Legislature(1999 - 2000)

02/25/1999 01:38 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         SENATE LABOR AND COMMERCE COMMITTEE                                                                                    
                  February 25, 1999                                                                                             
                      1:38 P.M.                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Jerry Mackie, Chairman                                                                                                  
Senator Tim Kelly, Vice Chairman                                                                                                
Senator Dave Donley                                                                                                             
Senator Loren Leman                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 29                                                                                                              
"An Act relating to licensure of physicians; and providing for an                                                               
effective date."                                                                                                                
                                                                                                                                
     -MOVED CSSB 29(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 54                                                                                                              
"An Act relating to an exemption from and deferral of payment on                                                                
municipal taxes on deteriorated property; and providing for an                                                                  
effective date."                                                                                                                
                                                                                                                                
     -MOVED CSSB 54(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 29 - See Labor & Commerce Committee minutes dated 2/11/99.                                                                   
                                                                                                                                
SB 54 - See Labor and Commerce minutes dated 2/11/99.                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Mr. Mark Hodgins, Staff                                                                                                         
Senator Jerry Ward                                                                                                              
State Capitol Bldg.                                                                                                             
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT: Commented on SB 29 for sponsor.                                                                             
                                                                                                                                
Ms. Catherine Reardon, Director                                                                                                 
Division of Occupational Licensing                                                                                              
Department of Commerce and Economic Development                                                                                 
P.O. Box 110806                                                                                                                 
Juneau, AK 99811-0806                                                                                                           
POSITION STATEMENT: Supported SB 29.                                                                                            
                                                                                                                                
Mr. Doug Salik, Staff                                                                                                           
Senator Tim Kelly                                                                                                               
State Capitol Bldg.                                                                                                             
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT: Commented on SB 54 for the sponsor.                                                                         
                                                                                                                                
Mr. Mark Marlow                                                                                                                 
2600 Railroad Dr.                                                                                                               
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Supported SB 54.                                                                                            
                                                                                                                                
Mr. Steven Van Sant, State Assessor                                                                                             
Department of Community and Regional Affairs                                                                                    
333 W 4th, Ste 220                                                                                                              
Anchorage, Ak 99501                                                                                                             
POSITION STATEMENT: Commented on SB 54.                                                                                         
                                                                                                                                
Mr. Charles Wohlforth, Member                                                                                                   
Anchorage Assembly                                                                                                              
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Supported SB 54.                                                                                            
                                                                                                                                
Mr. Pat Carlson, Borough Assessor                                                                                               
Kodiak Island Borough                                                                                                           
710 Mill Bay Rd.                                                                                                                
Kodiak, AK 99615                                                                                                                
POSITION STATEMENT: Supported SB 54.                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-5, SIDE A                                                                                                               
                                                                                                                                
Number 001                                                                                                                      
                                                                                                                                
           SB 29-REQUIREMENTS FOR PHYSICIAN'S LICENSE                                                                           
                                                                                                                                
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee                                                                  
meeting to order at 2:38 p.m. and announced SB 29 to be up for                                                                  
consideration.                                                                                                                  
                                                                                                                                
MR. MARK HODGINS, staff to Senator Ward, sponsor of SB 29, said at                                                              
the end of the last meeting there was some opposition concerning                                                                
the time period for training American physicians.  So, he took out                                                              
references to American and Canadian physicians' training and kept                                                               
the requirements for foreign physicians.  The Medical Board                                                                     
continues to support this change.                                                                                               
                                                                                                                                
SENATOR LEMAN moved to adopt Lauterbach draft LS0270\H, dated                                                                   
2/11/99.  There were no objections and it was so ordered.                                                                       
                                                                                                                                
MR. HODGINS explained that the CS changes the requirements for                                                                  
foreign physicians to practice in the State of Alaska.  It requires                                                             
a three-year term that can be  either an internship, a residency,                                                               
or to satisfactory performance of the duties and functions of an                                                                
intern/resident. A candidate must submit documentation to the                                                                   
program which has to be approved by the American Board of Medical                                                               
Specialists.  One other change is the citizen language, "citizen of                                                             
the United States or lawfully residing in the United States" and                                                                
the deletion of the phrase,  "admitted for permanent residence".                                                                
                                                                                                                                
