SB 352-MUNICIPAL TAXATION OF AGRICULTURAL LAND  WILDA RODMAN, aide to Senator Gene Therriault, read the following sponsor statement into the record: The State of Alaska has been careful to recognize that there is a public purpose served when land used for farming and other agricultural activities is classified and restricted for agricultural use. One key element of restricting land for agricultural use is that, so long as it is so classified and restricted, the land should be assessed and taxed at a rate that is based on farm value, rather than on land sales that are often higher than farm value. The state recognized the need for assessing fee simple land, used for agriculture, on its farm value and provided a farm exemption under AS 29.45.060. The statute did not specifically include state restricted agricultural use lands, since these lands, by definition, could only be used for agriculture. Unfortunately, the assessment of state restricted agricultural lands is subject to rising taxes as local assessors increasingly use comparable sales to assess these lands while ignoring the agricultural value of these restricted use lands. Often state restricted agricultural use land cannot meet the requirements of AS 29.45.060. Yet, land sold by the state and restricted to agricultural use can only be used for agricultural purposes, therefore precluding other uses of the land. Thus, assessments should be based on the value of the crops that can be produced, not on other perceived values or land sales. SB 352 re-affirms the public purposes of the state's designation of certain lands for agricultural purposes only. It removes the requirement that owners of agricultural land apply for and receive a determination of agricultural use before receiving the farm exemption assessment provided by AS 29.45.060. MS. RODMAN said SB 352 is a companion bill to HB 455, which was amended in a House committee. She provided members with copies of the amendment. SENATOR TORGERSON called for teleconferenced testimony. STEVE VAN SANT, state assessor, said he was available to answer questions. CHAIRMAN TORGERSON asked him if he supported the bill as amended in the House. STEVE VAN SANT replied they didn't oppose it. SENATOR PHILLIPS asked for the definition of "certain." MR. VAN SANT replied the amendment applied to page 2, line 5 where "for farm use in accordance with this section" is deleted and "based upon that restricted use" is inserted. The intent was that land restricted to agricultural use would be assessed based on that use. That doesn't mean that it would be based on farm us because the land isn't required to be farmed. Some land is required to be cleared but not farmed so the intent was that those lands would be assessed based on what those lands are selling for. SENATOR PHILLIPS said he was referring to the title change in the proposed amendment \A.1 in which "certain" replaces "farm or" on page 1 line 1. He asked if this was defined by page 2, line 5. MR. VAN SANT said the legal department changed the title, but it was referring to the agricultural restricted lands. CHAIRMAN TORGERSON asked for the status of HB 455. MS. RODMAN replied it came over to the Senate that day and received referrals to the Community and Regional Affairs and Resources Committees. CHAIRMAN TORGERSON announced they would take action on HB 455 at a later meeting. They would take testimony on SB 352, but take no action. SENATOR AUSTERMAN said he didn't find reference to the last sentence of the sponsor statement in the bill. MS. RODMAN replied, "They receive that determination… where it says, 'This subsection does not apply to a person with an interest in land that is classified…." SENATOR AUSTERMAN said he wasn't familiar with agricultural land and was having difficulty reading that out of the bill itself. He then asked whether it referred to the new language at the bottom of page 1 and top of page 2 and that is what removes the requirement. MS. RODMAN said that is her understanding, but Ed Arobio was on line and could address the question more specifically. CHAIRMAN TORGERSON replied they would hear from him later. ROB WELLS, Director of the Division of Agriculture testified in support of the bill and said they have been working with the assessor's office on this version of the bill. Their support is based on interest from farmers who feel they should not be required to fill out the application for farm use land since they are restricted to agricultural use as conveyed by the state at purchase. JOHN TOBIN testified via teleconference from Fairbanks in support of SB 352. He testified on HB 455 previously. His land assessment has increased almost 500 percent in the last two years and the added tax burden makes it difficult to make ends meet. STEWART DAVIES testified via testified teleconference from Fairbanks in support of SB 352. He purchased his land in 2000 knowing it had a restrictive agricultural covenant. His current assessment is at $400.00 per acre and is based on comparable sales in the borough. They don't acknowledge inherent differences between fee simple title property and agricultural restricted land. Filing yearly for the farm use exemption to get a reduced assessment is redundant since the land already has an agricultural restriction placed on it by the State of Alaska. SENATOR AUSTERMAN asked why subsection (b) from page 1 couldn't be deleted altogether. ED AROBIO from the Division of Agriculture explained the statute was originally set up for completely fee simple land that was being used for farming so that is the reason for the other sections of the bill. SENATOR AUSTERMAN asked again whether subsection (b) couldn't be eliminated. MR. AROBIO didn't believe they would support that and the borough probably wouldn't either because it applies to other land that is being used for farming as well as the restricted land discussed here. CHAIRMAN TORGERSON asked Mr. Van Sant for his thoughts on eliminating subsection (b). MR. VAN SANT said, "First I nearly had a heart attack." The subsection was included to take the pressure off farmers to sell their fee simple farmland to developers by lowering the property taxes. It is quite important. CHAIRMAN TORGERSON asked him what the assessed value would be on state agricultural land if the bill passed. MR. VAN SANT replied it would be helpful to give a theoretical explanation. A piece of fee simple land might be assessed at $300.00 per acre based on farm use, but have a full value of $1,000.00 to $3,000.00 per acre. Then there are state agricultural restricted lands that are selling for $400 to $600 per acre that the assessor is assessing at that rate. Some people are under the impression that the assessor is assessing that land at values other than agricultural restricted land. You aren't going to find land that you can buy in large chunks for $400.00 per acre in this state. That is the assessed value of agricultural restricted land. This is a reiteration that the assessor will assess this land based on the agricultural restricted value of $400-$600 per acre or whatever it may be. CHAIRMAN TORGERSON said his reading is that Section 1 exempts them from subsection (b) then Section 2 subsection (f) is the mechanism for assessing. MR. VAN SANT agreed, based on the restricted use. CHAIRMAN TORGERSON said the bill would be held and the committee would act on the companion bill the following week.