04/26/2006 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS

    CSHB 334(FIN)-MUNICIPAL PROPERTY TAX DEFERRAL/EXEMPTION                                                                 
                                                                                                                              
                                                                                                                              
CHAIR BERT STEDMAN announced HB 334 to be up for consideration.                                                                 
                                                                                                                                
2:22:38 PM                                                                                                                  
                                                                                                                                
REPRESENTATIVE  JAY RAMRAS,  Sponsor  of HB  334, introduced  the                                                               
bill as  an effort to  deal with dilapidated buildings.  He noted                                                               
that  much  like  the  MacKay  Building  in  downtown  Anchorage,                                                               
Fairbanks has the  Polaris Building, which is boarded  up and has                                                               
become quite an  eyesore. The condition is made  more obvious due                                                               
to the  fact that it's  located just  across the street  from the                                                               
new Jay Rabinowitz Courthouse.                                                                                                  
                                                                                                                                
Builder  Marc  Marlow, who  has  had  experience with  converting                                                               
dilapidated buildings, has been  working with Fairbanks community                                                               
officials   to  get   property  tax   concessions  to   encourage                                                               
renovation  of  dilapidated  buildings. However,  there  is  some                                                               
question  as  to whether  one  city  council  may bind  a  future                                                               
council.  HB  334 clarifies  that  once  a local  governing  body                                                               
enters  into an  agreement  related to  an  exemption, it  remain                                                               
valid for the duration of the  project. It still allows for local                                                               
control and  latitude for  municipalities to  strike a  deal. The                                                               
only  exception is  a beneficial  occupancy, which  is between  a                                                               
potential developer and the local municipality.                                                                                 
                                                                                                                                
CHAIR STEDMAN referenced page 1,  line 12 and said he understands                                                               
that once a property is sold  all the deferred taxes would be due                                                               
to the municipality.                                                                                                            
                                                                                                                                
REPRESENTATIVE RAMRAS responded changes  were made in the Finance                                                               
Committee  because of  substantial occupancy  issues that  arose.                                                               
The  concern  related  to  creating an  unfair  advantage  for  a                                                               
developer who then  became a landlord that  didn't participate in                                                               
the sale of the building.                                                                                                       
                                                                                                                                
CHAIR STEDMAN  asked for  clarification that  there would  not be                                                               
multiple stacking issues.                                                                                                       
                                                                                                                                
REPRESENTATIVE RAMRAS responded he believes that is correct.                                                                    
                                                                                                                                
SENATOR KOOKESH asked whether the  McKay building was refurbished                                                               
under this statute or under municipal ordinance.                                                                                
                                                                                                                                
REPRESENTATIVE RAMRAS  replied Mr.  Pound informed  him it  was a                                                               
combination, but  there hasn't been  clarifying language.  HB 334                                                               
would provide  a developer  certainty that  once a  tax exemption                                                               
has been  secured; it will remain  in effect through the  life of                                                               
the   project  even   if  the   local   governing  body   changes                                                               
composition. The hope  is that the clarifying  language will give                                                               
developers certainty so they're  willing to rehabilitate eyesores                                                               
and thereby provide regentrification to communities.                                                                            
                                                                                                                                
SENATOR  GARY STEVENS  asked  for  assurance that  municipalities                                                               
would have  the option of adopting  this and that it  would in no                                                               
way be a mandate.                                                                                                               
                                                                                                                                
REPRESENTATIVE RAMRAS said that's correct.                                                                                      
                                                                                                                                
2:31:35 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN asked  him to discuss the procedure  if a developer                                                               
were to abandon a property that had been exempted.                                                                              
                                                                                                                                
REPRESENTATIVE RAMRAS responded  HB 334 isn't meant  to address a                                                               
default by a developer.                                                                                                         
                                                                                                                                
SENATOR  WAGONER commented  anything  that  helps communities  is                                                               
worth  consideration and  he could  see the  need, but  more than                                                               
likely just a few properties would fall under this bill.                                                                        
                                                                                                                                
REPRESENTATIVE RAMRAS  responded the  head of the  Alaska Tourism                                                               
Industry Association (ATIA) sees the  bill as a potential vehicle                                                               
for various cities to use  to renovate dilapidated buildings that                                                               
might be used  in the tourism industry. ATIA is  the only private                                                               
sector entity that made contact, which  is why he went out of his                                                               
way  to contact  Mr. Marlow  to  get his  perspective and  assure                                                               
himself that this legislation wouldn't benefit just one party.                                                                  
                                                                                                                                
SENATOR  GARY  STEVENS  motioned  to  report  CSHB  334(FIN)  and                                                               
attached   fiscal   note(s)   from  committee   with   individual                                                               
recommendations. There being no objection, it was so ordered.