Legislature(2023 - 2024)BARNES 124
03/21/2023 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB61 | |
| HB17 | |
| HB84 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 84 | TELECONFERENCED | |
| += | HB 17 | TELECONFERENCED | |
| += | HB 61 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 84-MUNI PROP TAX EXEMPTION/TAX BLIGHTED PROP
9:23:57 AM
CHAIR MCCORMICK announced that the final order of business would
be HOUSE BILL NO. 84, "An Act relating to municipal property
tax; and providing for an effective date."
9:24:12 AM
REPRESENTATIVE JESSE SUMNER, Alaska State Legislature, as prime
sponsor, presented HB 84. He gave the sponsor statement, which
read as follows [original punctuation provided]:
HB 84 provides local governments with additional,
optional tools to incentivize economic development.
First, HB 84 allows municipalities to fully exempt
property taxes for economic development purposes.
Currently, municipalities may only exempt the portion
of property taxes that is above the district's
required local contribution. HB 84 removes this limit
for economic development properties. However, this
change does not impact education funding. The mandated
local contribution must still be met, but other
revenue sources may be used to meet this requirement.
Second, HB 84 allows local governments to levy a
light tax". "Blighted" properties are heavily
deteriorated properties that can reduce property tax
and quality of life by devaluing neighboring
properties. Blighted properties often become a magnet
for criminal activity, which impose additional costs
upon the local government. A "blight tax" implements a
higher tax on these properties, however, the tax is
reduced when the property is appropriately remediated
and no longer considered "blighted." Under HB 84, it
is up to the local government's discretion to define
what properties are considered "blighted," what the
tax rate would be, and what is considered
"remediated." It is further left to the local
government's discretion whether they seek to establish
this system; they cannot use the blight tax tool
without adopting additional local code.
Declining state revenue has limited the State's
ability to invest in economic development initiatives.
This has left the municipalities to rely more on their
own means to facilitate those projects. Coupled with
rising construction costs and an insufficient labor
force, economic development initiatives have suffered.
HB 84 seeks to address these concerns by providing
further options for localities; however, it does not
impose any new requirementslocal governments are free
to use these tools or to decline to do so. I urge your
support.
9:26:54 AM
REPRESENTATIVE HIMSCHOOT expressed concern regarding language on
page 2, line 13, of HB 84, wherein local community sets
standards for determining whether a property is blighted. She
asked if it could be allowed for municipalities to increase
taxes on people who are actually occupying something that
appears blighted.
9:28:13 AM
REPRESENTITIVE SUMNER replied yes. He added that if a local
government chose to make such a politically interesting choice,
it will bear the repercussions.
9:29:18 AM
JESSE LOGAN, Staff, Representative Jessie Sumner, Alaska State
Legislature, on behalf of Representative Sumner, prime sponsor
of HB 84, in response to Representative Himschoot's concern,
explained that the property owner would have the right to
challenge that designation of blighting, and would raise it to a
level of public awareness to where there would, he assumed, have
to be public notice.
9:30:08 AM
CHAIR MCCORMICK welcomed invited testimony.
9:30:37 AM
BILL POPP, President and CEO, Anchorage Economic Development
Corporation, provided a brief background and gave invited
testimony in support of HB 84. He stated he and his
organization, Anchorage Economic Development Corporation (AEDC),
support passage of this legislation; it would add key tools in
the toolbox that currently do not exist in the "economic
development toolbox." It would provide more latitude to address
needs that he believed could be further addressed by Mr.
Robbins, a fellow invited testifier today. He further explained
that the bill could have the potential to be a game-changer in
many ways in terms of getting new housing started in Anchorage,
Alaska, and making housing more available to all levels of
income as well as cost-effective housing. He welcomed questions
from members of the committee.
9:35:10 AM
VICE CHAIR MCCABE inquired about what kind of protections AEDC
envisions that could be established to prevent an assembly from
not listening to the people and "just willy-nilly taking
property."
MR. POPP replied AEDC does not have power over the assembly. He
said he believes public process elements proposed under HB 84
would provide a robust debate.
VICE CHAIR MCCABE commented that he wished to strongly protect
homeowners, especially ones going through hard times. He also
stressed his support for protecting individual rights as well as
city rights.
9:38:45 AM
MIKE ROBBINS, Executive Director, Anchorage Community
Development Authority, offered invited testimony in support of
HB 84, and he stated the bill would stimulate economic and
housing development around the state. He noted the housing
shortages in Alaska are at "all levels." He said Section 1 of
the bill would help to address the challenge facing builders,
and this challenge is mainly the cost. The bill would give
cities more local control, bring the decision-making process
home to the local communities, and the cities would decide the
amount and length of an abatement. He opined that is something
that belongs at the city level; cities should have the
opportunity to make these determinations for themselves.
9:43:12 AM
REPRESENTATIVE HIMSCHOOT brought up that 100 percent abatement
is already allowed for deteriorated properties, and she asked
for confirmation if this is correct.
MR. ROBBINS replied that under current state law, local
municipalities are allowed to abate/tax the school district
portion of the property tax for deteriorated property.
9:45:40 AM
REPRESENTATIVE RUFFRIDGE asked about blighted property and what
it looks like in, for example, Anchorage.
MR. ROBBINS responded that his organization had not done a study
or identified all blighted property in Anchorage due to no
ordinances being passed.
REPRESENTATIVE RUFFRIDGE stated he is 100 percent in support of
the local control that HB 84 would provide. In terms of
blighted property, he asked if there would be an increase in
property taxes if the property is not remediated.
MR. ROBBINS replied that an owner may qualify for deteriorated
property or redevelop the property for economic purposes. Under
the provisions of HB 84, the owner would be able to take
advantage of the 100 percent tax abatement for redevelopment.
9:50:18 AM
NILS ANDREASSEN, Executive Director, Alaska Municipal League,
gave invited testimony in support of HB 84. The bill would
support local governments to address community and economic
development. The bill speaks to the blight portion - the
"community redevelopment tax incentive program," - where there
is not currently any statute that would allow for local
governments to develop methods to remediate properties. Vacant
and underutilized properties would be used for more productive
purposes which increases values throughout the community. He
encouraged the committee to pass HB 84.
9:52:24 AM
REPRESENTATIVE HIMSCHOOT asked for examples of other states that
"do this" and she also inquired as to how a community may define
"blighted."
MR. ANDREASSEN replied he is aware of two states: Washington,
DC, and Georgia. In response to a follow-up question, he
explained the way the bill is structured, it would be up to the
community to define "blighted".
9:54:39 AM
REPRESENTATIVE HIMSCHOOT asked Representative Sumner if the
municipality would have the option to find revenue elsewhere
within its budget due to a gap in its funding [for the education
cap.]
REPRESENTATIVE SUMNER replied that no district he is aware of
funds at the minimum effort, but if one property is accepted,
yes, the municipality would find the revenue elsewhere. He
stated it is the same with any amount of tax abatement.
9:56:49 AM
REPRESENTATIVE SUMNER thanked the committee for hearing HB 84
and said he looks forward to future consideration by the
committee members.
9:57:34 AM
CHAIR MCCORMICK announced HB 84 was held over.