HB 347-PROPERTY ASSESSMENT  8:07:47 AM CHAIR MCCORMICK announced that the first order of business would be HOUSE BILL NO. 347, "An Act relating to assessment of property, boards of equalization, and certification of assessors; and providing for an effective date." 8:08:15 AM REPRESENTATIVE JULIE COULOMBE, Alaska State Legislature, prime sponsor, presented HB 347. She explained that in the original version of the bill, the definition of "real and true value" was inadvertently taken out. She added that the forthcoming committee substitute (CS) would reinsert that definition. 8:09:03 AM REPRESENTATIVE MEARS asked whether [the CS] is on par with the companion bill in the Senate. REPRESENTATIVE COULOMBE answered yes. 8:09:24 AM REPRESENTATIVE HIMSCHOOT asked whether the bill sponsor had reached out to the Alaska Association of Assessing Officers (AAAO). She shared her belief that the bill would place a burden on them. REPRESENTATIVE COULOMBE asked Representative Himschoot to clarify what burden she referred to. 8:10:23 AM REPRESENTATIVE MCCABE moved to adopt the proposed committee substitute (CS) for HB 347, Version 33-LS1430\B, Dunmire, 3/8/24, as the working document. There being no objection, Version B was before the committee. 8:10:54 AM REPRESENTATIVE COULOMBE paraphrased the sponsor statement for HB 347 [included in the committee packet], which read as follows [original punctuation provided]: Alaskans deserve transparency and fairness when it comes to property taxes. HB 347 puts some baseline requirements in place for Alaska municipalities, while preserving the important principle of local control. The bill has the State set baseline standards for assessors to use so Alaskans know what the rules are for figuring property values. It also lets municipalities adopt their own by ordinance if state or national standards don't fit. It also changes the default for who hears tax appeals to an appointed Board of Equalization instead of local elected officials. It's important to keep those separate because Alaskans can't talk freely about problems with the assessment process with an elected official who will later sit as a quasi-judge over their appeal. Citizens shouldn't lose access to their representatives when they disagree with city hall. Because some municipalities may be unable to fill appointed seats, the bill lets them opt out of this change by passing an ordinance. HB 347 stops a municipality from raising the assessed value during an appeal process. Government's bite at the apple comes when it sends you a notice of assessed value. Raising that value when a citizen disagrees can chill taxpayers from exercising their rights. The bill also levels the playing field for citizens with a recent appraisal in hand by requiring any Board of Equalization that doesn't agree with a fee appraisal to explain its findings on the record. Finally, HB 347 ensures assessors have the experience and credentials to do the job well. 8:13:43 AM ELEILIA PRESLEY, Staff, Representative Julie Coulombe, Alaska State Legislature, on behalf of Representative Coulombe, prime sponsor of HB 347, presented the sectional analysis [included in the committee packet], which read as follows [original punctuation provided]: Section 1: Requires local assessors to use published standards. Default standards will be adopted by the state, or a local governing body can adopt alternate standards by ordinance. Section 2: Requires the Department of Commerce, Community, and Economic Development to adopt the default assessment standardsbased on those published by the International Association of Assessing Officersby regulation. Section 3: Requires a local assessor to have or be supervised by someone who has a level 3 certification from the Alaska Association of Assessing Officers. Section 4: Says a local governing body must appoint a Board of Equalization unless it adopts an ordinance to set itself as the Board of Equalization. Section 5: Prohibits local government from raising the assessed value of the property during the appeals process, unless requested by the appellant. Sec. 5 also requires a Board of Equalization to make specific findings on the record if it disagrees with a fee appraisal. Section 6: Lets the Department of Commerce, Community, and Economic Development adopt regulations setting the default assessment standards. Section 7: Sets an immediate effective date for the department to put out regulations. Section 8: Sets a January 1, 2025 effective date for all other changes in the bill. CHAIR MCCORMICK opened invited testimony. 8:15:44 AM BRENDA JOSEPHSON, representing self, gave invited testimony during the hearing on HB 347. She said she was passionate about the need to codify assessment standards and best practices because she had personally witnessed unjust actions that occurred in Haines. Last year, the Haines Borough hired an uncertified contract assessor who enacted a new hybrid replacement cost new mass appraisal methodology, which ignored actual market sales conditions by adding speculative costs for replacing existing structures. The stated goal was to equalize property values across large areas of the community. However, the new replacement cost did not properly consider the specific marketability of the parcels, nor did it give due weight to the physical and functional obsolescence of the buildings, resulting in excessive assessments. The approach