Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/16/2023 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB77 | |
| Presentation(s): Housing Alaskans - a Public Private Partnership | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 77 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 77-MUNI PROP TAX EXEMPTION/TAX BLIGHTED PROP
1:42:34 PM
CHAIR DUNBAR announced the consideration of SENATE BILL NO. 77
"An Act relating to municipal property tax; and providing for an
effective date."
CHAIR DUNBAR said this is the introductory hearing for SB 77.
The intention is to introduce the bill, followed by the
sectional analysis, invited testimony, committee discussion, and
public testimony.
1:43:39 PM
CHAIR DUNBAR, speaking as the sponsor, introduced SB 77, stating
the bill gives local governments two optional tools to
incentivize economic development. These apply mainly to
residential and commercial housing developments.
CHAIR DUNBAR said that the first tool provides a full property
tax abatement. Currently, local governments can only exempt the
amount above the local school requirement. He said SB 77 removes
this limit, allowing for a full property tax abatement. He
emphasized that it is important to note that this does not
impact the required contribution for schools. Local governments
still need to fund schools and will need to find alternative
funding sources. He said this may cause a short-term increase in
some property taxes but increases the property tax base over the
long term. In Anchorage, for example, a downtown property tax
abatement lasts about 12 years.
CHAIR DUNBAR said that the second tool gives local governments
the option to adopt an ordinance for implementing a "blight
tax." Blighted properties can reduce property tax collection by
decreasing the value of surrounding properties. He said they
also provide a public safety risk, becoming centers of criminal
activity. A "blight tax" increases the property tax on blighted
property until it is remediated, incentivizing owners to
remediate their properties.
CHAIR DUNBAR reiterated that SB 77 does not impose either of
these tools on localities; instead, it changes state law to
allow local governments to use these tools if they choose. Local
governments would adopt their own local ordinances before using
either tool, particularly in the case of blighted property. He
said that local governments must set out a framework defining a
blighted property.
CHAIR DUNBAR completed the introduction of the bill. He invited
Ms. Salanguit to present the sectional analysis for SB 77.
1:45:34 PM
ALLIANA SALANGUIT, Staff, Senator Forrest Dunbar, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for SB 77 on behalf of the sponsor.
[Original punctuation provided.]
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.
MS. SALANGUIT said that Section 1 does not remove the
municipality's obligation to fund the required local
contribution.
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;
• 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;
• 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. They must also fulfill the terms of the
pan.
Municipalities may designate the tax revenue to be
used for community redevelopment purposes.
Primary residences are exempt from this section.
MS. SALANGUIT said that Sections 1 and 2 use "may" instead of
"shall" so the tools to incentivize economic development are
optional, not required.
Section 3: Provides for an immediate effective date
after enactment per AS 01.10.070(c).
1:47:37 PM
SENATOR GRAY-JACKSON sought clarification that, currently, the
exemption applies only to service areas.
CHAIR DUNBAR asked her to expound on "service areas."
SENATOR GRAY-JACKSON sought verification that SB 77 proposes
exemptions for all service areas and school districts.
CHAIR DUNBAR replied yes, if localities decide to do that, they
would have the ability. He moved down the agenda to invited
testimony. He asked Mr. Robbins to put himself on the record and
begin his testimony.
1:48:51 PM
MIKE ROBBINS, Executive Director, Anchorage Community
Development Authority (ACDA), Anchorage, Alaska, provided
invited testimony on SB 77, stating this bill would stimulate
economic and housing development around the state. Many places
across the state suffer from serious housing shortages. Multiple
factors contribute to this, and while the state cannot affect
some, it can and should influence others. This is why SB 77 is
important. He said that one of the biggest challenges facing
builders is the gap between construction costs and the expected
returns for multi-family housing. SB 77 allows cities to offer a
full tax abatement to help bridge that gap. He stated that the
law already allows a 100 percent abatement for redevelopment of
deteriorated property, noting it seems equitable to offer the
same incentive for new construction.
MR. ROBBINS said the "blight tax" is a much-needed tool to
protect property values, clean up neighborhoods, and encourage
redevelopment. The blighted property section of SB 77 gives
cities the opportunity to enact a tax on blighted properties to
encourage neighborhood development.
MR. ROBBINS said this bill appears to have no financial
consequences to the state budget and should not negatively
affect education. As property taxes increase through
development, so will revenue for education funding. It is a
multiple win for multiple sectors of the economy, including
jobs, housing, tax creation, and construction. SB 77 makes
housing affordable for young people, which is one way to prevent
population decline in Alaska.
1:51:50 PM
BILL POPP, President and Chief Executive Office, Anchorage
Economic Development Corporation (AEDC), Anchorage, Alaska,
provided invited testimony on SB 77. He stated this bill would
provide the Municipality of Anchorage and other communities with
the ability to develop strategic initiatives to attract new
investments from outside Alaska through housing development.
