Legislature(1999 - 2000)

04/07/2000 09:09 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HOUSE BILL NO. 272                                                                                                              
"An Act relating to the tax assessment by a home rule                                                                           
or general law municipality of housing that qualifies                                                                           
for the low-income housing credit under the Internal                                                                            
Revenue Code; and providing for an effective date."                                                                             
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill in the Senate                                                                          
Finance Committee.                                                                                                              
                                                                                                                                
JONATHAN LACK, staff to Representative Andrew Halcro,                                                                           
testified that this bill would set into law, a formula for                                                                      
accessing federally qualified low-income housing. He shared                                                                     
that until 1998, local governments throughout the State Of                                                                      
Alaska were assessing low-income housing based on a                                                                             
federally restricted rental income, taking into                                                                                 
consideration deed restrictions and other covenants on the                                                                      
properties that are required by the federal government. In                                                                      
1998, he continued, the Municipality of Anchorage changed                                                                       
its formula for accessing its low-income housing. He stated                                                                     
the formula is now based on the market value of these units                                                                     
without consideration of deed restrictions.                                                                                     
                                                                                                                                
Mr. Lack remarked that unfortunately, because these units                                                                       
have deed restrictions on the amount of rent that can be                                                                        
charged, the non-profit organizations that sponsor these                                                                        
housing units, couldn't raise rents to compensate for these                                                                     
increased property taxes. In some cases, he shared; the                                                                         
increase in property taxes through the difference in                                                                            
assessment methods has been over 100 percent.                                                                                   
                                                                                                                                
Mr. Lack stated that this bill places these low-income                                                                          
housing units in jeopardy and places all units throughout                                                                       
Alaska at risk. He explained that banks are refusing to                                                                         
finance these projects anywhere in the state without a                                                                          
uniform taxation policy. Additionally, he said, the City                                                                        
and Borough of Juneau has tried to change its taxation                                                                          
policy in the past, but fortunately, the non-profit                                                                             
organizations were successful in their appeals to the local                                                                     
boards of equalization.                                                                                                         
                                                                                                                                
Mr. Lack asserted that the bill follows the standards                                                                           
approved by the "uniform standards of special appraisal                                                                         
practices". He stated all Alaskan communities are affected                                                                      
by the Municipality of Anchorage policy; Anchorage is the                                                                       
only city affected by this legislation because other                                                                            
communities properly assess their qualified low-income                                                                          
housing.                                                                                                                        
                                                                                                                                
Mr. Lack stressed the need to support low-income housing in                                                                     
Alaska, saying that most rental housing in the state was                                                                        
constructed during the pipeline days and targets single                                                                         
adults. Today, he said there are more small families                                                                            
looking for housing due to low-paying service industry jobs                                                                     
that are replacing higher paying oil industry jobs.                                                                             
                                                                                                                                
Mr. Lack relayed that other states, including Washington,                                                                       
Oregon, California and Hawaii, have exempted low income                                                                         
housing from all property taxes. HB 272 does not go that                                                                        
far, he stated. Instead, he said it only requires the                                                                           
assessor take into consideration, the rent restrictions                                                                         
that are on these properties. He added that this bill fills                                                                     
the need for affordable housing.                                                                                                
                                                                                                                                
ROBIN GILCRIST, President, Housing First, testified in                                                                          
Juneau in support of the bill. She described the Juneau-                                                                        
based non-profit housing development organization and the                                                                       
need for the organization to annually appeal its                                                                                
assessment. She stated that the assessment is based on a                                                                        
market-value system rather than a rent restricted system.                                                                       
                                                                                                                                
DAN FAUSKE, CEO/Executive Director, Alaska Housing Finance                                                                      
Corporation, testified in Juneau in support on bill and the                                                                     
concept behind it. He thought this legislation would help                                                                       
"level the playing field." He talked about the                                                                                  
corporation's low-income housing investments of                                                                                 
approximately $58 million statewide. He said this bill                                                                          
would be a tool to use as the federal government is moving                                                                      
away from public housing and toward more "Section 8" rent                                                                       
subsidies.                                                                                                                      
                                                                                                                                