resulted in what appeared to be a regressive taxation scheme, she said, by shifting a disproportionate burden of the tax to the lower and middle value properties. She reported that over 200 appeals were filed with the assessor's office, and many more went unreported. The assessor refused to address the merits of many appeals and property owners were faced with a confrontational process, including unprofessional interactions, an unwillingness to correct obvious errors, retaliatory increases, willful misdescriptions, a lack of sufficient notice for hearing dates, and failure to receive the assessor's staff reports, as required by the borough's policy. She shared several examples of wrongful conduct. She stated that HB 347 would establish needed guardrails to bring trust to the assessment process and help promote a transparent and professional approach by requiring certification. Further, the bill would protect the ability to redress the government by defaulting to an appointed Board of Equalization and reduce the "chilling" effect of retaliatory increases in assessments. 8:27:48 AM REPRESENTATIVE MCCABE asked whether the assessor works for the mayor. MS. JOSEPHSON explained that the assessor was hired by the administration and directly reported to the borough manager. In response to a follow up question, she explained that there was a community petition for the contract assessor's removal on the basis that he was uncertified. The petition was signed by nearly 600 people. Ultimately, she explained that his contract was not renewed. REPRESENTATIVE MCCABE asked what happened to the money that was collected from the over-assessments. MS. JOSEPHSON confirmed that the money was spent by the borough. 8:32:23 AM REPRESENTATIVE HIMSCHOOT asked whether citizens appointed to the Board of Equalization would be required to avoid talking about the cases in the same way the assembly members were. MS. JOSEPHSON agreed that at any quasi-judicial hearing, any [board member] cannot have ex parte communication with appellants. REPRESENTATIVE HIMSCHOOT sought to confirm that if the board was composed, at least partially, of regular citizens, the assembly could then speak with them about these issues without violating any confidentiality rules. MS. JOSEPHSON said, "That is correct." 8:37:25 AM JOE GELDHOF, representing self, gave invited testimony during the hearing on HB 347. He stated that this is a statewide problem driven by local governments deciding that they need more money. He opined that the bill is grounded in fundamental fairness and would eliminate potential for abuse. He explained his support for allowing local governments to opt out because not all municipalities need the full "belt and braces." Nonetheless, he stressed that the standards in HB 347 should be a floor. He described the three methods of assessing property: sales comparison approach, income approach, and cost replacement approach. 8:44:24 AM DAVE HANNA, representing self, gave invited testimony during the hearing on HB 347. He stated that there is no reason not to pass the legislation because it would assign no cost to the state and force the municipalities to do that which they claim to already do. He shared his experience attending 70-80 Board of Equalization meetings, characterizing many of those as "horror stories." He pointed out that assessors are not required to show their work or justify their assessments; further that no assessor certification is required. He shared several anecdotal examples of wrongful conduct. 8:52:07 AM REPRESENTATIVE MCCABE recalled an instance in Juneau in which the value of the property was being shared on public record to allow the assessor to tax the property on the cost of the property, versus its actual value. MR. HANNA responded, "That's true." He discussed the disclosure rules in Juneau and characterized them as a double-edged sword, noting that they were eventually removed by an initiative. Nonetheless, he pointed out that the sales data is easy to find. REPRESENTATIVE HIMSCHOOT highlighted the assessor certification on page 2 of the bill. She asked who would keep track of [the certification requirements]. REPRESENTATIVE COULOMBE said did not anticipate a large increase in workload. 8:56:37 AM REPRESENTATIVE MCCABE asked how often property assessments are required. REPRESENTATIVE COULOMBE answered every five years. REPRESENTATIVE MCCABE asked whether there would be a way to encourage the borough to follow those guidelines or a way to self-report. CHAIR MCCORMICK shared her understanding that there are no penalties at the local level. She pointed out that conducting assessments on a regular basis is in the best interest of municipalities to avoid under-assessments. 8:59:56 AM SANDRA MOLLER, Director, Division of Community & Regional Affairs, Department of Commerce, Community & Economic Development (DCCED), stated that it's up to the municipality to decide when to conduct assessments. 9:00:47 AM REPRESENTATIVE RUFFRIDGE questioned the difference between assessors and appraisers. REPRESENTATIVE COULOMBE indicated that there are different standards used by assessors versus appraisers. CHAIR MCCORMICK sought closing remarks from the bill sponsor. 9:04:24 AM REPRESENTATIVE COULOMBE concluded that the bill would help fix the cracks in the system and retain local control. CHAIR MCCORMICK announced that HB 347 would be held over.