                                                                                                                
4:19:45 PM                                                                                                                    
KATHIE  WASSERMAN, Executive  Director,  Alaska Municipal  League                                                               
(AML),  said  AML is  supportive.  The  bill gives  boroughs  the                                                               
discretion. The AML supports the entire bill, she stated.                                                                       
                                                                                                                                
CHAIR  OLSON  asked what  the  Department  of Transportation  and                                                               
Public Facilities (DOTPF) has said.                                                                                             
                                                                                                                                
SENATOR THOMAS said  there has been no comment from  it. The bill                                                               
is an issue of fairness. "If  you're using the roads, you pay, if                                                               
you're not using  the roads, you have the opportunity  to get out                                                               
of the service district."                                                                                                       
                                                                                                                                
SENATOR KOOKESH moved to report SSSB 136 from committee with                                                                    
individual recommendations and attached fiscal note(s). There                                                                   
were no objections and it was so ordered.                                                                                       
                                                                                                                                

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