HB 370-MUNICIPAL TAX EXEMPTIONS                                                                             
                                                                                                                                
8:21:09 AM                                                                                                                    
                                                                                                                                
CHAIR TILTON announced that the next order of business would be                                                                 
HOUSE BILL NO. 370, "An Act relating to municipal tax                                                                           
exemptions."                                                                                                                    
                                                                                                                                
[CHAIR TILTON passed the gavel to Vice Chair Seaton.]                                                                           
                                                                                                                                
CHAIR TILTON provided a brief overview of the bill, summarizing                                                                 
the sponsor's statement, which read as follows [original                                                                        
punctuation provided]:                                                                                                          
                                                                                                                                
     AS  29.45.050m authorizes  municipalities to  exempt or                                                                    
     defer all or parts of  real and personal property taxes                                                                    
     by  ordinance for  economic development  purposes. This                                                                    
     bill  would  remove  the time  limitation  mandated  by                                                                    
     statute  and authorize  local governments  to determine                                                                    
     time  periods  appropriate  for specific  projects  and                                                                    
     according to their own needs and objectives.                                                                               
                                                                                                                                
     The section  presently allows  a municipality  to grant                                                                    
     the exemption  or deferral for  up to five  years, with                                                                    
     options  for  renewal,   and  contains  provisions  for                                                                    
     property  eligibility,   public  notice,   hearing  and                                                                    
     referendum, project  goals, preserving  mandated school                                                                    
     funding   tax  equivalency,   and  criteria   regarding                                                                    
     previous use  or taxation  in the  subject municipality                                                                    
     or another municipality.                                                                                                   
                                                                                                                                
     As  the  current  budget  deficit  limits  the  State's                                                                    
     ability to invest  in economic development initiatives,                                                                    
     municipalities  will need  to  rely more  on their  own                                                                    
     means  to   facilitate  those  projects.   The  current                                                                    
     initial  five  year  limitation does  not  provide  the                                                                    
     longer  term  certainty   necessary  for  investors  to                                                                    
     commit to  larger and more capital  intensive projects.                                                                    
     HB   370   (Municipal   Tax   Exemptions)   amends   AS                                                                    
     29.45.050(m) to  remove the requirement that  a full or                                                                    
     partial   property  tax   exemption  or   deferral  for                                                                    
     economic  development  property   be  limited  to  five                                                                    
     years, with  possible renewals. This  legislation would                                                                    
     authorize  a municipality's  discretion to  establish a                                                                    
     full  or partial  property  tax  exemption or  deferral                                                                    
     over a designated period of  time without limitation in                                                                    
     state law,  and to  designate a period  of time  for an                                                                    
     exemption or  deferral that differs  based on  the type                                                                    
     of economic development property.                                                                                          
                                                                                                                                
     In  addition,  AS  29.45.050(m)  would  be  amended  to                                                                    
     augment the requirements for eligibility  for a full or                                                                    
     partial   property  tax   exemption  or   deferral  for                                                                    
     economic  development  property by  including  economic                                                                    
     development  property  that   involves  a  "significant                                                                    
     capital  investment  in physical  infrastructure"  that                                                                    
     expands the tax base of  the municipality and that will                                                                    
     generate  property  tax  revenue  after  the  exemption                                                                    
     expires.                                                                                                                   
                                                                                                                                
[VICE-CHAIR SEATON returned the gavel to Chair Tilton.]                                                                         
                                                                                                                                
[HB 338 was held over.]