Legislature(2015 - 2016)BELTZ 105 (TSBldg)
04/12/2016 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB370 | |
| HB209 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 370 | TELECONFERENCED | |
| + | HB 209 | TELECONFERENCED | |
HB 370-MUNICIPAL TAX EXEMPTIONS
3:37:58 PM
CHAIR BISHOP announced the consideration of HB 370.
3:38:09 PM
SENATOR HOFFMAN moved that Senate committee substitute (SCS) for
CSHB 370, [version: 29-LS1551\P], be used as the committee's
working document.
CHAIR BISHOP objected for discussion purposes.
3:38:47 PM
REPRESENTATIVE CATHY TILTON, Alaska State Legislature, Juneau,
Alaska, read her sponsor's statement as follows:
HB 370 is a bill that is about flexibility and local
control to encourage new investments in our state and
local municipalities; it amends a current statute that
allows for exemptions or deferrals on economic
development properties for an initial five-year period
with the option for renewal after that. The five-year
period was found to be too restrictive for many of the
municipalities to be able to use that and become an
effective economic development tool; the CS before you
would extend it up to 30 years to help incentivize
large-scale projects.
When we were looking for identifying some projects
that had been used in the statute which has been
around for nearly 30 years, we found that there were
very few projects that were able to fall under the
statute guidelines as it were because of the
restrictiveness. There has been language included in
the new version that is before you to provide some
sideboards in an effort to protect service areas and
taxes levied in those service areas. The provisions
stipulate that if a municipality has a service-area
board that could be impacted that that board has a
formal say in approving the exemption or the deferral.
Additional provisions stipulate that factors must be
considered in providing this exemption for more
deferrals and those factors are that it must enable
significant capital investment in physical
infrastructure, it must expand the tax base of the
municipality and will generate property tax revenue
after the exemption expires.
3:40:05 PM
SENATOR MACKINNON joined the committee meeting.
3:41:10 PM
REPRESENTATIVE TILTON noted that Section 1 of the bill's newest
version was added at the request of a member from the Alaska
House Interior Delegation. She specified that Section 1
pertained to Military Facility Zones and detailed that the
provision would allow Military Facility Zones to be established
through zoning ordinances. She summarized that HB 370 would
provide municipalities with greater flexibility and control.
3:41:41 PM
At ease.
3:42:01 PM
CHAIR BISHOP called the committee back to order.
3:42:07 PM
HEATH HILYARD, Staff, Representative Tilton, Alaska State
Legislature, Juneau, Alaska, said HB 370 had two sections. The
first section dealt entirely with Military Facility Zones. He
revealed that the Fairbanks North Star Borough wanted zoning
ordinance flexibility to support economic development at Fort
Wainwright and Eielson Air Force Base (AFB), especially with the
recent decision to base F-35 squadrons at Eielson AFB.
MR. HILYARD explained that the bill's second section would allow
assemblies to offer 30-year property tax exemptions or deferrals
for large-scale projects. He noted that HB 370 originally
provided assemblies with the ability to offer an unspecified
timeframe for exemptions or deferrals, but was changed to 20
years. He revealed that some municipalities voiced their concern
that 20 years was still too narrow for large-scale projects. He
divulged that the House included sideboard language where
service areas with service-area boards with two or more members
would have a formal vote to approve exemptions or deferrals.
3:44:46 PM
He set forth that the bill's significant portion for new
language to the statute was found on page 4, lines 7-11 as
follows:
An exemption or deferral on the property enables
significant capital investment of physical
infrastructure that: expands the tax base of the
municipality, and will generate property tax revenue
after the exemption expires.
3:46:00 PM
SENATOR MACKINNON asked what the meaning was for the term
"significant capital."
MR. HILYARD replied that the term was up to the local assemblies
to determine.
SENATOR MACKINNON addressed the 30-year exemption and noted that
while she served on the Anchorage Assembly, an economic
development project received an exemption and nothing happened
to the property. She remarked that she was worried about 20 year
or 30-year exemptions. She asked if there was a provision that
would allow local assemblies to go back and remove exemptions if
there was no activity or active economic development on the
exempted property.
