Legislature(2011 - 2012)HOUSE FINANCE 519

02/22/2012 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 56 INCLUDE ARSON IN CRIMES OF CONSPIRACY TELECONFERENCED
Moved Out of Committee
+ HB 216 REGULATIONS: INFORMATIVE SUMMARY/BILLS TELECONFERENCED
Moved CSHB 216(FIN) Out of Committee
+ HB 253 CATHINONE BATH SALTS TELECONFERENCED
Scheduled But Not Heard
+ HB 264 MUNI PROPERTY TAX DEFERRAL: SUBDIVISIONS TELECONFERENCED
Moved CSHB 264(CRA) Out of Committee
*+ HB 302 REPEAL PICK-CLICK-GIVE AUDIT REQUIREMENT TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 279 EXTENDING CERTAIN BOARDS & COMMISSIONS TELECONFERENCED
Moved CSHB 279(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 22, 2012                                                                                          
                         1:39 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:39:51 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:39 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Mike Sica,  Staff, Representative Bob Lynn;  Anne Carpeneti,                                                                    
Assistant Attorney  General, Legal  Services Section-Juneau,                                                                    
Criminal  Division, Department  of Law;  Joe Michel,  Staff,                                                                    
Representative  Bill Stoltze;  Representative Peggy  Wilson,                                                                    
Sponsor; Representative Cathy  Munoz, Sponsor; Bill Rotecki,                                                                    
Member,  Ketchikan Gateway  Borough  Assembly; Alan  Wilson,                                                                    
Chairman,   Juneau  Affordable   Housing  Commission;   John                                                                    
Harrington,  Member,  Ketchikan  Gateway  Borough,  Planning                                                                    
Commission  and  Economic  Development  Advisory  Committee;                                                                    
Fred  Morino,  Manager,  D.J.G.  Development,  Juneau;  Dave                                                                    
Hanna, Owner, JLC Properties, Juneau.                                                                                           
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
                                                                                                                                
Brian Balega,  Fire investigator, Municipality  of Anchorage                                                                    
and  President,   Alaska  Association  of  Fire   and  Arson                                                                    
Investigators,  Anchorage; John  Bond,  Deputy Fire  Marshal                                                                    
and  Vice President,  Alaska Association  of Fire  and Arson                                                                    
Investigators,  Anchorage; Jeff  Tucker,  Fire Chief,  North                                                                    
Star  Fire Department  and  Former  President, Alaska  State                                                                    
Fire  Chiefs   Association,  North  Pole;   Leslie  Houston,                                                                    
Director,  Division of  Administrative Services,  Department                                                                    
of  Corrections,  Juneau;  Douglas  Moody,  Public  Defender                                                                    
Agency, Department of Administration, Anchorage.                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 56     INCLUDE ARSON IN CRIMES OF CONSPIRACY                                                                                 
                                                                                                                                
          HB 56  was REPORTED  out of  committee with  a "no                                                                    
          recommendation"  and  with one  new  indeterminate                                                                    
          fiscal  note from  the Department  of Corrections,                                                                    
          one new  zero fiscal  note from the  Department of                                                                    
          Public Safety,  and one new zero  fiscal note from                                                                    
          the Department of Law.                                                                                                
                                                                                                                                
HB 216    REGULATIONS: INFORMATIVE SUMMARY/BILLS                                                                                
                                                                                                                                
          CSHB 216(FIN)  was REPORTED out of  committee with                                                                    
          a "do  pass" recommendation and with  one new zero                                                                    
          impact  fiscal   note  from  the  Office   of  the                                                                    
          Governor.                                                                                                             
                                                                                                                                
HB 253    CATHINONE BATH SALTS                                                                                                  
                                                                                                                                
          HB 253 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HB 264    MUNI PROPERTY TAX DEFERRAL: SUBDIVISIONS                                                                              
                                                                                                                                
          CSHB 264(CRA)  was REPORTED out of  committee with                                                                    
          a "do  pass" recommendation and with  one new zero                                                                    
          fiscal  note  from  the  Department  of  Commerce,                                                                    
          Community and Economic Development.                                                                                   
                                                                                                                                
HB 279    EXTENDING CERTAIN BOARDS & COMMISSIONS                                                                                
                                                                                                                                
          CSHB 279(FIN)  was REPORTED out of  committee with                                                                    
          a  "do  pass"  recommendation and  with  four  new                                                                    
          fiscal  impact   notes  from  the   Department  of                                                                    
          Commerce, Community and  Economic Development, one                                                                    
          new  fiscal impact  note  from  the Department  of                                                                    
          Public Safety, and one new fiscal impact note                                                                         
          from Department of Natural Resources.                                                                                 
                                                                                                                                
HB 302    REPEAL PICK-CLICK-GIVE AUDIT REQUIREMENT                                                                              
                                                                                                                                
          HB 302 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
HOUSE BILL NO. 279                                                                                                            
                                                                                                                                
     "An Act  extending the termination  dates of  the Board                                                                    
     of Nursing,  the Board of  Dental Examiners,  the Board                                                                    
     of Barbers  and Hairdressers,  the Big  Game Commercial                                                                    
     Services Board,  the Alcoholic Beverage  Control Board,                                                                    
     and the  Alaska Seismic Hazards Safety  Commission; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
1:40:16 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze pointed  to the  fiscal  notes related  to                                                                    
each of the boards and commissions under the legislation.                                                                       
                                                                                                                                
Co-Chair  Thomas  MOVED  to  report  CSHB  279(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB  279(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation  and with four new  fiscal impact notes                                                                    
from  the Department  of  Commerce,  Community and  Economic                                                                    
Development, one new fiscal impact  note from the Department                                                                    
of  Public  Safety, and  one  new  fiscal impact  note  from                                                                    
Department of Natural Resources.                                                                                                
                                                                                                                                
1:42:25 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:43:46 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 56                                                                                                             
                                                                                                                                
     "An Act making  arson in the first degree  and arson in                                                                    
     the  second degree  serious  felonies  for purposes  of                                                                    
     application of the crime of conspiracy."                                                                                   
                                                                                                                                
1:43:46 PM                                                                                                                    
                                                                                                                                
MIKE SICA,  STAFF, REPRESENTATIVE  BOB LYNN,  explained that                                                                    
HB  56  added first  and  second  degree arson  to  Alaska's                                                                    
conspiracy   statute.  The   sponsors   believed  that   the                                                                    
implementation of the bill closed  a loophole in current law                                                                    
and would act as strong  deterrent to the serious crimes. He                                                                    
provided  a definition  for conspiracy:  "when  two or  more                                                                    
people agree to  commit a crime with at least  one overt act                                                                    
to further  the conspiracy." He  expounded that it  would be                                                                    
considered an overt act if two  or more people agreed to set                                                                    
fire to a  building and one of the people  bought a match to                                                                    
further the crime.                                                                                                              
                                                                                                                                
Mr.  Sica explained  that arson  in the  first degree  was a                                                                    
class A  felony; defined  as an incident  in which  a person                                                                    
intentionally  damages   property  by  fire   explosion  and                                                                    
recklessly places  another person, including  the responders                                                                    
in danger  of serious injury.  He delineated that  under the                                                                    
legislation conspiracy  to commit arson  would be a  class B                                                                    
felony. He  detailed that  arson in  the second  degree took                                                                    
place when a person knowingly  damages a building by fire or                                                                    
explosion  and was  currently a  class B  felony; under  the                                                                    
legislation the crime would be  changed to a class C felony.                                                                    
He relayed  that the bill  was strongly supported  by Alaska                                                                    
fire departments,  the Alaska  Fire Chiefs  Association, the                                                                    
Alaska   Peace   Officers   Association,  and   the   Alaska                                                                    
Association of  Fire and  Arson Investigators.  The sponsors                                                                    
felt that it was important  to align charges for the offense                                                                    
with other similar serious offenses.                                                                                            
                                                                                                                                
