04/02/2002 01:50 PM Senate L&C

        HB 389-MUNI TAX EXEMPTION: DETERIORATED PROPERTY                                                                    
                                                                                                                                
CHAIRMAN STEVENS announced HB 389 to be up for consideration.                                                                   
                                                                                                                                
REPRESENTATIVE  VIC KOHRING,  sponsor  of HB  389, said  it is  an                                                              
amendment  to Title  29  that would  allow  for  certain types  of                                                              
property  exemptions  that would  enable  deteriorated  properties                                                              
that are subject  to rehabilitation to have greater  odds in terms                                                              
of financing  of those properties.  He said the McKay  Building in                                                              
downtown  Anchorage had  been an  eyesore for  many years and  had                                                              
been  purchased  by  Marlow  Development  Corporation,  which  was                                                              
attempting to upgrade the building,  but they need more financing.                                                              
This legislation  would enable them  and other similar  properties                                                              
to obtain  that financing,  because a tax  exemption puts  them in                                                              
better position to get dollars from investment institutions.                                                                    
                                                                                                                                
This bill  actually adds  to the existing  law on properties  that                                                              
are  granted  a  tax  exemption.  In 1996-97  a  bill  was  passed                                                              
addressing this issue, but it sunsets  on July 1, 2002. Instead of                                                              
extending the sunset this legislation deletes the sunset clause.                                                                
                                                                                                                                
SENATOR  LEMAN  said  he  understands   the  reasons  behind  this                                                              
legislation and asked why he didn't just extend the sunset date.                                                                
                                                                                                                                
REPRESENTATIVE KOHRING  replied that his original  legislation had                                                              
a time  certain of 2005,  but the  Community and Regional  Affairs                                                              
Committee amended the  legislation and they felt it  was better to                                                              
drop the exemption.                                                                                                             
                                                                                                                                
MR.  MIKE KRIEBER,  Staff to  Representative  Kohring, agreed  and                                                              
said  they  did the  same  thing  a few  years  ago when  it  came                                                              
through.  Representative Halcro  had put  in language relating  to                                                              
local  community control  that he  felt  were adequate  so no  one                                                              
would  receive  unfair  economic   benefit  -  the  rationale  the                                                              
committee used to remove the sunset  extension that Representative                                                              
Kohring's original bill proposed.                                                                                               
                                                                                                                                
SENATOR   AUSTERMAN  asked   if  AS   29.45.05  actually   exempts                                                              
deteriorated buildings  and does it go on until  the renovation is                                                              
completed.                                                                                                                      
                                                                                                                                
MR. MARC MARLOW, Marlow Development  Corporation, said the goal of                                                              
the  previous  legislation   was  to  develop  a   way  for  local                                                              
communities  to   extend  property  tax  relief   to  deteriorated                                                              
properties for up to five years of  an outright exemption followed                                                              
by  up  to five  years  of  deferred property  taxes.  This  would                                                              
provide flexibility in financing  a renovation. The local assembly                                                              
must first  by ordinance designate  a property that  would benefit                                                              
from this  statute as  a deteriorated  property and the  developer                                                              
could request  exemptions based  on need.  The mayor and  assembly                                                              
would then approve it or reject it.                                                                                             
                                                                                                                                
SENATOR  TORGERSON said  he,  like Senator  Leman,  wanted a  date                                                              
certain.                                                                                                                        
                                                                                                                                
SENATOR  DAVIS moved  to pass  CSHB 389(CRA)  from committee  with                                                              
individual  recommendations and  the attached  fiscal note.  There                                                              
were no objections and it was so ordered.