The Alaska House of Representatives Monday approved and sent to the Senate a bill aimed a reducing the cost to develop new housing.
Sponsored by Rep. Cathy Muñoz, R-Juneau, and others, House Bill 264 would allow cities to defer collection of increased property taxes on new subdivisions until the homes are built and sold.
As it is now, subdividing significantly increases land values and the accompanying property taxes for developers.
“As soon as that process is initiated and finalized, the tax burden goes through the roof, sometimes five times — sometimes 10 times — the pre-filing rate,” Muñoz said.
Muñoz said local homebuilders and the Alaska State Home Building Association brought the bill to her hoping to lower the cost of development.
“In communities like Juneau that are experiencing a limited land base and high housing cost, that extra carrying cost is a huge deterrent to new subdivisions and new housing development,” Muñoz said, speaking at a press conference before the bill passed overwhelmingly on the House floor.
Helping out the bill were its co-sponsors, including House Speaker Mike Chenault, R-Nikiski, and Minority Leader Beth Kerttula, D-Juneau.
“This helps us have more development in Juneau, and we need it — we need more housing,” Kerttula said.
It is difficult for developers to pay the ongoing higher costs during the development process, but, when the houses are later sold, the money to pay the deferred taxes is then available.
Developer Hugh Grant, as well the Juneau Affordable Housing Commission, endorsed the bill.
Commission Chairman Alan Wilson said the bill removes a disincentive for real estate development and offers a new tool to help make housing more affordable.
Sen. Dennis Egan, D-Juneau, said he thinks the bill has a good chance to pass the Senate as well, despite the short time left in the legislative session.
“It’s a good idea,” he said, but it took some changes to get municipal endorsement. There’s now a deadline of five years for the deferred taxes to be paid.
“There were concerns, but with the cities’ endorsement I think it has a good chance of action this year,” he said.
It would be up to cities to decide whether to offer the property tax deferral, according to the bill. Muñoz said the cities will not only get all the deferred taxes, they’ll also get the additional taxes from any development the bill spurs.
The session ends April 15, and the House will stop committee action on its own bills next week and consider only Senate bills after that, said House Majority Leader Alan Austerman, R-Kodiak. The Senate is expected to take reciprocal action.
• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.
Comments (13)
Add commentGee, Hugh Grant endorsed the
Gee, Hugh Grant endorsed the bill? Bet he was clicking his heels all the way to the bank...
It's not like
It's not like Hugh Grant or any other developer is trying to get out of paying the tax's, they just want to defer them. Makes good business sense to do that. Sounds like a wee bit of jealousy in your comment "kpawsuh"!!!
Good idea - but....
If the developers would guarantee to pass the savings on to the home-buyer, rather than just adding it to their profit margin - great!! However...
Back in 2005, Hugh Grant bought that 31.5-acre land parcel behind Fred Meyer for $375,000 (well under it's then appraised value of $930,000). And this was done, after CBJ had already made significant (and expensive) drainage improvements to the property. As part of this "good ol' boy" deal, Grant promised to work with the Tlingit-Haida Regional Housing Authority to build/develop affordable housing on the site for Juneau.
Hmmh... I believe that Mr. Grant gave the property to his son, who in return, did build a personal home there, but most definitely - did not construct affordable housing.
Incentives are good (and, perhaps necessary), but we really don't need any more useless giveaways. If this bill is passed, just make sure there are accompanying conditions.
Why?
Does anyone know why this has to be a State Law? Seems to me that the assembly could have done the same thing.
Great legislation, and great process.
This is the way the process is supposed to work. There is a need for more housing, and the housing industry and housing advocates agreed on a need, went to an effective legislator, legislation was introduced, everyone had an opportunity to weigh in, and the legislation passed the House.
It should pass the Senate but it may be held for trading stock at the end since the bill had so much support in the House. That would risk the bill not passing the Senate since the end of the session is likely to have a big wreck.
This was a decent article, and it was placed on the front page where it belongs. The writing deserved at least a B+. Editing might have been a little better.
total nonsence
As soon as a subdivision is completed the owners can sell the undeveloped lots for market value. The developer can use the subdivision lot values as collateral and borrow money on the basis of those values. A sub-divider could hold those lots undeveloped indefinitely and not be paying the taxes. Sounds like a great deal for the sub-dividers and those who would speculate on the properties.
And yes this is a legislative matter becasue the current state law required property to be accessed at its market value as on December 31 of the prior year.
Am I missing something
Am I missing something here?
Differing property taxes for developers is good for developers but what about the rest of us.
The "rest of us" are looking at increased fees and less services.
"There’s now a deadline of five years for the deferred taxes to be paid".
I have not seen any "developers" in town that have needed a tax break and if so many people need homes "developers" should certainly have the cash flow to pay the tax, so why give developers 5 years to pay up, when the city needs revenue?
Yes, It is a win for the "developers".
Now with this as a possible win for the developers - lets all ask of the Senate to make some improvements to this bill. Lets see if they can assure that the public gets a promise for "quality neighborhood building" rather than the same old for profit building.
Leave some trees on the lots for god sakes and let the public use the trees you cut down rather than clear cutting lots and burning everything up in smoke.
The public has to breathe all that smoke during the summer months and I am certainly tired of it. Such wastefulness should not be allowed.
Five years of collecting
Five years of collecting interest, maybe?
Jealosy, you say budget? More like disgust. I have been in Juneau for multiple decades and watch as Grant makes Millions, building cheap crappy housing and selling it for $500K. I guess he's better than Madsen, but barely. These guys also get sweetheart deal left and right. Just go look at the assessors database. These guys have thousands of acres in Juneau, yet are barely paying any property tax. They are also sold these acres for pennies on the dollar, pay next to no taxes on them, and then throw up a mediocre at best house and sell it for $500k. They get more for one house than they paid for the entire plot of land, which they subdivide and sell 50 homes on.Its not that they are merely doing what others dont want to do, its that they get special deals that no one else gets and therefore no one else can afford to do.
No jealosy. Pure disgust at Grant and at the people who give him the deals, selling him our land while collecting a paycheck from us, the tax payers.
No war at all if they get
No war at all if they get there by hard work and sweat. Only if they get there by greasin palms and back door deals. Play fair and honest and I will shout your praises from on high.
roughcut?? I think you got
roughcut?? I think you got that one all backwards buddy.
Chill kpawsuh....Nowell is a
Chill kpawsuh....Nowell is a good Irishman who earned his keep and is more generous than you probably know. I'd rather him have the land and the $$$ than the pinko-kyayakers who'd sooner turn the land into some porcupine or beaver preserve......
Frankly, you sound like one of the damn moochers.....