SB 106-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY  3:31:24 PM CHAIR MEYER announced the consideration of SB 106. 3:31:34 PM SENATOR COGHILL, sponsor of SB 106, explained that the bill addresses previous legislation that was narrowly crafted and allows municipal authority and flexibility for economic development issues. 3:32:16 PM RYNNIEVA MOSS, Staff, Senator Coghill, Alaska State Legislature, Juneau, Alaska, noted that SB 106 was HB 370 during the 29th Alaska State Legislature. She concurred with Senator Coghill that SB 106 provides more flexibility to local municipalities on giving property tax exemptions for economic development property. She noted that the current statute provides a five- year limit for a property-tax emption, but SB 106 eliminates the limitation and allows municipalities to determine what the limit for the tax emption will be. She added that the bill covers tax exemptions and deferrals. MS. MOSS presented a sectional analysis as follows: Section 1: · Removes the five-year limitation on economic development property exemptions and deferrals. · Removes renewals provision and the limit on property tax exemptions for renewals. · Eligibility for economic development property exemption, (m)(1), is based on one qualifier instead of multiple qualifiers. · Adds a qualifier for property development that enables a significant capital investment in physical infrastructure that: 1. Expands the tax base of the municipality; 2. Generates property tax revenue after the exemption expires. Section 2: · Makes the mandated tax exemption for a fire- protection system up to 2 percent of the value of the structure optional. Section 3: · Repeals AS 29.45.030(l) which was the mandated tax exemption for a fire-protection system. MS. MOSS provided an example of what SB 106 will mean to municipalities as follows: The Matanuska-Susitna Borough gave us some information on their sports center. The land that the sports center is on had an assessed value prior to construction of $294000, today the land and the building is assessed at $6.998 million; the approximate tax bill on that property, today undeveloped would be $4900 a year, today they are generating $102500 a year. Since the exemption expired, they have raised $615000 in revenues; had that development not occurred, that $600000 would dwindle down to $31000. So, it's a significant avenue for municipalities to raise additional revenue which in today's world is important because they have less contributions from the state. 3:35:44 PM CHAIR MEYER opened public testimony. 3:36:20 PM CHRISTOPHER SCHUTTE, Director, Economic and Community Development, Municipality of Anchorage, Anchorage, Alaska, testified in support of SB 106. He commented that Senator Coghill and his staff have done a great job of capturing the important need and value in changing the current state statutes. He set forth that SB 106 will be a useful tool in Anchorage for encouraging development and redevelopment of all sizes, not only of the scale that Ms. Mention regarding the sports center in the Matanuska-Susitna Borough. He disclosed that Anchorage is running out of available developable land and the legislation will allow the municipality to incentivize and encourage the redevelopment of aging-housing stock. He pointed out that one of the bill's components will allow the municipal-infrastructure requirement that Anchorage places upon developers to be eligible for rebate through a property-tax-abatement tool which will be especially powerful. He said Anchorage has multiple examples of projects that did not "pencil out" due to the municipal requirement to provide public infrastructure or public upgrades, as a result the municipality is left with undeveloped land; for example, a former gravel site was purchased by a company looking to build a $40 million distribution warehouse, but the requirements placed upon the project would have required $4.5 million to bring public infrastructure up to code. MR. SCHUTTE summarized that SB 106 is a very powerful tool that will provide municipalities across the state with the flexibility to create incentives that offset mandatory expenses through decreased tax in the short term. 3:39:47 PM CHAIR MEYER closed public testimony. 3:39:55 PM CHAIR MEYER set SB 106 aside for future consideration.