Senator Donley wanted to know the public policy                                                                                 
ramifications. He gave a situation of a low-income family                                                                       
in Anchorage that saved to buy or built a house, using AHFC                                                                     
funding and is now paying a higher mortgage rate than those                                                                     
living in rural areas.                                                                                                          
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #80, Side A    10:44 AM                                                                                          
                                                                                                                                
                                                                                                                                
Senator Donley commented on how this bill will require low-                                                                     
income homeowners to now subsidize the renters' portion of                                                                      
public services. He noted that some low-income renter have                                                                      
higher incomes than the homeowners do.                                                                                          
                                                                                                                                
Mr. Fauske replied that this housing would not have been                                                                        
built without some kind of "layered financing." He stressed                                                                     
that building these low-income units brings in more tax                                                                         
base, which eases the burden on the existing taxpayers                                                                          
because there is more property to be assessed.                                                                                  
                                                                                                                                
Senator Donley asked if those low-income residents wouldn't                                                                     
have to live somewhere.                                                                                                         
                                                                                                                                
Mr. Fauske referenced a study done by the military at                                                                           
Elmondorf Air Force Base, that found the number of low-                                                                         
income units unacceptable. While he was not critical of                                                                         
private landlords, he stated that without the input of new                                                                      
stock, the state finds itself in a situation where demand                                                                       
exceeds supply. He said this results in a lower quality of                                                                      
units. He spoke of the large waiting list for the Section 8                                                                     
program and the extensive work developers and financiers                                                                        
must go through to build low-income housing.                                                                                    
                                                                                                                                
Co-Chair Torgerson announced this bill would be brought up                                                                      
at a future Committee meeting for more public testimony.                                                                        
                                                                                                                                
DAVID GUNDACKER SR testified via teleconference from                                                                            
Anchorage that he is a retired disabled veteran living in                                                                       
low-income rental housing. His biggest concern was that                                                                         
banks would no longer finance housing units such as where                                                                       
he lived if there were no tax break. He stressed this would                                                                     
devastating for people like himself.                                                                                            
                                                                                                                                
Senator Leman clarified that the bill would have just the                                                                       
opposite affect of what the witness stated.                                                                                     
                                                                                                                                
MIKE BURNS testified via teleconference from Anchorage to                                                                       
defer his time to the next testifier.                                                                                           
                                                                                                                                
DAVID LAWER, President, Alaska Bankers Association,                                                                             
testified via teleconference from Anchorage in support of                                                                       
HB 272. He referenced written testimony submitted by and                                                                        
representatives from Alaskan banks. [Copies on file.]                                                                           
                                                                                                                                
JAN SIEBERTS testified via teleconference from Anchorage                                                                        
stating that Mr. Lawer spoke on his behalf.                                                                                     
                                                                                                                                
HUBERT GELLERT, Private Landlord, Former Chair, Board of                                                                        
Equalization, Municipality of Anchorage, testified via                                                                          
teleconference from Anchorage that he is currently                                                                              
developing low-income housing units in Girdwood. He                                                                             
supports the legislation. He challenged the appraisal                                                                           
process in Anchorage, giving details of its faults.                                                                             
                                                                                                                                
MATT REAMS, resident of Spruce View low income housing                                                                          
area, testified via teleconference from Anchorage                                                                               
qualifying that he did not understand the legislative                                                                           
process but did not want increased taxes that would hamper                                                                      
the development of low income housing.                                                                                          
                                                                                                                                
WILEY BROOKS, Property Manager, testified via                                                                                   
teleconference from Anchorage that he was not opposed to                                                                        
affordable housing but he did not like special interest                                                                         
legislation. He said no one was representing the small                                                                          
property owners. He referenced written testimony. [Copy on                                                                      
file.]                                                                                                                          
                                                                                                                                
JEFF JUDD, Executive Director, Anchorage Mutual Housing                                                                         
Association testified in Juneau about quality affordable                                                                        
housing. His organization was in support of the bill. He                                                                        
asserted that affordable housing was in a crisis situation.                                                                     
                                                                                                                                
Co-Chair Torgerson ordered the bill HELD in Committee.                                                                          
ADJOURNED                                                                                                                       
                                                                                                                                
Senator Torgerson adjourned the meeting at 11:04 AM.                                                                            
SFC-00 (22) 04/07/00                                                                                                            

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