Legislature(2007 - 2008)BELTZ 211
04/03/2008 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB356 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 356 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 3, 2008
3:31 p.m.
MEMBERS PRESENT
Senator Donald Olson, Chair
Senator Albert Kookesh, Vice Chair
Senator Joe Thomas
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Gary Stevens
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 356(CRA)
"An Act relating to an exemption from municipal property taxes
for certain real property that is exempt from levy and
collection of real property taxes when conveyed by the federal
government to implement the Alaska Native Claims Settlement Act
or when conveyed under a land exchange authorized by that Act
involving land or an interest in land that is made exempt from
local property taxes by that Act; and providing for an effective
date."
MOVED CSHB 356(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 356
SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTIONS
SPONSOR(S): REPRESENTATIVE(S) STOLTZE
02/06/08 (H) READ THE FIRST TIME - REFERRALS
02/06/08 (H) CRA, FIN
02/28/08 (H) CRA AT 8:00 AM BARNES 124
02/28/08 (H) Moved CSHB 356(CRA) Out of Committee
02/28/08 (H) MINUTE(CRA)
02/29/08 (H) CRA RPT CS(CRA) 4DP
02/29/08 (H) DP: CISSNA, SALMON, FAIRCLOUGH, LEDOUX
03/12/08 (H) FIN RPT CS(CRA) 9DP
03/12/08 (H) DP: HAWKER, CRAWFORD, GARA, NELSON,
STOLTZE, THOMAS, KELLY, MEYER, CHENAULT
03/12/08 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/12/08 (H) Moved Out of Committee
03/12/08 (H) MINUTE(FIN)
03/27/08 (H) TRANSMITTED TO (S)
03/27/08 (H) VERSION: CSHB 356(CRA)
03/28/08 (S) READ THE FIRST TIME - REFERRALS
03/28/08 (S) CRA
04/03/08 (S) CRA AT 3:30 PM BELTZ 211
WITNESS REGISTER
REPRESENTATIVE BILL STOLTZE
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of HB 356.
JIM ARNESEN, Land Manager
Eklutna Inc.
Eagle River, AK
POSITION STATEMENT: Spoke in support of HB 356.
JACK OMELAK, Staff
to Senator Olson and a member of an ANCSA corporation
Alaska Capitol
Juneau, AK
POSITION STATEMENT: Spoke in support of HB 356.
ACTION NARRATIVE
CHAIR DONALD OLSON called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:31:32 PM.
Senators Kookesh, Thomas, and Olson were present at the call to
order. Senator Wagoner arrived later.
HB 356-MUNICIPAL PROPERTY TAX EXEMPTIONS
CHAIR OLSON announced the consideration of HB 356. [Before the
committee was CSHB 356(CRA).]
3:32:01 PM
REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, said that
Eklutna and Eklutna Inc. are in his district and brought an
issue to his attention regarding the tax exemption of land that
was undeveloped and was traded to a municipality and then became
taxable. It was not the intent of the federal government. It
dampened their enthusiasm to do some important public-interest
land trades. He spoke with members of the Bush Caucus and
attorneys from CIRRI (Cook Inlet Region, Incorporated) who made
changes to the bill. There is a quirk in the law and it deviates
from the intent of Congress. That is that undeveloped land is
being taxed by some municipalities. It is predominantly
initiated by the local governmental entity. People in Southeast
said there are land trades that didn't occur because of the
taxes. He said he talked to people in Senator Olson's region.
"It's been a good process for me to learn more about a body of
law that I am certainly glad to know more about."
3:34:27 PM
REPRESENTATIVE STOLTZE said there was a Chugiak State Park
access point, which the Legislature appropriated for and the
Municipality of Anchorage bonded for to provide for the land
trade. There was strong support. The property that Eklutna
traded for in another undeveloped area is now taxable. The state
assessor moved the effective date back so the bill will
"positively affect that trade." The fiscal note shows a positive
economic impact, "because some things are going to happen that
wouldn't otherwise happen."
