04/10/2025 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

            HB  13-MUNICIPAL PROPERTY TAX EXEMPTIONS                                                                        
                                                                                                                                
8:11:21 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MEARS  announced that the  next order of  business would                                                               
be SPONSOR SUBSTITUTE FOR HOUSE BILL  NO. 13, "An Act relating to                                                               
optional municipal property tax  exemptions for certain long-term                                                               
rental units, certain mobile home  parks, real property rented to                                                               
low-income  families,  real  property  owned and  occupied  as  a                                                               
permanent place of  abode, and real property  owned by first-time                                                               
homebuyers."                                                                                                                    
                                                                                                                                
8:11:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HALL  moved  to   adopt  the  proposed  committee                                                               
substitute  (CS)  for  SSHB  13,  Version  34-LS0194\T,  Dunmire,                                                               
4/8/25, as the working document.                                                                                                
                                                                                                                                
CO-CHAIR MEARS objected for the purpose of discussion.                                                                          
                                                                                                                                
8:12:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDREW  GRAY, Alaska State  Legislature, expressed                                                               
his   appreciation  for   the   robust   discussion  during   the                                                               
introductory bill  hearing, as  some of  those changes  have been                                                               
implemented.     In  response  to   a  concern  about   the  term                                                               
"municipalities"  not applying  to  boroughs,  he explained  that                                                               
"municipalities" refers  to boroughs, cities, and  unified cities                                                               
and boroughs in Alaska.  He  emphasized that the goal of the bill                                                               
is to find optional ways to incentivize Alaska housing.                                                                         
                                                                                                                                
8:13:27 AM                                                                                                                    
                                                                                                                                
KYLE JOHANSEN,  Staff, Representative  Andrew Gray,  Alaska State                                                               
Legislature, gave  an explanation  of changes  in Version  T from                                                               
the  written  summary  of  changes  [included  in  the  committee                                                               
packet], which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
     The following is a change comparison between SS HB 13                                                                      
     (34-LS1094\N) and CS SS HB 13 (CRA) (34-LS1094\T).                                                                         
                                                                                                                                
     • Subsection (aa): Changes the definition of long-term                                                                     
     rental from a unit rented for not less than 90 days to                                                                     
     a unit rented for not less than 31 days                                                                                    
     • Subsection (cc): Specifically defines rent to income                                                                     
     ratio threshold at 30% to qualify for an exemption for                                                                     
     renting to defined low-income families                                                                                     
      • Subsection (ee): Adds the requirement that a first-                                                                     
     time homebuyer must also own and occupy said home.                                                                         
                                                                                                                                
REPRESENTATIVE   GRAY   noted   that   the   goal   is   not   to                                                               
unintentionally  reward property  owners that  charge high  rent.                                                               
Many economists  recommend spending  no more  than 30  percent of                                                               
one's income on rent, which is  why this criterion was chosen for                                                               
Subsection (cc).                                                                                                                
                                                                                                                                
CO-CHAIR MEARS  removed her  objection.   There being  no further                                                               
objection, Version T was adopted.                                                                                               
                                                                                                                                
8:18:08 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HIMSCHOOT asked how Subsection (cc) would be enforced.                                                                 
                                                                                                                                
REPRESENTATIVE  GRAY  pointed   out  that  typically,  low-income                                                               
tenants are  required to  submit proof of  income, so  this would                                                               
not create an added burden.                                                                                                     
                                                                                                                                
MR.   JOHANSEN  added   that   the   municipality  could   "craft                                                               
structures" to  address such things.   He said if  someone wanted                                                               
to qualify for  that exemption, they could  provide the necessary                                                               
paperwork.                                                                                                                      
                                                                                                                                
8:20:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRAY explained that  some housing organizations in                                                               
Anchorage  have  conveyed  the difficulty  of  holding  rents  at                                                               
certain  levels.   This particular  exemption  would allow  these                                                               
organizations to continue offering housing  at levels that do not                                                               
violate the 30 percent rule.                                                                                                    
                                                                                                                                
CO-CHAIR  HIMSCHOOT asked  how much  of  this would  fall on  the                                                               
municipality versus the landlord.                                                                                               
                                                                                                                                
