SB 77-MUNI PROP TAX EXEMPTION/TAX BLIGHTED PROP  8:05:19 AM CHAIR MCCORMICK announced that the first order of business would be CS FOR SENATE BILL NO. 77(CRA) am, "An Act relating to municipal property tax; and providing for an effective date." 8:05:35 AM SENATOR FORREST DUNBAR, Alaska State Legislature, as prime sponsor, presented SB 77, which is the companion to HB 84 from Representative Sumner that would provide two optional tools to municipalities for the purposes of (indisc.) construction and property development. He offered his understanding that there may be an amendment offered today in reference to defining the term "blighted". 8:06:58 AM CHAIR MCCORMICK opened public testimony on CSSB 77(CRA). 8:07:20 AM MARGARET AUTH, representing self, testified in support of SB 77. She explained she has lived in Spenard [Anchorage], Alaska, for 35 years and is an active member of the Spenard Community Council. She described her activity working in code enforcement to try to get some movement on abandoned and derelict properties, as well as working with the assembly to make housing more affordable. She pointed out that the abandoned houses tend to be used for drug dens and squatters, which in turn can also become fire hazards and lead to lower property values. 8:10:59 AM ARI BARGIL, Senior Attorney, Institute for Justice, stated his concern is that there is no definition of "blight", and his interest is in finding out what the proposed amendment will contain. 8:13:17 AM CHRIS SCHUTTE, representing self, testified in support of SB 77. He stated the timing of the bill is critical; housing is in dire need in Alaska, and the costs of construction of new homes are at all-time highs. He encouraged the committee to pass the bill and allow the state to help develop neighborhoods and communities across Alaska. 8:14:35 AM SAM SPIEGELMAN, Attorney, Pacific Legal Foundation, cautioned that the lack of definition for any sort of "blight" opens floodgates for local abuse of the definition. 8:17:54 AM BETHANY MARCUM, Alaska Policy Forum, testified in opposition to SB 77. She stated the bill under consideration would give Alaska's boroughs and municipalities "carte blanche" to call commercial and some personal properties "blighted," and then levy taxes on those properties. As written, there are no guardrails for defining what constitutes "blighted" property to protect Alaska property owners from this "government overreach." 8:20:51 AM DENNIS HULL, Americans for Tax Reform, testified in opposition to SB 77. He stated that it would be one of the broadest frameworks for local blight tax authorizations in the nation, and municipalities would have to ability to adopt any definition of "blight" that they like, as well as impose a very heavy new tax burden amongst the 60 percent. 8:23:32 AM CHAIR MCCORMICK, after ascertaining that there was no one else who wished to testify, closed public testimony on SB 77. 8:23:47 AM MIKE ROBBINS, Executive Director, Anchorage Community Development Authority, gave invited testimony in support of SB 77. He explained the first part of the bill is an economic incentive to help drive housing development across the state. The second part of the bill he called a "blighted incentive." He explained that currently, municipalities have no tools available to encourage redevelopment of blighted properties, and the blighted section of the bill would give municipalities the tools they need to help redevelop needed housing and other commercial property. 8:27:14 AM REPRESENTATIVE MCCABE asked Mr. Robbins to explain how the bill would benefit more than just Anchorage. MR. ROBBINS explained that he had been involved in conversations as the Community Development Authority contemplated the legislation, and blighted in Bethel, Alaska, is different than blighted in Anchorage, Alaska. Local municipalities need to have some leeway to be able to define what that means within their jurisdiction. The amendment would provide the right kind of guardrails for that. 8:29:31 AM REPRESENTATIVE MCKAY expressed that he is a defender of private property rights, and asked if there is a mechanism for appeal - to give the property owner a place to say whether a property is blighted or not. MR. ROBBINS replied it is not the intention of the bill to violate private property rights. He envisioned that for each locale would be an arduous but complete public process. The municipality would go through steps to notify the property owner ahead of time with ample time to submit a plan. 8:31:56 AM REPRESENTATIVE MCKAY stated his belief that it is important for a property owner to have a chance to defend themself and not get "railroaded." MR. ROBBINS affirmed this is not a punitive measure. The goal through the bill would be that cities can work with property owners to encourage redevelopment - not take anything away. 8:33:22 AM REPRESENTATIVE MEARS observed in the amendment several opportunities for remediation and working with local governments to improve things. MR. ROBBINS agreed and said the intention behind the bill is to offer multiple opportunities for the property owner to work with the city for redevelopment. 