3:35:39 PM
SENATOR THOMAS asked if the bill simply allows what the federal
government allows as far as not taxing undeveloped land. So when
land is traded with a municipality it will have the same
regulation as federal land. If it is developed, that will be
different.
REPRESENTATIVE STOLTZE said that's correct.
CHAIR OLSON asked if it makes a difference if the land is within
a borough or not.
REPRESENTATIVE STOLTZE said this is municipal tax, so if it is
not in a borough it won't apply.
CHAIR OLSON asked about developed versus undeveloped land.
REPRESENTATIVE STOLTZE said there are state and federal
definitions of developed land, and they are similar.
CHAIR OLSON asked how often this issue impeded potential past
trades.
3:37:28 PM
REPRESENTATIVE STOLTZE said he doesn't know. He has spoken with
people in Eklutna, who are managing their property for the
future so they don't have an interest in acquiring more taxable
land. He said CIRI has subsurface rights in his area, and a lot
of the legwork was done by their attorneys. There are [land
trades] that the shareholders will have less interest in. They
are very active members of his community, and they see the
public benefit, but after acquiring the tax status so many
times, "they have to ask themselves if it's worth [it]."
CHAIR OLSON noted that Senator Wagoner had joined the committee.
3:38:54 PM
JIM ARNESEN, Land Manager, Eklutna Inc., said this bill cleans
up something that is missing in ANCSA (Alaska Native Claims
Settlement Act). When Eklutna Inc. trades land with a
municipality for undeveloped land, it has to pay taxes on it. As
a result the corporation has turned down a land trade with the
school district and one with the fire department. "We just want
to be able to exchange lands if they're similar - if both lands
are undeveloped - then we want to continue that exemption until
we do develop it." If Eklutna Inc. receives developed property
that produces income, "we don't have a problem paying taxes on
that." They don't want to pay taxes on land until they develop
it.
3:41:13 PM
SENATOR THOMAS asked if page 2, line 27, refers to ANCSA.
MR. ARNESEN said that is part of ANCSA, and the 1636(d) is part
of ANILCA. This is an amendment to bring things up to date.
3:42:10 PM
SENATOR WAGONER said he understands why the Native corporations
don't pay taxes. He questioned who pays for firefighting costs
on Native land.
MR. ARNESEN said he doesn't know but his corporation probably
doesn't.
SENATOR WAGONER said someone is going to have to start property
tax to get those services. The federal government helps pay for
services. The Native corporations have a lot of land, and if
services are going to be provided, "somebody's got to be able to
tax somebody someway, even on undeveloped property." A private
person pays property tax on undeveloped land, so be prepared for
it, he said.
SENATOR KOOKESH said that Eklutna Inc. is probably paying taxes
on developed land. The Alaska Native corporations pay over $220
million in taxes already on developed lands. "It's not as if
we're not paying our way on land that we are developing." Every
piece of property in Southeast Alaska with a timber sale becomes
developed and taxes are owed.
SENATOR WAGONER said, "If it's in a taxable jurisdiction." For
the private sector even undeveloped land is charged taxes.
3:44:30 PM
REPRESENTATIVE STOLTZE said the state is just melding Alaska law
with federal intent. If it were litigated, it wouldn't even be a
close call. He said to keep the state out of court because
Eklutna would have a pretty good case on what the federal intent
was. He said he went to schools on land owned by Eklutna Inc.;
and it was leased to the district for $10 per year. That value
probably exceeds taxes for fire service.
SENATOR KOOKESH said the public interest that the committee is
considering is whether or not we're going to allow the Native
corporations to step forward and do exchanges. They are not any
more, even though the school district and fire department wants
to. There are 440 million acres of Native land in Alaska, "and
I'm sure there are going to be people who want exchanges." It
would make sense to do this for the public interest, he said.
