HB 411-MUNICIPAL TAX EXEMPTIONS/DEFERRALS  8:53:23 AM CO-CHAIR HANNAN announced that the next order of business would be HOUSE BILL NO. 411, "An Act relating to municipal tax exemptions and deferrals on economic development property." 8:53:39 AM RYAN JOHNSTON, Staff, Representative Calvin Schrage, Alaska State Legislature, on behalf of Representative Schrage, prime sponsor, noted those who would give invited testimony during the hearing on HB 411. 8:54:14 AM MIKE EDGINGTON, representing self, noted that he is the co-chair of the Girdwood Board of Supervisors, which had not developed a position on HB 411; therefore, he is speaking on his own behalf. He said under current law, some communities are unable to make full use of municipal tax exemptions [related to economic development property]. He said although Girdwood is a separate community in terms of government, it is within the Unified Municipality of Anchorage. Girdwood addresses this by having its own service area, including police, fire, roads and drainage, and parks and recreation. He said about 40 percent of Girdwood's taxes fund these services, and the rest go to schools. He reviewed that in 2007, the legislature expanded the ability of municipalities to provide tax incentives for local economic development but excluded service areas run by an elected board. He noted that Girdwood is affected by the high cost and low availability of housing. He stated that he is asking for a small, targeted change [to statute] so that Girdwood can qualify to offer the tax exemptions. He pointed out that there are a number of other communities across the state that would also benefit from this change. 8:58:20 AM MR. EDGINGTON, in response to a question from Representative McCarty, explained that the Girdwood Board gives a recommendation for the tax level to the Municipality of Anchorage, which then approves it. He said his recollection is that the Municipality of Anchorage has never disapproved a tax submitted by Girdwood. In response to a follow-up question, he said the Municipality of Anchorage is bound by state statute, and it has taken the language of the statute to apply the restrictions on taxes being imposed in service areas. REPRESENTATIVE MCCARTY expressed concern that a service area will come to the state because it does not like the decision of the local home-rule [municipality]. MR. EDGINGTON clarified that the situation at hand is that both the service area of Girdwood and the Municipality of Anchorage are in agreement but cannot do anything about it because of statute. 9:03:02 AM CO-CHAIR HANNAN noted there was a lawyer on line to testify. 9:03:24 AM MR. EDGINGTON, in response to Representative Prax, confirmed that a service area cannot exempt general taxation. In response to a follow-up question, he maintained his understanding that the assembly has veto power over a service area's desire for a tax exemption. 9:06:14 AM CO-CHAIR SCHRAGE clarified the issue is that even if a municipality wishes to allow the tax exemption to the service area, it is prohibited from doing so by statute. 9:06:46 AM MR. EDGINGTON, in response to Representative Drummond, confirmed there is not a current project being considered for tax exemption, but if there were, both the Girdwood Board and the Municipality of Anchorage would have to approve it for it to be allowed, provided HB 411 is passed in order to change the statute. 9:07:46 AM MR. EDGINGTON, in response to Representative McCarty, clarified that the limitation is on elected boards; there are other service areas in Anchorage that do not have elected boards, and the restriction on tax exemption does not apply to them. 9:09:09 AM WILLIAM "BILL" FALSEY, representing self, stated that he is a private practice attorney testifying today in his personal capacity. He specified that the limitation being discussed is found in AS 29.45.50(m). He noted that service areas are a concept authorized by Article 10, Section 5, of the Constitution of the State of Alaska, and they are common. He confirmed the information about the board operated service areas and the exclusion added in 2017 and the concern behind it. He said HB 411 is particularly meaningful in places like Girdwood; it would allow the Girdwood Board to opt out by passing a resolution of objection no later than 30 days after the local ordinance. He emphasized the 30-day window would come after all public notice requirements were made. He expressed his strong support of the proposed legislation. 9:14:59 AM CO-CHAIR SCHRAGE noted that at the last committee hearing, there had been discussion about the notice requirement. He asked whether there would be a problem if the notice were changed to 60 days. MR. FALSEY described the process to illustrate the ample public notice that would occur prior to the 30-day window. That said, he remarked that he did not see any reason to oppose a 60-day notice. 9:17:00 AM MR. FALSEY, in response to a question from Representative McCarty as to whether there are things that state law should preclude local governments from doing in terms of taxation and exemption, said philosophically he is "more in the camp of trusting the local elected officials." He said he thinks if there were no state restrictions, then the local governments would work those issues out appropriately. 9:19:07 AM MR. FALSEY, in response to a question from Representative Drummond regarding other service areas, explained the differences between Girdwood's board-operated service area and others in terms of tax exemptions. 9:22:39 AM CO-CHAIR HANNAN opened public testimony on HB 411. After ascertaining no one wished to testify, she closed public testimony. 9:23:52 AM MR. JOHNSTON, in response to Co-Chair Hannan, concluded, "As the municipality might have a veto, the service area boards also still retain the ability to opt out, and we think that addresses the issue of the 2017 concerns." 9:24:18 AM CO-CHAIR HANNAN expressed her understanding of Juneau's government, saying that she does not think there are elected boards in any of the borough's service areas. 9:25:45 AM CO-CHAIR HANNAN announced that HB 411 was held over.