8:34:26 AM MR. ROBBINS, in response to a question from Representative McCabe, reiterated that as the legislation was contemplated, municipalities would have the ability to create a system of support. The intention behind the bill is not to collect more tax, but to encourage redevelopment. 8:37:12 AM MR. ROBBINS, in response to Representative Himschoot, related that there are at least 18 states that have defined "blighted" to varying degrees, but it has worked in most of those states. The first resort would not be to "whack someone with a blighted tax," he remarked. In response to a follow-up question, he said the other states have provided a guide for municipalities to manage their own processes at the local level. 8:39:36 AM BILL POPP, President & CEO, Anchorage Economic Development Corporation, testified in support of SB 77, in particular the tax abatement language in the bill is an important new tool added to the "limited toolbox" that already exists. 8:41:25 AM CHAIR MCCORMICK moved to adopt Amendment 1 to CSSB 77(CRA), labeled 33-LS0416\S.A.3, Dunmire, 4/17/23, which read: Page 2, line 13, following "blighted;": Insert "the standards must include the following requirements: (A) the condition of the property endangers public health and safety; (B) the property has been declared a public nuisance under a local housing, building, plumbing, fire, or other related code or ordinance; (C) the property has been vacant for not less than one year; (D) the unsecured, vacant, or deteriorated state of the property has caused it to become the subject or center of repeated illegal activity; and (E) the property is (i) open to the elements; (ii) unfit for occupancy; or (iii) a fire hazard;" 8:41:54 AM REPRESENTATIVE PATKOTAK objected for the purpose of discussion. CHAIR MCCORMICK withdrew his motion to adopt Amendment 1, in response to Representative McCabe pointing out he was the maker of the amendment. 8:42:06 AM REPRESENTATIVE MCCABE moved to adopt Amendment 1 to CSSB 77(CRA), labeled 33-LS0416\S.A.3, Dunmire, 4/17/23, [text previously provided]. He explained Amendment 1 would define "blighted" and set the controls that are necessary to flesh out Section 2 of the bill, regarding "blighted tax". 8:43:59 AM REPRESENTATIVE HIMSCHOOT inquired about the intent of a conceptual amendment for Amendment 1 [in the committee packet and not yet offered]. 8:44:59 AM REPRESENTATIVE MCCABE moved to adopt Conceptual Amendment 1 to Amendment 1. There being no objection, Conceptual Amendment 1 to Amendment 1 was adopted. [Included in the committee packet is a page from Representative McCabe that describes the intent of Conceptual Amendment 1 to Amendment 1, and which read as follows [original punctuation provided]: This is a conceptual amendment. Legislative Legal is directed to make any changes or deletions to the suggested language, including technical, conforming, or bill title changes, in order accomplish the intent. INTENT OF AMENDMENT: To add language clarifying that the definition of "blighted" may include one, some, or all of the items listed on the amendment. As currently written, it could be interpreted that all of the descriptions in the amendment are necessary in order for a property to be deemed "blighted". Suggested Language: Page 1, line 9, following "activity;" Delete "and" Insert "or" 8:45:20 AM REPRESENTATIVE PATKOTAK removed his objection to Amendment 1, [as amended]. There being no further objection, Amendment 1, as amended, was adopted. 8:46:03 AM SENATOR DUNBAR, in closing, expressed appreciation for the comments heard and the work done by the committee to help improve the bill. He stated he hoped everyone can move forward together and increase the amount of housing in the state. 8:47:28 AM REPRESENTATIVE MCCABE reemphasized that under the proposed legislation, a municipality would not "take your home from under you," and the language assures that. 8:48:39 AM The committee took an at-ease from 8:48 a.m. to 8:51 a.m. 8:51:52 AM REPRESENTATIVE MCCABE moved to report CSSB 77(CRA), as amended, out of committee with individual recommendations and the accompanying fiscal notes, and to authorize Legislative Legal Services to make any conforming and technical changes necessary to implement the intent of the committee. 8:52:21 AM REPRESENTATIVE PATKOTAK objected. 8:52:25 AM The committee took a brief at-ease at 8:52 a.m. 8:52:30 AM [The objection by Representative Patkotak was treated as removed.] CHAIR MCCORMICK announced there being no objection, HCS CSSB 77(CRA) was reported out of the House Community and Regional Affairs Standing Committee.