Legislature(2017 - 2018)BUTROVICH 205
04/13/2017 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB106 | |
| HB148 | |
| HB78 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 148 | TELECONFERENCED | |
| += | HB 78 | TELECONFERENCED | |
| + | HB 87 | TELECONFERENCED | |
| *+ | SB 106 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 106-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY
3:31:24 PM
CHAIR MEYER announced the consideration of SB 106.
3:31:34 PM
SENATOR COGHILL, sponsor of SB 106, explained that the bill
addresses previous legislation that was narrowly crafted and
allows municipal authority and flexibility for economic
development issues.
3:32:16 PM
RYNNIEVA MOSS, Staff, Senator Coghill, Alaska State Legislature,
Juneau, Alaska, noted that SB 106 was HB 370 during the 29th
Alaska State Legislature. She concurred with Senator Coghill
that SB 106 provides more flexibility to local municipalities on
giving property tax exemptions for economic development
property. She noted that the current statute provides a five-
year limit for a property-tax emption, but SB 106 eliminates the
limitation and allows municipalities to determine what the limit
for the tax emption will be. She added that the bill covers tax
exemptions and deferrals.
MS. MOSS presented a sectional analysis as follows:
Section 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.
· Eligibility for economic development property
exemption, (m)(1), 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;
2. Generates property tax revenue after the
exemption expires.
Section 2:
· Makes the mandated tax exemption for a fire-
protection system up to 2 percent of the value of
the structure optional.
Section 3:
· Repeals AS 29.45.030(l) which was the mandated
tax exemption for a fire-protection system.
MS. MOSS provided an example of what SB 106 will mean to
municipalities as follows:
The Matanuska-Susitna Borough gave us some information
on their sports center. The land that the sports
center is on had an assessed value prior to
construction of $294000, today the land and the
building is assessed at $6.998 million; the
approximate tax bill on that property, today
undeveloped would be $4900 a year, today they are
generating $102500 a year. Since the exemption
expired, they have raised $615000 in revenues; had
that development not occurred, that $600000 would
dwindle down to $31000. So, it's a significant avenue
for municipalities to raise additional revenue which
in today's world is important because they have less
contributions from the state.
3:35:44 PM
CHAIR MEYER opened public testimony.
3:36:20 PM
CHRISTOPHER SCHUTTE, Director, Economic and Community
Development, Municipality of Anchorage, Anchorage, Alaska,
testified in support of SB 106. He commented that Senator
Coghill and his staff have done a great job of capturing the
important need and value in changing the current state statutes.
He set forth that SB 106 will be a useful tool in Anchorage for
encouraging development and redevelopment of all sizes, not only
of the scale that Ms. Mention regarding the sports center in the
Matanuska-Susitna Borough.
He disclosed that Anchorage is running out of available
developable land and the legislation will allow the municipality
to incentivize and encourage the redevelopment of aging-housing
stock. He pointed out that one of the bill's components will
allow the municipal-infrastructure requirement that Anchorage
places upon developers to be eligible for rebate through a
property-tax-abatement tool which will be especially powerful.
He said Anchorage has multiple examples of projects that did not
"pencil out" due to the municipal requirement to provide public
infrastructure or public upgrades, as a result the municipality
is left with undeveloped land; for example, a former gravel site
was purchased by a company looking to build a $40 million
distribution warehouse, but the requirements placed upon the
project would have required $4.5 million to bring public
infrastructure up to code.
MR. SCHUTTE summarized that SB 106 is a very powerful tool that
will provide municipalities across the state with the
flexibility to create incentives that offset mandatory expenses
through decreased tax in the short term.
3:39:47 PM
CHAIR MEYER closed public testimony.
3:39:55 PM
CHAIR MEYER set SB 106 aside for future consideration.