Anchorage Assembly: Worksession re AO 2026-89 and AO 2026-93, enacting Anchorage Municipal Code Chapter 12.110...

Bills that have been introduced that are scheduled for public hearing on August 4th. Uh, these each relate to incentives for production of homes, uh, and one for first-time homebuyers, which is AB 2026-89, and another for mixed-use multi-unit housing, uh, AB 2026-93. And so combining these, they're, they're programs that each address a different aspect of the housing sort of spectrum, but use kind of a similar means of tax abatement to get there. So both of these do align with some of the stated strategies, both the Assembly's Housing Action Plan and the Mayor's 10,000 Homes in 10 Years Plan calling for the use of incentives to close the feasibility gap as far as residential development and reuse. And the use of incentives to increase the housing stock, essentially.

There's also some language I didn't put up here that relates to the 2040 Land Use Plan too, and about use of incentives and trying to promote housing affordability.

So these programs— so I wanted to put up here, I think sometimes it comes up like, OK, how many different tax abatement programs do we have? And so if we're proposing something new, how do they fit into the overall context? And so I put this table together.

The top 2 under 1235 are for economic development and for deteriorated property. Those are incentives that have been on the books for a long time. I think some version of at least deteriorated property goes back to the 1990s, almost 30 years ago. The 2 green ones, multifamily property and vacant and abandoned property, were ones that were, proposed by the, by the LaFrance administration and with Assembly co-sponsors and passed in 2025. So that's our multifamily property for multifamily rental housing and for our rehab one for vacant and abandoned property.

So these two incentives are intended to fill gaps that aren't addressed by some of those other programs that already exist, right? These, these are for different purposes. These are both for aimed at owner-occupied housing. As well, different modes of owner-occupied housing.

So first up, talking about 2026-893, which is the mixed-use housing tax incentive. So this is to create a tax incentive program for mixed-use buildings that have owner-occupied housing as part of the mix. You could— the prior multifamily exemption for rental housing that we already have, it could actually be used this way too, but it could only apply to rental housing. That's 8 or more units. So this one can apply for condominiums that might be part of a mixed-use development.

And so it is filling a different need there. It's about increasing the housing supply and redeveloping underutilized commercial properties. The core idea here is about things like commercial properties that we have that are underutilized. You know, we, just like many places around the country, a lot of vacant office space or high vacancy office space. We have in this community, at the same time that we have a housing crunch, it makes a whole lot of sense to find ways to help people convert, or building up property owners to convert some of their property to residential uses, if that's at all feasible.

And this is something that's intended to help make that more feasible. Residential conversions are difficult and expensive. They don't work for every kind of building. A typical office building, you know, the idea of office buildings to residential is something that comes up a lot and can be done and has been done, including in Anchorage with one, with, with it, at least one building, the Emerald Building, which has senior housing in it. But it's difficult and it's expensive, right?

The features of an office building are a bit different from a residential building as far as the depth of the floor plan you want. Residential units want to have more windows, more closer access to windows, that interior portion. In an office building, doesn't work well for residential uses. Sometimes there's utilities and plumbing, water usage, things like that that have to be changed, mechanical systems. There's a lot of upgrades that have to happen that make it make it difficult to do.

So providing a tax incentive is one way to help with that. Doesn't necessarily, you know, negate all of these problems, but it can help with that. So the problem that it addresses, uh, um, the BP building comes up a lot. I don't have any exciting things to announce with that building that I'm aware of, but, but it comes up a lot as, you know, here's an example of a large, mostly empty building, um, that could be, you know, converted to this type of use. Uh, a lot of the commercial buildings that we have from the '70s and '80s especially have higher vacancies and need rehabilitation.

So this makes a lot of sense.

And, you know, and to help close some of that feasibility gap. How does it work? Builder or developer applies for the exemption. There's a provisional and a final approval. So before you actually, you know, start building or spending a lot of money on it, you can get that provisional approval from the assessor.

The assessor can grant it to you. Then that gives you the certainty to go forward with the project, knowing that you'll get the tax abatements, and then you get the final approval when the project is completed. It provides a 10-year property tax exemption. The developments has to have to— it has to produce 4 or more residential units. And the units also do have a price cap on this.

We use the average assessed home value, which is about $500,000,— as a price cap has to be below that. Part of the goal here are trying to get housing units that are— that's still a fairly expensive home by a lot of people's standards, but that is putting some amount of downward pressure on housing, trying to give tax incentives to properties that may be more accessible to more of our community. The exemption applies only to the residential portion. So if there's still commercial portions of the property, you know, if there's a street-level store or part of it remains office building, Those are still taxed, and also the land that it's sitting on remains taxable. So the tax break applies to the residential portion of the property, the qualifying residential portion of the property.