SENATOR MACKIE asked if this change was one of the three things the                                                             
committee was originally trying to accomplish.                                                                                  
                                                                                                                                
MR. HODGINS answered yes, this is one of the suggestions from the                                                               
Medical Board.  There was a lot of opposition to this bill, because                                                             
the Board had not educated people.  Therefore, they removed the                                                                 
more controversial portions.  Basically, he repeated, CSSB 29                                                                   
increases the time limit from one year to three years for a foreign                                                             
applicant to satisfactorily perform the duties of resident                                                                      
physician or intern at a recognized hospital.  The time increase is                                                             
because of a variety of different foreign curriculums across the                                                                
world.  Three years gives the Medical Board a good feeling that the                                                             
doctor has learned what is adequate for residents of the State of                                                               
Alaska.                                                                                                                         
                                                                                                                                
CHAIRMAN MACKIE asked if there was currently a shortage of locally                                                              
trained doctors and if there was a need for foreign doctors now.                                                                
                                                                                                                                
MR. HODGINS replied that there is a need for certain specialists,                                                               
not necessarily general practitioners.  The Medical Board supports                                                              
this.                                                                                                                           
                                                                                                                                
CHAIRMAN MACKIE asked if other states allow the same thing.                                                                     
                                                                                                                                
MR. HODGINS replied in other states licensure of immigrating                                                                    
doctors requires from one year to three years.  A majority of                                                                   
states require two years and above.  Alaska would be requiring the                                                              
most time.  Nine states require one year, 16 states require two                                                                 
years, and 29 states require three years.                                                                                       
                                                                                                                                
CHAIRMAN MACKIE asked if we are the only state that doesn't allow                                                               
licensure of foreign doctors right now.                                                                                         
                                                                                                                                
MR. HODGINS replied that all states allow foreign doctors; only the                                                             
residency requirements differ.                                                                                                  
                                                                                                                                
CHAIRMAN MACKIE asked if this bill does more than make the                                                                      
requirements more stringent.                                                                                                    
                                                                                                                                
MR. HODGINS said that's all it does and added that it corresponds                                                               
with the Immigration Act of 1996 which changes the classification                                                               
of visa to H1B visa, a three year requirement.                                                                                  
                                                                                                                                
SENATOR LEMAN asked what other states do for non-foreign medical                                                                
graduates regarding citizenship.  Currently, you must be a citizen                                                              
of the U.S. or be admitted for permanent residence.  The proposal                                                               
is to change that to "being a citizen" or to be "lawfully                                                                       
residing."                                                                                                                      
                                                                                                                                
MR. HODGINS responded that to be lawfully residing a person must                                                                
possess a H1B visa which he thought would bring us into conformance                                                             
with federal law and with what other states are doing.                                                                          
                                                                                                                                
SENATOR LEMAN questioned the requirements in sections 1 and 2 for                                                               
non-foreign and foreign medical graduates which don't have                                                                      
corresponding provisions for citizenship.                                                                                       
                                                                                                                                
MR. HODGINS explained that language on page 2, line 9, Section 1,                                                               
paragraph 5, "be a citizen of the United States or lawfully                                                                     
residing in the United States" covers the immigration status.                                                                   
                                                                                                                                
MS. CATHERINE REARDON, Director, Division of Occupational                                                                       
Licensing, said the division provides staff support to the Medical                                                              
Board and supports the changes in the most recent committee                                                                     
substitute.  She said there are two separate issues: can you get a                                                              
license if you don't have a green card, but you do have another                                                                 
visa you would be working under in the United States; and, if you                                                               
went to school outside the country, regardless of your citizenship                                                              
status, should you be required to have additional years of training                                                             
in the U.S.  She believed the State would not be out of compliance                                                              
with any federal law by leaving things as they are, but the Medical                                                             
Board and the department support changing them for public policy                                                                
reasons.                                                                                                                        
                                                                                                                                
