Legislature(2023 - 2024)ADAMS 519
05/05/2023 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB154 | |
| SB81 | |
| SB77 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 154 | TELECONFERENCED | |
| + | SB 81 | TELECONFERENCED | |
| + | SB 77 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 77
"An Act relating to municipal property tax; and
providing for an effective date."
3:24:49 PM
SENATOR FORREST DUNBAR, SPONSOR, introduced SB 77. He read
from prepared remarks.
Thank you, all. SB 77 is the companion bill to HB 84
by Rep. Sumner
SB 77 gives local governments two optional tools to
incentivize economic developmentparticularly
residential/commercial housing developments.
First, it allows for a full property tax exemption
instead of limiting that exemption to the value above
a property's local minimum school contribution.
However, local governments will STILL be required to
meet their minimum local contribution, meaning SB 77
will not have an impact on total school funding.
The second tool gives local governments the option to
adopt an ordinance for implementing a blight tax.
This is a conditional increase, capped at 50% of the
property's annual assessed property tax, on abandoned
and dilapidated commercial properties that pose a
threat to public safety and welfare.
Primary residences of property owners are exempted
from being designated as blighted.
The blight tax may be removed once the property begins
remediation or redevelopment. It also may NOT be
applied to primary residences.
Senator Dunbar stressed that the tools were optional, and
it a local government did not levy a property tax the
provisions were not applicable. Additionally, the
definition of "blighted" was added to the bill.
All session, many of us have heard about the unmet
demand for new housing and the growing need for
economic development. SB 77 will help local
governments work towards these goals.
Senator Dunbar concluded that the fiscal note was zero and
there was no cost to state governments.
3:27:19 PM
ALLIANA SALANGUIT, STAFF, SENATOR DUNBAR, (via
teleconference), read the sectional analysis of the bill.
Section 1: Amends AS 29.45.050 Optional exemptions and
exclusions to allow municipalities to completely
exempt property taxes for an economic development
property. Currently, only the amount above the school
district's local required contribution may be
exempted.
Section 2: Adds a new section AS 29.45.057 Levy of tax
on blighted property that allows municipalities to
adopt an ordinance establishing a blight tax. The
ordinance must include the following:
Standards for determining if a property is blighted.
The standards must include that the property meets one
or more of the following criteria.
The property: Endangers public health and safety.
Is a public nuisance under a local housing, building,
plumbing, fire, or other related code or ordinance;
Has been vacant for no less than a year; o Is the
subject or center of repeated illegal activity due to
its unsecured, vacant, or deteriorated state; or
Is open to the elements, unfit for occupancy, or a
fire hazard; A procedure for designating a property as
blighted, notifying the property owner, and providing
the property owner an opportunity to appeal;
A tax rate for the blighted property that may not
exceed 50% of the annual property tax assessed on the
property;
Standards for remediating or redeveloping the property
so it will no longer be considered blighted;
A duration of time and reduced tax rate for remediated
properties. To qualify for the reduced tax rate, the
property owner must have a plan for remediating or
redeveloping the property submitted to and approved by
the municipality. The blight tax may be removed once
they began the remediation or redevelopment process
and follow the approved plan. Municipalities may
designate the tax revenue to be used for community
redevelopment purposes. Primary residences are exempt
from this section. Section 3: Allows home rule and
first-class cities inside boroughs to levy a blight
tax. Section 4: Provides for an immediate effective
date after enactment per AS 01.10.070(c).
3:29:49 PM
Co-Chair Foster asked whether the blighted definition was
contained in the House companion bill sponsored by
Representative Jessee Sumner, HB 84-Exemption/Tax Blighted
Prop. Senator Dunbar replied in the affirmative.
3:30:08 PM
Representative Hannan asked if the definition of blighted
property was on page 2, subsection 2 of the bill and if the
word standards was used interchangeably in the
definition. Senator Dunbar responded in the affirmative. He
explained that the definition was not a separate section in
the bill, but the blighted definition was in the standards
section on page 2, line 12 of the legislation. He noted
that a municipality could choose not to use all the
standards; the standards were optional. A municipality
could use one or two of the standards, none, or all. He
noted that the Alaska Municipal League (AML) did not want
to include any standards in order to maintain local
control. He generally supported local control but there
were legislators who wanted to put some parameters on how
far a local government could act.
Representative Hannan referred to the standards in
subsection 2 and noted that a local government only had to
meet one of the standards for determining a blighted
property. She asked if the standards were all contained in
subsections (a) through (e). Senator Dunbar responded that
there was a drafting error, and he was going to ask a
member of the committee to amend it. He explained that
subsections (e) and (C) were intended to be one section.
He thanked her for spotting the error.
3:33:17 PM
Co-Chair Foster
Senator Dunbar offered a practical example on the types of
situations that might occur. He recounted that local
governments were restricted in the kind of property taxes
and policies it could implement. The Anchorage Assembly
adopted a 12-year property tax abatement for construction
of residential property in the downtown Overlake district.
He detailed that there were projects that went forward that
would not have been able to go forward without it. In
regard to the blight tax, there was a large building in
Midtown Anchorage that sat vacant for more than a decade
and caused significant consternation. The owners were out
of state and had been unwilling to demolish the building
until recently. The blight tax would have been one tool
used to convince the owners to remediate the property. He
emphasized that the tax was not intended to raise
significant property tax for local government, but to spur
remediation for vacant and potentially dangerous buildings
in communities.
Co-Chair Foster reviewed the agenda for the following
committee meeting.
SB 77 was HEARD and HELD in committee for further
consideration.