1:46:13 PM                                                                                                                    
                                                                                                                                
ANNE CARPENETI,  ASSISTANT ATTORNEY GENERAL,  LEGAL SERVICES                                                                    
SECTION-JUNEAU,  CRIMINAL   DIVISION,  DEPARTMENT   OF  LAW,                                                                    
believed  arson  was a  reasonable  offense  to add  to  the                                                                    
definition of serious felony for  conspiracy because the act                                                                    
of making the agreement and  intent to commit the crime made                                                                    
it more likely for a crime to take place.                                                                                       
                                                                                                                                
Vice-chair  Fairclough  asked  about the  number  of  arsons                                                                    
committed  annually.  She  wondered   how  the  addition  to                                                                    
statute would impact Court System caseload.                                                                                     
                                                                                                                                
Ms.  Carpeneti replied  that arson  and conspiracy  were not                                                                    
common  crimes.  She  referenced  the  decisions  under  the                                                                    
conspiracy statute that had been  enacted in the early 1980s                                                                    
and explained that  there had only been two  or three cases.                                                                    
She would follow up with the figure at a later time.                                                                            
                                                                                                                                
Vice-chair Fairclough hoped to  understand the impact on the                                                                    
Court System  and the  correctional facilities.  She pointed                                                                    
to  incidents of  personal property  damage caused  by arson                                                                    
related to domestic violence and sexual assault.                                                                                
                                                                                                                                
Ms. Carpeneti referred  to data showing that  there had been                                                                    
111 occurrences in Anchorage in 2009.                                                                                           
                                                                                                                                
Co-Chair Stoltze  asked whether the  occurrences represented                                                                    
suspicious  fires or  arsons. Mr.  Sica  responded that  the                                                                    
figure had  been listed as  arson under the  Anchorage crime                                                                    
rate statistics. Based on the  figure he suspected there had                                                                    
been hundreds of cases throughout the state.                                                                                    
                                                                                                                                
Representative Doogan  asked whether the  provision included                                                                    
under  the bill  would allow  a  person to  be charged  with                                                                    
conspiracy  without having  committed  arson. Ms.  Carpeneti                                                                    
replied in  the affirmative. The conspiracy  law allowed for                                                                    
a  separate charge  for conspiracy  to commit  a crime  even                                                                    
though the target crime had not been committed.                                                                                 
                                                                                                                                
1:49:54 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze pointed  to the intent to  commit murder as                                                                    
another  crime where  intent was  punishable. Ms.  Carpeneti                                                                    
agreed. She  furthered that there  were laws for  attempt to                                                                    
commit  murder  and  laws that  prohibited  solicitation  to                                                                    
commit   certain   "unfinished"  crimes.   Current   statute                                                                    
included  attempt, solicitation,  and  conspiracy to  commit                                                                    
crimes.                                                                                                                         
                                                                                                                                
Representative Gara queried the  difference between arson in                                                                    
the first  degree and arson  in the second degree.  Mr. Sica                                                                    
replied that  arson in the first  degree involved recklessly                                                                    
placing  another  person  in   danger  of  serious  physical                                                                    
injury.                                                                                                                         
                                                                                                                                
Representative  Gara asked  for the  definition of  arson in                                                                    
the second degree.  Mr. Sica communicated that  arson in the                                                                    
second  degree involved  a person  who  knowingly damaged  a                                                                    
building by starting a fire or causing an explosion.                                                                            
                                                                                                                                
Representative Gara  wondered whether  a group of  kids that                                                                    
did not  follow through  with a  crime after  a conversation                                                                    
about  burning down  an unoccupied  house  could be  charged                                                                    
with arson in the second degree under the legislation.                                                                          
                                                                                                                                
Ms. Carpeneti replied  in the negative. She  did not believe                                                                    
the  situation would  fall under  conspiracy either  because                                                                    
there had been  no culpable mental state, no  overt act, and                                                                    
no furtherance of the conspiracy.                                                                                               
                                                                                                                                
Representative  Gara asked  for verification  that in  order                                                                    
for a crime to be categorized  as conspiracy there had to be                                                                    
discussion of  a crime  and at least  one overt  act towards                                                                    
committing the  crime. Ms. Carpeneti agreed.  She reiterated                                                                    
that there had  to be discussion of a crime,  intent, and an                                                                    
overt act in furtherance of the crime.                                                                                          
                                                                                                                                
1:52:14 PM                                                                                                                    
                                                                                                                                
Representative   Wilson   referred   to   the   hypothetical                                                                    
situation  presented   by  Representative  Gara   and  asked                                                                    
whether all of the kids  would be charged with conspiracy if                                                                    
only two out of the group followed through with the crime.                                                                      
                                                                                                                                
Ms. Carpeneti  replied in the  negative. She  clarified that                                                                    
the culpable mental state  for conspiracy required intention                                                                    
of the result. The act of  talking about it or being present                                                                    
when others are  talking about it did not  meet the elements                                                                    
of conspiracy.                                                                                                                  
                                                                                                                                
Vice-chair  Fairclough  asked  whether  HB  56  limited  the                                                                    
definition  of arson  to buildings.  Mr.  Sica replied  that                                                                    
arson  in  the first  degree  included  any property.  Under                                                                    
current  law,   arson  in  the  second   degree  related  to                                                                    
buildings only.                                                                                                                 
                                                                                                                                
Ms. Carpeneti  added that the  statute relating to  arson in                                                                    
the first degree had existed since 1983.                                                                                        
                                                                                                                                
Co-Chair Stoltze  referred to a  case in which a  person had                                                                    
lit  a  boat  on  fire  that  subsequently  burnt  down  the                                                                    
adjacent  100-year-old church.  Ms.  Carpeneti replied  that                                                                    
the incident fell under arson in the first degree.                                                                              
                                                                                                                                
Vice-chair  Fairclough wondered  whether  the Department  of                                                                    
Law had concerns that the  definition of arson in the second                                                                    
degree  was  limited to  buildings.  Ms.  Carpeneti was  not                                                                    
aware  of any  concerns, but  noted that  there may  be fire                                                                    
marshals with different opinions.                                                                                               
                                                                                                                                
Co-Chair Stoltze  noted there  would be  arson investigators                                                                    
testifying on the legislation.                                                                                                  
                                                                                                                                
Representative Costello  wondered whether starting  a forest                                                                    
fire applied  to the law.  Ms. Carpeneti responded  that the                                                                    
land  qualified as  property and  it would  be arson  in the                                                                    
first degree  if the fire caused  a person harm or  the risk                                                                    
of serious physical injury.                                                                                                     
                                                                                                                                
Representative  Costello  asked  whether a  camp  fire  that                                                                    
resulted in a  forest fire because it had  not been properly                                                                    
extinguished would fall under the law.                                                                                          
                                                                                                                                
Ms.  Carpeneti  replied  in the  negative;  accidentally  or                                                                    
negligently leaving  a fire would  not apply.  She explained                                                                    
that for conspiracy the intent for  a fire to take place was                                                                    
required,  for arson  in the  first degree  a person  had to                                                                    
intentionally damage  property, and for arson  in the second                                                                    
degree a person had to knowingly damage a building.                                                                             
                                                                                                                                
1:55:43 PM                                                                                                                    
                                                                                                                                
Representative  Costello  asked  how the  state  dealt  with                                                                    
minors who committed a felony.                                                                                                  
                                                                                                                                
Ms. Carpeneti  replied that minors  under the age of  18 who                                                                    
committed crimes  were typically treated as  juveniles; they                                                                    
were charged with delinquent acts  and were not charged with                                                                    
or  convicted  of crimes.  She  relayed  that there  was  an                                                                    
automatic waiver for 16 and  17-year-olds who committed very                                                                    
serious crimes.                                                                                                                 
                                                                                                                                
Representative Gara  queried whether  minors were  judged as                                                                    
delinquents if they committed a  lower level crime such as a                                                                    
misdemeanor.                                                                                                                    
                                                                                                                                
Ms.  Carpeneti replied  that  for  certain traffic  offenses                                                                    
juveniles could  be charged and  convicted, such  as driving                                                                    
under the  influence; however, most offenses  for kids under                                                                    
the age  of 18 were  delinquent acts  and did not  result in                                                                    
conviction.                                                                                                                     
                                                                                                                                
