Legislature(2001 - 2002)
03/28/2001 01:37 PM Senate CRA
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ALASKA STATE LEGISLATURE
SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE
March 28, 2001
1:37 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Alan Austerman
Senator Randy Phillips
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Pete Kelly
COMMITTEE CALENDAR
HOUSE BILL NO. 118
"An Act relating to a mandatory exemption from municipal taxes on
certain residences; and providing for an effective date."
MOVED HB 118 OUT OF COMMITTEE
HOUSE BILL NO. 156
"An Act relating to municipal debt for development and
redevelopment projects."
MOVED HB 156 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
HB 118 - No previous action
HB 156 - No previous action
WITNESS REGISTER
Lori Backes
Alaska State Capitol, Room 41
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 118
Steve Van Sant, State Assessor
Department of Community & Economic Development
Division of Community and Business Development
550 W 7th Ave Ste 770
Anchorage, AK 99501-3510
POSITION STATEMENT: Answered questions on HB 118
c
Representative Lesil MGuire
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 156
Tom Klinkner
No address provided
Anchorage LIO
POSITION STATEMENT: Testified on HB 156
Fred Burrows
Downtown Anchorage Civil Venture
No address provided
Anchorage LIO
POSITION STATEMENT: Testified on HB 156
Rod Pfleiger
Downtown Partnership
No address provided
Anchorage LIO
POSITION STATEMENT: Testified on HB 156
Anna Fairclough
P.O. Box 77112
Eagle River, AK 99577
POSITION STATEMENT: Testified on HB 156
Mike Scott
Municipality of Anchorage
st
1200 East 1Avenue
Anchorage, AK 99504
POSITION STATEMENT: Testified on HB 156
ACTION NARRATIVE
TAPE 01-11, SIDE A
Number 001
CHAIRMAN JOHN TORGERSON called the Senate Community & Regional
Affairs Committee meeting to order at 1:37 p.m. Senators Austerman,
Phillips, Lincoln and Chairman Torgerson were present.
The first order of business was HB 118.
HB 118-SR CIT./DISABLED VET. PROP TAX EXEMPTION
Lori Backes, staff to Representative Whittaker introduced the bill
and explained that HB 118 allows municipalities to establish, by
their own ordinance, methods for accepting applications for the
senior citizen, disabled veterans, and widows and widowers property
tax exemption. Under current state law, these citizens must file
yearly for this exemption and Representative Whittaker thought it
was best that communities establish their own procedures for
accepting these applications. For example, he thought it was unfair
that seniors had to apply yearly for the exemption when the general
residential property tax exemption could be made on a one time
basis.
SENATOR PHILLIPS asked if he was correct that, at the local option,
a senior citizen would have to file just once for a property tax
exemption.
MS. BACKES said that is correct if that is the choice of the
municipality.
SENATOR PHILLIPS asked how the municipality would check to see
whether the seniors had moved and their non-senior children were
now occupying the house.
MS. BACKES said that would be addressed the same way that
municipalities currently address that situation; the house would no
longer qualify for the exemption.
SENATOR PHILLIPS thought he was missing some point; registering for
the exemption just once could invite fraud.
MS. BACKES said that municipalities could set their own methods for
checking that the exemptions were allowable. One suggestion is that
a reminder or question card could be sent on a yearly basis asking
whether the individual still lives at the same location. If the
card isn't sent back, that residence should be checked.
SENATOR PHILLIPS thought that people would cheat.
CHAIRMAN TORGERSON asked Steve Van Sant to address Senator
Phillips' concerns.
STEVE VAN SANT, local assessor for the Department of Community and
Economic Development, responded that they have this problem now.
There is a small percentage of senior citizens throughout the state
who sign that they live at a particular residence when they really
don't live there. There is a safeguard that the local municipality
can put in whereby certain requirements must be met and the
assessors expect that those procedures would be written in so that
they would be able to check if there was a question. There is no
perfect solution, however.
SENATOR PHILLIPS asked whether it would be mandatory to include
procedures for checking or not.
MR. VAN SANT said the bill says, "…shall by ordinance establish
procedures." Within those procedures each municipality has
latitude.
SENATOR PHILLIPS said this is non-mandatory.
MR. VAN SANT agreed.
CHAIRMAN TORGERSON asked whether assessors generally support the
bill.
MR. VAN SANT said they do generally but the one concern they have
is on page 1, line 14 where "for that year" is removed. If an
individual asks for an exemption to be retroactive for several
years there would be no way for the assessor to go back and check
whether they met criteria for the exemption.
CHAIRMAN TORGERSON asked for confirmation that removing "for that
year" might make this retroactive.
MR. VAN SANT said he believed it would. To this point, that
language has been used to mean that the governing body may only
waive an application late file for that year only. It cannot be
retroactive.
MS. BACKES responded that it hinges upon the word "may" in line 13.
"The governing body of the municipality for good cause shown may
waive…" It would be a borough or municipal assembly decision to
waive the application or not waive it. This allows the applicant
the opportunity to appeal the decision. Without the change in
language, local municipalities can only address that type of
situation during that current application year.
SENATOR LINCOLN spoke about a woman from Fairbanks who was ill and
didn't realize that she had to request a waiver. The borough said
its hands were tied because they weren't allowed to waive that year
or prior years.
