HB 146-MUNICIPAL TAX EXEMPTION  3:34:23 PM CHAIR BISHOP announced the consideration of HB 146. [CSHB 146(CRA) was before the committee.] 3:34:33 PM TERRY HARVEY, Staff, Representative Cathy Munoz, Alaska State Legislature, Juneau, Alaska, explained that HB 146 will provide a tax exemption incentive for housing as follows: HB 146 will give municipalities around the state the option to provide an incentive to develop land for housing and it does so by offering an exemption for up to five years, a property tax increase that's associated with subsidizing a piece of property, and it would need to be three or more parcels. The emphasis on this bill is it is optional for municipalities to decide if this could be a tool to help spur housing development. MR. HARVEY specified the issues in Juneau as follows: In our own community of Juneau, we've had issues with limited housing availability and this issue was brought to us first by the Juneau Affordable Housing Commission. We had encouragement from the City and Borough of Juneau Assembly and we know there are other areas in the state that are interested in having a local choice option like this. Typically when a piece of property is subdivided, you get permitted and a property tax will increase as soon as all of the paperwork is filed. This statute would allow, if adopted by a local community, to suspend that additional increase in a property tax value while the development was underway for up to five years. There is flexibility in the statute to allow a community to exempt all or a portion of the increase in property tax value. 3:36:53 PM MR. HARVEY summarized that the intent of the bill is to create an incentive to develop properties to get housing on the market. 3:38:11 PM At ease. 3:38:46 PM SENATOR STEDMAN moved to adopt [Senate CS for CSHB 146, labeled 29-LS0048\H, as the working document.] CHAIR BISHOP announced that without objection version H has been adopted. 3:39:52 PM EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State Legislature, Juneau, Alaska, explained that the Senate CS for CSHB 146 includes SB 87, a bill that was heard in the committee the previous week. She detailed that the CS will do three things as follows: 1. Fixes the omission of the word "not," which is a technical change on page 2, line 27. 2. Allows the eight unit minimum to be either at the time of application or at the time of the completion of the project. 3. Allows multiple properties in one deteriorated area of a municipality to be considered collectively for that eight unit minimum. 3:41:06 PM MERRILL SANFORD, Mayor, City and Borough of Juneau, Juneau, Alaska, explained that the concept was brought up within the past two years as a tax deferral and no one had shown interest. He said local building and construction committees in addition to the Juneau Affordable Housing [Commission] asked that the incentive be a tax exemption. He specified that the bill gives local community governments the option to adopt the exemption and provide another tool to address housing shortages that almost all communities face. 3:42:47 PM NORTON GREGORY, Chair, Juneau Affordable Housing Commission (JAHC), Juneau, Alaska, noted that he also serves on the management team for the Tlingit-Haida Regional Housing Authority, the largest provider of affordable housing in Southeast Alaska. He stated that JAHC supports HB 146 because there is a disincentive for property owners that own large parcels to subdivide. He explained the disincentive under current state statute to subdivide as follows: With the current mill rate in Juneau, if somebody subdivided their property, let's say un-subdivided for that chunk of property, that tax would be $1,000 per year; once they subdivide that property, the mill rate changes and all of a sudden that same chunk of property ends up being taxed at $12,000. He said current state statute allows for property tax deferral, but JAHC would like to see property tax abatement until there has actually been an improvement made on the property that ultimately generates a higher tax rate. He summarized that HB 146 is important for providing affordable housing and community development. 3:44:23 PM SHIRLEY MARQUARDT, Mayor, City of Unalaska, Unalaska, Alaska, said HB 146 is good legislation. She remarked that landowners do not have a very good incentive to subdivide their large pieces of property due to higher value taxes. She said HB 146 will provide Unalaska with a valuable tool that will bring immediate help in bringing down the cost of building. 3:46:24 PM CHUCK HOMAN, President, Alaska State Home Building Association (ASHBA), Eagle River, Alaska, declared that ASHBA supports HB 146 as a way for municipal governments to have an option to provide tax incentives to help in meeting their housing needs. 3:47:14 PM KATHIE WASSERMAN, Executive Director, Alaska Municipal League (AML), Juneau, Alaska, declared that AML supports HB 146 as an opt-in tool to help municipalities develop land. 3:48:16 PM DAVE HANNA, General Contractor, Juneau, Alaska, said HB 146 is enabling legislation that is not mandatory. He asserted that progressive communities will embrace HB 146. He remarked that the current tax law is a disincentive and is horrible. He set forth that a property owner's raw land for subdivision development that is taxed $6,000 to $10,000 a year would be taxed at $150,000 per year before a shovel full of dirt is turned. He summarized that municipalities will collect more taxes from bringing developed properties online. 3:50:30 PM SENATOR STEDMAN asked what Juneau's high-low range was for building rate values and its millage rate. MR. HANNA answered that Juneau's millage rate was approximately 12. He explained that a non-waterfront building lot will range from $100,000 to $125,000. 3:51:18 PM RUSS MCDOUGAL, Member, Alaska State Homebuilders Association, Juneau, Alaska, noted that he serves on the Juneau Affordable Housing Commission (JAHC) as well. He remarked that Juneau needs more housing. He noted that he presented to JAHC the need to reintroduce tax incentive legislation and let the Alaska State Home Builders sign-on as the sponsor through Representative Munoz. He asserted that HB 146 is a win-win situation. 3:52:49 PM CHAIR BISHOP closed public testimony and announced that HB 146 will be set aside.