Legislature(2015 - 2016)SENATE FINANCE 532
04/14/2015 09:00 AM FINANCE
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CS FOR HOUSE BILL NO. 146(CRA) "An Act relating to a municipal tax exemption for certain subdivided property." 9:49:37 AM SENATOR CATHY MUNOZ, SPONSOR, explained that HB 146 would give municipalities the option of exempting the increase value of a new subdivision until the lot started to sell, or until a certain time period was met. She related that the legislation came as a result of a request from the City and Borough of Juneau to look at ways to encourage new housing development, especially affordable housing. She furthered that the legislation would incentivize developers to develop lands while keeping down the costs of developments. She explained that currently when a subdivision plot map was finalized and certified, the property assessment rose considerably. She stated that the legislation was a tool that would allow municipalities in communities with housing shortages to work with the developer to exempt a portion, or all, of the increased valuation for a certain time period. 9:51:41 AM EDRA MORLEDGE, STAFF TO SENATOR KEVIN MEYER, explained that the amendment to the bill made in the Senate Regional Affairs Committee would allow for a partial or total exemption, or deferral of property tax for deteriorated properties. The amendment clarified that the 8 unit requirement currently in statute for the rehabilitation of deteriorated properties could be required at the time of application for the tax exemption or deferral, or at the completion of the project. The amendment also allowed for multiple properties in a designated deteriorated property area to be considered collectively for the 8 unit minimum. Finally, the amendment made a technical fix, inserting the word "not" where it had be omitted prior on Page 2, line 27. 9:53:40 AM Co-Chair MacKinnon OPENED public testimony. 9:54:25 AM GABE LAYMAN, GENERAL COUNSEL, COOK INLET HOUSING, ANCHORAGE (via teleconference), testified in support of the bill. He asserted the legislation would empower municipalities to offer certain property tax incentives that would encourage private developers to proceed with developments in Alaska's challenging real estate market. He spoke to the positive impact of the provisions in the bill that pertained to optional municipal property tax incentives for the redevelopment of deteriorated properties. He believed that HB 146 would clarify ambiguous provisions of the existing state statute, improving its usefulness. He pointed out that municipalities would need to opt into the program in order to offer the tool to developers. He shared that once a municipality opted in, it retained the ability to evaluate project applications on a case by case basis. He concluded that the legislation would promote economic development, further empower municipalities to address blight and deterioration in a locally controlled manner without costing the state any money. 9:56:01 AM CHUCK HOMAN, PRESIDENT, ALASKA STATE HOME BUILDING ASSOCIATION, EAGLE RIVER (via teleconference), testified in support of the bill. He noted that his organization had sent a letter of support (copy on file). 9:56:43 AM Co-Chair MacKinnon CLOSED public testimony. 9:57:05 AM Co-Chair MacKinnon asked how the bill might affect the values across the state in comparison to the state treasury. RON BROWN, STATE ASSESSOR, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, ANCHORAGE (via teleconference), stated that there exemption was optional. He explained that if a municipality were to adopt the legislation there would be zero impact to the full value determination, as an optional exemption the property would be appraised and reported by the local municipality and added back into the full value for the community. Co-Chair MacKinnon asked how the foundation formula would be effected by the legislation. Mr. Brown explained that for optional exemptions, the full value of determination and local school contribution would be returned to the local community. 9:59:10 AM Co-Chair MacKinnon asked if whether it would positively or negatively affect the amount of funding that municipalities would receive for schools. Mr. Brown responded that the effect would be neutral. Co-Chair MacKinnon thought that the committee would need to hear from the Department of Education on how the bill would affect the foundation formula. 10:00:03 AM TERRY HARVEY, STAFF TO REPRESENTATIVE CATHY MUNOZ, assured the committee that the information concerning the bills effect on formula funding for education would be provided to the committee. CSHB 146(CRA) was HEARD and HELD in committee for further consideration. 10:00:14 AM Co-Chair MacKinnon discussed housekeeping.