MS. REARDON believed there are no other states requiring U.S.                                                                   
citizenship for a medical license.  One other Alaska licensing                                                                  
program requires U.S. citizenship, marine pilotage, which also                                                                  
requires a U.S. Coast Guard license requiring citizenship.                                                                      
Ideally, the State would like to remove the issue from the statute                                                              
altogether, but if it remains in law, it is an improvement to say                                                               
"or lawfully resides."  There are doctors in Alaska right now                                                                   
working for the federal government and they don't need a state                                                                  
license although they can't work outside of their federal jobs or                                                               
switch jobs.  While there is not a large number of these doctors,                                                               
she suspected this is what created the issue.  The Board did not                                                                
expect this to be a very controversial topic, so it did not                                                                     
highlight it in their January newsletter.  The Board did, however,                                                              
ask for changes in training requirements.                                                                                       
                                                                                                                                
MS. REARDON said that the Department of Law also suggested that,                                                                
when things like this have been contested in other states, the                                                                  
courts ruled the federal government, not the state government                                                                   
should  determine who can work.                                                                                                 
                                                                                                                                
The issue of training foreign medical graduates is a separate                                                                   
topic, because some of them could be U.S. citizens.  They could be                                                              
Americans who intentionally went outside the U.S. to get their                                                                  
medical training.  The Board's figures indicate 43 other states                                                                 
require three years of training.                                                                                                
                                                                                                                                
MS. REARDON said initially, the Board thought there wasn't much                                                                 
concern about this issue because of the poor response to the                                                                    
newsletter.  Now they are more aware of the issue and working on                                                                
it.                                                                                                                             
                                                                                                                                
SENATOR LEMAN moved to pass CSSB29(L&C) with the accompanying zero                                                              
fiscal note from committee with individual recommendations.  There                                                              
were no objections and it was so ordered.                                                                                       
                                                                                                                                
         SB 54-MUNICIPAL TAXES ON DETERIORATED PROPERTY                                                                         
                                                                                                                                
CHAIRMAN MACKIE announced SB 54 to be up for consideration.                                                                     
                                                                                                                                
SENATOR TIM KELLY, sponsor, noted that the companion bill to SB 54                                                              
moved out of the House State Affairs committee this morning with                                                                
some amendment language that he was proposing for this bill.                                                                    
                                                                                                                                
MR. DOUG SALIK, staff to Senator Tim Kelly, explained that the                                                                  
first amendment on page l, line 13 is a verbiage correction. It                                                                 
deletes "only" and replaces it with "any".  Page 1, line 14, to                                                                 
delete "attributable to that part" and page 2, line 1, to delete                                                                
"and the deferral attributed to that part ends" go together.  Mr.                                                               
Van Sant and Mr. Pat Carlson, both state assessors, made those                                                                  
suggestions.                                                                                                                    
                                                                                                                                
SENATOR KELLY moved to adopt amendment #1.  There were no                                                                       
objections and it was so ordered.                                                                                               
                                                                                                                                
MR. SALIK said he believed there were other concerns about the                                                                  
bill, but he would let Mr. Marlow address them.                                                                                 
                                                                                                                                
Number 311                                                                                                                      
                                                                                                                                
MR. MARK MARLOW, Alaskan electrician, supported SB 54.  He                                                                      
presented the committee with a rendering of the building utilizing                                                              
this law.  He said permit fees had been paid this past Monday and                                                               
he hoped they could start work this summer.                                                                                     
                                                                                                                                
MR. MARLOW said the McKay building isn't the only building that                                                                 
would use this law, but it has served the purpose in other states,                                                              
especially in the older parts of the country. As older buildings                                                                
become obsolete and dysfunctional, this law could be used to                                                                    
provide incentive to revitalize an area or building so that it is                                                               
useful and producing taxes, and not causing a blight on the                                                                     
community.                                                                                                                      
                                                                                                                                
CHAIRMAN MACKIE asked what relationship Mr. Marlow had to the                                                                   
project.                                                                                                                        
                                                                                                                                
MR. MARLOW answered that he is redeveloping the building as an                                                                  
apartment house.                                                                                                                
                                                                                                                                