BRIAN BALEGA,  FIRE INVESTIGATOR, MUNICIPALITY  OF ANCHORAGE                                                                    
AND  PRESIDENT,   ALASKA  ASSOCIATION  OF  FIRE   AND  ARSON                                                                    
INVESTIGATORS,   ANCHORAGE   (via  teleconference),   voiced                                                                    
strong support  for the legislation. He  believed that arson                                                                    
was  a valid  concern for  public  safety in  the state.  He                                                                    
stated that  there were many  cases in Alaska that  were not                                                                    
properly identified  as arson. There were  hundreds of fires                                                                    
in  Anchorage   annually  and  because   he  was   the  sole                                                                    
investigator he was  only able to investigate  an average of                                                                    
50 to 60  fires per year. He detailed  that approximately 25                                                                    
of his cases  in 2010 and 50  of his cases in  2011 had been                                                                    
arson.  He  discussed  that  juvenile  fire  setting  was  a                                                                    
concern;  he  had  arrested  16   juveniles  for  arson  and                                                                    
wildland fires  during the summer  of 2009. He  explained if                                                                    
two people conspired  to burn a building  and one encouraged                                                                    
the  other to  commit the  crime, under  current law  it was                                                                    
probable  that only  the person  actually  setting the  fire                                                                    
would be charged.                                                                                                               
                                                                                                                                
Mr. Balega  believed that the  legislation fixed  a loophole                                                                    
in the system and would  deter fires by holding all involved                                                                    
parties accountable  for their  actions. He opined  that the                                                                    
crime  of arson  affected all  residents of  the state  on a                                                                    
personal  and  financial  level.  In reference  to  a  prior                                                                    
question  by  Representative  Wilson he  responded  that  he                                                                    
would look at  holding the kids responsible  for setting the                                                                    
fire  accountable, but  he would  look to  determine whether                                                                    
the other  kids helped  to plan or  had participated  in any                                                                    
other way; he stressed that  an overt act would include them                                                                    
in the  conspiracy. He thought  the state's arson  laws were                                                                    
narrow in  their application,  given that  they specifically                                                                    
dealt with  property and  did not extend  to cars  and other                                                                    
items. He  had recently  talked with the  association's vice                                                                    
president  about modifying  the  arson in  the third  degree                                                                    
law;  currently  setting  a  vehicle on  fire  on  state  or                                                                    
municipal  lands  was a  class  C  felony; however,  if  the                                                                    
vehicle  was in  a  person's private  driveway the  offender                                                                    
could only  be charged with something  like criminal damage,                                                                    
criminal  mischief,  or  vandalism.  He  stressed  that  his                                                                    
resources  were limited  and that  there  were many  vehicle                                                                    
fires in  Anchorage that he  had to rely on  fire department                                                                    
officers to deal with.                                                                                                          
                                                                                                                                
Mr.  Balega  explained that  the  issue  of unattended  camp                                                                    
fires  turning  into wildland  fires  would  most likely  be                                                                    
included  in  one of  the  crimes  associated with  forested                                                                    
lands  currently   listed  in  statute;  depending   on  its                                                                    
severity  the  crime  could  reach   the  felony  level.  He                                                                    
detailed  that forested  lands  had  civil attachments  that                                                                    
would   allow  for   double  restitution   related  to   the                                                                    
suppression and other activities of a fire.                                                                                     
                                                                                                                                
2:04:28 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze recalled  a  prior  conversation with  Mr.                                                                    
Balega  and asked  whether he  believed the  bill should  be                                                                    
amended. Mr.  Balega replied that there  had been discussion                                                                    
about  changing the  law to  apply  to "propelled  vehicles"                                                                    
instead  of  "motor  vehicles";   however,  there  had  been                                                                    
concern from a district attorney  that the change may create                                                                    
constitutional challenges on  prior convictions. He wondered                                                                    
whether DOL thought the law  could be changed to read "motor                                                                    
vehicle and/or propelled vehicle."                                                                                              
                                                                                                                                
Co-Chair Stoltze communicated that  the bill would remain as                                                                    
it  was.  He  communicated  that   work  could  be  done  to                                                                    
determine another  route for the  additional item.  He asked                                                                    
whether Ms. Carpeneti concurred. Ms. Carpeneti agreed.                                                                          
                                                                                                                                
Representative Gara shared that  he did not necessarily have                                                                    
a  problem with  the bill,  given  that arson  seemed to  be                                                                    
serious  enough  to  fit  in   with  conspiracy  crimes.  He                                                                    
referred to  the crime of  aiding and abetting.  He surmised                                                                    
that  a person  was  already covered  under  the aiding  and                                                                    
abetting  crime if  they  purchased  materials and  provided                                                                    
them  to the  arsonist.  He surmised  that conspiracy  would                                                                    
apply  to   all  of  the   individuals  that   talked  about                                                                    
committing the  crime; whereas, aiding and  abetting covered                                                                    
the person who purchased the materials.                                                                                         
                                                                                                                                
Ms.  Carpeneti replied  in  the  affirmative. She  expounded                                                                    
that  conspiracy  applied  to the  individuals  that  talked                                                                    
about  the crime  and intended  for  it to  take place.  She                                                                    
explained that whether  or not a person  could be considered                                                                    
an  accomplice   depended  on  the  facts.   Other  offences                                                                    
included solicitation  and attempt.  She discussed  that the                                                                    
harm in conspiracy  is that the act of  making the agreement                                                                    
and intent  to commit the  crime make  it more likely  for a                                                                    
crime to take place.                                                                                                            
                                                                                                                                
2:08:10 PM                                                                                                                    
                                                                                                                                
Representative Gara  asked for verification that  aiding and                                                                    
abetting  resulted  from  an  action,  but  that  conspiracy                                                                    
occurred  when a  person just  agreed that  something should                                                                    
happen.  Ms.  Carpeneti  replied that  the  explanation  was                                                                    
correct in most circumstances.                                                                                                  
                                                                                                                                
JOHN BOND,  DEPUTY FIRE MARSHAL  AND VICE  PRESIDENT, ALASKA                                                                    
ASSOCIATION OF FIRE AND  ARSON INVESTIGATORS, ANCHORAGE (via                                                                    
teleconference),  spoke in  support of  the legislation.  He                                                                    
communicated that  currently there  was no  way to  charge a                                                                    
person  who  conspired  to  commit arson  if  they  did  not                                                                    
actually take any action related to the crime.                                                                                  
                                                                                                                                
JEFF  TUCKER, FIRE  CHIEF, NORTH  STAR  FIRE DEPARTMENT  AND                                                                    
FORMER  PRESIDENT,  ALASKA  STATE FIRE  CHIEFS  ASSOCIATION,                                                                    
NORTH POLE  (via teleconference), vocalized support  for the                                                                    
bill.  The association  felt that  the legislation  closed a                                                                    
loophole in  current statute and  could provide  a deterrent                                                                    
for individuals who may consider committing arson.                                                                              
                                                                                                                                
LESLIE   HOUSTON,  DIRECTOR,   DIVISION  OF   ADMINISTRATIVE                                                                    
SERVICES,  DEPARTMENT  OF  CORRECTIONS  (DOC),  JUNEAU  (via                                                                    
teleconference),   relayed  that   DOC  would   monitor  its                                                                    
database to  determine whether there  were any  increases in                                                                    
arson offences going forward.                                                                                                   
                                                                                                                                
Co-Chair Stoltze  queried whether  DOC had  any expectations                                                                    
or  projections related  to the  indeterminate fiscal  note.                                                                    
Ms.  Houston  answered that  it  was  not possible  for  the                                                                    
department  to have  any projections  at  the present  time.                                                                    
There were  currently twelve  people incarcerated  for arson                                                                    
in the  first degree, one  person incarcerated for  arson in                                                                    
the  second   degree,  and   two  people   incarcerated  for                                                                    
attempted arson in  the first degree. She  explained that if                                                                    
the  legislation passed,  the department  would monitor  the                                                                    
incarceration  rates  to determine  whether  it  led to  any                                                                    
significant increases to the prison population.                                                                                 
                                                                                                                                
