04/14/2022 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

           HB 411-MUNICIPAL TAX EXEMPTIONS/DEFERRALS                                                                        
                                                                                                                                
8:53:23 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced  that the next order  of business would                                                               
be  HOUSE  BILL  NO.  411,  "An Act  relating  to  municipal  tax                                                               
exemptions and deferrals on economic development property."                                                                     
                                                                                                                                
8:53:39 AM                                                                                                                    
                                                                                                                                
RYAN  JOHNSTON,  Staff,  Representative  Calvin  Schrage,  Alaska                                                               
State  Legislature, on  behalf of  Representative Schrage,  prime                                                               
sponsor, noted those who would  give invited testimony during the                                                               
hearing on HB 411.                                                                                                              
                                                                                                                                
8:54:14 AM                                                                                                                    
                                                                                                                                
MIKE EDGINGTON, representing self, noted  that he is the co-chair                                                               
of the Girdwood  Board of Supervisors, which had  not developed a                                                               
position on HB 411; therefore, he  is speaking on his own behalf.                                                               
He said  under current law,  some communities are unable  to make                                                               
full  use  of  municipal  tax  exemptions  [related  to  economic                                                               
development property].   He said although Girdwood  is a separate                                                               
community  in  terms of  government,  it  is within  the  Unified                                                               
Municipality  of Anchorage.   Girdwood  addresses this  by having                                                               
its  own   service  area,  including  police,   fire,  roads  and                                                               
drainage, and parks and recreation.   He said about 40 percent of                                                               
Girdwood's  taxes  fund  these  services,  and  the  rest  go  to                                                               
schools.  He reviewed that  in 2007, the legislature expanded the                                                               
ability  of municipalities  to provide  tax incentives  for local                                                               
economic  development  but  excluded  service  areas  run  by  an                                                               
elected board.   He noted that  Girdwood is affected by  the high                                                               
cost  and low  availability of  housing.   He stated  that he  is                                                               
asking  for  a  small,  targeted  change  [to  statute]  so  that                                                               
Girdwood can  qualify to  offer the tax  exemptions.   He pointed                                                               
out  that there  are a  number  of other  communities across  the                                                               
state that would also benefit from this change.                                                                                 
                                                                                                                                
8:58:20 AM                                                                                                                    
                                                                                                                                
MR.  EDGINGTON, in  response to  a  question from  Representative                                                               
McCarty,   explained   that   the    Girdwood   Board   gives   a                                                               
recommendation  for   the  tax  level  to   the  Municipality  of                                                               
Anchorage, which then  approves it.  He said  his recollection is                                                               
that the  Municipality of Anchorage  has never disapproved  a tax                                                               
submitted by Girdwood.   In response to a  follow-up question, he                                                               
said the  Municipality of  Anchorage is  bound by  state statute,                                                               
and  it has  taken  the  language of  the  statute  to apply  the                                                               
restrictions on taxes being imposed in service areas.                                                                           
                                                                                                                                
REPRESENTATIVE  MCCARTY expressed  concern  that  a service  area                                                               
will come to  the state because it does not  like the decision of                                                               
the local home-rule [municipality].                                                                                             
                                                                                                                                
MR. EDGINGTON clarified  that the situation at hand  is that both                                                               
the service  area of Girdwood  and the Municipality  of Anchorage                                                               
are  in agreement  but cannot  do  anything about  it because  of                                                               
statute.                                                                                                                        
                                                                                                                                
9:03:02 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN noted there was a lawyer on line to testify.                                                                    
                                                                                                                                
9:03:24 AM                                                                                                                    
                                                                                                                                
MR.  EDGINGTON, in  response  to  Representative Prax,  confirmed                                                               
that a service area cannot  exempt general taxation.  In response                                                               
to  a follow-up  question, he  maintained his  understanding that                                                               
the assembly  has veto power over  a service area's desire  for a                                                               
tax exemption.                                                                                                                  
                                                                                                                                
9:06:14 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  SCHRAGE  clarified   the  issue  is  that   even  if  a                                                               
municipality wishes  to allow  the tax  exemption to  the service                                                               
area, it is prohibited from doing so by statute.                                                                                
                                                                                                                                
