HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 2, 1999 8:05 a.m. MEMBERS PRESENT Representative Andrew Halcro, Co-Chairman Representative John Harris, Co-Chairman Representative Carl Morgan Representative Lisa Murkowski Representative Fred Dyson Representative Reggie Joule Representative Albert Kookesh MEMBERS ABSENT All members present COMMITTEE CALENDAR *HOUSE BILL NO. 22 "An Act relating to investigations of property by a municipal assessor or the assessor's agent; and providing for an effective date." - HEARD AND HELD *HOUSE BILL NO. 25 "An Act relating to a municipal river habitat protection tax credit." - MOVED HB 25 OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 22 SHORT TITLE: INVESTIGATIONS BY MUNICIPAL ASSESSOR SPONSOR(S): REPRESENTATIVES(S) OGAN Jrn-Date Jrn-Page Action 1/19/99 23 (H) PREFILE RELEASED 1/8/99 1/19/99 23 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 23 (H) CRA 2/02/99 (H) CRA AT 8:00 AM CAPITOL 124 BILL: HB 25 SHORT TITLE: RIVER HABITAT PROTECTION TAX CREDIT SPONSOR(S): REPRESENTATIVES(S) DAVIES Jrn-Date Jrn-Page Action 1/19/99 24 (H) PREFILE RELEASED 1/8/99 1/19/99 24 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 24 (H) CRA, RESOURCES 2/02/99 (H) CRA AT 8:00 AM CAPITOL 124 WITNESS REGISTER REPRESENTATIVE OGAN Alaska State Legislature Capitol Building, Room 128 Juneau, Alaska 99801 Telephone: (907) 465-3878 POSITION STATEMENT: Testified as sponsor of HB 22. STEVE VAN SANT, State Assessor Department of Community & Regional Affairs 333 West 4th, Suite 220 Anchorage, Alaska 99501 POSITION STATEMENT: Testified on HB 22. WAYNE HEARER, Municipal Assessor Director of Property Appraisal Municipality of Anchorage 632 West 6th Avenue Anchorage, Alaska 99519 POSITION STATEMENT: Testified on HB 22. DAVID GUTTENBERG, Legislative Administrative Assistant for Representative Davies Alaska State Legislature Capitol Building, Room 422 Juneau, Alaska 99801 Telephone: (907) 465-4457 POSITION STATEMENT: Presented the sponsor statement for HB 25. JOHN MOHRCICH, Employee Kenai River Center Kenai Peninsula Borough 1336 Kenai Spur Highway Soldotna, Alaska 99669 POSITION STATEMENT: Supported HB 25. ACTION NARRATIVE TAPE 99-3, SIDE A Number 001 CO-CHAIRMAN HARRIS called the House Community and Regional Affairs Standing Committee meeting to order at 8:05 a.m. Members present at the call to order were Representatives Halcro, Harris, Morgan, Dyson, Joule and Kookesh. Representative Murkowski arrived at 8:07 a.m. HB 22 - INVESTIGATIONS BY MUNICIPAL ASSESSOR Number 018 CO-CHAIRMAN HARRIS announced the first order of business was HOUSE BILL NO. 22, "An Act relating to investigations of property by a municipal assessor or the assessor's agent; and providing for an effective date." REPRESENTATIVE OGAN, Alaska State Legislature, explained that HB 22 was introduced out of concern of an incident, albeit isolated, that occurred to a constituent. Representative Ogan noted that the committee packet contained written testimony from the constituent involved. The constituent heard someone in his house who turned out to be the borough tax assessor who was already 10-15 feet inside of the house with the door closed. Representative Ogan believed the following provisions in the Alaska Constitution regarding the right of privacy, Article I, Section 22, searches and seizures in Article I, Section 14, and due process in Article I, Section 7, were recognized in HB 22. He reviewed Alaska Statute (AS) Section 29.45.130, specifically (b) of that section which reads, "For investigation, the assessor or the assessor's agent may enter a premise during reasonable hours and may examine property on the premise." Representative Ogan explained that HB 22 would require the assessor to gain permission from the possessor of the property before entering the property. He commented that the reference to "reasonable hours" may not be considered the same by all. Number 134 REPRESENTATIVE KOOKESH asked if the normal process of going through the channels of the municipal government, such as contacting this assessor's supervisor or bringing the situation before the borough assembly, was attempted. Representative Kookesh said that HB 22 seemed far-reaching in response to a single incident. REPRESENTATIVE OGAN said that Representative Kookesh's point was well taken, but he viewed his obligation to defend the constitution and his constituent's rights as a serious responsibility. Any time the government has leeway, abuses occur. In talking with the local people, Representative Ogan did not believe this situation would happen again, but the incident prompted review of the statute which was cause for concern. Representative Ogan did not believe it to be good policy to allow the state assessor the authority to have access to a house whenever he wants. REPRESENTATIVE MURKOWSKI understood that the assessors observe the exterior of a property, but not actually come inside the dwelling. She interpreted the statute language, "enter a premise" as allowing the assessor to enter the real property, but not into the dwelling. Is the