HOUSE BILL NO. 272 "An Act relating to the tax assessment by a home rule or general law municipality of housing that qualifies for the low-income housing credit under the Internal Revenue Code; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. JONATHAN LACK, staff to Representative Andrew Halcro, testified that this bill would set into law, a formula for accessing federally qualified low-income housing. He shared that until 1998, local governments throughout the State Of Alaska were assessing low-income housing based on a federally restricted rental income, taking into consideration deed restrictions and other covenants on the properties that are required by the federal government. In 1998, he continued, the Municipality of Anchorage changed its formula for accessing its low-income housing. He stated the formula is now based on the market value of these units without consideration of deed restrictions. Mr. Lack remarked that unfortunately, because these units have deed restrictions on the amount of rent that can be charged, the non-profit organizations that sponsor these housing units, couldn't raise rents to compensate for these increased property taxes. In some cases, he shared; the increase in property taxes through the difference in assessment methods has been over 100 percent. Mr. Lack stated that this bill places these low-income housing units in jeopardy and places all units throughout Alaska at risk. He explained that banks are refusing to finance these projects anywhere in the state without a uniform taxation policy. Additionally, he said, the City and Borough of Juneau has tried to change its taxation policy in the past, but fortunately, the non-profit organizations were successful in their appeals to the local boards of equalization. Mr. Lack asserted that the bill follows the standards approved by the "uniform standards of special appraisal practices". He stated all Alaskan communities are affected by the Municipality of Anchorage policy; Anchorage is the only city affected by this legislation because other communities properly assess their qualified low-income housing. Mr. Lack stressed the need to support low-income housing in Alaska, saying that most rental housing in the state was constructed during the pipeline days and targets single adults. Today, he said there are more small families looking for housing due to low-paying service industry jobs that are replacing higher paying oil industry jobs. Mr. Lack relayed that other states, including Washington, Oregon, California and Hawaii, have exempted low income housing from all property taxes. HB 272 does not go that far, he stated. Instead, he said it only requires the assessor take into consideration, the rent restrictions that are on these properties. He added that this bill fills the need for affordable housing. ROBIN GILCRIST, President, Housing First, testified in Juneau in support of the bill. She described the Juneau- based non-profit housing development organization and the need for the organization to annually appeal its assessment. She stated that the assessment is based on a market-value system rather than a rent restricted system. DAN FAUSKE, CEO/Executive Director, Alaska Housing Finance Corporation, testified in Juneau in support on bill and the concept behind it. He thought this legislation would help "level the playing field." He talked about the corporation's low-income housing investments of approximately $58 million statewide. He said this bill would be a tool to use as the federal government is moving away from public housing and toward more "Section 8" rent subsidies. Senator Donley wanted to know the public policy ramifications. He gave a situation of a low-income family in Anchorage that saved to buy or built a house, using AHFC funding and is now paying a higher mortgage rate than those living in rural areas. Tape: SFC - 00 #80, Side A 10:44 AM Senator Donley commented on how this bill will require low- income homeowners to now subsidize the renters' portion of public services. He noted that some low-income renter have higher incomes than the homeowners do. Mr. Fauske replied that this housing would not have been built without some kind of "layered financing." He stressed that building these low-income units brings in more tax base, which eases the burden on the existing taxpayers because there is more property to be assessed. Senator Donley asked if those low-income residents wouldn't have to live somewhere. Mr. Fauske referenced a study done by the military at Elmondorf Air Force Base, that found the number of low- income units unacceptable. While he was not critical of private landlords, he stated that without the input of new stock, the state finds itself in a situation where demand exceeds supply. He said this results in a lower quality of units. He spoke of the large waiting list for the Section 8 program and the extensive work developers and financiers must go through to build low-income housing. Co-Chair Torgerson announced this bill would be brought up at a future Committee meeting for more public testimony. DAVID GUNDACKER SR testified via teleconference from Anchorage that he is a retired disabled veteran living in low-income rental housing. His biggest concern was that banks would no longer finance housing units such as where he lived if there were no tax break. He stressed this would devastating for people like himself. Senator Leman clarified that the bill would have just the opposite affect of what the witness stated. MIKE BURNS testified via teleconference from Anchorage to defer his time to the next testifier. DAVID LAWER, President, Alaska Bankers Association, testified via teleconference from Anchorage in support of HB 272. He referenced written testimony submitted by and representatives from Alaskan banks. [Copies on file.] JAN SIEBERTS testified via teleconference from Anchorage stating that Mr. Lawer spoke on his behalf. HUBERT GELLERT, Private Landlord, Former Chair, Board of Equalization, Municipality of Anchorage, testified via teleconference from Anchorage that he is currently developing low-income housing units in Girdwood. He supports the legislation. He challenged the appraisal process in Anchorage, giving details of its faults. MATT REAMS, resident of Spruce View low income housing area, testified via teleconference from Anchorage qualifying that he did not understand the legislative process but did not want increased taxes that would hamper the development of low income housing. WILEY BROOKS, Property Manager, testified via teleconference from Anchorage that he was not opposed to affordable housing but he did not like special interest legislation. He said no one was representing the small property owners. He referenced written testimony. [Copy on file.] JEFF JUDD, Executive Director, Anchorage Mutual Housing Association testified in Juneau about quality affordable housing. His organization was in support of the bill. He asserted that affordable housing was in a crisis situation. Co-Chair Torgerson ordered the bill HELD in Committee. ADJOURNED Senator Torgerson adjourned the meeting at 11:04 AM. SFC-00 (22) 04/07/00