Legislature(2023 - 2024)ADAMS 519

05/05/2023 01:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed Until 2:15PM --
+ HB 154 AK HOUSING FINANCE CORP: SUSTAIN ENERGY TELECONFERENCED
Heard & Held
+ SB 81 OFFICE VICTIMS' RIGHTS: COMP, APPTMT TELECONFERENCED
Heard & Held
+ SB 77 MUNI PROP TAX EXEMPTION/TAX BLIGHTED PROP TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 77                                                                                                            
                                                                                                                                
     "An  Act  relating  to   municipal  property  tax;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
3:24:49 PM                                                                                                                    
                                                                                                                                
SENATOR FORREST DUNBAR, SPONSOR, introduced SB 77. He read                                                                      
from prepared remarks.                                                                                                          
                                                                                                                                
     Thank you,  all. SB 77 is  the companion bill to  HB 84                                                                    
     by Rep. Sumner                                                                                                             
                                                                                                                                
     SB  77 gives  local governments  two optional  tools to                                                                    
     incentivize      economic      developmentparticularly                                                                     
     residential/commercial housing developments.                                                                               
                                                                                                                                
     First,  it allows  for a  full  property tax  exemption                                                                    
     instead of  limiting that exemption to  the value above                                                                    
     a property's local minimum school contribution.                                                                            
                                                                                                                                
     However, local  governments will  STILL be  required to                                                                    
     meet their  minimum local  contribution, meaning  SB 77                                                                    
     will not have an impact on total school funding.                                                                           
                                                                                                                                
     The second  tool gives local governments  the option to                                                                    
     adopt an ordinance for implementing a blight tax.                                                                          
                                                                                                                                
     This is  a conditional increase,  capped at 50%  of the                                                                    
     property's annual  assessed property tax,  on abandoned                                                                    
     and  dilapidated  commercial  properties  that  pose  a                                                                    
     threat to public safety and welfare.                                                                                       
                                                                                                                                
     Primary  residences  of  property owners  are  exempted                                                                    
     from being designated as blighted.                                                                                         
                                                                                                                                
     The blight tax may be  removed once the property begins                                                                    
     remediation  or  redevelopment.  It  also  may  NOT  be                                                                    
     applied to primary residences.                                                                                             
                                                                                                                                
Senator Dunbar  stressed that the  tools were  optional, and                                                                    
it  a local  government  did  not levy  a  property tax  the                                                                    
provisions   were   not    applicable.   Additionally,   the                                                                    
definition of "blighted" was added to the bill.                                                                                 
                                                                                                                                
     All  session, many  of us  have heard  about the  unmet                                                                    
     demand  for  new  housing  and  the  growing  need  for                                                                    
     economic   development.   SB   77   will   help   local                                                                    
     governments work towards these goals.                                                                                      
                                                                                                                                
Senator Dunbar concluded that the fiscal note was zero and                                                                      
there was no cost to state governments.                                                                                         
                                                                                                                                
3:27:19 PM                                                                                                                    
                                                                                                                                
ALLIANA    SALANGUIT,    STAFF,   SENATOR    DUNBAR,    (via                                                                    
teleconference), read the sectional analysis of the bill.                                                                       
                                                                                                                                
     Section 1: Amends AS  29.45.050 Optional exemptions and                                                                    
     exclusions  to   allow  municipalities   to  completely                                                                    
     exempt  property  taxes  for  an  economic  development                                                                    
     property. Currently,  only the amount above  the school                                                                    
     district's   local   required   contribution   may   be                                                                    
     exempted.                                                                                                                  
                                                                                                                                
     Section 2: Adds a new  section AS 29.45.057 Levy of tax                                                                    
     on  blighted  property  that allows  municipalities  to                                                                    
     adopt  an  ordinance  establishing a  blight  tax.  The                                                                    
     ordinance must include the following:                                                                                      
     Standards for  determining if  a property  is blighted.                                                                    
     The standards must include that  the property meets one                                                                    
     or more of the following criteria.                                                                                         
                                                                                                                                
     The property: Endangers public health and safety.                                                                          
                                                                                                                                
     Is a  public nuisance under a  local housing, building,                                                                    
    plumbing, fire, or other related code or ordinance;                                                                         
                                                                                                                                
     Has  been vacant  for no  less than  a year;  o Is  the                                                                    
     subject or  center of repeated illegal  activity due to                                                                    
     its unsecured, vacant, or deteriorated state; or                                                                           
                                                                                                                                
     Is  open to  the elements,  unfit for  occupancy, or  a                                                                    
     fire hazard; A procedure  for designating a property as                                                                    
     blighted, notifying  the property owner,  and providing                                                                    
     the property owner an opportunity to appeal;                                                                               
                                                                                                                                
     A  tax rate  for  the blighted  property  that may  not                                                                    
     exceed 50% of  the annual property tax  assessed on the                                                                    
     property;                                                                                                                  
                                                                                                                                
     Standards for remediating  or redeveloping the property                                                                    
     so it will no longer be considered blighted;                                                                               
                                                                                                                                
