04/24/2025 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

            HB  13-MUNICIPAL PROPERTY TAX EXEMPTIONS                                                                        
                                                                                                                                
9:48:36 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HIMSCHOOT announced  that the  final 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."   [Before  the committee,  adopted as                                                               
the  working  document on  4/10/25,  was  the proposed  committee                                                               
substitute  (CS)  for  SSHB  13,  Version  34-LS0194\T,  Dunmire,                                                               
4/8/25 ("Version T").]                                                                                                          
                                                                                                                                
9:48:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  moved to  adopt Amendment 1  to Version                                                               
T, labeled 34-LS0194\T.3, Dunmire, 4/22/25, which read:                                                                         
                                                                                                                                
     Page 1, line 12:                                                                                                           
          Delete "31 consecutive days"                                                                                          
          Insert "one year"                                                                                                     
                                                                                                                                
CO-CHAIR HIMSCHOOT objected.                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE explained that  Amendment 1 would change                                                               
the definition  of "long-term rental  unit" from a  dwelling unit                                                               
offered  for rent  for periods  of not  less than  31 consecutive                                                               
days to one year.                                                                                                               
                                                                                                                                
CO-CHAIR HIMSCHOOT asked for input from the bill sponsor.                                                                       
                                                                                                                                
9:49:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDREW  GRAY, Alaska  State Legislature,  as prime                                                               
sponsor, clarified that the goal  is to allow as much flexibility                                                               
for  municipalities, boroughs,  and  cities  because a  long-term                                                               
rental may  look different in  each community.  For  that reason,                                                               
he said he opposed Amendment 1.                                                                                                 
                                                                                                                                
CO-CHAIR HIMSCHOOT maintained her objection.                                                                                    
                                                                                                                                
9:51:09 AM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representatives  Prax and Ruffridge                                                               
voted in  favor of Amendment  1.  Representatives  Hall, Holland,                                                               
Mears, and  Himschoot voted against  it.  Therefore,  Amendment 1                                                               
failed by a vote of 2-4.                                                                                                        
                                                                                                                                
9:51:34 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  moved to  adopt Amendment 2  to Version                                                               
T, labeled 34-LS0194\T.4, Dunmire, 4/22/25, which read:                                                                         
                                                                                                                                
     Page 2, following line 21:                                                                                                 
     Insert a new subsection to read:                                                                                           
          "(ff)  A municipality may only adopt an exemption                                                                     
     under (aa)  - (ee) of  this section after  conducting a                                                                    
     fiscal impact study  on how tax revenue  lost under the                                                                    
     proposed   exemption   would   be   addressed   without                                                                    
     disproportionately burdening vulnerable homeowners."                                                                       
                                                                                                                                
CO-CHAIR HIMSCHOOT objected.                                                                                                    
                                                                                                                                
9:51:40 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  explained that Amendment 2  would add a                                                               
new sub-subparagraph (ff)  to conduct a fiscal  impact study that                                                               
shows how lost  tax revenue would be made up  for before adopting                                                               
the proposed exemptions by ordinance.                                                                                           
                                                                                                                                
CO-CHAIR  HIMSCHOOT  pointed out  that  in  Sitka, the  mil  rate                                                               
cannot be changed without a vote of the people.                                                                                 
                                                                                                                                
9:53:24 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRAY said  he expected  municipal governments  to                                                               
have  the fiduciary  interest of  citizens at  heart.   He opined                                                               
that the proposed  amendment would micromanage the  bill and said                                                               
he opposed Amendment 2.                                                                                                         
                                                                                                                                
9:54:45 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  said based  on his  experience serving  on a                                                               
municipal assembly,  he does  not have as  much faith  in elected                                                               
officials.    He  opined  that if  assemblies  could  enact  this                                                               
without voter approval, there should be tighter sideboards.                                                                     
                                                                                                                                
CO-CHAIR  HIMSCHOOT  asked  for  the  definition  of  "vulnerable                                                               
homeowner."                                                                                                                     
                                                                                                                                
REPRESENTATIVE RUFFRIDGE defined  vulnerable homeowner as someone                                                               
on the edge of the income limit who qualifies for no exemptions.                                                                
                                                                                                                                
9:58:11 AM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representatives  Prax and Ruffridge                                                               
voted in  favor of Amendment  2.  Representatives  Hall, Holland,                                                               
Mears, and  Himschoot voted against  it.  Therefore,  Amendment 2                                                               
failed by a vote of 2-4.                                                                                                        
                                                                                                                                
9:58:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  moved to  adopt Amendment 3  to Version                                                               
T, labeled 34-LS0194\T.1, Dunmire, 4/22/25, which read:                                                                         
                                                                                                                                
