Legislature(2023 - 2024)BARNES 124

03/21/2023 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Testimony <Invitation Only> --
Moved CSHB 17(HSS) Out of Committee
-- Public Testimony --
Moved HB 61 Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
        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                                                                    
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                                                               
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                                                               
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                                                               
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.                                                                                  

Document Name Date/Time Subjects
HB 84 Letters of Support.pdf HCRA 3/21/2023 8:00:00 AM
HB 84
HB 84 Sectional Analysis Version A.pdf HCRA 3/21/2023 8:00:00 AM
HB 84
HB 84 Sponsor Statement Version A.pdf HCRA 3/21/2023 8:00:00 AM
HB 84
HB 84 Supporting Document Anchorage Community Developoment Authority.pdf HCRA 3/21/2023 8:00:00 AM
HB 84
HB 84 Supporting Document Memo from Anchorage Community Deveopment Authority.pdf HCRA 3/21/2023 8:00:00 AM
HB 84
HB 84 DCCED Fiscal Note Version A.pdf HCRA 3/21/2023 8:00:00 AM
HB 84
HB 17 Letters of Support as of 0915 3.20.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 17
HB 17 Letter of Opposition as of 0915 3.20.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 17
HB 61 Letters of Opposition as of 0915 3.20.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 61
HB 61 Letters of Support as of 0915 3.20.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 61
HB 61 Letter of Opposition as of 1120 3.21.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 61
HB 17 Letter of Opposition as of 1120 3.21.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 17
HB 61 Letters of Support as of 1120 3.21.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 61
HB 17 Letters of Support as of 1120 3.21.23.pdf HCRA 3/21/2023 8:00:00 AM
HB 17