SENATOR KELLY asked if the building was going to be the same as                                                                 
shown in the picture, with more glass.                                                                                          
                                                                                                                                
MR. MARLOW explained that the building would be insulated from the                                                              
outside, because the fluid nature of concrete  causes movement with                                                             
temperature changes.  The core of the building will stay a constant                                                             
temperature, but the outside of the building actually creeps about                                                              
two inches up and down between winter and summer, creating cracks                                                               
in the sheetrock.  Insulating the outside of the building will keep                                                             
the whole building the same temperature, helping to preserve the                                                                
interior of the building.                                                                                                       
                                                                                                                                
SENATOR DONLEY said that people in Anchorage are excited about this                                                             
project, but his questions concern accountability over what has                                                                 
happened with the building over the last 10 years.  He asked Mr.                                                                
Marlow if he owns the building now.                                                                                             
                                                                                                                                
MR. MARLOW answered he created a limited liability company that                                                                 
bought the building from the estate of Harvey Sullivan and Duane                                                                
Hinson, operating as Hinson Associates.                                                                                         
                                                                                                                                
SENATOR DONLEY commented that he was probably familiar with the                                                                 
history of the previous owners and the city's struggle with them                                                                
during which the city probably chalked up hundreds of thousands of                                                              
dollars worth of legal fees.  He asked if the city had been                                                                     
reimbursed for all the legal fees from the previous owners.                                                                     
                                                                                                                                
MR. MARLOW answered that he didn't think so.                                                                                    
                                                                                                                                
SENATOR DONLEY asked how much he paid for the building.                                                                         
                                                                                                                                
MR. MARLOW answered about half a million dollars.                                                                               
                                                                                                                                
SENATOR DONLEY asked if he knew what the former owners paid for the                                                             
building.                                                                                                                       
                                                                                                                                
MR. MARLOW responded that he hadn't seen a record, but heard that                                                               
they paid $25,000.                                                                                                              
                                                                                                                                
SENATOR DONLEY said that was his concern.  He wanted some                                                                       
accountability for what the community had to go through.                                                                        
                                                                                                                                
MR. MARLOW said he appreciated Senator Donley's concern, but he is                                                              
not the one who did it.  He is offering solutions.                                                                              
                                                                                                                                
SENATOR KELLY asked if this law had been available before, would                                                                
the former owners have developed the building.                                                                                  
                                                                                                                                
MR. MARLOW answered that anything is possible, but that he couldn't                                                             
speak for the former owners.  This type of incentive works well in                                                              
other parts of the country.  Part of the anticipated success of                                                                 
this project at this point is the fact that the statistical vacancy                                                             
rate for rental housing in downtown Anchorage is zero.  A study                                                                 
done by an outside marketing and research firm for the lender                                                                   
indicates that this building, when it's done, will be full in four                                                              
months.                                                                                                                         
                                                                                                                                
SENATOR DONLEY asked how much would he have been willing to pay for                                                             
the building without the legislation that was passed.                                                                           
                                                                                                                                
MR. MARLOW answered the amount he paid had more to do with                                                                      
negotiating with the current owners, not the economics of the                                                                   
project.  The purchase agreement was made in advance of the passage                                                             
of this law.                                                                                                                    
                                                                                                                                
Number 400                                                                                                                      
                                                                                                                                
SENATOR DONLEY asked if the agreement had a clause or any reference                                                             
to legislation in it on a change of the tax status.                                                                             
                                                                                                                                
MR. MARLOW replied that he wouldn't have completed the purchase                                                                 
until the bill passed, because the project isn't feasible without                                                               
the legislation.                                                                                                                
                                                                                                                                
SENATOR DONELY asked what year he negotiated the sale agreement.                                                                
                                                                                                                                
MR. MARLOW replied last year, after the Governor signed the law.                                                                
SENATOR DONELY asked in his dealings with the city, had they ever                                                               
mentioned their past expenses for the building and who is liable.                                                               
                                                                                                                                
                                                                                                                                
MR. MARLOW answered no; and thought they considered it a cost of                                                                
doing business.                                                                                                                 
                                                                                                                                
