Legislature(1999 - 2000)
04/13/2000 12:08 PM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 272
"An Act relating to the tax assessment by a home rule
or general law municipality of housing that qualifies
for the low-income housing credit under the Internal
Revenue Code; and providing for an effective date."
This was the second hearing for this bill in the Senate
Finance Committee.
WILEY BROOKS, testified via teleconference from Anchorage
about his written remarks in opposition to the bill. He
restated earlier oral testimony regarding his disapproval
of "special interest legislation."
ERIC DYRUD, Real Estate Broker, Member, Anchorage Board of
Realtors Legislative Committee, and Alaska Board of
Realtors Legislative Committee, testified via
teleconference from Anchorage about the uniform opposition
to the bill from the organizations he represents. He
suggested this legislation would create an unfunded mandate
and a revenue reduction to municipalities. He thought this
would increase property taxes for other property owners and
be unfair to other rental property owners. He talked about
the detriment to the real estate…
JEROME PAPE testified via teleconference from Anchorage
that he thought the bill created favoritism amongst already
subsidized programs. He noted that the low-income renter
would not be benefited from this. He had been in the
business for many years and had never found a shortage of
low income housing for good tenants.
DAVID GARRISON, Associate Broker, owner of 34 units,
testified via teleconference from Anchorage saying that the
individuals in these projects know the tax situation going
into the business and that to change the structure for them
would be unfair to others. He also said that reducing taxes
for all rental property owners would not be right either,
since everyone should pay for the services they receive.
Co-Chair Torgerson noted those present to answer questions.
DARWIN PETERSON, Aide to Co-Chair Torgerson and the Senate
Finance Committee compared a proposed committee substitute,
1-LS1148\T, to the committee substitute before the
Committee, version "I".
Section 1(d)(2) - the governing power of a
municipality is given the responsibility to determine
the full and true value of the property to be included
in the low-income housing credit, as opposed to the
assessor. The governing body has an unlimited amount
of time to make that determination.
Section 1(d)(2)(B) - once that determination is made,
the assessment of the parcel of property will remain
in effect as long as the bond is outstanding.
Co-Chair Torgerson further clarified that this bill gives
more of a local option. He pointed out that a municipality
must take a positive action before this legislation can
take effect in their community.
Senator Leman asked if there was a maximum time for bonded
indebtedness under the federal program. He suggested the
Committee might want to limit the time.
Mr. Peterson did not know the time requirements for the
federal program.
Co-Chair Torgerson relayed that the question had been asked
previously, and that it was determined there are different
time frames for the various programs. He noted that the
standard timeframe is ten years.
Senator Donley asked if once a local government took action
to enact this legislation, if the adopted assessments apply
to all property in this category.
Mr. Peterson showed how the language in Section 1(d)(2)(A)
gives the municipality the ability to apply the assessment
on a parcel by parcel basis.
REPRESENTATIVE ANDREW HALCRO explained Section 1(d)(2)
grandfathers the existing properties already on the tax
roles. He stressed that some of the testimony heard was
actually incorrect.
Tape: SFC - 00 #87, Side B 7:18 PM
Representative Halcro continued that these properties were
built with the understanding that tax would be accessed at
what their deed-restricted rents would be. However, he
shared that the new tax assessor in Anchorage began
assessing these properties at fair market value. As a
result, he said, owners are unable to raise the rent enough
to meet the higher property appraisal.
Senator Donley asked for clarification of the grandfather
clause.
Co-Chair Torgerson stated that the process still must be
enacted through municipal ordinance and is not
automatically grandfathered.
Representative Halcro pointed out the bill language
stipulating that the action must be taken "on or after" the
time assessment, which automatically qualifies properties
already constructed. At that time, he said, the
municipalities can decide whether or not to include them.
Senator Donley thought the language was incomplete if this
were the actual intent. As he understood, the assessment
would apply to those properties that are submitted after
the effective date.
Representative Halcro clarified that the governing body has
the ability to grandfather.
Co-Chair Torgerson stressed again that the assessment
requires a positive action and that it was not a mandate.
He added that the Anchorage assembly supports this
legislation.
Representative Halcro noted the Anchorage assembly had
passed a resolution in favor of the bill.
Co-Chair Torgerson allowed that the language was confusing
and that he had needed assistance from the drafters to
understand it.
Senator Adams understood the language to dictate that any
party presently in the program is grandfathered in on the
effective date of the bill. He continued that anyone new
coming into the program, would require a determination by
local option.
Senator Donley stressed that the language does not state
that, but only addresses those that would qualify on or
after the effective date.
Co-Chair Torgerson said his intent was to have a local
option apply to the legislation. He stated that if the
members were confused with the language, he would request
the Division of Legal and Research Services redraft the
bill to make it more understandable.
Senator Wilken asked if once a municipality opted for the
assessment exemption program, if it has the ability to
change back for new projects.
Representative Halcro responded that the municipalities do
not have that option because, when these properties are
approved for construction of a low-incoming housing tax
credit property, the properties are build with the
assumption that they will only be taxed according to what
rent can be charged.
Senator Wilken and Representative Halcro further discussed
the matter.
Senator Donley stated that the language is confusing and
that he did not have the same interpretation regarding
existing property.
Representative Halcro clarified that the existing low-
income properties already are a part of the federal program
and that the language in subsection (2) stipulates that
those properties in the federal program qualify for the
program proposed in the bill.
Senator Donley noted the phrase "first qualifies… on or
after the effective date" on page 2, lines 6 and 7 of the
committee substitute. He emphasized "first" and understood
this to mean that previously qualified properties would not
be included in this legislation.
Co-Chair Torgerson countered the intent of "first
qualifies" to mean that before becoming eligible for the
assessment exemption, a property must first qualify for the
federal low-income housing credit.
JONATHAN LACK, Staff to Representative Halcro added that
subsection (2) provides that only after a property has
obtained a federal low-income housing credit, may a
municipality make a determination on whether to grant an
assessment exemption.
Senator Phillips commented that the bottom line was that
the legislature would pass the buck to the local
governments to make the decision. He spoke
Co-Chair Torgerson ordered the bill HELD in Committee.
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