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

        HB 134-PROPERTY TRANSFER TAX; MUNI TELECOMM TAX                                                                     
                                                                                                                                
9:22:18 AM                                                                                                                    
                                                                                                                                
CHAIR MCCORMICK announced  that the next order  of business would                                                               
be HOUSE  BILL NO. 134,  "An Act prohibiting  municipalities from                                                               
levying a tax  on the transfer of real  property; prohibiting the                                                               
state from  levying a tax on  the transfer of real  property; and                                                               
relating  to  municipal  taxation  of  mobile  telecommunications                                                               
services."                                                                                                                      
                                                                                                                                
9:22:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JULIE  COULOMBE,  Alaska  State  Legislature,  as                                                               
prime sponsor, introduced  HB 134.  She stated  that the proposed                                                               
legislation  would  prohibit  state and  local  governments  from                                                               
imposing real estate transfer taxes,  fees, and other assessments                                                               
on  sales, grants,  assignments, or  transfers of  real property.                                                               
She  stated that  transfer fees  are increasingly  being assessed                                                               
for property transactions  in other states.  She  pointed out the                                                               
housing problems in the state and  argued that in Alaska this tax                                                               
would  add the  obstacle of  increased costs.   Concerning  local                                                               
control  versus state  control, she  argued that  housing is  not                                                               
just a local  issue, as these struggles affect  the entire state.                                                               
She  stated  that the  tax  is  not  currently imposed,  and  the                                                               
proposed legislation is a preventative action.                                                                                  
                                                                                                                                
9:25:50 AM                                                                                                                    
                                                                                                                                
MAGY ELLIOTT, Staff, Representative  Julie Coulombe, Alaska State                                                               
Legislature,   on  behalf   of  Representative   Coulombe,  prime                                                               
sponsor,  presented  the  sectional  analysis  of  HB  134  [copy                                                               
included in the committee packet], which read as follows                                                                        
[original punctuation provided]:                                                                                                
                                                                                                                                
     Section 1:  (Page one line  5-7) Conforming  to Section                                                                
     4,  amends AS.29.10.200(56)  to add  the provisions  of                                                                    
     this  bill  to  the  Limitation  of  Home  Rule  Powers                                                                    
     statute.                                                                                                                   
                                                                                                                                
     Section 2:  (Page one line  8-9) Conforming  to Section                                                                
     6,  amends AS  29.10.200(57) to  add the  provisions of                                                                    
     this  bill  to  the  Limitation  of  Home  Rule  Powers                                                                    
     statute.                                                                                                                   
                                                                                                                                
     Section 3:  (Starting on  page 1, line  10, to  page 2,                                                                
     line 2)  Conforming language to  amend AS.29.45.650(a),                                                                    
     to add new  subsection (l) of this bill  to the statues                                                                    
     regarding Borough Sales and Use Tax.                                                                                       
                                                                                                                                
     Section 4:  (Page two  lines 3-5)  Amends AS.29.45.650,                                                                
     to add new subsection (l)  to the Borough Sales and Use                                                                    
     Tax statue  to provide that  a borough may not  levy or                                                                    
     collect sales tax on the transfer of real property.                                                                        
                                                                                                                                
     Section 5:  (Page two line 6-11)  Conforming to Section                                                                
     6,   amends   AS.29.45.700(a)   to  add   new   section                                                                    
     subsection  (h)  of this  bill  to  the Power  of  Levy                                                                    
     statute.                                                                                                                   
                                                                                                                                
     Section 6:  (Page two line  12-14) Amends  AS 29.45.700                                                                
     to  Add a  new  subsection  (h) to  the  Power of  Levy                                                                    
     Statute,  which states  that  a city  may  not levy  or                                                                    
     collect  a sales  or use  tax on  the transfer  or real                                                                    
     property.                                                                                                                  
                                                                                                                                
     Section 7: (Page two line  15-17) Adds a new section to                                                                
     Article  3, No  tax on  real property  transfers, which                                                                    
     stipulates that  the state may  not levy or  collect on                                                                    
     sales or use tax on the transfer of real property.                                                                         
                                                                                                                                
     Section  8:  (Page  two line  16-19)  Repealer  section                                                                
     related    to    municipal     taxation    of    mobile                                                                    
     telecommunications.                                                                                                        
                                                                                                                                
9:28:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCKAY expressed the understanding that the                                                                       
definition of real property is bigger than just a residential                                                                   
home.    He  requested  a  comment on  the  definition  of  "real                                                               
property."                                                                                                                      
                                                                                                                                
REPRESENTATIVE  COULOMBE   stated  that  the  intention   of  the                                                               
proposed legislation would be for residential housing.                                                                          
                                                                                                                                
REPRESENTATIVE  MCKAY  expressed  concern  that  the  legislation                                                               
designates  the term  "real  property," and  this  could have  an                                                               
expansive definition.                                                                                                           
                                                                                                                                