SENATOR DONLEY wished Mr. Marlow good luck.  He sees a problem                                                                  
with someone buying a dilapidated piece of property for $25,000,                                                                
which costs the taxpayers of the city a lot of money over six                                                                   
years, then doing nothing to fix it up, and then selling it to Mr.                                                              
Marlow for half a million dollars because the legislature passed                                                                
some favorable special piece of legislation.                                                                                    
                                                                                                                                
MR. MARLOW said he understands Senator Donley's frustration, but                                                                
this law isn't being passed specifically for him.  The McKay                                                                    
Building redevelopment will be the recipient of this tool, but as                                                               
Alaska grows, there will be other buildings.                                                                                    
                                                                                                                                
SENATOR KELLY inserted that the law they passed last year was a                                                                 
national statute that had been enacted in other places dealing with                                                             
dilapidated housing and neighborhoods.  They made the law pertain                                                               
to commercial buildings or multi-family units only, feeling that                                                                
Alaska didn't have the same kinds of problems.  The good news is                                                                
that there aren't many blighted urban areas in Alaska, but the                                                                  
older we get, the more likely they'll be.                                                                                       
                                                                                                                                
SENATOR DONLEY asked if Mr. Marlow hired a lobbyist to work on this                                                             
last year.                                                                                                                      
                                                                                                                                
MR. MARLOW answered no, and he didn't know of anyone else working                                                               
on it.                                                                                                                          
                                                                                                                                
SENATOR LEMAN applauded Mr. Marlow's efforts with the building and                                                              
said his own preference would be to rename the building with its                                                                
original name, the McKinley Building.                                                                                           
                                                                                                                                
MR. MARLOW responded that the new name hadn't been chosen and he                                                                
assured them that it would have a whole different image - something                                                             
the whole community could be proud of again.  Their projected                                                                   
completion date is late summer of 2000.                                                                                         
                                                                                                                                
Number 538                                                                                                                      
                                                                                                                                
MR. STEVEN VAN SANT, State Assessor, said he agreed with Senator                                                                
Kelly that if any portion of the property is transferred, any                                                                   
deferred taxes would become immediately due.                                                                                    
                                                                                                                                
On page 1, lines 6 and 7 he noted the phrase "beginning on or any                                                               
time..." might allow an exemption to begin in the middle of the                                                                 
year with prorated taxes.  Mr. Van Sant said that our Supreme Court                                                             
has determined that exemptions begin on January 1.  A property is                                                               
either fully taxable or exempt on that date.  He wanted to see                                                                  
further discussion of this issue.                                                                                               
                                                                                                                                
A third concern is the ability a municipality has to collect                                                                    
interest on deferred taxes (not exempt taxes).  He suggested using                                                              
an eight percent rate because that is what is used for the                                                                      
agriculture deferment.  He added that he appreciates what Mr.                                                                   
Marlow is doing with the building.                                                                                              
                                                                                                                                
CHAIRMAN MACKIE noted that the House didn't do anything with Mr.                                                                
Van Sant's  suggestions and asked if he supported the legislation                                                               
as it is currently written.                                                                                                     
                                                                                                                                
MR. VAN SANT answered that the interest was not included.  They                                                                 
discussed the beginning of the language on lines 6 and 7 and                                                                    
everyone agreed that an exemption did not begin in the middle of                                                                
the year, but would be at the beginning of the assessment year.  He                                                             
said they could live with the bill the way it is currently written,                                                             
however.                                                                                                                        
                                                                                                                                
MR. CHARLES WOHLFORTH, representing the Anchorage Assembly                                                                      
regarding the McKay Building, said he has tried to deal with this                                                               
problem for the entire six years he has been on the Assembly.  It                                                               
is a real drag on the economic vitality of the east side of                                                                     
downtown and it was one of the reasons that area has a lot of                                                                   
problems.  Ever since he joined the Assembly, they have been trying                                                             
to get control of the building to have it torn down.  They have not                                                             
succeeded and  Mr. Marlow came forward last year.  If the building                                                              
was condemned, they would still have to spend $2.4 million to tear                                                              
it down and then they would have an empty lot.                                                                                  
                                                                                                                                