MR. HILYARD replied that assemblies would have the option to
extend up to 30 years on a case-by-case basis. He reiterated
that the bill's intent was to provide municipalities with
flexibility.
3:48:24 PM
SENATOR MACKINNON asked if the bill allowed assemblies to take
away exemptions if there was no economic development.
MR. HILYARD replied that an assembly may repeal an exemption at
any point because the exemption was done by ordinance.
SENATOR EGAN noted that the City and Borough of Juneau had
exempted the Alaskan Brewing Company for five years. He detailed
that the Alaskan Brewing paid back what they owed, the city made
a great return, and the company went on to become a very
successful business. He noted that the exemption could have been
withdrawn at any time.
MR. HILYARD confirmed that the statute provisions regarding the
ability to withdraw an exemption was not changed by the bill.
3:50:53 PM
CHRISTOPHER SCHUTTE, Director, Office of Economic and Community
Development for the Municipality of Anchorage, Anchorage,
Alaska, stated that HB 370 would grant additional flexibility to
local jurisdictions to adopt specific tools to achieve their
economic development goals. He noted that recognizing community
investment in underlying infrastructure for private-sector
investment was a crucial tool for Anchorage's economic and
community development.
3:53:47 PM
CHAIR BISHOP addressed Mr. Schutte's letter of support and
quoted a portion of his letter as follows:
It is important to note that HB 370 does not change
current law regarding abatement of the portion of
local property taxes allocated to a school district
for the muni-match for education funding. Only after
the education requirement is met can the property tax
revenue be exempted or deferred.
He asked Mr. Schutte to confirm that education taxes would
continue to be paid by the exempted property.
MR. SCHUTTE answered correct. He specified that service areas in
the school districts would continue to receive the funding or at
least the portion of the tax revenue that was a source of their
funding.
3:55:02 PM
RON LONG, Assistant City Manager and Community Development
Director, City of Seward, Seward, Alaska, remarked that the
ability to provide a 30-year exemption would allow for
supporting bigger projects that were more capital intensive. He
set forth that Seward recognized that the city would have to
take more initiative at the local level to support the bigger
projects and not rely so much on the state. He noted that the
30-year exemption aligned fairly closely with some lending
institutions' criteria. He said HB 370 would add flexibility at
the local level for more self-determination while keeping some
protections and sideboards intact. He said he would prefer to
address rescinding exemptions for projects on the front-end with
sideboards and performance standards built into the enabling
ordinance.
3:58:23 PM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), Juneau, Alaska, set forth that AML supported HB 370. She
said due to the state's fiscal crisis, AML was encouraging
communities to look at all of its tools in order to raise
revenues. She pointed out that the bill does not impact the
state, has safety nets for a municipality to repeal, and allows
for local control. She addressed Senator MacKinnon's question on
the meaning of "significant capital" and remarked that the
financial level was different for each community. She remarked
that most municipalities were aware of their financial status
and should be able to hopefully choose wisely to protect their
taxpayers.
SENATOR MACKINNON asked if her testimony for local control was
consistent with what she provided to Senate Finance regarding
property tax exemptions.
MS. WASSERMAN answered yes.
SENATOR MACKINNON asked Ms. Wasserman to verify that AML wants
local control for municipalities to remove their ability to
collect taxes on property, but AML does not want the state to
give municipalities local control to control its fate on
property.
MS. WASSERMAN specified that the AML Board decided not to take
over the senior citizens' property tax exemptions due to cuts to
seniors at the time as well as other reasons. She noted that
many people thought the transfer meant senior citizens' property
exemptions were gone, but that was nowhere close to the truth.
4:01:25 PM
CHAIR BISHOP closed public testimony.
4:01:39 PM
CHAIR BISHOP removed his objection and announced that HB 370
would be held in committee.