Legislature(2023 - 2024)BARNES 124
03/21/2023 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB61 | |
| HB17 | |
| HB84 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 84 | TELECONFERENCED | |
| += | HB 17 | TELECONFERENCED | |
| += | HB 61 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 84-MUNI PROP TAX EXEMPTION/TAX BLIGHTED PROP
9:23:57 AM
CHAIR MCCORMICK announced that the final order of business would
be HOUSE BILL NO. 84, "An Act relating to municipal property
tax; and providing for an effective date."
9:24:12 AM
REPRESENTATIVE JESSE SUMNER, Alaska State Legislature, as prime
sponsor, presented HB 84. He paraphrased the sponsor statement
[copy included in the committee packet], which read as follows
[original punctuation provided]:
HB 84 provides local governments with additional,
optional tools to incentivize economic development.
First, HB 84 allows municipalities to fully exempt
property taxes for economic development purposes.
Currently, municipalities may only exempt the portion
of property taxes that is above the district's
required local contribution. HB 84 removes this limit
for economic development properties. However, this
change does not impact education funding. The mandated
local contribution must still be met, but other
revenue sources may be used to meet this requirement.
Second, HB 84 allows local governments to levy a
"blight tax". "Blighted" properties are heavily
deteriorated properties that can reduce property tax
and quality of life by devaluing neighboring
properties. Blighted properties often become a magnet
for criminal activity, which impose additional costs
upon the local government. A "blight tax" implements a
higher tax on these properties, however, the tax is
reduced when the property is appropriately remediated
and no longer considered "blighted." Under HB 84, it
is up to the local government's discretion to define
what properties are considered "blighted," what the
tax rate would be, and what is considered
"remediated." It is further left to the local
government's discretion whether they seek to establish
this system; they cannot use the blight tax tool
without adopting additional local code.
Declining state revenue has limited the State's
ability to invest in economic development initiatives.
This has left the municipalities to rely more on their
own means to facilitate those projects. Coupled with
rising construction costs and an insufficient labor
force, economic development initiatives have suffered.
HB 84 seeks to address these concerns by providing
further options for localities; however, it does not
impose any new requirementslocal governments are free
to use these tools or to decline to do so. I urge your
support.
9:26:54 AM
REPRESENTATIVE HIMSCHOOT expressed concern regarding language on
page 2, line 13 which relates that a local community would set
the standards for determining whether properties are blighted.
She asked whether municipalities would be able to increase taxes
for people who are occupying a property which appears blighted.
9:28:13 AM
REPRESENTITIVE SUMNER responded in the affirmative. He added
that if a local government "chooses to make such a politically
interesting choice," there would be repercussions; however, he
continued with the opinion that this would not happen. He added
that communities should have local control.
9:29:18 AM
JESSE LOGAN, Staff, Representative Jessie Sumner, Alaska State
Legislature, on behalf of Representative Sumner, prime sponsor
of HB 84, responded to Representative Himschoot's concern. He
explained that the property owners would have the right to
challenge a designation of "blighting." He expressed the
opinion that it would be raised to a level of public awareness
to where there would have to be public notices.
9:30:08 AM
CHAIR MCCORMICK welcomed invited testimony.
9:30:37 AM
BILL POPP, President, Anchorage Economic Development Corporation
(AEDC), provided a brief background and gave invited testimony
in support of HB 84. He stated that AEDC supports the proposed
legislation, as it would add key elements that currently do not
exist in the "economic development toolbox." He explained that
the proposed legislation would provide more latitude to address
needs, of which Mike Robbins, a fellow invited testifier, would
be addressing. He further explained that the bill could have
the potential to be a "game changer" in terms of adding new
housing in Anchorage and making it more cost-effective.
9:35:10 AM
REPRESENTATIVE MCCABE inquired about what kind of protections
AEDC envisions which would prevent an assembly from not
listening to residents and "just willy-nilly taking property."