intent of HB 22 to require permission only when the assessor wants to enter a dwelling or would permission also be necessary to come on the real property itself? Number 200 REPRESENTATIVE OGAN referred to Section 1 of HB 22 where "[A PREMISE]" was deleted and "real property" is included. Representative Ogan said that an assessor would be allowed to drive on the property and look around, but permission from the person in possession of the property would be required to enter the dwelling. Representative Ogan noted that there had been concerns that "possession" was somewhat ambiguous. He suggested that the language be amended to "actual possession" which is defined in Black's Law Dictionary as "exists where the thing is in immediate occupancy and physical control of the party" which Representative Ogan said could be an owner or renter. Representative Ogan further suggested that language should be considered that would allow an assessor to enter when a property is under the possession of a contractor and is under construction. REPRESENTATIVE MURKOWSKI asked if the intent was to only require permission if the assessor wanted to enter a dwelling. REPRESENTATIVE OGAN replied yes. He envisioned a form that the assessor would have the owner sign to indicate permission was granted. This would alleviate later civil liability. Representative Ogan noted that the assessor can get a court order to enter a dwelling if so compelled which is specified on page 1, line 10 of HB 22. Representative Ogan mentioned that assessors have told him that it is in the favor of the owner to enter the house because the assessor would take some things for granted if only looking at the exterior. Number 284 REPRESENTATIVE DYSON was startled with the statutory language regarding assessors. REPRESENTATIVE JOULE asked if there would be a way to address this isolated problem at the borough level through borough code or ordinances. REPRESENTATIVE OGAN said that the borough could pass a code, but that ignores the legislative responsibility to protect citizens' rights under the constitution. REPRESENTATIVE JOULE noted that this issue was similar to the wolf snare issue where a particular area had a problem that some were trying to deal with on a statewide level. He indicated that passage of a law could be avoided, if local areas could deal with this situation on their own. Representative Joule agreed with where Representative Ogan was attempting to go. REPRESENTATIVE OGAN believed that past legislators across the nation have ignored the constitution, passed laws that are unconstitutional and let the courts make the decisions. Representative Ogan said that he takes his oath seriously and wants to close the loop holes that could result in possible injustice and abuse by the government. Representative Ogan suspected this problem to be more widespread than is evident; who wants to make an issue of it? Number 351 CO-CHAIRMAN HALCRO explained that in the Municipality of Anchorage one must receive a Certificate of Occupancy from a building inspector before moving into a new home. Does that apply in the Mat-Su Valley? REPRESENTATIVE OGAN replied no, as with most of the state there are no building codes nor inspections. Commercial buildings are reviewed by the state fire inspector. In further response to Co-Chairman Halcro, Representative Ogan said there is no authority that approves building plans in Mat-Su or most areas of the state. REPRESENTATIVE MURKOWSKI asked if the municipal regulations or borough ordinances had been reviewed with regard to assessors and their ability to be on property. She wondered if there was a lack of uniformity within municipal or borough government regarding the power of the assessors. Number 391 REPRESENTATIVE OGAN said that he did not do an extensive review of the authority of municipal assessors because they have broad authority in the statutes. This legislation would cleanup the statute and establish the standard. REPRESENTATIVE MURKOWSKI restated her question. She asked if there was language in municipal ordinances or regulations that specify that an assessor shall not enter a dwelling or property without permission. Is it possible to monitor this on a local level? REPRESENTATIVE OGAN agreed with Co-Chairman Harris' assessment that HB 22 only deals with entering the premise. Representative Ogan read the language on page 1, line 5 which states, "For investigation, the assessor or the assessor's agent may enter real property [A PREMISE] during reasonable hours to [AND MAY] examine visible personal property and the exterior of a dwelling or other structure on the real property." He said that the assessor must knock on the door and identify himself as an assessor and receive permission to enter the house from the owner. Representative Ogan did not believe that would be an unreasonable policy to impose statewide whether a borough or municipality already does so or not. CO-CHAIRMAN HARRIS inquired as to whether mobile homes would be included in the definition of personal property. REPRESENTATIVE OGAN read the following