HB 324 - MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS Number 0257 CHAIRMAN ROKEBERG announced the committee's first item of business was HB 324, "An Act relating to liens for municipal assessments for certain utility improvements." He asked the sponsor's representative to briefly explain the differences between HB 324 and the proposed committee substitute. Number 0260 DAVE STANCLIFF, Legislative Assistant to Representative Scott Ogan, came forward to testify. Mr. Stancliff said it was the sponsor's original intent to provide relief for people who could not afford to hook-up to a utility for various reasons. He said it had been discovered in the last committee meeting [House Labor and Commerce Standing Committee meeting February 9, 1998], and after conversations with municipal officials, that requiring municipalities to grant complete exemptions could jeopardize the financing package and cause problems for the local improvement district (LID) process. He stated the proposed committee substitute has been changed to simply grant, and make it clear in statute, that local governments can provide a deferment according to their terms and conditions for people who are elderly, economically disadvantaged or otherwise unable to meet this cost. Mr. Stancliff emphasized that the deferment does not mean the debt goes unpaid. It can be deferred as long as municipalities wish and that debt would still be liable when the property changed hands. He said the bill was much more friendly toward the municipal governments. The proposed committee substitute for HB 324, labeled 0-LS1150\B, Cook, dated 3/25/98, read: * Section 1. AS 29.46.020 is amended by adding a new subsection to read: (d) A municipality may by ordinance provide for deferral of payment of all or part of the assessments on real property owned and occupied as the primary residence and permanent place of abode by a resident who is elderly or economically disadvantaged as determined under criteria established in the ordinance. The assessment becomes due when the property ceases to be owned by the resident who qualified for the deferral. Number 0380 CHAIRMAN ROKEBERG confirmed the deferred amount would attach to the title of the land and have to be satisfied upon the transfer of title. MR. STANCLIFF agreed that was correct. Number 0398 REPRESENTATIVE JOHN COWDERY asked if the deferment had to be until the transfer of title, questioning whether this would work in a situation he knew of, where the wage earner had been in an accident and was "pretty stretched for a dollar" for a couple of years. Number 0323 MR. STANCLIFF indicated the municipalities could set up any systems they wanted to work with people who might be economically disadvantaged for a couple of years in the situation Representative Cowdery described. He added the examples of a single mother or elderly person. Number 0458 REPRESENTATIVE BILL HUDSON said the state of Oregon has "sort of" a senior property tax deferral, asking if this was similar. He commented he was thinking a lot of seniors in Alaska could be in situations where what they had always considered to be their retirement homes had become such valuable pieces of property that they could not afford the tax loads. He gave the example of seniors with beach-front homesteads on Fritz Cove Road in Juneau, mentioning changes in property value and tax mechanism. Representative Hudson noted this could possibly solve some of these peoples' problems because the municipality could give them an option to defer the taxes until their death. He indicated this would allow them to stay in their homes, with the taxes due from any heirs. Representative Hudson asked if that was what Mr. Stancliff saw the proposed committee substitute for HB 324 doing. Number 0530 MR. STANCLIFF replied, "Very much." He said they had been offered some language from either Washington or Oregon, he believed, to do exactly that. He said they used that generic approach here, and the drafter, Tamara Cook, put it into her style. Mr. Stancliff indicated the problem in statute is a difference in interpretation of assessment for equal use, noting the Matanuska-Susitna (Mat-Su) Borough's attorney said the borough felt it needed something a little clearer in statute to give the borough the ability. Number 0566 REPRESENTATIVE JOE RYAN asked the chairman, noting the chairman's real estate background, if the assessment would come due on transfer of inherited property to the beneficiary or if they would have to wait for the sale of the property. Number 0595 CHAIRMAN ROKEBERG said it was a very good question. He indicated he thought it would come due on inheritance, based on his reading of the last sentence of the bill ["The assessment becomes due when the property ceases to be owned by the resident who qualified for the deferral."]. He commented on the wording, "ceases to own", noting he thinks there is a reason for that use of the words; it would account for various changes or transfer of title. Therefore, he said, whoever came into title would assume that obligation, which is normally a payment amortized over a period of years with accrued interest. He stated, "So, I - I think that that would be the case. It's like a - a covenant that attaches itself to the land ... and it goes with the land until it's satisfied. It's a lien, actually, on the property and would show up on the title report as a lien on the property." Number 0648 REPRESENTATIVE RYAN said, "My only concern is that some sharper attorney may put a clause in there that the property would escheat to the governmental unit at the time." Number 0663 CHAIRMAN ROKEBERG said he thinks this is a permissive type of ordinance. It grants an election to a municipal government and allows the government to make its decision; he thinks the municipal government could develop a construct around that. He commented, "And we don't want to have no attorneys screwing with our laws that we make, how's that?" With that, Chairman Rokeberg stated he would accept a motion to adopt the proposed committee substitute. Number 0693 REPRESENTATIVE HUDSON made a motion to adopt the proposed committee substitute for HB 324, Version B, for consideration. There being no objections, Version B of HB 324 was adopted. Number 0764 REPRESENTATIVE HUDSON made a motion to move the proposed committee substitute for HB 324, Version B, out of committee with zero fiscal note and individual recommendations, asking unanimous consent. There being no objections, CSHB 324(L&C) was so moved.