2:12:29 PM                                                                                                                    
                                                                                                                                
DOUGLAS  MOODY,   PUBLIC  DEFENDER  AGENCY,   DEPARTMENT  OF                                                                    
ADMINISTRATION,  ANCHORAGE  (via  teleconference),  did  not                                                                    
believe  the bill  would have  a significant  impact on  the                                                                    
department,  given  that  there   were  not  many  arson  or                                                                    
conspiracy cases. He confirmed  that in most cases involving                                                                    
more  than  one  arsonist  the extra  people  involved  were                                                                    
charged with  accomplice liability  or aiding  and abetting.                                                                    
He did  not expect additional  cases if DOL made  no changes                                                                    
to its practices because the  crime of conspiracy would just                                                                    
get  filed in  with  the arson  cases.  He acknowledged  the                                                                    
potential  for  a case  increase  and  the possibility  that                                                                    
young people  could get roped into  conspiracy charges where                                                                    
the extent of  their involvement was not  clear. He believed                                                                    
that it would be difficult for  a kid to prove that they did                                                                    
not intend  for a  crime to actually  happen after  they had                                                                    
been  present when  the idea  had been  hatched. He  relayed                                                                    
that proving  intent was very  difficult to  discern because                                                                    
intent  could   only  be   inferred,  unless   both  parties                                                                    
specifically stated that they  planned to carry through with                                                                    
the crime. He  discussed that in the case  of wildland fires                                                                    
children could intend  to start a fire,  but not necessarily                                                                    
to  start a  wildland  fire. He  elaborated that  conspiracy                                                                    
could  just  grow; there  was  the  potential to  apply  the                                                                    
charge to a large group of  kids that did not really mean to                                                                    
start a fire. He relayed that  arson in the first degree was                                                                    
automatically waived  for 16 and 17-year-olds.  Arson in the                                                                    
second  degree  would  only be  automatically  waived  under                                                                    
certain conditions (e.g. if a  person used explosives or had                                                                    
"priors").                                                                                                                      
                                                                                                                                
2:17:26 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon believed  the  bill  might have  more                                                                    
impact  on  the  juvenile  justice  system  than  previously                                                                    
thought. He  wondered whether  there would  be an  impact to                                                                    
the fiscal note.  Mr. Sica was not aware of  the bill having                                                                    
an impact on the juvenile justice system.                                                                                       
                                                                                                                                
Representative  Edgmon   pointed  to  prior   testimony  and                                                                    
thought  there could  be potential  costs  due to  increased                                                                    
cases. He communicated that he  could have been missing some                                                                    
of the information on the issue.                                                                                                
                                                                                                                                
Co-Chair  Stoltze   noted  that  it  was   the  departments'                                                                    
responsibility to  provide fiscal  notes if they  believed a                                                                    
bill would cause a financial impact.                                                                                            
                                                                                                                                
Ms. Carpeneti confirmed  that arson in the  first degree was                                                                    
an automatic  waiver for 16 and  17-year-olds. She clarified                                                                    
that  the  bill  should  not  have  a  disparate  impact  on                                                                    
juvenile justice procedures. She  elaborated that there were                                                                    
not many  conspiracy prosecutions in Alaska  potentially due                                                                    
to a  lack of  evidence or  conspiracies. She  detailed that                                                                    
"chest beating"  by young  kids was not  the same  as intent                                                                    
for  a  crime  to  be  committed. She  agreed  that  it  was                                                                    
unlikely  that a  significant number  of prosecutions  would                                                                    
result from the passage of the bill.                                                                                            
                                                                                                                                
Representative  Gara   believed  there  were   positive  and                                                                    
negative  aspects  of  the   conspiracy  law.  The  negative                                                                    
component  was  that   a  child  would  have   a  hard  time                                                                    
convincing  a  jury  that  they did  not  intend  to  commit                                                                    
conspiracy. The positive aspect was  that it was more likely                                                                    
the  prosecution would  succeed  if there  was a  conspiracy                                                                    
law,  given  that there  was  a  larger  pool of  people  to                                                                    
provide evidence.                                                                                                               
                                                                                                                                
2:21:23 PM                                                                                                                    
                                                                                                                                
Mr.   Moody  explained   that  it   all   depended  on   the                                                                    
perspective. The advantage of  a conspiracy statute was that                                                                    
it could  be broad;  the defendant  did not  have to  be the                                                                    
person that  committed the act;  an agreement that  could be                                                                    
inferred from  conduct was  all that  was necessary.  He did                                                                    
not  know whether  there would  be  a substantial  advantage                                                                    
added  related to  "rolling individual  defendants from  the                                                                    
group."  He   believed  that   the  police   were  effective                                                                    
investigators because they were  capable of "rolling people"                                                                    
during the course of their investigations.                                                                                      
                                                                                                                                
Ms. Carpeneti added  that the prosecution had  to prove that                                                                    
a person  committed a crime  beyond a reasonable  doubt; the                                                                    
defendant did not have to say or prove anything.                                                                                
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
Representative  Wilson discussed  that it  was hard  to know                                                                    
the impact of  the bill when the number of  arson cases were                                                                    
not readily available.                                                                                                          
                                                                                                                                
Ms.  Carpeneti replied  that she  could follow  up with  the                                                                    
data. She  referenced Leslie Houston's testimony  that there                                                                    
were twelve individuals currently  incarcerated for arson in                                                                    
the  first degree  and one  incarcerated for  second degree.                                                                    
She thought  it was  fairly clear that  Alaska did  not have                                                                    
many  prosecutions for  arson; the  cases were  difficult to                                                                    
prove because many  times the evidence was  destroyed in the                                                                    
fire.                                                                                                                           
                                                                                                                                
Representative  Wilson   was  concerned  about   the  intent                                                                    
portion of  the conspiracy  law. Ms. Carpeneti  replied that                                                                    
there  was a  provision  in statute  for  renunciation of  a                                                                    
crime, which was a defense against the crime of arson.                                                                          
                                                                                                                                
2:26:03 PM                                                                                                                    
                                                                                                                                
Representative Doogan found it  almost impossible that there                                                                    
was no legal recourse against  someone who hired a person to                                                                    
burn a building down. He  understood that it could be easier                                                                    
if the bill passed, but he  opined that many things would be                                                                    
easier in  the criminal  justice system  if the  law allowed                                                                    
it. He believed the issue  was a balancing act and discussed                                                                    
whether  the benefit  outweighed  the  gain to  individuals'                                                                    
civil rights. He did not believe  a solid case had been made                                                                    
for the  proposed change. He discussed  that the legislature                                                                    
had been stiffening  up the penalties for many  of the items                                                                    
it had been  presented with. He believed that  at some point                                                                    
the practice  needed to be  stopped and surmised  that given                                                                    
the facts  and numbers that  had been presented  perhaps the                                                                    
current bill was the place to start.                                                                                            
                                                                                                                                
Co-Chair Stoltze remarked that the discussion was relevant.                                                                     
                                                                                                                                
Representative  Gara  referred  to  the  federal  government                                                                    
conspiracy law "RICO"  that had been passed in  order to get                                                                    
a  person to  come forward  with information  about a  crime                                                                    
(specifically related to mafia  crime). He believed that the                                                                    
legislature  should take  a look  at the  conspiracy law  at                                                                    
some  point  in  the  future. He  believed  that  arson  was                                                                    
serious enough that it should  fit under the conspiracy law.                                                                    
He wondered  whether all property crimes  were second degree                                                                    
felonies.  He thought  it could  be possible  to save  money                                                                    
related to  jail time and  prosecution on the  second degree                                                                    
arson cases.                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked whether  the charges related  to the                                                                    
value of property and also the risk of life.                                                                                    
                                                                                                                                
Representative Gara  clarified that risk of  life fell under                                                                    
arson in the  first degree. He wondered  whether the penalty                                                                    
for  arson  in  the  second  degree  could  be  reduced  for                                                                    
properties that were worth a small amount.                                                                                      
                                                                                                                                