Data shows that businesses prioritize stability and availability
of workforce when deciding to invest in an area. He said Alaska
is reaching a demographic tipping point; population trends
demonstrate a decline in the available workforce in the coming
decades. This will become a critical issue for businesses
seeking new investment opportunities nationwide. A key piece in
attracting and retaining workers is housing availability. SB 77
could be an important tool for multi-family development in
Anchorage, particularly for vertical construction, given the
diminishing availability of buildable land that does not require
significant redevelopment costs. He said AEDC hopes that the
legislature and the governor pass SB 77 into law so communities
can get to work developing their variations of this new
legislation.
1:54:15 PM
At ease.
1:54:32 PM
CHAIR DUNBAR reconvened the meeting and invited Mr. Andreassen
to share his perspective on SB 77.
1:54:47 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League
(AML), Juneau, Alaska, provided invited testimony, stating that
fundamentally SB 77 is a "tools in the toolbox" bill. It gives
local governments the ability to do good things in their
communities related to community and economic development. AML
is supportive of both aspects of the bill:
- the abatement exemption, which AML recognizes increases
property values over time with increased early investment; and
- the blighted properties incentive program.
MR. ANDREASSEN commented on the blighted properties portion of
SB 77. He said blighted properties produce property tax
collections by devaluing neighboring properties. "Blight tax" is
shorthand for a tax incentive program that encourages community
redevelopment. It is not currently an option for municipalities
as no provisions in Alaska Statutes allow it. This legislation
aims to allow municipalities to levy an additional property tax
on blighted properties. He said that the bill helps communities
by encouraging property owners to redevelop their properties or
sell them to new owners who will. SB 77 enables vacant or
underutilized properties to be used for more productive purposes
and, ultimately, increases the value of the property and
surrounding properties with positive effects that reverberate
throughout the community. He said AML looks forward to
contributing its perspective throughout the legislative process
and supports SB 77 as currently drafted.
1:56:51 PM
SENATOR OLSON asked how much SB 77 will affect communities other
than Anchorage.
MR. ANDREASSEN answered that this bill focuses on communities
with a property tax. It is self-limiting to some extent because
most local governments have a sales tax instead of a property
tax. More populated communities use property tax as the revenue
base, so SB 77 could benefit the majority of Alaskans in some
way. However, in terms of the total number of communities, the
bill affects a smaller footprint.
SENATOR OLSON sought verification that the bill applies mainly
to first-class cities.
MR. ANDREASSEN answered that it is not necessarily attributable
to class, but yes, home rule, first-class, and unified are the
main local governments with property taxes. He commented that he
could not think of any second-class cities with property taxes.
CHAIR DUNBAR thanked Mr. Andreassen for his testimony and
permitted him to clarify a statement.
MR. ANDREASSEN clarified that second-class boroughs have a
property tax, but second-class cities do not have a property
tax.
1:59:00 PM
CHAIR DUNBAR opened public testimony on SB 77.
1:59:34 PM
CHRIS SCHUTTE, representing self, Anchorage, Alaska, stated that
he is a private economic and development consultant based in
Anchorage, testifying in support of SB 77. The bill makes
critical statutory changes that empower local jurisdictions to
encourage new jobs, new local taxes, and long-term economic
benefits for their communities. He supports the property tax
abatement tools that create incentives and the property tax that
deals with blighted properties.
MR. SCHUTTE discussed the proposed tax abatement changes to AS
29.45.050(m). He explained that before 2017, property tax
abatement tools encouraging economic or community development
were limited and rarely used. Changes to the law improved
incrementally but did not fully achieve their aim. He said SB 77
is the right statutory fix. He thanked the sponsor for the bill.
2:02:38 PM
CHAIR DUNBAR closed public testimony and held SB 77 in
committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 1. SB 77 - Sponsor Statement vers. A.pdf |
HCRA 4/13/2023 8:00:00 AM SCRA 3/16/2023 1:30:00 PM |
SB 77 |
| 2. SB 77 vers. A.PDF |
HCRA 4/13/2023 8:00:00 AM SCRA 3/16/2023 1:30:00 PM |
SB 77 |
| 3. SB 77 - Sectional Analysis vers. A.pdf |
HCRA 4/13/2023 8:00:00 AM SCRA 3/16/2023 1:30:00 PM |
SB 77 |
| 4. SB 77 - LOS through 3.14.2023.pdf |
SCRA 3/16/2023 1:30:00 PM |
SB 77 |
| 5. SB 77 - Supporting Doc.; Agnew Beck Memo.pdf |
HCRA 4/13/2023 8:00:00 AM SCRA 3/16/2023 1:30:00 PM |
SB 77 |
| 6. SB 77 - FN; DCCED-DCRA.pdf |
SCRA 3/16/2023 1:30:00 PM |
SB 77 |
| Housing Alaskans Presentation, SCRA, 3.16.2023 - PDF.pdf |
SCRA 3/16/2023 1:30:00 PM |
|
| Alaskas Housing Challenges - HAPP, 3.16.23.pdf |
SCRA 3/16/2023 1:30:00 PM |