Legislature(1999 - 2000)
03/01/2000 01:43 PM Senate CRA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 272-MUNICIPAL TAX: LOW INCOME HOUSING
MR. JONATHAN LACK, legislative staff to Representative Halcro,
presented HB 272, and stated until 1998, local governments in the
State were assessing low income housing based on its federally
restricted rental income.
In 1998, the Municipality of Anchorage changed the formula for
assessing these projects, and the formula is now based on the
market value of the units. Because these units have deed
restrictions on the amount of rent charged, the non-profit
organizations who sponsor the units cannot raise rents to
compensate for the increase in property taxes.
The new formula places low income housing units in jeopardy. It
also puts units throughout the State at risk. Banks statewide are
refusing to finance these projects anywhere in the State without a
uniform statewide taxation policy.
The City and Borough of Juneau has tried to change its assessment
policy in the past. The non-profit organizations in Juneau were
successful in the appeal to the local Board of Equalization. Other
western states have exempted low income housing from local property
taxes. HB 272 only requires that the assessor consider rent
restrictions on these properties. HB 272 fills the need for
affordable housing.
SENATOR PHILLIPS stated the Muldoon side of his district has
complaints about treating property owners as a different class. HB
272 creates an unequal situation for property owners.
MR. LACK stated people are questioning what is low income housing,
and what is housing that is qualified for low income tax credits.
There are very few units in Anchorage that qualify for tax credits.
The market is not filling the need for low income housing. That is
why the federal government established the low income housing tax
credit program. The fair way to assess low income housing is based
on what the income of the units are; the income is restricted by
the deed restrictions. The tax credits given for the units are
separated from the ownership, the benefits of the tax credits go to
a different party, not the owner. The tax credits are very minimal
in benefit to the purchaser.
SENATOR MACKIE asked if the Municipality of Anchorage supports HB
272.
MR. LACK stated yes.
SENATOR MACKIE asked if there is other opposition to HB 272.
MR. LACK stated most opposition comes from people who are comparing
units that have low income families renting their properties.
SENATOR MACKIE asked if, once HB 272 is explained to those people,
their view changed.
MR. LACK stated no. They do not want government subsidized
competition.
SENATOR MACKIE asked if the city assessor assesses based on rental
income.
MR. LACK said yes.
SENATOR MACKIE asked if the Municipality of Anchorage was going to
change the formula through an ordinance.
Number 135
MR. LACK stated the State assessor testified the ordinance change
proposed by the assembly was not permissible.
Number 165
SENATOR HOFFMAN asked how often the income of people occupying low
income housing is evaluated.
MR. LACK replied the people qualify to get into low income housing,
but there is no evaluation beyond that.
SENATOR HOFFMAN stated if there were provisions in HB 272 that
required an evaluation, maybe there would not be opposition to HB
272.
Number 188
MR. JOHN BITNEY, legislative liaison for Alaska Housing Finance
Corporation (AHFC), stated support for HB 272. The opposition
comes from people seeing only the benefit of tax credits. Those
people don't see the obligations for the developer who is involved
in these projects.
Annual audits are performed for AHFC to look at qualifications by
income for every tenant within the building, to maintain compliance
with the IRS code for the tax credit to remain valid. The IRS has
no leniency about qualifications for families in low income
housing.
CHAIRMAN KELLY asked if a family's income increases, does that
family have to move out of low income housing units.
MR. BITNEY stated once a family qualifies to move in, the law does
not require eviction if the annual income increases for the family.
Number 243
MR. JEFF JUDD, Executive Director of Anchorage Mutual Housing
Association (AMHA), supports HB 272. AMHA provides healthier
community for all Alaskans, in response to the need for affordable
housing. Non-profit organizations began developing properties to
serve lower income families.
SENATOR MACKIE moved HB 272 with individual recommendations out of
committee. SENATOR PHILLIPS objected. The motion carried with
Senators Mackie, Hoffman, and Kelly voting "Yea," and Senator
Phillips voting "Nay."
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