     Page 1, line 4, following "buyers":                                                                                      
          Insert "; and relating to annual increases in                                                                       
     property assessments"                                                                                                    
                                                                                                                                
     Page 2, following line 21:                                                                                                 
     Insert a new bill section to read:                                                                                         
       "* Sec. 2. AS 29.45.110 is amended by adding a new                                                                   
     subsection to read:                                                                                                        
          (f)  A municipality may by ordinance limit to                                                                         
     five percent or  less the amount by  which the assessed                                                                    
     value  of  real  property  may be  increased  over  the                                                                    
     previous  year's assessed  value. An  ordinance adopted                                                                    
     under this section must allow  the assessor to increase                                                                    
     the value  of real property above  the percentage limit                                                                    
     established in  the ordinance if the  increase is based                                                                    
     on an  improvement to the real  property or information                                                                    
     about the real property that  the assessor did not know                                                                    
     at the time of the previous assessment."                                                                                   
                                                                                                                                
CO-CHAIR HIMSCHOOT objected.                                                                                                    
                                                                                                                                
9:59:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  explained that Amendment 3  would allow                                                               
municipalities  by   ordinance  to  impose  a   cap  on  property                                                               
assessments to  ensure that  taxes are not  increasing at  a rate                                                               
that  makes homes  unaffordable  for  the vulnerable  population.                                                               
The proposed amendment would limit  the increase to 5 percent, or                                                               
less the amount by which the  assessed value of real property may                                                               
be increased over  the previous year's assessed value.   It would                                                               
allow  for incremental  growth but  not massive  spikes of  20-30                                                               
percent, for example.                                                                                                           
                                                                                                                                
10:00:56 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GRAY stated that  the proposed amendment offers an                                                               
optional limit  by ordinance and  shows a great  understanding of                                                               
the bill  while making  it better.   He said  he is  grateful for                                                               
Amendment 3.                                                                                                                    
                                                                                                                                
CO-CHAIR  MEARS   asked  whether  Representative   Ruffridge  had                                                               
discussed Amendment 3 with any assessors.                                                                                       
                                                                                                                                
REPRESENTATIVE RUFFRIDGE said the  proposed amendment would still                                                               
allow  the assessors  to do  their job  with certain  sideboards.                                                               
For example, if property values  are increasing by 20 percent, it                                                               
would have to  be a four-year increase at five  percent each year                                                               
if this ordinance were enacted  by the municipality.  In response                                                               
to a follow up question, he  referred to lines 10-12 of Amendment                                                               
3, and explained that the  assessor could increase the value past                                                               
the percentage limit if it's based  on an improvement to the real                                                               
property or information about the  property that the assessor did                                                               
not have at the time of the previous assessment.                                                                                
                                                                                                                                
CO-CHAIR  HIMSCHOOT said  she liked  the amendment  but expressed                                                               
concerned about how it would play  out if the assessment does not                                                               
happen annually.                                                                                                                
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  stated that Amendment  3 seeks to  be a                                                               
protector of  vulnerable homeowners.   He shared an example  of a                                                               
home  with  an  artificially  inflated assessed  value  and  said                                                               
Amendment 3  would help keep  home prices somewhat  protected and                                                               
help keep  vulnerable homeowners  protected from  large increases                                                               
to property tax.                                                                                                                
                                                                                                                                
10:06:07 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  MEARS  stated that  Amendment  3  is  too in  depth  to                                                               
support without further discussion.                                                                                             
                                                                                                                                
REPRESENTATIVE HOLLAND expressed concern  that property tax value                                                               
would no  longer match the  value of the  property.  He  said the                                                               
disconnect  between the  assessments versus  the mil  rate versus                                                               
the real market value is a step that he's uncomfortable with.                                                                   
                                                                                                                                
CO-CHAIR HIMSCHOOT asked  how Amendment 3 would  impact the local                                                               
contribution to school districts.                                                                                               
                                                                                                                                
10:08:05 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  said the  real question is  whether the                                                               
mil  rate had  been  reduced  in Anchorage  over  the past  three                                                               
years, as property values have increased dramatically.                                                                          
                                                                                                                                
REPRESENTATIVE   HOLLAND  shared   his  understanding   that  the                                                               
Municipality of  Anchorage is subject to  a tax cap, and  the mil                                                               
rate is readjusted to keep the municipality within that limit.                                                                  
                                                                                                                                
REPRESENTATIVE GRAY responded yes; the tax rate has decreased.                                                                  
                                                                                                                                