REPRESENTATIVE GRAY  said the burden  would largely be  placed on                                                               
the landlord  to provide  the documentation  to qualify  for this                                                               
exemption,  which would  enable them  to make  more money  in the                                                               
long run.                                                                                                                       
                                                                                                                                
CO-CHAIR MEARS  reiterated that this  would be optional  for both                                                               
the municipality and the landlord.                                                                                              
                                                                                                                                
REPRESENTATIVE  GRAY stressed  that the  bill would  be rewarding                                                               
landlords who are  doing good work for  low-income people because                                                               
its difficult to meet the 30 percent threshold in 2025.                                                                         
                                                                                                                                
8:26:42 AM                                                                                                                    
                                                                                                                                
MR. JOHANSEN  noted that  the Alaska  Municipal League  (AML) had                                                               
reviewed Version T and found it reasonable.                                                                                     
                                                                                                                                
CO-CHAIR MEARS opened invited testimony.                                                                                        
                                                                                                                                
8:27:38 AM                                                                                                                    
                                                                                                                                
FELIX  RIVERA,  Member,  Anchorage   Assembly,  stated  that  the                                                               
Anchorage  Assembly  fully supports  passage  of  HB 13  and  the                                                               
optional tools  it would provide  to address the  housing crisis.                                                               
He cited  data on the  housing crisis  in Alaska and  the actions                                                               
taken   by  the   Municipality  of   Anchorage  (MOA),   such  as                                                               
eliminating  parking  minimums,  reducing   red  tape  in  zoning                                                               
regulations, and  making direct public investments  in low income                                                               
and workforce housing.  Furthermore,  in the most recent assembly                                                               
meeting, seven agenda items were  directly related to the housing                                                               
crisis.  They also passed AR  No. 2025-61, as amended, in support                                                               
of  HB 13,  which would  provide nonmandatory  options for  local                                                               
jurisdictions to provide tax exemptions.    If HB 13 were passed,                                                               
he said  the assembly  could decide if  and how  these exemptions                                                               
are enacted  and could tailor  them to  have the most  benefit to                                                               
the community.   He  further detailed  a tax  abatement ordinance                                                               
that  the  assembly  is  working on  in  partnership  with  Mayor                                                               
LaFrance.   He requested  that the legislature  give the  MOA the                                                               
most local control possible to address local needs.                                                                             
                                                                                                                                
8:31:22 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HIMSCHOOT sought  to confirm  that spot  zoning is  not                                                               
allowed, but tax abatement by zone  is.  She asked how that would                                                               
work.                                                                                                                           
                                                                                                                                
MR.  RIVERA  acknowledged  that generally,  spot  zoning  is  not                                                               
allowed.   He  said tax  abatements  would offer  the ability  to                                                               
tailor solutions with  bonuses to help spur development  in a way                                                               
that would most  benefit the community.  In response  to a follow                                                               
up question,  he envisioned that  the tax abatement would  for 8-                                                               
plus unit housing and implemented as broadly as possible.                                                                       
                                                                                                                                
8:34:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  asked why the  assembly is asking  the state                                                               
to do  something that could  be accomplished by  the municipality                                                               
with a vote of the people.                                                                                                      
                                                                                                                                
MR. RIVERA said  it would make sense to use  tools that allow for                                                               
swift, immediate action, rather than wait for voter approval.                                                                   
                                                                                                                                
MR.  JOHANSEN  clarified that  per  AS  29.45.050, a  city  can't                                                               
exempt   property   without    expressed   authority   from   the                                                               
legislature,  which  is   why  this  bill  is   necessary.    The                                                               
legislature  must   grant  the   authority  either  by   vote  or                                                               
ordinance.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  PRAX  sought  to   confirm  that  currently,  the                                                               
Anchorage  Assembly  cannot  enact  this  with  citizen  approval                                                               
alone.                                                                                                                          
                                                                                                                                
MR.  JOHANSEN  said  correct and  explained  that  the  Anchorage                                                               
Assembly  must  obtain  legislative approval  before  putting  it                                                               
before voters or implementing the exemptions by ordinance.                                                                      
                                                                                                                                