     A duration of time and  reduced tax rate for remediated                                                                    
     properties. To  qualify for the  reduced tax  rate, the                                                                    
     property  owner must  have a  plan  for remediating  or                                                                    
     redeveloping the property submitted  to and approved by                                                                    
     the municipality.  The blight  tax may be  removed once                                                                    
     they  began the  remediation  or redevelopment  process                                                                    
     and  follow  the   approved  plan.  Municipalities  may                                                                    
     designate  the tax  revenue to  be  used for  community                                                                    
     redevelopment purposes.  Primary residences  are exempt                                                                    
     from  this section.  Section 3:  Allows  home rule  and                                                                    
     first-class  cities inside  boroughs to  levy a  blight                                                                    
     tax.  Section 4:  Provides for  an immediate  effective                                                                    
     date after enactment per AS 01.10.070(c).                                                                                  
                                                                                                                                
3:29:49 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  asked whether  the blighted  definition was                                                                    
contained  in   the  House   companion  bill   sponsored  by                                                                    
Representative Jessee  Sumner, HB  84-Exemption/Tax Blighted                                                                    
Prop. Senator Dunbar replied in the affirmative.                                                                                
                                                                                                                                
3:30:08 PM                                                                                                                    
                                                                                                                                
Representative Hannan  asked if  the definition  of blighted                                                                    
property was on page 2, subsection  2 of the bill and if the                                                                    
word    standards    was   used   interchangeably   in   the                                                                    
definition. Senator Dunbar responded  in the affirmative. He                                                                    
explained that the definition was  not a separate section in                                                                    
the bill, but  the blighted definition was  in the standards                                                                    
section  on page  2, line  12 of  the legislation.  He noted                                                                    
that  a  municipality  could  choose  not  to  use  all  the                                                                    
standards;  the  standards  were  optional.  A  municipality                                                                    
could use  one or  two of  the standards,  none, or  all. He                                                                    
noted that  the Alaska Municipal  League (AML) did  not want                                                                    
to  include  any  standards  in   order  to  maintain  local                                                                    
control.  He generally  supported  local  control but  there                                                                    
were legislators  who wanted to  put some parameters  on how                                                                    
far a local government could act.                                                                                               
                                                                                                                                
Representative   Hannan  referred   to   the  standards   in                                                                    
subsection 2 and  noted that a local government  only had to                                                                    
meet  one  of  the  standards  for  determining  a  blighted                                                                    
property.  She asked if  the standards were all contained in                                                                    
subsections (a)  through (e). Senator Dunbar  responded that                                                                    
there  was a  drafting  error, and  he was  going  to ask  a                                                                    
member  of the  committee  to amend  it.  He explained  that                                                                    
subsections (e)  and (C)  were intended  to be  one section.                                                                    
He thanked her for spotting the error.                                                                                          
                                                                                                                                
3:33:17 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster                                                                                                                 
                                                                                                                                
Senator Dunbar offered  a practical example on  the types of                                                                    
situations  that  might  occur.   He  recounted  that  local                                                                    
governments were  restricted in  the kind of  property taxes                                                                    
and  policies it  could  implement.  The Anchorage  Assembly                                                                    
adopted a  12-year property  tax abatement  for construction                                                                    
of residential  property in the downtown  Overlake district.                                                                    
He detailed that there were  projects that went forward that                                                                    
would  not have  been  able  to go  forward  without it.  In                                                                    
regard  to the  blight tax,  there was  a large  building in                                                                    
Midtown Anchorage  that sat  vacant for  more than  a decade                                                                    
and caused  significant consternation.  The owners  were out                                                                    
of state  and had  been unwilling  to demolish  the building                                                                    
until  recently. The  blight tax  would have  been one  tool                                                                    
used to  convince the owners  to remediate the  property. He                                                                    
emphasized  that   the  tax  was   not  intended   to  raise                                                                    
significant property  tax for local government,  but to spur                                                                    
remediation for  vacant and potentially  dangerous buildings                                                                    
in communities.                                                                                                                 
                                                                                                                                
Co-Chair  Foster  reviewed  the  agenda  for  the  following                                                                    
committee meeting.                                                                                                              
                                                                                                                                
SB  77  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB154 Sectional Analysis ver S 04.24.23.pdf HFIN 5/5/2023 1:30:00 PM
HB 154
HB154 Transmittal Letter 04.24.23.pdf HFIN 5/5/2023 1:30:00 PM
HB 154
HB154 Summary of Changes ver A to ver S 04.24.23.pdf HFIN 5/5/2023 1:30:00 PM
HB 154
SB 81 Letter of Support from OVR 04.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 81
SB 81 Sectional Analysis Version B.A 04.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 81
SB 81 Sponsor Statement Version B.A 04.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 81
SB 81 Summary of Changes from Version B to Version B.A 04.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 81
SB 81 Support Document - Excerpt from 08.18.22 Leg Council Minutes 04.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 81
1. SB 77 Sponsor Statement, vers. D, 4.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 77
3. SB 77 Summary of Changes, vers. A-D, 4.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 77
4. SB 77 Sectional Analysis, vers. D, 4.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 77
5. SB 77 Supporting Doc.; Agnew Beck Memo, 4.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 77
6. SB 77 Letters of Support Received as of 4.25.23.pdf HFIN 5/5/2023 1:30:00 PM
SB 77
HB 154 NEW FN DCCED AEA 4-28-23.pdf HFIN 5/5/2023 1:30:00 PM
HB 154
HB 154 HFIN.AHFC-AEA-Presentation 050523.pdf HFIN 5/5/2023 1:30:00 PM
HB 154
HB 154 Public Testimony Rec'd by 050923.pdf HFIN 5/5/2023 1:30:00 PM
HB 154
HB 154 Public Testimony Rec'd by 051123 (2).pdf HFIN 5/5/2023 1:30:00 PM
HB 154