04/04/2024 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB161 | |
| HB221 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 161 | TELECONFERENCED | |
| *+ | HB 221 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 4, 2024
8:01 a.m.
MEMBERS PRESENT
Representative CJ McCormick, Chair
Representative Kevin McCabe, Vice Chair
Representative Tom McKay
Representative Thomas Baker
Representative Justin Ruffridge
Representative Rebecca Himschoot
Representative Donna Mears
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 161(CRA) AM
"An Act relating to municipal taxation of farm land and farm
structures; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 221
"An Act relating to subdivision of unplatted land in second
class boroughs; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 161
SHORT TITLE: TAX EXEMPTION FOR FARM LAND/STRUCTURES
SPONSOR(s): SENATOR(s) BJORKMAN
01/16/24 (S) PREFILE RELEASED 1/8/24
01/16/24 (S) READ THE FIRST TIME - REFERRALS
01/16/24 (S) CRA
01/30/24 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
01/30/24 (S) Heard & Held
01/30/24 (S) MINUTE(CRA)
02/01/24 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/01/24 (S) Heard & Held
02/01/24 (S) MINUTE(CRA)
02/15/24 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/15/24 (S) <Above Item Removed from Agenda>
02/15/24 (S) MINUTE(CRA)
02/22/24 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/22/24 (S) -- Invited & Public Testimony --
02/27/24 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/27/24 (S) <Bill Hearing Rescheduled to 02/29/24>
02/29/24 (S) CRA AT 1:30 PM BELTZ 105 (TSBldg)
02/29/24 (S) Moved CSSB 161(CRA) Out of Committee
02/29/24 (S) MINUTE(CRA)
03/01/24 (S) CRA RPT CS 4DP NEW TITLE
03/01/24 (S) DP: DUNBAR, GRAY-JACKSON, GIESSEL,
BJORKMAN
03/18/24 (S) TRANSMITTED TO (H)
03/18/24 (S) VERSION: CSSB 161(CRA) AM
03/18/24 (S) VERSION: CSSB 161(CRA) AM
03/20/24 (H) READ THE FIRST TIME - REFERRALS
03/20/24 (H) CRA
04/02/24 (H) CRA AT 8:00 AM BARNES 124
04/02/24 (H) Heard & Held
04/02/24 (H) MINUTE(CRA)
04/04/24 (H) CRA AT 8:00 AM DAVIS 106
BILL: HB 221
SHORT TITLE: SUBDIVISION OF UNPLATTED LAND
SPONSOR(s): REPRESENTATIVE(s) CARRICK
01/16/24 (H) PREFILE RELEASED 1/8/24
01/16/24 (H) READ THE FIRST TIME - REFERRALS
01/16/24 (H) CRA, L&C
04/04/24 (H) CRA AT 8:00 AM DAVIS 106
WITNESS REGISTER
SENATOR JESSE BJORKMAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, gave an overview of CSSB
161(CRA) am.
LAURA ACHEE, Staff
Senator Jesse Bjorkman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on
CSSB 161(CRA) am, on behalf of Senator Bjorkman, prime sponsor.
CAROLE TRIEM, Program Coordinator, Resilience Economies &
Economies
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on CSSB
161(CRA) am.
BRAD ST. PIERRE, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified during the hearing on CSSB
161(CRA) am.
SAVANNAH FLETCHER, Presiding Officer
Fairbanks North Star Borough Assembly
Fairbanks, Alaska
POSITION STATEMENT: Testified during the hearing CSSB 161(CRA)
am.
BONNE WOLDSTAD, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified during the hearing on CSSB
161(CRA) am.
REPRESENTATIVE ASHLEY CARRICK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 221.
STUART RELAY, Staff
Representative Ashley Carrick
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for HB
221, on behalf of Representative Carrick, prime sponsor.
KELLEN SPILLMAN, Planning Director
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 221.
ACTION NARRATIVE
8:01:19 AM
CHAIR MCCORMICK called the House Community and Regional Affairs
Standing Committee meeting to order at 8:01 a.m.
Representatives McKay, Baker, Ruffridge, Himschoot, Mears, and
McCormick were present at the call to order. Representative
McCabe arrived as the meeting was in progress.
SB 161-TAX EXEMPTION FOR FARM LAND/STRUCTURES
8:02:15 AM
CHAIR MCCORMICK announced that the first order of business would
be CS FOR SENATE BILL NO. 161(CRA) am, "An Act relating to
municipal taxation of farm land and farm structures; and
providing for an effective date."
8:02:40 AM
SENATOR JESSE BJORKMAN, Alaska State Legislature, prime sponsor,
gave an overview of CSSB 161(CRA) am. He stated that the bill
would extend the property tax exemption from farm use lands to
farm use buildings to allow the buildings to be taxed at the
farm rate, not the full and true value assessment. Also, the
bill would extend optional provisions for municipalities and
political subdivisions to incorporate all farm buildings if they
so choose.
8:05:07 AM
LAURA ACHEE, Staff, Senator Jesse Bjorkman, Alaska State
Legislature, on behalf of Senator Bjorkman, prime sponsor of
CSSB 161(CRA) am, said she had nothing to add.
