04/11/2017 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS

         SB 106-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY                                                                     
                                                                                                                                
3:44:52 PM                                                                                                                    
CHAIR BISHOP announced the consideration of SB 106, sponsored by                                                                
Senator John Coghill.                                                                                                           
                                                                                                                                
3:45:15 PM                                                                                                                    
RYNNIEVA  MOSS,  staff  to Senator  John  Coghill,  Alaska  State                                                               
Legislature, Juneau, Alaska,  provided an overview of  SB 106 for                                                               
the sponsor.  It allows  municipalities to  provide partial  or a                                                               
total  exemption for  a  time period  to  determine property  tax                                                               
exemptions or  deferrals for  economic development  projects. She                                                               
said this  bill has a  committee substitute  (CS) [CSSB 106  ( ),                                                               
version 30-LS0797\D] that corrects the earlier bill's format.                                                                   
                                                                                                                                
3:46:19 PM                                                                                                                    
MS. MOSS provided a sectional analysis.                                                                                         
                                                                                                                                
Sec 1. Removes  the five year limitation  on economic development                                                             
property  exemptions and  deferrals.  Removes renewals  provision                                                               
and the limit on property tax exemptions for renewals.                                                                          
(m)(1)  Eligibility for  economic development  property exemption                                                               
is based on one qualifier instead of multiple qualifiers.                                                                       
Adds  a  qualifier  for  property  development  that  "enables  a                                                               
significant capital investment in physical infrastructure that:                                                                 
1. Expands the tax base of the municipality; and                                                                                
2.  Will  generate  property  tax  revenue  after  the  exemption                                                               
expires.                                                                                                                        
                                                                                                                                
For example, the  MatSu assessor has provided  information on the                                                               
sports  center that  was built.  The land  had an  assessed value                                                               
prior  to construction  of  $294,000. Today  that  land with  the                                                               
building is assessed  at $6,998,300. The approximate  tax bill on                                                               
the land prior to the exemption  was $4,900. The average tax bill                                                               
on  the land  and building  today  is $102,500.  The total  taxes                                                               
generated on this  land since the exemption is  $615,100. Had the                                                               
improvements not  been made,  that would  have been  about $5,200                                                               
and a  total of $31,500. So,  it's a significant advantage  and a                                                               
tool  for municipalities  to use  to generate  revenues in  times                                                               
when they are losing state funds.                                                                                               
                                                                                                                                
3:48:20 PM                                                                                                                    
Sec.  3. Makes  optional what  is now  a mandated  2 percent  tax                                                             
exemption for a  fire protection systems, and sec.  4 repeals the                                                               
language that mandates that exemption.                                                                                          
                                                                                                                                
3:49:37 PM                                                                                                                    
SENATOR  GARDNER said  she is  familiar with  the context  of the                                                               
bill and it is a priority for her community.                                                                                    
                                                                                                                                
3:50:04 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
3:50:59 PM                                                                                                                    
CHAIR BISHOP called the committee back to order.                                                                                
                                                                                                                                
SENATOR  STEDMAN  moved  to  adopt  the  CSSB  106,  version  30-                                                               
LS0797\D, as the working document.                                                                                              
                                                                                                                                
3:51:08 PM                                                                                                                    
CHAIR BISHOP objected for discussion  purposes. He asked Ms. Moss                                                               
if the repealer  in sec. 3 talks about a  percentage decrease for                                                               
sprinklers.                                                                                                                     
                                                                                                                                
MS. MOSS answered that is correct.                                                                                              
                                                                                                                                
3:51:51 PM                                                                                                                    
SENATOR GARDNER asked  if the repealer of the  mandated 2 percent                                                               
is still in the bill.                                                                                                           
                                                                                                                                
MS. MOSS answered yes, and Sec. 2 makes it optional.                                                                            
                                                                                                                                
3:52:17 PM                                                                                                                    
CHAIR  BISHOP  said  the  next committee  of  referral  is  State                                                               
Affairs.                                                                                                                        
                                                                                                                                
MS. MOSS said that was correct.                                                                                                 
                                                                                                                                
3:52:27 PM                                                                                                                    
CHAIR BISHOP removed his objection and version D was adopted.                                                                   
                                                                                                                                
3:52:33 PM                                                                                                                    
SENATOR  STEDMAN  moved  to  report  the [CS  for]  SB  106  from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s).                                                                                                                        
                                                                                                                                
CHAIR  BISHOP announced  that  without  objection, CSSB  106(CRA)                                                               
moved  from the  Senate Community  and Regional  Affairs Standing                                                               
Committee.