04/18/2000 05:45 PM Senate RLS

            HB 272-MUNICIPAL TAX: LOW INCOME HOUSING                                                                            
                                                                                                                                
CHAIRMAN KELLY announced that a proposed Senate Rules Committee                                                                 
substitute had been drafted labeled "Version T."                                                                                
                                                                                                                                
MR. JONATHAN LACK, legislative aide to Representative Halcro,                                                                   
sponsor of the measure, explained Version T as follows.  Version T                                                              
is Representative Halcro's preferred version.  It says that for                                                                 
IRS-qualified low income housing, the municipal assessment shall be                                                             
based on the actual income derived from the property recognizing                                                                
the deed restrictions on that property.  The second change says                                                                 
that the governing body of the local municipality shall determine                                                               
by ordinance whether the properties that qualify for the low income                                                             
housing tax credits after the date of the act shall be exempt from                                                              
the requirements of the assessment procedure in the first section.                                                              
For properties that have been exempted by ordinance, the governing                                                              
body may determine by parcel which method of assessment will be                                                                 
used and may not change the manner of assessment if there is                                                                    
outstanding original debt on that property.                                                                                     
                                                                                                                                
CHAIRMAN KELLY asked if "by parcel," Mr. Lack meant by project.                                                                 
                                                                                                                                
MR. LACK said yes.                                                                                                              
                                                                                                                                
CHAIRMAN KELLY stated that all of the old projects are grand                                                                    
fathered in and any new projects are local option - project by                                                                  
project.                                                                                                                        
                                                                                                                                
MR. LACK agreed.                                                                                                                
                                                                                                                                
SENATOR LEMAN clarified, for the record, that the term "actual                                                                  
income derived" pertains to that market.  It does not mean that                                                                 
someone can, through bad management, actually cause a depression of                                                             
the market value of that property.  It is actual income derived at                                                              
market and that the assessor assumed some type of vacancy factor                                                                
for income property that is applied for that particular unit.                                                                   
                                                                                                                                
MR. LACK agreed that is correct and noted that he spoke with the                                                                
state assessor, Steve VanZant.  The term "actual income derived                                                                 
from the property" means at market so if a property has a 60                                                                    
percent occupancy but the market provides for an 80 percent                                                                     
occupancy, it will be assessed at 80 percent.  That will provide no                                                             
incentive for an owner to underfill a unit to get a break on                                                                    
property taxes.  The amendment that came out of the Senate Finance                                                              
Committee added "at full occupancy."  The intent was to address a                                                               
situation in which someone might intentionally underfill a unit.                                                                
That amendment was problemative because "at full occupancy" ends up                                                             
meaning that if there is a significant downturn in the rental                                                                   
market, for example if Elmendorf Airforce Base closed, ten percent                                                              
would be the market occupancy rate and the unit would still have to                                                             
pay taxes on 100 percent occupancy.  Version T clears that problem                                                              
up.                                                                                                                             
                                                                                                                                
SENATOR ELLIS moved to adopt Version T as the Senate Rules                                                                      
Committee substitute.  There being no objection, the motion                                                                     
carried.                                                                                                                        
                                                                                                                                
SENATOR LEMAN moved to calendar all Senate versions of HB 272 for                                                               
calendaring at the Chairman's discretion.  There being no                                                                       
objection, the motion carried.