9:06:46 AM                                                                                                                    
                                                                                                                                
MR. EDGINGTON, in response  to Representative Drummond, confirmed                                                               
there  is  not  a  current   project  being  considered  for  tax                                                               
exemption, but  if there  were, both the  Girdwood Board  and the                                                               
Municipality of Anchorage  would have to approve it for  it to be                                                               
allowed,  provided  HB 411  is  passed  in  order to  change  the                                                               
statute.                                                                                                                        
                                                                                                                                
9:07:46 AM                                                                                                                    
                                                                                                                                
MR. EDGINGTON,  in response to Representative  McCarty, clarified                                                               
that  the  limitation  is  on elected  boards;  there  are  other                                                               
service areas in  Anchorage that do not have  elected boards, and                                                               
the restriction on tax exemption does not apply to them.                                                                        
                                                                                                                                
9:09:09 AM                                                                                                                    
                                                                                                                                
WILLIAM "BILL"  FALSEY, representing  self, stated  that he  is a                                                               
private  practice  attorney  testifying  today  in  his  personal                                                               
capacity.   He specified that  the limitation being  discussed is                                                               
found  in AS  29.45.50(m).   He noted  that service  areas are  a                                                               
concept authorized by Article 10,  Section 5, of the Constitution                                                               
of the  State of Alaska, and  they are common.   He confirmed the                                                               
information  about  the  board operated  service  areas  and  the                                                               
exclusion added  in 2017 and the  concern behind it.   He said HB
 is particularly meaningful in  places like Girdwood; it would                                                               
allow the  Girdwood Board to opt  out by passing a  resolution of                                                               
objection no  later than 30 days  after the local ordinance.   He                                                               
emphasized the 30-day  window would come after  all public notice                                                               
requirements were made.   He expressed his strong  support of the                                                               
proposed legislation.                                                                                                           
                                                                                                                                
9:14:59 AM                                                                                                                    
                                                                                                                                
CO-CHAIR SCHRAGE noted that at  the last committee hearing, there                                                               
had  been  discussion  about the  notice  requirement.  He  asked                                                               
whether there  would be a problem  if the notice were  changed to                                                               
60 days.                                                                                                                        
                                                                                                                                
MR. FALSEY described  the process to illustrate  the ample public                                                               
notice that would  occur prior to the 30-day window.   That said,                                                               
he remarked  that he did  not see any  reason to oppose  a 60-day                                                               
notice.                                                                                                                         
                                                                                                                                
9:17:00 AM                                                                                                                    
                                                                                                                                
MR.  FALSEY,  in  response  to  a  question  from  Representative                                                               
McCarty  as to  whether there  are things  that state  law should                                                               
preclude local  governments from doing  in terms of  taxation and                                                               
exemption,  said  philosophically he  is  "more  in the  camp  of                                                               
trusting  the local  elected officials."   He  said he  thinks if                                                               
there  were no  state  restrictions, then  the local  governments                                                               
would work those issues out appropriately.                                                                                      
                                                                                                                                
9:19:07 AM                                                                                                                    
                                                                                                                                
MR.  FALSEY,  in  response  to  a  question  from  Representative                                                               
Drummond   regarding   other   service   areas,   explained   the                                                               
differences  between Girdwood's  board-operated service  area and                                                               
others in terms of tax exemptions.                                                                                              
                                                                                                                                
9:22:39 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN  opened  public  testimony on  HB  411.    After                                                               
ascertaining  no  one  wished  to   testify,  she  closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
9:23:52 AM                                                                                                                    
                                                                                                                                
MR. JOHNSTON, in response to  Co-Chair Hannan, concluded, "As the                                                               
municipality  might have  a veto,  the service  area boards  also                                                               
still retain the ability to opt  out, and we think that addresses                                                               
the issue of the 2017 concerns."                                                                                                
                                                                                                                                
9:24:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR   HANNAN  expressed   her   understanding  of   Juneau's                                                               
government,  saying that  she does  not think  there are  elected                                                               
boards in any of the borough's service areas.                                                                                   
                                                                                                                                
9:25:45 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that HB 411 was held over.