10:09:33 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE,  in  response to  Co-Chair  Himschoot,                                                               
said Amendment 3  would have no impact on  the local contribution                                                               
to schools.   In response to  a follow up question,  he explained                                                               
that  the  local   contribution  amount  is  set   by  the  local                                                               
government.                                                                                                                     
                                                                                                                                
CO-CHAIR HIMSCHOOT  shared her understanding  that the  amount is                                                               
based on the assessed value of real property.                                                                                   
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE  shared   his  understanding  that  the                                                               
assessed  value sets  the floor  and the  ceiling, and  there are                                                               
very few municipalities that get close to either.                                                                               
                                                                                                                                
CO-CHAIR  HIMSCHOOT stated  that she  is  aware of  two that  are                                                               
funding completely  to the cap.   She said she would  like to see                                                               
Amendment  3 as  its own  bill, adding  that she's  uncomfortable                                                               
adopting it at this time.                                                                                                       
                                                                                                                                
10:10:56 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  PRAX [moved  to adjourn]  because the  subject is                                                               
complicated and requires more time.                                                                                             
                                                                                                                                
10:12:00 AM                                                                                                                   
                                                                                                                                
A roll call  vote was taken.  Representatives  Prax and Ruffridge                                                               
voted in favor  of the motion to adjourn.   Representatives Hall,                                                               
Holland, Mears, and  Himschoot voted against it.   Therefore, the                                                               
motion to adjourn failed by a vote of 2-4.                                                                                      
                                                                                                                                
10:12:20 AM                                                                                                                   
                                                                                                                                
A roll call  vote was taken.  Representatives  Prax and Ruffridge                                                               
voted in  favor of Amendment  3.  Representatives  Holland, Hall,                                                               
Mears, and  Himschoot voted against  it.  Therefore,  Amendment 3                                                               
failed by a vote of 2-4.                                                                                                        
                                                                                                                                
10:12:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RUFFRIDGE  moved to  adopt Amendment 4  to Version                                                               
T, labeled 34-LS0194\T.5, Dunmire, 4/23/25, which read:                                                                         
                                                                                                                                
     Page 1, line 7, following "ordinance":                                                                                     
          Insert "approved by the voters"                                                                                       
                                                                                                                                
     Page 2, line 6, following "ordinance":                                                                                     
          Insert "approved by the voters"                                                                                       
                                                                                                                                
     Page 2, line 9, following "ordinance":                                                                                     
          Insert "approved by the voters"                                                                                       
                                                                                                                                
     Page 2, line 17, following "ordinance":                                                                                    
          Insert "approved by the voters"                                                                                       
                                                                                                                                
     Page 2, line 20, following "ordinance":                                                                                    
          Insert "approved by the voters"                                                                                       
                                                                                                                                
CO-CHAIR HIMSCHOOT objected.                                                                                                    
                                                                                                                                
10:12:52 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RUFFRIDGE   explained  that  Amendment   4  would                                                               
require that  the ordinances  proposed in HB  184 be  approved by                                                               
the voters.                                                                                                                     
                                                                                                                                
10:14:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GRAY said  he opposed the amendment.   He recalled                                                               
that last year, the House voted  to add an existing exemption and                                                               
to remove  a voting requirement, which  Representative Ruffridge,                                                               
Himschoot, Mears, Prax, and himself, all  voted to for.  He added                                                               
that this has been done before.                                                                                                 
                                                                                                                                
10:16:11 AM                                                                                                                   
                                                                                                                                
A roll call  vote was taken.  Representatives  Prax and Ruffridge                                                               
voted in  favor of Amendment  4.  Representatives  Hall, Holland,                                                               
Mears, and  Himschoot voted against  it.  Therefore,  Amendment 4                                                               
failed by a vote of 2-4.                                                                                                        
                                                                                                                                
10:16:57 AM                                                                                                                   
                                                                                                                                
CO-CHAIR MEARS  moved to report  CSSSHB 13,  Version 34-LS0194\T,                                                               
Dunmire,    4/8/25,   out    of    committee   with    individual                                                               
recommendations and the accompanying fiscal notes.                                                                              
                                                                                                                                
REPRESENTATIVE RUFFRIDGE objected.                                                                                              
                                                                                                                                
10:17:15 AM                                                                                                                   
                                                                                                                                
A  roll call  vote  was taken.    Representatives Hall,  Holland,                                                               
Mears, Himschoot  voted in  favor of reporting  Version T  out of                                                               
committee.  Representatives Prax  and Ruffridge voted against it.                                                               
Therefore,  CSSSHB   13(CRA)  was  reported  out   of  the  House                                                               
Community and  Regional Affairs Standing  Committee by a  vote of                                                               
4-2.