3:46:08 PM
REPRESENTATIVE STOLTZE said Eklutna Inc. is the largest private
land owner in his district. It will be a major player for access
points where people are trespassing now. There will be interest
in gaining public access points to fishing streams and hunting
and recreation areas. "Right now I'm seeing this becoming an
impediment."
CHAIR OLSON asked Mr. Arnesen to comment on whether subsurface
rights go with land that's traded.
MR. ARNESEN said CIRI has been reluctant to exchange its
subsurface rights unless it gets subsurface rights elsewhere
that are valuable. CIRI supports this bill, and there are cases
where it would trade those subsurface rights for something else.
The transaction that brought about this legislation is that
Eklutna is trading 80 acres for 20 acres of municipal land. CIRI
did not want to trade 80 acres of subsurface for 20 acres of
subsurface, but if it was a like amount of land, it probably
would.
3:48:11 PM
SENATOR KOOKESH said in ANCSA the village corporations got the
surface and the regional corporations got the subsurface, so
there are two estates and two deals must be made. It's an
interesting scenario. "One can go but the other one doesn't have
to."
SENATOR THOMAS asked what happens to Native land that is
developed and has a municipal building on it.
SENATOR KOOKESH said the tax exemption doesn't stay with the
land that is traded - it goes with the new one. "If they trade
undeveloped land for undeveloped land, they want to keep their
tax exemption, and it goes with the land that the Natives own."
The trigger is Native owned Alaska ANCSA lands. Trades were made
on Prince of Wales Island. "We [Sealaska Corporation] took
undeveloped land and it became tax exempt until we develop it."
Native land that became non-Native land immediately loses the
tax exemption.
SENATOR THOMAS asked about land that remained Native owned and
was leased to the school, for example.
SENATOR KOOKESH said it's once the land is developed regardless
of what the development is. "We could put a trail across
Sealaska land and if an individual used it for commercial
purposes, it is immediately …"
SENATOR THOMAS interjected to ask, "Even a tax exempt?"
SENATOR KOOKESH said yes; the land all sits on a cliff and as
soon as it tips one way or the other, it becomes taxable. No
matter what the development is, if someone puts a stake in the
ground "you're pretty close to saying that's development."
3:50:38 PM
JACK OMELAK, Staff to Senator Olson and a member of an ANCSA
corporation, said this bill puts Alaska in line with federal
intent. ANCSA lands are considered private, but they have an
ability to be tax exempt. He spoke with a land manager at the
Bering Straits region, the president of the Alaska Village
Council, and the director of Alaska Native Studies at the
university, and they all agree that this would put state laws
closer to federal intent. They all agree that HB 356 would be
beneficial.
CHAIR OLSON asked if he is in favor of the bill and if the
Native corporations that he contacted are too.
MR. OMELAK said yes, it is a fairly benign bill. There are
stipulations with ANCSA lands, but any lands being traded are
specialized and must go through their own process so that would
take the state out of the equation anyway. The lands that this
bill will affect are privately owned and wouldn't necessarily
carry any federal restrictions.
3:53:19 PM
SENATOR WAGONER asked if a Native corporation could develop a
portion of a large piece of land and only pay tax on the
developed portion.
SENATOR KOOKESH said that is allowed. It goes by something
smaller than an acre and it depends on the proposed application.
"If it is going to be a baseball or football field, you
certainly can't develop just the area that's going to house the
locker room. You have to develop and claim the whole thing." And
once the land loses the tax exemption, it can never go back so
it's really based on the plans for the development. In Southeast
Alaska if [Sealaska] plans to cut 50 acres and only cuts one
acre, the entire 50 acres becomes tax exempt.
3:54:47 PM
REPRESENTATIVE STOLTZE said he is not an expert in this area and
he appreciates the experts who have helped him along the way.
SENATOR KOOKESH moved to report CSHB 356(CRA) from committee
with individual recommendations and attached fiscal note(s).
There being no objection, the motion carried.
There being no further business to come before the committee,
Chair Olson adjourned the meeting at 3:56:16 PM.
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