definition of personal property as found in Black's Law Dictionary, "Personal property includes money, goods, chattels, things in action, evidence of debt. Personal property is divisible into corporal personal property and incorporeal personal property." Number 450 STEVE VAN SANT, State Assessor, Department of Community & Regional Affairs(DCRA), testified via teleconference. He stated that most assessors do not have a problem with HB 22 which encompasses what is typically done. In this particular case in Mat-Su, this was an isolated incident. Mr. Van Sant did not know of any written policies, but every assessor has been instructured not to enter a home unless invited nor should an assessor enter a home if only children are present. With regard to who is in possession of a property, there could be some problems. For example, who is in possession when property is under construction or can an assessor look around if no one is present. Who should the assessor contact when inspecting a commercial property? Mr. Van Sant believed that the case that prompted HB 22 involved miscommunication. REPRESENTATIVE MURKOWSKI asked if the rule in which assessors ask permission before entering a property was an unwritten rule or is it contained in any municipal or borough ordinances. MR. VAN SANT did not know of any written manuals or policies. As a former assessor in Anchorage and Mat-Su, Mr. Van Sant said that all new appraisers are instructed not to enter a premise unless permission is granted. Mr. Van Sant agreed with Representative Murkowski that it was an industry practice. Number 511 CO-CHAIRMAN HALCRO inquired as to who would be liable if an assessor is in the property and the assessor falls down the stairs or is bitten by a dog. MR. VAN SANT did not know. The industry discourages even opening a door if someone inside says, "Come in" because children could be home alone. The industry does not want assessors in the house with underage children. CO-CHAIRMAN HARRIS noted that he had never heard of any assessor entering a home in Valdez without being invited. The assessor would note that he/she could not enter the dwelling, therefore, the assessment could be higher or lower based on that criteria. Is that always the case? Co-Chairman Harris characterized HB 22 as housekeeping. MR. VAN SANT believed that to be the case. An assessor would hopefully report a better indication of value if he/she could enter the dwelling. Mr. Van Sant noted that he had been an assessor for over 30 years and very rarely is an assessor allowed inside a home. Number 550 WAYNE HEARER, Municipal Assessor and Director of Property Appraisal, Municipality of Anchorage, testified via teleconference. He informed the committee that he had been in the appraisal and assessment practice in Alaska for nearly 20 years. Mr. Hearer said that respect for property owners has always been maintained. He noted that he had worked in this capacity in Kodiak, Kenai, and Anchorage. In all three municipalities, if no one is home a door hanger was left requesting contact from the property owner. Mr. Hearer echoed Mr. Van Sant's comments regarding the industry practice to not enter a premise without permission. REPRESENTATIVE MURKOWSKI asked if this legislation was necessary or helpful in light of the current industry practice. MR. HEARER said that initially he did not have a problem with HB 22 because it specified how the industry already interprets AS Section 29.45.130(b). Mr. Hearer expressed the need to clarify the definition of possession and permission. REPRESENTATIVE OGAN agreed with Co-Chairman Harris' characterization of HB 22 as a housekeeping measure. This legislation simply clarifies the existing unwritten policy of the assessors. Representative Ogan believed that the current statute violates the constitutional principle of right to privacy. REPRESENTATIVE OGAN recommended the following, page 1, line 10 insert "actual" before "possession" and on line 9, insert "written" before "permission". Representative Ogan further recommended including language that would "exempt buildings under construction and possession of a general contractor" which would allow assessors to enter building under construction without any impediment. In response to Co-Chairman Harris, Representative Ogan did not know exactly where to insert the language and thought it may be for the committee to discuss. Number 607 REPRESENTATIVE KOOKESH expressed concern with the procedure to attain written permission. Will a written form be required? If written permission is required a burden is created for someone. REPRESENTATIVE OGAN foresaw an assessor getting a form initialed to enter a dwelling before entering. Placing this in statute could expose municipalities to liability if there is a violation with civil action. This type of procedure is required of Fish & Wildlife Protection officers for search and seizures. REPRESENTATIVE DYSON asked if HB 22 had a Judiciary referral. REPRESENTATIVE OGAN replied no. REPRESENTATIVE DYSON said that it seemed the committee could pass HB 22 with individual