Ms. Carpeneti replied that arson  in the second degree dealt                                                                    
with damages to  a building from a fire  or explosion. Arson                                                                    
in  the third  degree  related to  exploding  a vehicle  and                                                                    
criminally negligent  burning related to crimes  that caused                                                                    
less damage. She communicated that  statutes did not include                                                                    
monetary  values   under  the  various  arson   crimes.  She                                                                    
furthered that  criminally negligent  burning in  the second                                                                    
degree  occurred when  a person  with  "the culpable  mental                                                                    
state of criminal negligence damages  property by fire or an                                                                    
explosion,"  which was  a  class  A misdemeanor.  Criminally                                                                    
negligent   burning  in   the   first   degree  applied   to                                                                    
individuals who  had a  prior offence  in the  previous ten-                                                                    
year  period. She  believed a  crime that  involved a  small                                                                    
amount of  damage would  be charged  as a  misdemeanor under                                                                    
criminally negligent burning.                                                                                                   
                                                                                                                                
2:31:41 PM                                                                                                                    
                                                                                                                                
Co-Chair Thomas MOVED to report  HB 56 out of committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
HB   56  was   REPORTED  out   of  committee   with  a   "no                                                                    
recommendation" and  with one new indeterminate  fiscal note                                                                    
from  the Department  of Corrections,  one  new zero  fiscal                                                                    
note from the Department of  Public Safety, and one new zero                                                                    
fiscal note from the Department of Law.                                                                                         
                                                                                                                                
2:32:36 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:34:50 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 216                                                                                                            
                                                                                                                                
     "An Act  relating to deadlines  in bills  directing the                                                                    
     adoption of regulations and  to the informative summary                                                                    
     required  for  the  proposed  adoption,  amendment,  or                                                                    
     repeal of a regulation."                                                                                                   
                                                                                                                                
2:35:05 PM                                                                                                                    
                                                                                                                                
Co-Chair   Thomas   MOVED   to  ADOPT   proposed   committee                                                                    
substitute for  HB 216,  Work Draft  27-LS0701\S (Bannister,                                                                    
2/22/12).                                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
JOE  MICHEL, STAFF,  REPRESENTATIVE BILL  STOLTZE, explained                                                                    
that  the CS  made three  changes to  the original  bill. On                                                                    
page 2,  line 8 the  words "furnishes or  otherwise provides                                                                    
a," were  inserted. Language  had been  removed from  page 2                                                                    
line  12 through  13  that  stated "that  is  posted on  the                                                                    
Alaska  online  public  notice system  or  furnished  in  an                                                                    
electronic format under AS 44.62.190  (a)." On Page 2, lines                                                                    
14 through 16 the following language had been inserted:                                                                         
                                                                                                                                
     "however,  if  under AS  42.62.190  (a)  the notice  is                                                                    
     published  in   a  newspaper   or  trade   or  industry                                                                    
     publication or  is broadcast, this subsection  does not                                                                    
     require that  the brief description  otherwise required                                                                    
     by  the subsection  accompany  the  publication or  the                                                                    
     broadcast."                                                                                                                
                                                                                                                                
Representative Doogan  asked for further explanation  of the                                                                    
insertion and deletion on page 2.                                                                                               
                                                                                                                                
Mr.  Michel deferred  the question  to Representative  Peggy                                                                    
Wilson.                                                                                                                         
                                                                                                                                
REPRESENTATIVE PEGGY WILSON,  SPONSOR, introduced her staff.                                                                    
She clarified  that the addition required  the department to                                                                    
provide a  brief description of  the regulation  in layman's                                                                    
terms;  however,  the  description would  be  excluded  from                                                                    
newspapers,  state  publications,  and  radio  announcements                                                                    
because charges were  incurred on a per word,  per line, and                                                                    
per minute basis respectively.                                                                                                  
                                                                                                                                
Representative  Neuman thought  that the  point of  the bill                                                                    
was to  provide the  public with  a better  understanding of                                                                    
the changes in  regulations. He understood that  there was a                                                                    
cost, but believed the public  should be aware of changes in                                                                    
regulations that could potentially impact them.                                                                                 
                                                                                                                                
Representative Peggy  Wilson explained  that the  bill dealt                                                                    
with two  frustrations relating to  the process  of creating                                                                    
or changing state regulations: (1)  state agencies often did                                                                    
not write regulations in a  timely fashion. She relayed that                                                                    
on occasion regulations  had not been completed  by the time                                                                    
the scheduled  effective date arrived. She  cited an example                                                                    
related  to Alaska's  Clear and  Equitable Share  (ACES) and                                                                    
explained that  the regulations had  not been  finished five                                                                    
years   after   the   legislation  had   been   implemented;                                                                    
therefore,  producers were  not clear  on what  was required                                                                    
under the law  and it had presented  difficulty when looking                                                                    
at a proposed oil tax law  (HB 110) the prior year. The bill                                                                    
would  help  legislators  and  members   of  the  public  to                                                                    
understand what  the changes to proposed  regulations meant;                                                                    
(2)  the bill  would  ensure that  all  new regulations  and                                                                    
changes  to current  regulations would  be accompanied  by a                                                                    
brief  descriptive summary  written in  layman's terms.  The                                                                    
sponsor had worked with  community members, legislators, and                                                                    
the  Department   of  Law  to  develop   clear  and  concise                                                                    
language.  Section  1  specified   that  the  deadlines  for                                                                    
adopting and  amending or appealing regulations  were set by                                                                    
departments and agencies, which  would be included on fiscal                                                                    
notes. She  relayed that agencies would  be held accountable                                                                    
for meeting  the deadlines and  would be required  to report                                                                    
to  a  regulations  review committee  if  the  deadline  was                                                                    
missed; they would also be required to set a new deadline.                                                                      
                                                                                                                                
2:42:48 PM                                                                                                                    
                                                                                                                                
Representative  Peggy  Wilson  discussed that  state  boards                                                                    
that  met   infrequently  would   not  be  subject   to  the                                                                    
regulation   review   committee  requirement.   She   listed                                                                    
agencies that  were required  to meet  the deadlines  due to                                                                    
frequent interactions  with the public and  legislature: the                                                                    
Alaska  Housing Finance  Corporation, the  Alaska Industrial                                                                    
Development and Export Authority,  the Alaska Public Offices                                                                    
Commission,  and   the  Alaska  Oil  and   Gas  Conservation                                                                    
Commission.  Language   had  been  inserted  in   Section  2                                                                    
specifying  that  the  brief  description  was  targeted  at                                                                    
emails and online notices. She  reiterated that the bill had                                                                    
removed the  newspaper, trade or industry  publications, and                                                                    
broadcasting  announcements   from  the   requirements.  She                                                                    
expounded  that   a  significant  amount   of  communication                                                                    
related to the issue was done via email and online.                                                                             
                                                                                                                                
Representative  Peggy  Wilson  highlighted  that  Section  2                                                                    
clarified that individuals could  not take action against an                                                                    
agency if they misunderstood  the brief description that had                                                                    
been   provided.  Sections   3   and  4   stated  that   the                                                                    
requirements  applied only  to legislation  filed after  the                                                                    
effective date of July 1, 2012.                                                                                                 
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, Work Draft 27-LS0701\S was ADOPTED.                                                                          
                                                                                                                                
Representative  Neuman discussed  that many  members of  the                                                                    
public received  their information about  regulation changes                                                                    
from the  media. He  cited a specific  case in  his district                                                                    
related  to  changes  to   animal  cruelty  regulations.  He                                                                    
wondered  how  people  would  know   whether  they  were  in                                                                    
compliance with the law or how it would impact them.                                                                            
                                                                                                                                
Representative Peggy  Wilson responded that people  would be                                                                    
informed  much   like  they   were  currently,   given  that                                                                    
newspaper and  broadcast announcements would be  required to                                                                    
specify where  the description was  located. She  added that                                                                    
unfortunately the  bill did not  solve the  problem entirely                                                                    
because  some  areas  did  not  have  internet  access.  She                                                                    
thought that individuals  without internet could potentially                                                                    
contact their legislators to receive the description.                                                                           
                                                                                                                                
Representative Neuman  surmised that the point  of excluding                                                                    
the brief  description from newspapers,  state publications,                                                                    
and radio announcements was to save the departments money.                                                                      
                                                                                                                                
