HB 264 Would Give Cities the Option to Allow a Five-Year Tax Deferral for Subdividing Property
(Juneau) – The Alaska House passed a bill yesterday to give municipalities the option and flexibility to defer property tax increases on land development as an incentive for expanding housing and economic opportunities.
House Bill 264, by Juneau Representative Cathy Muñoz, would allow a deferral of up to five years on a property tax increase that is associated with subdividing a piece of property. Under the legislation, municipalities could defer increases in property taxes on subdivided parcels until a lot is sold or a residential or commercial building is constructed on a plot of land. The measure would allow a local government to adopt the optional deferral for all or a portion of a subdivided property and let it decide the terms of paying the tax deferral and when those payments are due.
“The idea for this bill came from constituents who see it as a tool to help spur more housing development in places like Juneau that face a tight housing market,” Muñoz said. “They say it would remove a disincentive for developing privately owned property by holding taxes at the undeveloped land value until improvements occur that lead to a parcel’s being developed and sold – thus becoming more valuable and capable of generating more revenues for local governments. Costs associated with subdividing property include surveying and platting as well as making improvements for putting in access roads, drainage ditches, and utility corridors.”
“The bill lets local governments decide whether a property tax deferral will benefit them,” Muñoz said.
The measure is supported by the Alaska State Home Building Association, the Alaska Association of Realtors, the Associated General Contractors of Alaska, and the Juneau Affordable Housing Commission.
HB 264 passed the House on a vote of 36 to 1.