SENATOR BJORKMAN noted that the current version before the
committee included aquaculture.
8:06:03 AM
CHAIR MCCORMICK opened public testimony on SB 161.
8:06:33 AM
CAROLE TRIEM, Program Coordinator, Resilience Economies &
Economies, Alaska Municipal League, testified during the hearing
on CSSB 161(CRA) am. She commented on mandatory exemptions and
how they reduce the local government's ability to raise revenue
while doing nothing to reduce costs. She added that expanding
mandatory exemptions shifts the tax burden to commercial
property owners, residential homeowners, and renters. In
addition, she said that expanding the mandatory exemption would
lower the full value determination, which in turn, would lower
the amount of funding a local government can give to the school
district. She added that optional exemptions allow
municipalities to provide fit for purpose policy that fits their
local needs, so for that reason, she said the AML supports the
removal of the requirement for the optional exemption to be put
to voters, in addition to the expansion of the optional
exemption.
8:08:34 AM
BRAD ST. PIERRE, representing self, testified during the hearing
on CSSB 161(CRA) am. He said he supports the tax exemption for
farmers. He opined that there are two pieces of the bill that
need to be amended, as they would negatively impact young
farmers and their access to farm land. Firstly, he requested
that the committee amend the bill to keep the public engaged and
keep the vote of the people required on all tax exemption
changes. Secondly, he opined that the state should keep the
qualification for applicants to be proof that 10 percent of the
farmer's total income comes from farming. He concluded that
changing it to the ability to produce $1,000 in agricultural
products and filing a schedule F would not support the type of
farming that would bolster Alaska's food system.
8:12:26 AM
SAVANNAH FLETCHER, Presiding Officer, Fairbanks North Star
Borough Assembly, testified during the hearing on CSSB 161(CRA)
am. She confirmed that last year, Fairbanks passed Proposition
2 by an overwhelming majority, which provides a tax exemption
for farm structures used exclusively for farming. Despite the
suggestion from Legislative Legal Services that the bill would
not nullify the municipal exemption, she expressed concern that
the language in Section 1 would not allow the exemption to
continue. She requested that the bill be amended to provide
further clarity on this and sustain local power and local choice
in setting the tax exemption. She explained that the $1,000
threshold would be a huge departure from the current standard of
10 percent of income, which, rather than encouraging additional
farming, may support hobby farmers getting a big tax exemption
without producing more food for the community to consume. In
addition, she expressed concern about use of the word "normally"
[on page 1, line 10] due to the USDA's interpretation of it and
the potential for broad interpretation by assessors. Lastly,
she expressed concern about the ability to assess farm
structures if exclusive use would no longer be a requirement.
REPRESENTATIVE HIMSCHOOT asked Ms. Fletcher to speak to the
difference between 10 percent of yearly gross income versus
$1,000 in sales.
MS. FLETCHER said presumably, [10 percent] is a more stringent
standard. She suggested implementing a flat number that's
higher than $1,000.
REPRESENTATIVE HIMSCHOOT asked whether the sharing of financial
statements is the barrier, or whether the barrier is the money
amount.
MS FLETCHER said either way, some [financial statement] would
need to be shared. She reiterated her concern that $1,000 would
be too low to achieve the policy goal.
REPRESENTATIVE HIMSCHOOT asked what the threshold should be if
not 1,000.
MS. FLETCHER deferred to the Alaska Farmers Market Association.
She estimated that $5,000 would be closer to the target.
8:20:01 AM
REPRESENTATIVE MCCABE questioned the change in revenue in
Fairbanks prior to the public vote on [Proposition 2].
MS. FLETCHER said a conservative estimate suggests that this
could take at least $7 million off the tax roll, as currently
written, based on agricultural land at the 10 percent threshold.
She noted that the tax exemption only passed [six months] ago,
so she did not have the requested data.
REPRESENTATIVE MCCABE expressed concern that the term "hobby
farms" was being used derisively. He opined that hobby farms
are not necessarily a bad thing if they are growing their own
food.
8:22:43 AM
BONNE WOLDSTAD, representing self, testified during the hearing
on CSSB 161(CRA) am. She suggested adding "on or" before the
wording "before May 15" in the language pertaining to the
Schedule F form in Section 3, subsection (f). She said she
found it ironic that last year, the state of Alaska offered
grants for the purchase of livestock feed to help sustain small
farms at the same time that individuals were finding it
increasingly difficult to apply for and receive the farm tax
exemption. She said SB 161 would assist in keeping small farms
operational in Alaska.
CHAIR MCCORMICK closed public testimony on SB 161.
8:25:01 AM
The committee took a brief at-ease.
8:26:05 AM
CHAIR MCCORMICK sought questions from committee members.
8:26:19 AM
REPRESENTATIVE HIMSCHOOT asked the bill sponsor to speak to the
change from 10 percent of yearly gross income to $1,000 in
sales.
SENATOR BJORKMAN said Representative Himschoot was correct in
identifying that the source of the standard to access the tax
deferment came from the Food Strategy Taskforce. He agreed that
farms often start small and then scale as they're able produce
more food. He opined that the $1,000 threshold is a good place
to start because individuls filing a schedule F would be telling
the Internal Revenue Service (IRS) that they are in the business
of farming. He spoke to the purpose of the farm use rate.