Representative Peggy Wilson replied  in the affirmative. She                                                                    
explained   that  the   description   could  get   lengthier                                                                    
dependent  upon  the  subject  matter,  which  could  become                                                                    
expensive to publish.  She explained that they  had not been                                                                    
able to determine  the exact cost, but the goal  was to keep                                                                    
the  cost  to a  minimum.  She  added that  the  departments                                                                    
already  articulated the  intent internally  and adding  the                                                                    
description  to  the  public notices  should  be  relatively                                                                    
simple.                                                                                                                         
                                                                                                                                
2:48:42 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze ClOSED public testimony.                                                                                       
                                                                                                                                
Representative  Doogan thanked  Representative Peggy  Wilson                                                                    
for  bringing the  bill  forward.  He supported  legislation                                                                    
that  made  government  business   more  accessible  to  the                                                                    
public.                                                                                                                         
                                                                                                                                
Representative  Neuman  believed  that  the  intent  of  the                                                                    
legislation was to  ensure that the public  was informed. He                                                                    
was concerned that  the departments did not  have to provide                                                                    
the description  in print. He  opined that the change  was a                                                                    
step backwards.                                                                                                                 
                                                                                                                                
Representative Peggy Wilson  reiterated that the departments                                                                    
would be required  to provide the description  online and in                                                                    
emails  and that  the exclusion  only  applied to  broadcast                                                                    
information  due  to costs.  The  goal  was to  provide  the                                                                    
public with a better understanding of any changes.                                                                              
                                                                                                                                
Representative Neuman supported the  bill, but believed that                                                                    
the  information   should  be  included  in   the  broadcast                                                                    
announcements and print media as well.                                                                                          
                                                                                                                                
Representative Tammy  Wilson asked  for a  brief description                                                                    
between print versus email.                                                                                                     
                                                                                                                                
Representative Peggy  Wilson replied  that there  were three                                                                    
exceptions    including,    newspapers,   trader    industry                                                                    
publications,  and  broadcast.   The  description  would  be                                                                    
included in emails and in  published documents sent by mail.                                                                    
The goal  was to save the  state money by not  requiring the                                                                    
departments to pay for publishing the description.                                                                              
                                                                                                                                
Co-Chair Stoltze supported the legislation.                                                                                     
                                                                                                                                
Representative Peggy  Wilson responded  that the  bill would                                                                    
have to go  through the Senate as well and  she would change                                                                    
the  bill  if  the  Senate  was receptive  to  the  idea  of                                                                    
including the description in print media.                                                                                       
                                                                                                                                
2:55:26 PM                                                                                                                    
                                                                                                                                
Co-Chair  Thomas  MOVED  to  report  CSHB  216(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
Co-Chair Stoltze discussed the  zero impact fiscal note from                                                                    
the Office of Management and Budget.                                                                                            
                                                                                                                                
CSHB  216(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation and  with one  new zero  impact fiscal                                                                    
note from the Office of the Governor.                                                                                           
                                                                                                                                
2:55:51 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:56:36 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 264                                                                                                            
                                                                                                                                
     "An  Act  allowing  a deferral  of  municipal  property                                                                    
     taxes on  the increase  in the  value of  real property                                                                    
     attributable  to  subdivision  of  that  property;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
2:57:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CATHY  MUNOZ, SPONSOR, explained that  HB 264                                                                    
would  give   municipalities  the   option  to   provide  an                                                                    
incentive to  develop land for  housing by deferring  for up                                                                    
to five  years a property  tax increase directly  related to                                                                    
the subdivision  of a piece  of property into three  or more                                                                    
lots. She elaborated  that there was a limited  land base in                                                                    
Juneau,    which   resulted    in   limited    new   housing                                                                    
opportunities. She detailed that  when a developer purchased                                                                    
a piece  of land and  began the subdivision process  as soon                                                                    
as  the  surveying  and planning  paperwork  was  filed  the                                                                    
property was  reassessed at a  rate that could be  between 5                                                                    
and 10  times the  predevelopment cost  before any  work had                                                                    
occurred on  the property. She  stressed that the  issue was                                                                    
an incredible disadvantage and  disincentive for new housing                                                                    
development  especially in  communities  faced with  limited                                                                    
housing opportunities.                                                                                                          
                                                                                                                                
Representative Munoz  continued to explain  the legislation.                                                                    
The  bill would  provide municipalities  the flexibility  to                                                                    
defer  increases in  property  taxes  on subdivided  parcels                                                                    
until a  lot was sold  or until a residential  or commercial                                                                    
building  was  constructed on  a  plot  of land.  The  local                                                                    
government would  be allowed to  adopt an  optional deferral                                                                    
for all  or a portion  of the subdivided property  and could                                                                    
decide   the  terms   of  paying   the  tax   deferral.  She                                                                    
communicated  that supporters  of  the legislation  believed                                                                    
that it would provide  an incentive for developing privately                                                                    
owned  property by  holding taxes  at  the undeveloped  land                                                                    
value   until  improvements   occurred  that   led  to   the                                                                    
development or  sale of the  parcel. The land would  then be                                                                    
more  valuable and  capable of  generating more  revenue for                                                                    
the local community.                                                                                                            
                                                                                                                                
Representative  Munoz delineated  that  the  purpose of  the                                                                    
bill  was to  encourage  land development  and more  housing                                                                    
opportunities and to let local  governments decide whether a                                                                    
property tax  deferral would benefit the  community. She was                                                                    
sensitive to  the concerns  of local  municipalities related                                                                    
to  exemption legislation  and the  passing  on of  unfunded                                                                    
liabilities to cities; the bill  would not impose the burden                                                                    
on  local municipalities.  The  sponsor  had worked  closely                                                                    
with the  Alaska Municipal League (AML).  She expounded that                                                                    
the  deferral was  optional and  that  property taxes  would                                                                    
ultimately be due  when the property was  sold or developed.                                                                    
She  informed   the  committee  that  the   assistant  state                                                                    
assessor and others were available to testify.                                                                                  
                                                                                                                                
Co-Chair  Stoltze appreciated  the process  that had  led to                                                                    
the bill.  He had been  slightly disappointed that  the bill                                                                    
only  included a  deferral, but  he understood  that it  had                                                                    
been crafted carefully.                                                                                                         
                                                                                                                                
3:01:18 PM                                                                                                                    
                                                                                                                                
Vice-chair  Fairclough  MOVED  CSHB 264(CRA)  as  a  working                                                                    
document before the committee.                                                                                                  
                                                                                                                                
BILL  ROTECKI, MEMBER,  KETCHIKAN GATEWAY  BOROUGH ASSEMBLY,                                                                    
spoke in support  of the legislation. He  discussed that the                                                                    
issue had come up as a  suggestion when the borough had done                                                                    
an  economic development  survey that  included the  housing                                                                    
industry.  He explained  that local  builders would  be more                                                                    
inclined to  subdivide parcels before selling  them if taxes                                                                    
could be deferred  for five years or until  the property was                                                                    
sold.  He  relayed  that  Ketchikan  would  face  a  housing                                                                    
shortage if the  local shipyard was awarded  the contract to                                                                    
build  new  state ferries  or  if  new mining  opportunities                                                                    
arose.  He  elaborated that  building  housing  to meet  the                                                                    
needs  of any  of  the possibilities  would  take time.  The                                                                    
borough did not want individuals  moving to the community to                                                                    
have  to commute  from another  location  due to  a lack  of                                                                    
housing options.  He opined that  under the  legislation the                                                                    
municipality  would most  likely gain  rather than  lose. He                                                                    
furthered  that the  community could  not  lose tax  revenue                                                                    
that  it did  not already  have,  but the  revenue would  be                                                                    
generated if the subdivision of property occurred.                                                                              
                                                                                                                                