MS. BACKES was familiar with the case and said that she wasn't ill
but illiterate and didn't know that she had to file more than once.
By the time the borough noticed the problem, she was many years in
arrears and her property was foreclosed upon. The borough said that
state statute would not allow them to go back and look at
extenuating circumstances.
SENATOR LINCOLN said that she would leave the language out due to
cases such as that. The local government should be able to make
those decisions.
CHAIRMAN TORGERSON asked if the money being discussed was local
with no State treasury affect.
MR. VAN SANT said that was correct, the legislature "hasn't funded
this since 1996."
CHAIRMAN TORGERSON said he knew that, he just wanted it on the
record.
There were no other questions or individuals giving testimony.
He asked for the will of the committee.
SENATOR AUSTERMAN moved HB 118 and zero fiscal note from committee
with individual recommendations. There were no objections.
HB 156-MUNICIPAL DEBT FOR DEVELOPMENT PROJECTS
REPRESENTATIVE LESIL MCGUIRE, bill sponsor, introduced the bill as
a straightforward measure that would allow municipalities to create
development and redevelopment projects. An assembly would identify
an area as blighted and qualified for either development or
redevelopment. They would identify the boundaries and then issue
bonds for either development or redevelopment purposes. As part of
the bond issuance, a pledge would be made that monies accrued from
the increased property value would then be used to pay down the
debt on the bonds.
This legislation was enacted in 1988 to give municipalities another
tool for community development and redevelopment. Because there are
several lines in the original statute that create difficulties, it
is virtually dormant. She is unaware of any municipality that has
used the funding tool.
Page 1, lines 9 and 10 of the amendment removes the additional
security required in the form of a letter. Bond underwriters are
already making a financial analysis prior to underwriting bonds and
each bond project is viewed differently. The language is redundant
and appears to require 100 percent collateralization. This has been
confusing and therefore not used.
HB 156 removes the redundant and confusing language and streamlines
the process so municipalities have the ability to use this as a
tool to aid development and redevelopment in their municipality.
For the record, Tom Klinkner, a municipal attorney with Birch
Horton and Bittner in Anchorage, is on line to answer questions. In
addition, Dan Sullivan, Anna Fairclough and Mike Scott were present
to answer questions and lend support.
SENATOR PHILLIPS asked what triggered the bill.
REPRESENTATIVE MCGUIRE said that the Municipality of Anchorage was
the first group to bring this to her attention. They are interested
in a series of downtown Anchorage developments and areas that
haven't attracted developers due to their blighted nature.
Municipalities have looked at this statute for a number of years
but it's proven difficult to use due to the confusing language.
She wanted to make certain that the issue isn't politicized because
it is a redevelopment tool and a local control issue. It's not a
financial burden that's being undertaken.
TOM KLINKNER, an attorney with the Anchorage office of Birch Horton
and Bittner, said that statute 29.47.460 was enacted in 1988 to
provide a basis in State law for municipalities to issue bonds that
are exempt from federal taxation. These are called qualified
redevelopment bonds and federal law imposes requirements for these
bonds to qualify for tax exemption. One requirement is that there
must be State-enabling legislation and this statute was supposed to
supply that qualification.
The language that will be deleted is not required by federal law
and is not necessary for tax exemption so it won't affect the
original purpose of the statute, it will make it more flexible.
SENATOR PHILLIPS asked how the decision is made and would downtown
Chugiak be as eligible as downtown Anchorage.
MR. KLINKNER said that the local legislative body must initiate the
process by identifying a blighted area.
CHAIRMAN TORGERSON asked whether any area within a municipality is
eligible.
MR. KLINKNER said it was.
REPRESENTATIVE MCGUIRE said that the meaning of municipality is the
standard definition.
FRED BURROW, representative of Downtown Anchorage Civic Ventures, a
new 501(C)3 non-profit community development corporation funded by
the municipality and private sector to promote community oriented
projects in underdeveloped or blighted areas, testified via
teleconference in support of the change. They feel that they are at
a competitive disadvantage without it.
ROD PFLEIGER, representative of the Anchorage Downtown Partnership
testified via teleconference that this amendment would allow Alaska
to be competitive with 48 other states that are using this tool.
ANNA FAIRCLOUGH, Anchorage assembly member, testified in support of
HB 156. The municipality would have an additional tool to help
promote infrastructure development in the private sector. The
eliminated criteria is above and beyond normal requirements.
MIKE SCOTT, an employee for the Municipality of Anchorage and chair
of the legislative committee for the Alaska Municipal League,
testified in support of the legislation. He said it's a piece of
legislation that can apply anywhere in the State that has property
taxes. They were pleased to hear that the House passed the
legislation on a 34 to 0 vote.
SENATOR PHILLIPS asked about the letter in the bill packet written
by Mr. Scott on a Municipal Light and Power (ML&P) letterhead.
MR. SCOTT said that downtown Anchorage is in the ML&P service area
and so they have a great interest in seeing more development in
this area so there is more need for their service.
SENATOR LINCOLN asked whether there was a down side for the State
of Alaska.
MR. SCOTT said he did not see any down side for the State but at
the local level people should pay particular attention in deciding
which projects to select for development or redevelopment.
SENATOR PHILLIPS moved HB 156 and zero fiscal note from committee
with individual recommendations. There were no objections.
CHAIRMAN TORGERSON adjourned the meeting at 2:00 p.m.
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