8:28:58 AM
REPRESENTATIVE HIMSCHOOT asked whether the schedule F form can
only be filed by farmers.
MS. ACHEE confirmed that only someone in the business of an
agricultural operation would file a schedule F, including
aquaculture and marijuana operations.
REPRESENTATIVE HIMSCHOOT suggested that the filing of a schedule
F would indicate that some portion of an individual's income
came from farming.
SENATOR BJORKMAN said, "That's correct."
MS. ACHEE opined that it isn't practicable to only focus on
large scale operations when it comes to increasing the food
supply in Alaska. She emphasized the importance of making room
for smaller operations that are creating a smaller change.
8:31:19 AM
CHAIR MCCORMICK announced that CSSB 161(CRA) am would be held
over.
8:32:21 AM
The committee took an at-ease from 8:32 a.m. to 8:34 a.m.
HB 221-SUBDIVISION OF UNPLATTED LAND
8:34:05 AM
CHAIR MCCORMICK announced that the final order of business would
be HOUSE BILL NO. 221, "An Act relating to subdivision of
unplatted land in second class boroughs; and providing for an
effective date."
8:34:15 AM
REPRESENTATIVE ASHLEY CARRICK, Alaska State Legislature, as
prime sponsor, presented HB 221. She paraphrased the sponsor
statement [included in the committee packet], which read as
follows [original punctuation provided]:
Alaska has abundant land resources, and land ownership
is a goal for most Alaskans. Unfortunately, there are
a large number of land parcels in boroughs around
Alaska that were created outside the subdivision
process, such as by recoding a deed, resulting in a
large number of lots that cannot legally be further
subdivided. In the Fairbanks North Star Borough for
example, it is estimated that there are as many as
10,000 land parcels that were created outside the
subdivision process and many of those illegal
subdivisions were not created by the current property
owners. If a property owner has an improperly
subdivided land parcel they cannot further subdivide
or sell off parts of that lot. Currently, for
illegally subdivided land to be further subdivided,
the owner of that land would have to research the
entire history of the creation of their parcel and
notify all other land owners in that parcel of the
further subdivision presenting a very burdensome and
bureaucratic process for landowners.
HB 221 allows our boroughs to create an exemption
process for illegally subdivided lands to be further
subdivided without the current burdensome legal
process. This is important for homeowners as well as
businesses to be able to more easily sell land. I hope
you will join me in supporting HB 221.
8:37:04 AM
STUART RELAY, Staff, Representative Ashley Carrick, Alaska State
Legislature, on behalf of Representative Carrick, prime sponsor
of HB 221, presented the sectional analysis [included in the
committee packet], which read as follows [original punctuation
provided]:
Section 1. AS 29.35.210(b)
Adds a new subsection allowing second-class boroughs
to create an exemption process for a land owner to
further subdivide their land that has not been
approved by the platting authority.
Section 2. AS 29.40.180(a)
Adds new subsection allowing for landowners to sell
lands that meet the requirements of the exemption
process in section 1.
Section 3. AS 40.15.070(a)
Allows land within a municipality to be subdivided
using the exemption process in section 1.
Section 4. Effective Date
Provides an immediate effective date.
8:38:54 AM
KELLEN SPILLMAN, Planning Director, Fairbanks North Star
Borough, gave invited testimony during the hearing on HB 221.
He explained that deep splits, or "illegal subdivisions," have
historically been prevalent in the Fairbanks area. Most of the
activity occurred in the pipeline era when it was difficult for
the Borough to enforce the subdivision regulations. The
practice essentially ended in the mid-1980s when the borough
became more aggressive in enforcing regulations. He reported
that approximately 10,000 parcels, or one-fifth of the parcels
in the borough, were potentially created by deep splits. Over
time, these parcels were bought and sold, leading to significant
problems when someone unknowingly purchases of one of these
parcels and either wishes to subdivide it or shift the lot
lines. He shared the example of a section of land in the North
Pole area that had been split 99 times. In order to further
subdivide or shift the lot line, all 99 other owners would need
to sign on to that subdivision application. He reported that
the problem is statewide, however, the scale of the problem in
other communities pales in comparison to what's being seen
Fairbanks. The the end goal, he said, would be to implement
clear authority in state statute to address these deep splits.
8:43:34 AM
REPRESENTATIVE MEARS requested clarification on the barriers
[created by deep splits].
MR. SPILLMAN said the biggest barrier is further subdivision and
changing the lot lines, or even knowing where the lot lines are.
REPRESENTATIVE MEARS asked whether the parcels are legally
recorded with the recorder's office.
MR. SPILLMAN answered yes, the parcels are recorded by a metes
and bounds description.
8:45:37 AM
REPRESENTATIVE CARRICK described the legislation as a work in
progress. She said she wanted to make sure that it truly
accomplishes the goal of benefitting the North Star Borough and
others and looked forward to working with the committee to
accomplish that with HB 221.
[HB 221 was held over.]
8:46:26 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:46 a.m.