3:04:30 PM                                                                                                                    
                                                                                                                                
ALAN   WILSON,    CHAIRMAN,   JUNEAU    AFFORDABLE   HOUSING                                                                    
COMMISSION,  voiced support  for the  bill. He  relayed that                                                                    
the Juneau  Assembly had  established the  Juneau Affordable                                                                    
Housing Commission in 2007 to  address local housing issues.                                                                    
The  commission  had  worked  on  multiple  items  including                                                                    
comprehensive planned issues,  density overlays, free gravel                                                                    
for  site  improvement,  and  other.  He  relayed  that  the                                                                    
commission had  looked at tools  utilized by  communities in                                                                    
the Lower  48 that allowed  them to  develop a region  or to                                                                    
target specific  types of housing; the  deferral of property                                                                    
taxes  had  been  a  strategy  used  by  other  communities.                                                                    
Carrying  costs over  time was  a burden  to developers  and                                                                    
could result in a loss of property.                                                                                             
                                                                                                                                
Mr. Wilson  communicated that HB  264 was the first  tool in                                                                    
the toolbox that private  developers could utilize directly.                                                                    
The  commission  viewed  the tax  deferral  as  an  economic                                                                    
development tool  versus a  housing tool;  however, anything                                                                    
that would  help address Juneau's housing  vacancy rate that                                                                    
was currently less than 1 percent would be beneficial.                                                                          
                                                                                                                                
Co-Chair Stoltze thought  the problem was about  a cash flow                                                                    
issue;  builders did  not  want  to put  out  cash prior  to                                                                    
making money. Mr. Wilson replied in the affirmative.                                                                            
                                                                                                                                
Vice-chair  Fairclough  asked  whether  the  commission  had                                                                    
asked the city  assessor's office why the  price of property                                                                    
was  increased  immediately  after  it  was  subdivided  and                                                                    
whether it would consider stair-stepping the tax increase.                                                                      
                                                                                                                                
Mr. Wilson answered that the  commission had asked the local                                                                    
assessor why tax  costs could not be  deferred. The response                                                                    
had been that  according to state statute  all property must                                                                    
be valued fairly. He explained  that a ten acre parcel could                                                                    
be valued  below a one  acre parcel,  but once the  ten acre                                                                    
property was  subdivided the value  and desirability  of the                                                                    
parcels increased.                                                                                                              
                                                                                                                                
Co-Chair Stoltze  noted that there  were a number  of strong                                                                    
state assessor laws. Mr. Wilson agreed.                                                                                         
                                                                                                                                
3:09:09 PM                                                                                                                    
                                                                                                                                
JOHN   HARRINGTON,   MEMBER,  KETCHIKAN   GATEWAY   BOROUGH,                                                                    
PLANNING  COMMISSION   AND  ECONOMIC   DEVELOPMENT  ADVISORY                                                                    
COMMITTEE,  spoke in  favor of  the legislation.  He relayed                                                                    
that  the entities  had interviewed  local business  sectors                                                                    
who had  been developing economic development  action plans.                                                                    
The borough assembly had  adopted approximately one-third of                                                                    
the plans,  one of which  was the same  proposal encompassed                                                                    
in the  bill. The assembly  had been told that  the proposal                                                                    
was   not   legal   under  current   law;   therefore,   the                                                                    
introduction of the bill had received broad support.                                                                            
                                                                                                                                
Co-Chair  Stoltze asked  whether  the  borough had  separate                                                                    
property tax levies from the  Cities of Ketchikan or Saxman.                                                                    
Mr. Harrington replied in the negative.                                                                                         
                                                                                                                                
Vice-chair   Fairclough   believed  that   the   legislation                                                                    
impacted several  groups including the homebuilders  and the                                                                    
homeowners.  She surmised  that  the homeowner  would pay  a                                                                    
smaller  amount  of  taxes depending  on  how  quickly  they                                                                    
purchased  a lot  on  a subdivided  property  and created  a                                                                    
different type  of ownership from  one where liens  would be                                                                    
placed on  each lot based on  tax deferred by the  year. She                                                                    
provided  a scenario  in which  a ten  acre lot  was divided                                                                    
into 10  parcels; only  one of  the lots  sold in  the first                                                                    
year.  She asked  whether under  the scenario  the homeowner                                                                    
would only be responsible for  one year of deferred taxes in                                                                    
their purchase price.                                                                                                           
                                                                                                                                
Mr. Harrington replied in the affirmative.                                                                                      
                                                                                                                                
Vice-chair   Fairclough   had   concerns   about   how   the                                                                    
repercussions  of  a  developer  that  went  bankrupt  would                                                                    
impact  homestead  property  owners that  carried  the  note                                                                    
themselves.  In the  event of  the  bankruptcy she  wondered                                                                    
whether  the  homesteader  would   be  responsible  for  any                                                                    
deferred taxes  on the subdivided parcel.  She was concerned                                                                    
that if  a bank was responsible  that it would be  second in                                                                    
line to the government take.                                                                                                    
                                                                                                                                
Mr.  Harrington  replied that  he  was  not the  appropriate                                                                    
person to answer  the question. He added  that the situation                                                                    
in  the   Ketchikan  Gateway  Borough   involved  landowners                                                                    
interested  in subdividing  their  properties. He  explained                                                                    
that  the  typical  situation  involved  remaining  land  on                                                                    
subdivided property that  was developed at a  later time and                                                                    
did  not  match  the  look  of  the  prior  development.  He                                                                    
believed  that  it  made  much   more  sense  to  allow  the                                                                    
landowner  time   to  implement   a  plan  for   the  entire                                                                    
development and to proceed systematically.                                                                                      
                                                                                                                                
3:14:38 PM                                                                                                                    
                                                                                                                                
Vice-chair   Fairclough  agreed,   but  surmised   that  the                                                                    
homeowner could have $10,000 of  additional costs built into                                                                    
a property they  were purchasing depending on  the amount of                                                                    
the  deferred property  tax. She  understood  that the  bill                                                                    
made  the  process easier  for  developers  and that  cities                                                                    
would receive  their share  as well,  but she  had questions                                                                    
remaining related to the homeowner.                                                                                             
                                                                                                                                
Co-Chair  Stoltze noted  that subdivision  costs were  a big                                                                    
revenue generator for the Municipality of Anchorage.                                                                            
                                                                                                                                
3:15:57 PM                                                                                                                    
                                                                                                                                
FRED MORINO, MANAGER,  D.J.G. DEVELOPMENT, JUNEAU, supported                                                                    
the  legislation.  He  believed  the bill  would  provide  a                                                                    
positive   economic   impact   statewide   for   homeowners,                                                                    
municipalities, and developers.                                                                                                 
                                                                                                                                
3:16:37 PM                                                                                                                    
                                                                                                                                
DAVE HANNA,  OWNER, JLC  PROPERTIES, JUNEAU,  voiced support                                                                    
for   the   bill.   He  referred   to   communication   with                                                                    
representatives from  several banks  who saw  the bill  as a                                                                    
great  incentive   for  development.  He  had   worked  with                                                                    
multiple homebuilding associations  including Alaska General                                                                    
Contractors and everyone had been  in favor of the proposal.                                                                    
He addressed that  AML had concerns but  the entity believed                                                                    
that given the bill's  flexibility the proposal was tailored                                                                    
to  suit  every  city's  needs; communities  could  use  the                                                                    
deferral as  a tool to  encourage development. The  bill was                                                                    
more than a  cost saving measure; it could be  used to steer                                                                    
the  desired development.  He detailed  that the  incentives                                                                    
could be  offered to a  developer who was willing  to create                                                                    
the lot sizes the city wanted  or to include features like a                                                                    
bus stop or a park.                                                                                                             
                                                                                                                                
Mr. Hanna believed  the bill would help  developers who were                                                                    
"hanging out to  dry." He explained that  the development of                                                                    
a  subdivision  was  a  drawn  out,  expensive  process.  He                                                                    
communicated  that  people  typically   did  not  enter  the                                                                    
business without a  good incentive and a  healthy demand for                                                                    
lots.  He  pointed  to building  cycles  that  occurred  and                                                                    
relayed that some developers looking  to take advantage of a                                                                    
good  market  were   experiencing  a  significant  financial                                                                    
burden because  the subdivision process was  lengthy and the                                                                    
market and  demand fell before  the lots could be  sold. The                                                                    
taxes were a tremendous  disincentive for development and he                                                                    
believed  lessening  the  burden   would  be  good  for  the                                                                    
economy.  He had  submitted  an example  showing  that if  a                                                                    
subdivision  had  been  bought  two years  earlier  than  it                                                                    
normally would have,  it would be a net  revenue increase to                                                                    
the municipality  because taxes  were higher on  houses than                                                                    
on raw land.                                                                                                                    
                                                                                                                                
