Legislature(2023 - 2024)ADAMS 519
05/05/2023 01:30 PM House FINANCE
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Audio | Topic |
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Start | |
HB154 | |
SB81 | |
SB77 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 154 | TELECONFERENCED | |
+ | SB 81 | TELECONFERENCED | |
+ | SB 77 | TELECONFERENCED | |
+ | 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.