8:39:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE   clarified  that  the   authority  for                                                               
property tax  exemptions could  be granted  to a  municipality by                                                               
either the voters or the legislature.   He asked Mr. Rivera why a                                                               
question on  property tax exemptions  was not put forward  to the                                                               
voters  on  the most  recent  ballot  if citizens  are  demanding                                                               
action on this issue.                                                                                                           
                                                                                                                                
MR. RIVERA  shared his understanding  that the state  only allows                                                               
certain questions  to be placed  on the  ballot, and some  of the                                                               
questions in SSHB 13 are not included in that category.                                                                         
                                                                                                                                
CO-CHAIR MEARS asked whether Ms.  Moller could provide additional                                                               
clarification  on the  allowability  of  property tax  exemptions                                                               
through municipal vote.                                                                                                         
                                                                                                                                
8:43:43 AM                                                                                                                    
                                                                                                                                
SANDRA  MOLLER,  Director,  Division   of  Community  &  Regional                                                               
Affairs,   Department   of   Commerce,   Community   &   Economic                                                               
Development,  clarified that  municipalities have  the option  to                                                               
put a property tax exemption on the ballot.                                                                                     
                                                                                                                                
REPRESENTATIVE RUFFRIDGE questioned why  [the MOA] is waiting for                                                               
legislative action when  action could have already  been taken by                                                               
the Anchorage Assembly on the property tax exemptions.                                                                          
                                                                                                                                
8:47:59 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HIMSCHOOT  sought to clarify whether,  currently, a city                                                               
assembly can  enact the  property tax exemptions  in the  bill by                                                               
placing it on the ballot.                                                                                                       
                                                                                                                                
MS. MOLLER  stated that a  municipality can adopt  exemptions via                                                               
ordinance or a vote of the people.                                                                                              
                                                                                                                                
8:49:50 AM                                                                                                                    
                                                                                                                                
JAMES DEVENS,  Member, Valdez City  Councilor, shared  his belief                                                               
that the  optional exemptions  would offer  Alaska municipalities                                                               
enormous  flexibility in  how they  encourage different  types of                                                               
housing to meet community needs  in response to changing economic                                                               
conditions.   He  detailed the  value and  defensibility of  each                                                               
section  of the  bill.   He posited  that the  biggest predictive                                                               
factor  of young  people  staying  in a  community  is access  to                                                               
homeownership.   Providing  attainable  housing  is necessary  to                                                               
keep  a young  workforce, he  added,  and is  the biggest  factor                                                               
limiting Alaska's  growth and stopping young  people from raising                                                               
families in the state.  He  urged passage of the original version                                                               
of HB 13, unamended.                                                                                                            
                                                                                                                                
8:58:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE asked  what has  prevented the  City of                                                               
Valdez from enacting these property tax exemptions.                                                                             
                                                                                                                                
MR.  DEVENS  stated  that  Valdez   has  already  addressed  some                                                               
exemptions under  AS 29.45.050.   He relayed an opinion  from the                                                               
city's legal representation, as well  as the clerk's office, that                                                               
"because  the purpose  of the  allowance of  those exemptions  is                                                               
specifically ...  targeted towards economic development,  some of                                                               
these categories  might not  directly reflect  the spirit  of the                                                               
law."  He opined that adding  the optional exemptions in the bill                                                               
would  provide   an  easy   methodology  for   municipalities  to                                                               
encourage different housing types.                                                                                              
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  asked whether Valdez had  placed any of                                                               
these items -  such as prioritizing a certain type  of housing or                                                               
renovation for  mobile home types -  on the ballot in  the recent                                                               
past.                                                                                                                           
                                                                                                                                
MR.  DEVENS answered  no and  opined  that doing  it through  the                                                               
legislative  process would  be cleaner  and more  equitable.   In                                                               
response to a  series of follow up  questions from Representative                                                               
Ruffridge about  the Valdez  Permanent Fund,  he shared  that the                                                               
city's mil rate is 20 mills.                                                                                                    
                                                                                                                                
REPRESENTATIVE GRAY  reiterated that the  goal of the bill  is to                                                               
help low-income Alaskans.                                                                                                       
                                                                                                                                
9:06:49 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  MEARS announced  that CSSSHB  13, Version  T, would  be                                                               
held over.