3:20:48 PM                                                                                                                    
                                                                                                                                
Vice-chair  Fairclough  asked which  financial  institutions                                                                    
had  been  communicated with.  Mr.  Hanna  replied that  the                                                                    
institutions  included  Alaska   Pacific  Bank,  True  North                                                                    
Federal Credit Union, and First Bank in Ketchikan.                                                                              
                                                                                                                                
Co-Chair  Stoltze remarked  there had  been a  large housing                                                                    
development  planned  in  one of  his  precincts  until  the                                                                    
economy had taken a downturn.  He observed that the bill had                                                                    
far reaching impacts.                                                                                                           
                                                                                                                                
Vice-chair Fairclough  was supportive of the  concept before                                                                    
the  committee,   but  she  reiterated  her   concern  about                                                                    
homeowners  in  her  district that  were  dealing  with  the                                                                    
ramifications  of a  bankruptcy. She  believed the  proposal                                                                    
was  an excellent  idea  and that  the  sponsor had  created                                                                    
flexibility  in  the  way  the state  would  pass  the  law;                                                                    
however,  she wanted  a more  detailed understanding  of the                                                                    
bankruptcy process in order for  municipalities to factor it                                                                    
into their implementation of the law.                                                                                           
                                                                                                                                
Mr.  Hanna  relayed that  based  on  conversations with  the                                                                    
state  and  local  assessor's  offices  he  understood  that                                                                    
municipalities could  take a second position  if desired. He                                                                    
elaborated that  the tax  liability by  law could  stay with                                                                    
the owner of record, but  the municipality could also choose                                                                    
to defer  the liability to  prevent it from  transferring to                                                                    
another person in the event of a bankruptcy.                                                                                    
                                                                                                                                
Vice-chair  Fairclough   understood  that   the  flexibility                                                                    
existed,  but  she  guessed that  in  her  municipality  the                                                                    
government would  take its cut  first. She shared  that when                                                                    
the government took  its cut on a  foreclosure or bankruptcy                                                                    
it meant  that the  Anchorage property  tax payers  would be                                                                    
accepting  the  burden  and risk.  She  believed  the  state                                                                    
framework in the bill worked fine,  but the devil was in the                                                                    
details  related to  who the  responsible party  was if  the                                                                    
developer went bankrupt.                                                                                                        
                                                                                                                                
3:24:30 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
Representative  Munoz read  from a  letter she  had received                                                                    
from Juneau commercial banker Jerry Kromer:                                                                                     
                                                                                                                                
     From a  lending perspective the increased  cash outflow                                                                    
     needed to  carry the property  taxes on the  full final                                                                    
     value of the  lots without being matched  to the timing                                                                    
     of  the cash  inflow  when the  lots  are sold  creates                                                                    
     greater risk to the lender.  Risk is compensated in two                                                                    
     ways:  higher rates  for  borrowing  and/or lower  loan                                                                    
     amounts, each  of which  adds to the  costs to  the end                                                                    
     purchaser of  the lot and higher  housing or commercial                                                                    
     prices without real increased  benefit to the developer                                                                    
     or  to  the  lender.   Through  the  higher  costs  and                                                                    
     reductions  in the  amount  of  development that  could                                                                    
     have been done,  the taxing authority is  in my opinion                                                                    
     getting    less   revenue    through   less    eventual                                                                    
     development.                                                                                                               
                                                                                                                                
Representative  Wilson   asked  whether  the   tax  deferral                                                                    
stopped  at  the beginning  of  a  housing project  or  upon                                                                    
completion.  Representative  Munoz  answered  that  the  tax                                                                    
liability would be due when  the lot sold within the initial                                                                    
five  year period  or it  would require  the building  to be                                                                    
completed if there was not a building permitting process.                                                                       
                                                                                                                                
Representative Wilson noted that  there was not a permitting                                                                    
process  in Fairbanks  and asked  for verification  that the                                                                    
developer would  not pay  the deferred  tax until  the house                                                                    
was completed.                                                                                                                  
                                                                                                                                
Representative  Munoz replied  that either  the sale  of the                                                                    
lot or the  construction of the building  would occur before                                                                    
the tax deferral ended.                                                                                                         
                                                                                                                                
Co-Chair Stoltze referred to the zero fiscal note.                                                                              
                                                                                                                                
Co-Chair  Thomas  MOVED  to  report  CSHB  264(CRA)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB  264(CRA) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with one  new zero fiscal note from                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 302                                                                                                            
                                                                                                                                
     "An  Act  repealing   certain  audit  requirements  for                                                                    
     entities  receiving contributions  from permanent  fund                                                                    
     dividends."                                                                                                                
                                                                                                                                
HB 302 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
HOUSE BILL NO. 253                                                                                                            
                                                                                                                                
     "An Act classifying certain substances as schedule IIA                                                                     
     controlled substances; and providing for an effective                                                                      
     date."                                                                                                                     
                                                                                                                                
HB 253 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:28:23 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:28 PM.                                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB216_Regulations_Sponsor_O.pdf HFIN 2/22/2012 1:30:00 PM
HB 216
HB216_Changes_Finance.pdf HFIN 2/22/2012 1:30:00 PM
HB 216
HB253 Letter.pdf HFIN 2/22/2012 1:30:00 PM
HB 253
HB 253 Support Article Alaska Dispatch 11.07.11 (1).pdf HFIN 2/22/2012 1:30:00 PM
HB 253
Sponsor Statement for HB 253pdf.pdf HFIN 2/22/2012 1:30:00 PM
HB 253
HB 302 Sponsor Statement.pdf HFIN 2/22/2012 1:30:00 PM
HB 302
HB 302 PCG backup information.docx HFIN 2/22/2012 1:30:00 PM
HB 302
HB 302 Letters of Support.pdf HFIN 2/22/2012 1:30:00 PM
HB 302
HB 302 federal audit information.docx HFIN 2/22/2012 1:30:00 PM
HB 302
HB 302 Alaska Statute 43.23.062.docx HFIN 2/22/2012 1:30:00 PM
HB 302
HB302-NEW FN-DOR-PFD-02-17-12.pdf HFIN 2/22/2012 1:30:00 PM
HB 302
11 - HB 264 Supporting Documents - Letter of Support from the Juneau Affordable Housing Commission, 17 January 2012.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
10 - HB 264 Supporting Documents - Letter of Support from DJG Development, 19 January 2012.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
09 - HB 264 Supporting Documents - Letter of Support from the Alaska Association of Realtors, 4 February 2012.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
08 - HB 264 Supporting Documents - Alaska State Home Building Association Resolution in Support of HB 264, 20 January 2012.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
07 - HB 264 Supporting Documents - Juneau Empire Editorial - City's Top 10 Goals - Tricks or Treats, 13 November 2011.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
05 - HB 264 Differences between HB 264 and CSHB 264 (CRA).pdf HFIN 2/22/2012 1:30:00 PM
HB 264
04 - CSHB 264 (CRA) Version I Sectional Analysis.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
03 - CSHB 264 (CRA) Version I Sponsor Statement.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
HB 56 - Relevant Statutes.pdf HFIN 2/22/2012 1:30:00 PM
HB 56
HB 56 Sponsor Statement 2012.pdf HFIN 2/22/2012 1:30:00 PM
HB 56
HB264-NEW FN-DCCED-DCRA-02-17-12.pdf HFIN 2/22/2012 1:30:00 PM
HB 264
HB216CS(JUD)-NEW FN-GOV-OMB-2-17-2012.pdf HFIN 2/22/2012 1:30:00 PM
HB 216
HB 216 CS WORKDRAFT FIN-B VERSION 022212.PDF HFIN 2/22/2012 1:30:00 PM
HB 216
HB 56 Support.pdf HFIN 2/22/2012 1:30:00 PM
HB 56
HB 264 Support letter.pdf HFIN 2/22/2012 1:30:00 PM
HB 264