MR. WOHLFORTH explained that Mr. Marlow proposed giving up 10 years                                                             
of taxes on a project which wouldn't exist at all without the tax                                                               
exemption. It would get it off their backs, so they are not giving                                                              
up that much.                                                                                                                   
                                                                                                                                
SENATOR KELLY asked Mr. Wohlforth the estimated worth of 10 years                                                               
of taxes.                                                                                                                       
                                                                                                                                
MR. WOHLFORTH answered he thought it would come to around $2                                                                    
million, with $1 million being paid when the building is sold.                                                                  
                                                                                                                                
TAPE 99-5, SIDE B                                                                                                               
Number 590                                                                                                                      
                                                                                                                                
SENATOR KELLY asked how much it would cost to tear the building                                                                 
down.                                                                                                                           
                                                                                                                                
MR. WOHLFORTH answered that the estimates have ranged from a low of                                                             
$2.4 to a high of $3 million.                                                                                                   
                                                                                                                                
CHAIRMAN MACKIE asked if he had any comments on Anchorage's                                                                     
liability issue.                                                                                                                
                                                                                                                                
MR. WOHLFORTH replied that he hated to see anyone benefit from this                                                             
situation, but pragmatically speaking, they would be getting out of                                                             
the situation for a lot less money than they expected.  The                                                                     
litigation has been going on for a long time and will continue.  He                                                             
didn't think those costs were recoverable.  They had thought about                                                              
simply paying off the owner, because it would have saved the city                                                               
a lot of money.  This solution is a lot more appealing than that                                                                
would have been.                                                                                                                
                                                                                                                                
SENATOR DONLEY asked how many years the building had been empty.                                                                
                                                                                                                                
MR. WOHLFORTH replied about 12 years.  Mr. McKay let it run down                                                                
and then it was taken over by the bank in the 1980s.                                                                            
                                                                                                                                
SENATOR DONLEY expressed his concern for the future, now that the                                                               
law is in place, would be to keep it from being used as an                                                                      
incentive to other folks to go out and buy large deteriorated                                                                   
properties and, then, essentially blackmail the city into giving                                                                
them a tax break to develop them.                                                                                               
                                                                                                                                
MR. WOHLFORTH said several things make that unlikely to happen.                                                                 
One is that there aren't any other buildings that are comparable to                                                             
the McKay Building, both in terms of the political will and desire                                                              
to get rid of it and the extreme blight it imposes on the                                                                       
community.                                                                                                                      
                                                                                                                                
He also said that if you owned a deteriorated property, you would                                                               
be able to use this program as much as the buyer would.  He hoped                                                               
people would use it if there was an opportunity to improve those                                                                
properties and bring them on to the tax rolls in a positive way.                                                                
                                                                                                                                
SENATOR DONLEY asked if the City was attempting to recoup any of                                                                
its costs from the building's former owners.                                                                                    
                                                                                                                                
MR. WOHLFORTH said that their legal department hadn't informed him.                                                             
                                                                                                                                
Number 542                                                                                                                      
                                                                                                                                
SENATOR DONLEY asked what Mr. Wohlforth thought about a provision                                                               
in the law stating if someone is selling, they couldn't make more                                                               
than 100 percent profit and any excess would revert to the local                                                                
government.                                                                                                                     
                                                                                                                                
MR. WOHLFORTH replied that he would be concerned over any change in                                                             
the law that would be complex and unworkable.                                                                                   
                                                                                                                                
SENATOR DONLEY asked why the City didn't just condemn the building                                                              
and then sell it to Mr. Marlow.                                                                                                 
                                                                                                                                
MR. WOHLFORTH answered that the City did condemn the building and                                                               
that's what the litigation was about.  The problem was that                                                                     
typically in condemning a building, you have to show that it is                                                                 
dangerous or a safety hazard.  This building is solid 40 or 50-                                                                 
year-old concrete.  The ordinance that was passed in the beginning                                                              
was amended to say buildings abandoned and vacant for a certain                                                                 
period of time could be condemned.  That has to be litigated all                                                                
the way to the Supreme Court to determine if that was a valid                                                                   
reason for condemning a property.  That is what's going on now.                                                                 
                                                                                                                                
