HB 411-MUNICIPAL TAX EXEMPTIONS/DEFERRALS  9:14:34 AM CO-CHAIR HANNAN announced that the final order of business would be HOUSE BILL NO. 411, "An Act relating to municipal tax exemptions and deferrals on economic development property." 9:14:48 AM RYAN JOHNSTON, Staff, Representative Calvin Schrage, Alaska State Legislature, presented HB 411 on behalf of Representative Schrage, prime sponsor. He said the bill seeks to allow municipalities to offer tax exemptions and deferrals on economic development property within service areas. The bill would amend AS 29.45.050(m) to allow the exemptions and deferrals, but it would provide a 30-day window for the service areas to concur or disagree with the potential tax deferral. 9:16:33 AM ROBERT PEARSON, Local Government Specialist V, Community Aid & Accountability Section, Division of Community and Regional Affairs, Department of Commerce, Community & Economic Development, in response to a question from Representative Drummond as to the definition of "special service area", offered his understanding that the definition is in statute, but he did not know it offhand. 9:18:57 AM MR. JOHNSTON, in response to a concern from Representative Prax that some service areas may not meet often enough to be able to respond within 30 days, said that possibility has been considered by the bill sponsor, and one idea would be to specify 30 days "from notice" to the service area. To a follow-up question, he confirmed the bill sponsor's office has been in contact with the Fairbanks North Star Borough. 9:21:03 AM REPRESENTATIVE DRUMMOND said by-laws for meeting notification may result in the need for the notice proposed under HB 411 to be increase to 60 or 90 days. She said again she would like a definition of service areas. 9:21:39 AM MR. JOHNSTON, in response to Representative McCarty, gave Girdwood as an example of service area governed by a board and a place that cannot be offered economic development incentives by the Municipality of Anchorage. In response to a follow-up question, regarding why Girdwood would be approaching the state, he offered his understanding that when the statute was first put in place, there was concern that a municipality could "do anything" without [consulting] with the service area. He said he would seek a better answer for Representative McCarty. 9:24:07 AM REPRESENTATIVE PRAX said he thinks it is fair to say that currently a second-class borough could grant tax exemption from borough imposed taxes, but should not be allowed to require the service area to agree to the tax exemption of the service area tax. He offered his understanding that that could be done today, and that is what HB 411 is trying to prevent. 9:25:06 AM MR. PEARSON said he thinks Representative Prax is correct. He said the makers of the existing statute were trying to avoid a situation by disallowing it altogether; whereas HB 411 would allow it with the approval of the service area. 9:26:21 AM REPRESENTATIVE DRUMMOND noted the government structure of Anchorage and how it is different from that in Girdwood. 9:27:04 AM CO-CHAIR HANNAN asked Mr. Pearson for knowledge about what statute allows for service areas within municipal governments and how many of them there are. MR. PEARSON estimated there are potentially hundreds of service areas that could be affected by HB 411. In response to a follow-up question, he said there are property taxes in various sized city governances, but there are many jurisdictions without property taxes. 9:29:33 AM REPRESENTATIVE PRAX surmised that citizens could establish a service area which taxes itself in order to have police protection, for example. 9:30:28 AM REPRESENTATIVE DRUMMOND offered an example of expansion of a police service area in Anchorage. 9:31:52 AM MR. JOHNSTON, in response to a request from Representative Prax for a definition of "economic development property", directed attention to the definition on page 2, lines 8-24. 9:33:12 AM CO-CHAIR HANNAN announced that HB 411 was held over.