recommendations, deal with changes in the committee, or hold the bill to Thursday when the sponsor could come back with the changes incorporated in a committee substitute. He inquired as to the preference of Representative Ogan. REPRESENTATIVE OGAN said that he would be happy to accommodate the Chair's wishes. REPRESENTATIVE JOULE asked if HB 22 would necessitate the property owner physically getting up and answering the door. Representative Joule said that he typically says, "Come in." REPRESENTATIVE OGAN said that if he were the assessor, he would open the door and identify himself as the state assessor and ask if the owner would still allow him to enter the premise. Number 657 CO-CHAIRMAN HARRIS said that HB 22 would be held to Thursday's meeting so that Representative Ogan could work on this. Co-Chairman Harris asked Mr. Van Sant if he believed that this would be an unfair burden on the state or local assessor. MR. VAN SANT believed that the written permission would be burdensome, seem to inhibit the process and perhaps intimidate people. Assessors are not searching for anything. To obtain permission is not a problem and is already practiced. Mr. Van Sant believed that written permission could result in inequities in assessments. With regard to mobile homes, mobile homes are considered personal property by statute unless classified otherwise by ordinance. Mr. Van Sant said that he would be happy to work with the sponsor. CO-CHAIRMAN HALCRO agreed with the intent of the legislation, but written permission would seem problematic. REPRESENTATIVE OGAN inquired as to if the assessors had an opinion on including the exemption for construction sites. MR. HEARER did not see a problem with inclusion of that exemption. Mr. Hearer also offered to work with the sponsor. HB 25 - RIVER HABITAT PROTECTION TAX CREDIT TAPE 99-3, SIDE B Number 001 CO-CHAIRMAN HARRIS announced the next order of business to be HOUSE BILL NO. 25, "An Act relating to a municipal river habitat protection tax credit." DAVID GUTTENBERG, Legislative Administrative Assistant for Representative Davies, Alaska State Legislature, read the following sponsor statement into the record, This bill, recognizing the need for habitat protection along rivers within a municipality, is a land management tool that provides the option of protecting fish habitat along the rivers by offering a tax credit to property owners along those waterways. Note that this is not an unfunded mandate. It is entirely optional at the local government level. In 1995 the nineteenth legislature recognized the importance of this kind of protection by granting similar legislation along the Kenai River; this bill would simply extend that option to municipalities along other rivers. There are few, if any, other rivers in the state with the fishing pressure that exist along the Kenai. However as state population and tourism continue to grow, many other circumstances will arise where a municipality may wish to encourage habitat protection. This bill will provide one more option for them to consider. Mr. Guttenberg asked if there were any questions. CO-CHAIRMAN HARRIS asked how this was working from the point of view of the Kenai Borough. MR. GUTTENBERG informed the committee that to date there have been 63 tax credits given to property owners. Mr Guttenberg said that he had not made contact with anyone yet. CO-CHAIRMAN HARRIS inquired as to why this was being brought up; are other municipalities interested in taking advantage of such a program. MR. GUTTENBERG explained that the Fairbanks Riverfront Commission deals with the Chena and Tanana Rivers. Some people have expressed interest in having this option. The Fairbanks Riverfront Commission does not have authority, but can offer recommendations to the borough; the assembly would make the decision. Number 060 CO-CHAIRMAN HALCRO inquired as to the procedure to apply for this tax credit. MR. GUTTENBERG explained that HB 25 provides the municipality with the option to create the borough procedure for application of this tax credit. REPRESENTATIVE MURKOWSKI asked if approval by the commissioner of fish & game was required. MR. GUTTENBERG replied no, the Fairbanks Riverfront Commission is a borough commission that can offer recommendations and planning, but does not have any authority. The borough assembly and planning commission would need to deal with this tax credit. Mr. Guttenberg noted that the process in each borough or city is different. Number 093 REPRESENTATIVE MURKOWSKI referred to AS 29.45.046(d) which specifies, "Before an ordinance is adopted under (a) of this section, it must be approved by the commissioner of fish and game." Subsection (a) is what is being amended by HB 25. Procedurally it would be different because the Fairbanks Riverfront Commission would express interest and discuss this option with the Fairbanks Northstar Borough, but ultimately the commissioner of fish and game would have to provide approval. MR. GUTTENBERG agreed. In response to Representative Murkowski's inquiry regarding how the commissioner of fish