04/13/2023 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

        SB  77-MUNI PROP TAX EXEMPTION/TAX BLIGHTED PROP                                                                    
                                                                                                                                
9:43:16 AM                                                                                                                    
                                                                                                                                
CHAIR MCCORMICK announced that the  final order of business would                                                               
be  CS FOR  SENATE  BILL  NO. 77(CRA)  am,  "An  Act relating  to                                                               
municipal property tax; and providing for an effective date."                                                                   
                                                                                                                                
9:43:54 AM                                                                                                                    
                                                                                                                                
SENATOR FORREST DUNBAR, Alaska  State Legislature, mentioned that                                                               
CSSB  77(CRA)  am is  the  companion  bill  to  HB 84,  which  is                                                               
sponsored  by Representative  Jesse  Sumner.   He explained  that                                                               
CSSB  77(CRA)  am  would  create two  optional  tools,  of  which                                                               
municipalities could  choose.   He pointed  out that  this aligns                                                               
with local control.  He  explained that several changes were made                                                               
to the bill.   First there would  be a cap on the  blight tax, as                                                               
only 50  percent of the  property's annual assessed  property tax                                                               
could be  used.  He  expressed the  understanding that this  is a                                                               
much lower  tax than in  other parts of  the country.   He stated                                                               
this would also prevent an  owner-occupied primary residence from                                                               
being the  subject of  a blight  tax.   He stated  another change                                                               
would allow  home rule  and first-class  cities to  implement the                                                               
blight tax.   He referenced  two other small changes:  the blight                                                               
tax would  be removed once  remediation has begun, as  opposed to                                                               
when  it is  completed,  and  a primary  residence  could not  be                                                               
identified as blighted.                                                                                                         
                                                                                                                                
9:47:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE questioned whether  an ordinance adopted by                                                               
the assembly in Anchorage would automatically go to the voters.                                                                 
                                                                                                                                
SENATOR DUNBAR  responded that most  ordinances do not go  to the                                                               
voters, with some  exceptions, such as a bond.   He explained the                                                               
two ways an ordinance would go to the voters.                                                                                   
                                                                                                                                
REPRESENTATIVE MCCABE  expressed the understanding that,  with no                                                               
voter  input,  the  assembly  could   adopt  an  ordinance  which                                                               
"designates 'blighted'  as somebody that didn't  mow their lawn."                                                               
He questioned  the protection in  the proposed legislation  for a                                                               
home owner and the definition of "blighted."                                                                                    
                                                                                                                                
SENATOR DUNBAR  responded that  if a person  is in  his/her home,                                                               
the  home is  not  subject  to this.    He  stated that  removing                                                               
something for public purpose is  not the definition of "blighted"                                                               
and not eminent  domain, which is a difficult process.   He added                                                               
that  there is  an appeals  process,  and the  primary check  for                                                               
local  governments  is  the  ability   for  the  public  to  vote                                                               
individuals  out of  office.   In  discussing  the definition  of                                                               
"blighted," he  stated that there  had been one put  forward, but                                                               
he expressed the opinion that  it had been inappropriate to amend                                                               
the bill  on the floor.   He continued that the  Alaska Municipal                                                               
League has  expressed the opinion  that local  governments should                                                               
define the  term themselves.   He  discussed the  definition that                                                               
other  states  have  put  forward  and  concluded  that  defining                                                               
"blighted" is  not an easy task.   He stressed the  importance of                                                               
local control in most cases.                                                                                                    
                                                                                                                                
9:51:59 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE  expressed appreciation for  local control;                                                               
however,  because  there are  some  unorganized  boroughs in  the                                                               
state, blighted  will need  to have a  basic definition,  such as                                                               
having  a floor.    He conceded  that Alaska  is  spread out,  so                                                               
creating a definition and having control would be difficult.                                                                    
                                                                                                                                
SENATOR  DUNBAR expressed  agreement;  however,  he reminded  the                                                               
committee  that  the proposed  legislation  would  only apply  to                                                               
entities that impose property tax.                                                                                              
                                                                                                                                
9:53:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCKAY argued  that  the legislature's  job is  to                                                               
pass  laws,  but  also  its  job  is  to  protect  citizens  from                                                               
overzealous  local governments.    He  expressed caution  because                                                               
these types  of laws could  have unintended consequences,  and he                                                               
gave an example.                                                                                                                
                                                                                                                                
SENATOR  DUNBAR  expressed  appreciation  for the  concern.    He                                                               
stated  that this  is why  he welcomed  the amendment  concerning                                                               
remediation of the  property, rather than completion.   He stated                                                               
that remediation  shows "a good  faith effort."  He  reminded the                                                               
committee  members   that  this   would  not  apply   to  primary                                                               
residences.  He gave the example  of a hotel in Anchorage with an                                                               
out-of-state  owner,  as it  sat  abandoned  for many  years  and                                                               
became  a center  of criminal  activity and  a fire  hazard.   He                                                               
pointed   out  that   this  type   of  property   would  be   the                                                               
legislation's focus.   He stated that it is not  intended to be a                                                               
punitive tool which leads to foreclosure.                                                                                       
                                                                                                                                
REPRESENTATIVE MCKAY pointed out that  the Anchorage hotel in the                                                               
given example was  taken care of without legislation.   He argued                                                               
that laws do not always respect good intentions.                                                                                
                                                                                                                                
SENATOR  DUNBAR  responded that  in  this  example, the  assembly                                                               
passed an  ordinance which imposed  fees for  unsecured property.                                                               
This had not  worked, and he discussed  the complicated agreement                                                               
which  had rectified  the problem.   He  explained that  this had                                                               
been  a  very long  process.    He  suggested that  the  proposed                                                               
legislation would lead to an easier solution.                                                                                   
                                                                                                                                
9:59:56 AM                                                                                                                    
                                                                                                                                
NILS  ANDREASSEN, Executive  Director,  Alaska Municipal  League,                                                               
provided invited testimony on CSSB 77(CRA)  am.  On behalf of the                                                               
Alaska  Municipal  League,  he expressed  the  opinion  that,  as                                                               
currently drafted, the proposed  bill would support local control                                                               
and community  redevelopment priorities.  It  would provide local                                                               
decision  making for  all the  local governments  in Alaska.   He                                                               
continued  that  the  proposed   legislation  would  empower  the                                                               
communities,  make  properties  more valuable,  and  protect  the                                                               
vulnerable populations, ensuring quality  of life, public health,                                                               
and public safety.                                                                                                              
                                                                                                                                
10:01:08 AM                                                                                                                   
                                                                                                                                
CHAIR MCCORMICK announced that CSSB 77(CRA) am was held over.