MR. POPP replied AEDC does not have power over assemblies. He
expressed the belief that the public process element in HB 84
would provide a robust debate.
REPRESENTATIVE MCCABE expressed the desire to strongly protect
homeowners, especially ones going through hard times. He
expressed support for protecting individuals' rights as well as
the municipalities' rights.
9:38:45 AM
MIKE ROBBINS, Executive Director, Anchorage Community
Development Authority, expressed the opinion that the proposed
bill would stimulate economic and housing development around the
state. He noted that the housing shortages in Alaska are at
"all levels." He said Section 1 of the bill would help to
address the challenge facing builders, and this challenge is
mainly the cost. He continued that the bill would give cities
local control in the decision-making process, as the cities
would decide the amount and length of an abatement. He opined
that this is something which belongs at the city level; cities
should have the opportunity to make these determinations for
themselves.
9:43:12 AM
REPRESENTATIVE HIMSCHOOT brought up that 100 percent abatement
is already allowed for deteriorated properties, and she asked
whether this is correct.
MR. ROBBINS replied that under current state law, local
municipalities are allowed to abate the school district portion
of the property tax for deteriorated property. In response to a
follow-up question, he affirmed this only works for a lot with a
building that needs to be removed or refurbished; however, a
blank lot with no structure is not eligible for an abatement of
the school district tax.
9:45:40 AM
REPRESENTATIVE RUFFRIDGE question whether there is data
concerning the amount of blighted property, for example, in
Anchorage.
MR. ROBBINS responded that his organization has not done a study
or identified all blighted property in Anchorage because there
are no ordinances, and the definition of what this might look
like is unclear.
REPRESENTATIVE RUFFRIDGE expressed 100 percent support for the
local control that HB 84 would provide. In terms of blighted
property, he asked if there would be an incentive to reduce the
tax burden if the property is remediated; however, he opined
that the bill could also be used to increase property taxes if
the property is not remediated.
MR. ROBBINS replied that the proposed legislation could be used
as a "carrot-stick" approach. He used an example with an owner
qualifying for deteriorated property. The person could
redevelop the property for economic purposes, and under the
provisions of HB 84, this owner would be able to take advantage
of the 100 percent tax abatement for redevelopment. He
continued that if the owner was not developing the property, and
the city wanted to encourage this, it could place an additional
mill rate on the property and additionally incentivize
redevelopment with a tax. Once the property is developed, the
city could also give a tax abatement; therefore, the bill could
work in both directions. He expressed the opinion that this is
the benefit of the bill.
9:50:18 AM
NILS ANDREASSEN, Executive Director, Alaska Municipal League,
gave invited testimony in support of HB 84. He stated that the
proposed legislation would support local governments to address
community and economic development with a community
redevelopment tax incentive program. He remarked that there are
no current statutes which allow local governments to develop
methods to remediate properties. He advised that with the
proposed bill, vacant and underutilized properties would be used
for more productive purposes, and this could increase values
throughout the community. He encouraged the committee to pass
HB 84.
9:52:24 AM
REPRESENTATIVE HIMSCHOOT asked for examples of other states that
"do this" and she also inquired as to how a community may define
"blighted."
MR. ANDREASSEN replied he is aware of two places which do this:
Washington, DC, and Georgia. In response to a follow-up
question, he explained that the way the bill is structured, it
would be up to the community to define "blighted."
9:54:39 AM
REPRESENTATIVE HIMSCHOOT asked if municipalities would have the
option to find revenue within its budget because of the gap in
its funding for the education cap. She questioned whether there
are parameters around this.
REPRESENTATIVE SUMNER responded that currently it is required
that [municipalities] fund at the minimum effort; however, he
expressed the understanding that none are doing this. He
continued that municipalities would have to find the revenue
elsewhere, and it is the same with any amount of tax abatement
which must be replaced with revenue from another source.
9:57:34 AM
CHAIR MCCORMICK announced HB 84 was held over.