SENATOR DONLEY asked if they would finish the appeal now that Mr.                                                               
Marlow owns the building.                                                                                                       
                                                                                                                                
MR. WOHLFORTH said he thought that case would no longer be pursued                                                              
now that the Building Board has the issue.                                                                                      
                                                                                                                                
MR. PAT CARLSON, Kodiak Assessor, expressed concern that in small                                                               
communities it might be easy for a major commercial entity to get                                                               
the Assembly to buy into something like this.  He wanted the                                                                    
structure to be there to enforce the exemption and deferral to                                                                  
ensure that the promises that made by property owners come true.                                                                
                                                                                                                                
MR. CARLSON also noted that the economic development clause in AS                                                               
29.50.50(m) requires specific eligibility requirements be                                                                       
stipulated in the written application process.  He thought that                                                                 
language would be applicable to this ordinance, also.                                                                           
                                                                                                                                
In the case of deferred taxes, they may become a lien on the                                                                    
property.  There has been litigation in the past regarding specific                                                             
language in property tax liens.  There are problems because                                                                     
personal and real property may not be foreclosed in the same                                                                    
manner.  The language would ensure that deferred taxes are                                                                      
immediately recorded as a lien on the property.                                                                                 
                                                                                                                                
SENATOR KELLY wanted Mr. Marlow to respond to the lien idea.                                                                    
                                                                                                                                
MR. MARLOW responded that the way he sees it, this is a state                                                                   
statute that specifically says municipalities "may" do some things.                                                             
They are not required or compelled to.  Property taxes are                                                                      
collected and/or exempted or deferred by state law.  Municipalities                                                             
don't have carte blanche to do what they want with property taxes                                                               
inside their domain.  The Municipality of Anchorage took this tool                                                              
and passed ordinances that specifically address Mr. Carlson's                                                                   
concerns.  This bill simply gives the municipality a tool to pass                                                               
an ordinance with those safeguards in it.  In the Municipality of                                                               
Anchorage, the ordinance specifically requires performance before                                                               
the exemption and deferral kick in.  With respect to the lien on                                                                
the deferred portion, he didn't have the ordinance before him, but                                                              
in his discussions with the municipal attorney, language was put in                                                             
the ordinance that insures it's a matter of public record that the                                                              
deferred property taxes is owed, so at the point of closing it can                                                              
be collected.                                                                                                                   
                                                                                                                                
SENATOR KELLY said that one of the things they were nervous about                                                               
last year was that other cities and boroughs in the state that                                                                  
weren't as sophisticated as Anchorage were protected.  He                                                                       
understands that Anchorage is protected, but Mr. Carlson wants                                                                  
protection in statute so that all municipalities throughout the                                                                 
state have to protect themselves.  He is always concerned about                                                                 
political pressure on the local level to do some type of deal for                                                               
a tax exemption.  He thought putting a lien on the property would                                                               
be straightforward.                                                                                                             
                                                                                                                                
MR. MARLOW asked if a property was normally under a lien for taxes.                                                             
He didn't disagree that there should be a public record of the tax                                                              
status.                                                                                                                         
                                                                                                                                
Number 444                                                                                                                      
                                                                                                                                
MR. CARLSON commented that typically the tax authority is called to                                                             
see if there are any taxes outstanding, but the recording of a lien                                                             
makes things real clear, like a street assessment.                                                                              
                                                                                                                                
CHAIRMAN MACKIE thanked Mr. Carlson for his comments and said                                                                   
Senator Kelly wanted to work on an amendment on this issue before                                                               
it gets to the floor of the Senate.                                                                                             
                                                                                                                                
SENATOR LEMAN moved to pass CSSB54(L&C)and the accompanying fiscal                                                              
note from committee with individual recommendations.  There were no                                                             
objections and it was so ordered.                                                                                               
                                                                                                                                
CHAIRMAN MACKIE adjourned the meeting at 2:48 p.m.                                                                              

Document Name Date/Time Subjects