and game was involved, Mr. Guttenberg indicated that this could have been a concern for offering protection for a site that did not require habitat protection under the original legislation of 1995. Mr. Guttenberg was not sure. In response to Co-Chairman Harris, Mr. Guttenberg explained that the original legislation was site specific because at the end of the session there was an attempt to amend the legislation to include all rivers. However, it was more important to move the legislation through versus returning the legislation to committee. Number 136 JOHN MOHRCICH, Employee of the Kenai River Center, Kenai Peninsula Borough, testified via teleconference. He explained that his position was responsible for reviewing and issuing permits for habitat protection projects on the Kenai River. Mr. Mohrcich said that he also reviews and issues the tax credit program. CO-CHAIRMAN HARRIS asked Mr. Mohrcich if he was in Kenai or working in his present position when the original legislation was enacted. MR. MOHRCICH informed the committee that he was working for the Kenai Peninsula Borough, but not in his current position with the Kenai River Center. In further response to Co-Chairman Harris, Mr. Mohrcich indicated agreement with Mr. Guttenberg's explanation as to why the original legislation was site specific. At the time of the original legislation, Kenai Mayor Don Gillman and Governor Knowles were pushing to establish the Kenai River Center and there was concern the process move forward which probably attributed to the legislation being site specific. REPRESENTATIVE MURKOWSKI asked Mr. Mohrcich to comment on how this is working on the Kenai. MR. MOHRCICH stated that the Kenai Peninsula Borough supports HB 25. The borough believes it beneficial to encourage the protection of the rivers and tributaries through this tax program. "Habitat protection and restoration projects result in preservation of our fisheries and our Alaska watershed." Mr. Mohrcich emphasized that without the tax credit, those building on the riverfront would bear the entire expense of protecting the river while everyone would benefit. He noted that about 15 percent of the land owners that do a habitat project on the Kenai River apply for this tax credit. Mr. Mohrcich believed this illustrated his opinion that these land owners had a desire to take care of their own property and that such people would often proceed with the habitat project even without the tax credit. Mr. Mohrcich stated that the experience has been positive in the Kenai Peninsula Borough. The ordinance establishing the tax credit included a sunset clause for the end of December 1998 which the assembly extended the tax credit program through the year 2001. During that process, no one spoke against the tax credit program. He noted that he had information regarding the number of applications and the amount the tax credit has saved property owners. Number 236 CO-CHAIRMAN HALCRO inquired as to the qualifications necessary to be approved for the creation of a fish habitat protection project on a property. MR. MOHRCICH explained that basically a project would need to reduce erosion, protect the riverbanks and the banks along the tributaries which would include elevated break walls, wooden boardwalks or stairs, floating docks, and the cabling of spruce trees along riverbanks. Mr. Mohrcich said that these are examples of the projects along the Kenai River that are qualifying for the tax credit. REPRESENTATIVE MURKOWSKI referred to AS 29.45.046(d) which she interpreted as saying that a municipality would propose an ordinance to qualify for the credit and the commissioner of fish and game will reply in writing whether the proposed ordinance is approved or disapproved. Representative Murkowski asked if the Department of Fish & Game had been contacted to determine if the department was supportive or not. MR. GUTTENBERG said that he had not heard from the Department of Fish & Game, but that he would make some inquiries. REPRESENTATIVE JOULE pointed out that HB 25 has a House Resources referral where the issue regarding the Department of Fish & Game could be taken up. CO-CHAIRMAN HALCRO noted that there is a zero fiscal note from the DCRA and there is no fiscal note from the Department of Fish & Game; does that happen later in the process? MR. GUTTENBERG believed that it could occur in the next committee of referral or a fiscal note from the Department of Fish & Game could be solicited. Mr. Guttenberg understood that since HB 25 requires no state action, except the comments regarding the Department of Fish & Game, there would probably be little or no fiscal impact. Number 299 CO-CHAIRMAN HALCRO moved to report HB 25 out of committee with individual recommendations and the accompanying zero fiscal note from DCRA. CO-CHAIRMAN HALCRO noted the lack of a fiscal note from the Department of Fish & Game. There being no objection, it was so ordered. ADJOURNMENT There being no further business before the committee, the House Community & Regional Affairs Committee meeting was adjourned at 9:07 a.m.