Legislature(2001 - 2002)

03/28/2001 01:37 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     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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