9:30:11 AM                                                                                                                    
                                                                                                                                
ERROL  CHAMPION, Managing  Broker, Coldwell  Banker Race  Realty;                                                               
Chair,   Industry  Issues   Committee,   Alaska  Association   of                                                               
Realtors, provided  invited testimony  on HB  134.   He addressed                                                               
Representative McKay's concern and stated  that, in terms of real                                                               
property  transactions,  around  less  than 10  percent  of  this                                                               
volume  is  commercial  property.     He  stated  that  an  exact                                                               
definition  cannot  be given,  as  something  sold as  commercial                                                               
could be developed  into residential property.   He expressed the                                                               
concern that 35  states have already moved  forward with leveeing                                                               
transfer  fees, and  this  would be  added to  the  cost of  real                                                               
property.   In response  to a  follow-up question,  he reiterated                                                               
that  there  is  no  way  to  determine  the  difference  between                                                               
commercial and residential property.                                                                                            
                                                                                                                                
9:32:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE  questioned the transfer fee  cost in other                                                               
states.                                                                                                                         
                                                                                                                                
MR. CHAMPION added that the  ten percent stated was the estimated                                                               
ratio  of  the  commercial   property  to  residential  property.                                                               
Answering the question,  he stated that the  highest transfer fee                                                               
he is  aware of is  in Washington State.   He explained  that the                                                               
fees vary,  and some states have  a county transfer fee,  a state                                                               
transfer fee,  and a municipal  transfer fee, while  other places                                                               
have  a flat  rate transfer  fee.   He stated  that realtors  who                                                               
support this  bill argue against  any costs which  would increase                                                               
the cost of acquiring a home.                                                                                                   
                                                                                                                                
9:33:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COULOMBE  expounded  that  Washington  State  and                                                               
Colorado have  the highest transfer  fee rates.  She  stated that                                                               
fees  varied  from 0.1  per  $100,000  all  the  way to  3.5  per                                                               
$100,000,  per level  of government,  as some  states have  three                                                               
levels of  government which charge  the tax.   She added  that if                                                               
all three  impose a tax, the  tax could be raised  to 10 percent.                                                               
She continued  that the way  transfer fees are structured,  it is                                                               
hard to determine a rate across the board.                                                                                      
                                                                                                                                
MR. CHAMPION,  in response to  a follow-up question,  stated that                                                               
most sellers  will recognize  they have  to pay  this; therefore,                                                               
the tax is added  to the asking price of the  home.  He expressed                                                               
the understanding  that [governments  like] transfers  because it                                                               
is a  one-time charge  collected by the  escrow office,  with the                                                               
seller paying at closing.                                                                                                       
                                                                                                                                
9:35:53 AM                                                                                                                    
                                                                                                                                
MR. CHAMPION  explained this has been  an issue in the  Lower 48,                                                               
and it  is being  monitored by  the Alaska  Realtors Association.                                                               
He  stated that  only recently  the  City and  Borough of  Juneau                                                               
passed  a disclosure  concerning  this;  however, compliance  was                                                               
poor,  and a  second  ordinance  with a  fee  was  adopted.   The                                                               
ordinance was afterwards  reversed, but it presented  the idea to                                                               
those in the industry that the  inclination "to go after the sell                                                               
of real  property" is there.   He reiterated that 35  states have                                                               
this tax,  while 12 other states  do not require disclosure.   He                                                               
expressed the opinion that without  disclosure, there cannot be a                                                               
transfer fee.  He expressed  the preference that the state remain                                                               
a nondisclosed  state.  He argued  that this is a  privacy issue,                                                               
which is referenced in the state's constitution.                                                                                
                                                                                                                                
9:38:37 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HIMSCHOOT questioned  if the  bill would  address                                                               
whether Alaska remains a nondisclosure state.                                                                                   
                                                                                                                                
REPRESENTATIVE COULOMBE  responded in  the negative, as  it would                                                               
not  address  this  part; the  proposed  legislation  would  only                                                               
address  the transfer  tax.   She added  that this  would be  the                                                               
community's choice.                                                                                                             
                                                                                                                                
REPRESENTATIVE HIMSCHOOT  questioned why the proposed  bill skips                                                               
addressing  a  state tax  and  directly  addresses the  municipal                                                               
level.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  COULOMBE  responded  that it  would  address  the                                                               
borough, state,  and municipality levels.   She offered  to point                                                               
out the sections in the bill which do this.                                                                                     
                                                                                                                                
REPRESENTATIVE  HIMSCHOOT stated  that she  would support  taking                                                               
everything  out  of the  proposed  legislation  which deals  with                                                               
municipalities and leaving only  the provisions which address the                                                               
state.  She reiterated that she is a proponent of local control.                                                                
                                                                                                                                
9:41:27 AM                                                                                                                    
                                                                                                                                
CHAIR MCCORMICK announced that HB 134 was held over.