04/12/2022 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

           HB 411-MUNICIPAL TAX EXEMPTIONS/DEFERRALS                                                                        
                                                                                                                                
9:14:34 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that the  final order of business would                                                               
be  HOUSE  BILL  NO.  411,  "An Act  relating  to  municipal  tax                                                               
exemptions and deferrals on economic development property."                                                                     
                                                                                                                                
9:14:48 AM                                                                                                                    
                                                                                                                                
RYAN  JOHNSTON,  Staff,  Representative  Calvin  Schrage,  Alaska                                                               
State Legislature,  presented HB 411 on  behalf of Representative                                                               
Schrage,  prime  sponsor.    He  said the  bill  seeks  to  allow                                                               
municipalities to offer tax exemptions  and deferrals on economic                                                               
development property within service areas.   The bill would amend                                                               
AS 29.45.050(m)  to allow  the exemptions  and deferrals,  but it                                                               
would provide a 30-day window for  the service areas to concur or                                                               
disagree with the potential tax deferral.                                                                                       
                                                                                                                                
9:16:33 AM                                                                                                                    
                                                                                                                                
ROBERT PEARSON,  Local Government  Specialist V, Community  Aid &                                                               
Accountability  Section,  Division   of  Community  and  Regional                                                               
Affairs,   Department   of   Commerce,   Community   &   Economic                                                               
Development,  in  response  to  a  question  from  Representative                                                               
Drummond as to the definition  of "special service area", offered                                                               
his understanding that  the definition is in statute,  but he did                                                               
not know it offhand.                                                                                                            
                                                                                                                                
9:18:57 AM                                                                                                                    
                                                                                                                                
MR. JOHNSTON, in  response to a concern  from Representative Prax                                                               
that some service  areas may not meet often enough  to be able to                                                               
respond  within   30  days,  said   that  possibility   has  been                                                               
considered by the bill sponsor, and  one idea would be to specify                                                               
30  days "from  notice"  to the  service area.    To a  follow-up                                                               
question,  he confirmed  the bill  sponsor's office  has been  in                                                               
contact with the Fairbanks North Star Borough.                                                                                  
                                                                                                                                
9:21:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND said  by-laws  for meeting  notification                                                               
may result  in the need for  the notice proposed under  HB 411 to                                                               
be increase to  60 or 90 days.   She said again she  would like a                                                               
definition of service areas.                                                                                                    
                                                                                                                                
9:21:39 AM                                                                                                                    
                                                                                                                                
MR.  JOHNSTON,  in  response   to  Representative  McCarty,  gave                                                               
Girdwood as an example of service  area governed by a board and a                                                               
place that  cannot be offered economic  development incentives by                                                               
the  Municipality  of Anchorage.    In  response to  a  follow-up                                                               
question, regarding why Girdwood  would be approaching the state,                                                               
he offered his understanding that  when the statute was first put                                                               
in  place,  there  was  concern that  a  municipality  could  "do                                                               
anything" without  [consulting] with the  service area.   He said                                                               
he would seek a better answer for Representative McCarty.                                                                       
                                                                                                                                
9:24:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX  said he  thinks  it  is  fair to  say  that                                                               
currently a  second-class borough could grant  tax exemption from                                                               
borough imposed taxes,  but should not be allowed  to require the                                                               
service area  to agree to the  tax exemption of the  service area                                                               
tax.   He  offered  his  understanding that  that  could be  done                                                               
today, and that is what HB 411 is trying to prevent.                                                                            
                                                                                                                                
9:25:06 AM                                                                                                                    
                                                                                                                                
MR. PEARSON  said he thinks  Representative Prax is correct.   He                                                               
said the  makers of the existing  statute were trying to  avoid a                                                               
situation  by disallowing  it altogether;  whereas  HB 411  would                                                               
allow it with the approval of the service area.                                                                                 
                                                                                                                                
9:26:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND   noted  the  government   structure  of                                                               
Anchorage and how it is different from that in Girdwood.                                                                        
                                                                                                                                
9:27:04 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN  asked  Mr. Pearson  for  knowledge  about  what                                                               
statute  allows for  service areas  within municipal  governments                                                               
and how many of them there are.                                                                                                 
                                                                                                                                
MR. PEARSON  estimated there are potentially  hundreds of service                                                               
areas  that could  be  affected by  HB  411.   In  response to  a                                                               
follow-up question, he  said there are property  taxes in various                                                               
sized city governances, but there  are many jurisdictions without                                                               
property taxes.                                                                                                                 
                                                                                                                                
9:29:33 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX surmised  that  citizens  could establish  a                                                               
service  area  which  taxes  itself   in  order  to  have  police                                                               
protection, for example.                                                                                                        
                                                                                                                                
9:30:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND offered  an  example of  expansion of  a                                                               
police service area in Anchorage.                                                                                               
                                                                                                                                
9:31:52 AM                                                                                                                    
                                                                                                                                
MR. JOHNSTON, in  response to a request  from Representative Prax                                                               
for  a definition  of "economic  development property",  directed                                                               
attention to the definition on page 2, lines 8-24.                                                                              
                                                                                                                                
9:33:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that HB 411 was held over.