So the other one—. Sorry, just to pause briefly. So one is we were joined in the room by Member Park at 1:05 and Member Silvers at 1:07. And then I'll just ask kind of for order of operations. I think It seems like maybe presenting on both of these and then taking questions would make sense.

But I do want to pause and just see, are there any clarifying questions on this first one before we move past?

Okay, Ms. Baldwin. And I'll kind of ask if it's getting into deep substance, let's hear both of them. But if there's something where you want to make sure you understand it before we move on. Yeah, I just want to make sure I understand it.

So is there a requirement here that a portion of the commercial building remains commercial?

Through the chair to member Baldwin-Day, it not a, not like a percentage portion, but it does have to qualify as mixed use. The property has to qualify as mixed use, so it has to meet that definition. So I think some portion of it would need to remain as a commercial use, and I would defer this. So does it have to qualify as mixed use when you start or mixed use when you finish? And I may get my phone-a-friend, Attorney Ben Bowman, to answer that.

Good afternoon, Assistant Municipal Attorney Ben Bowman, through the chair to Member Baldwin-Day. We've set it up so that it would need to qualify as mixed-use at the end, after it— once the rehabilitation is completed. And mixed-use is not strictly only commercial. They could have it so that it is a bottom floor which is Offices, or it could be, you know, top floor could be offices, or more than just residential within the building. That's helpful.

Thank you. Um, that's not entirely clear from the page 2, line 44 and 45. Um, so that for— that's qualifying question number 1, or clarifying question number 1. Uh, clarifying question number 2. I want to be sure I heard this correctly.

So the residential improvement is not taxed, or the entirety of the residential square footage is not taxed?

And I'm thinking about a scenario in which there maybe are 2 residential units, but now there are 8 of them. Are the 2 existing residential units taxed and then the additional 6 6 are not, or is— are all 8 of those residential units now not taxed because they are residential within the mixed use?

So, uh, through the chair to Member Baldwin-Day, um, so I think the second part of your question was if there were pre-existing residential units and then more units were added under this program. The preexisting ones wouldn't be— wouldn't qualify. It would have to be the qualifying residential portions that were under this application that didn't exist prior to this application. Gotcha. So it would be the improvement, not the existing?

Correct. Got it. Thank you. And to point exactly where that's at in the provision, again, Mr. Ben Bowman, through the chair, to Member Bolden-Day, page 5. Lines 16 through 27 is the magnitude of exemption section, and that spells out that the taxes eligible for exemption are those to the extent of state statute and attributable only to the newly constructed or rehabilitated residential units, exclusive of non-residential space and previously existing or non-eligible residential units.

Okay, I think we're good to proceed. Oh, sorry, Mr. Hanlon, go ahead. Yeah, so I have a question. So, um, it looks like this is mostly going to apply to kind of like apartment-style buildings, um, but you guys are like the average assessed home value that you guys are using. I guess, are you guys— do you guys pick that for a particular reason, or I mean I guess I'm looking at this more of should that be, I guess, the average value of similar style, like apartment buildings?

Through the Chair to Member Hendren, we chose the average assessed value, and I think it is actually the average assessed value of a single-family home as the benchmark there, which is really just kind of trying to pick a benchmark that makes sense. That could be consistently applied. And so that was the number that we ended up with, trying not to— trying— we're trying to balance between, you know, offering an incentive that helps development happen, but also, you know, not being seen as subsidizing a high-end, a very high-end luxury product on the market. So trying to balance those two things, that was a standard we picked that it was something we can readily produce from our own data that's transparent and, uh, and, and, and represents a relative midpoint in terms of the cost of housing. That was why we selected it, but it's not necessarily the exact same mode of housing.

And then another one, so, um, it's only units that are sold at this thing, and so I guess how would that apply? Um, so I guess, are you guys envisioning this like, hey, someone's buying, uh, the property and then selling off all the individual units, and those wouldn't be available to rent? They would only be For sale.

Yes, it would have to be for sale. These units through the chair to member handling, they would, they would have to be sold. This incentive is written as an owner-occupied one because we have other incentive of $1,260 for multifamily rental. So that could be for that usage if it's rental, if it's 8 or more units. That are rehabilitated from commercial space to residential.

Okay, thank you.

Okay, I think we're good for now. Let's hear about the other one, then we can get back into questions. All right, so AB 2026-89 is a first-time homebuyer incentive. And so this is aimed at making it easier for first-time homebuyers to afford a home, but also in adding to our housing stock homes that are relatively less expensive. And so trying to incentivize more of them to get built.

So it's— the terms like starter home and others sometimes have a very specific meaning behind them. But something like homes— something like the starter homes that were built after World War II when you had more single-family ranch-style homes or that met a lower price point that people could afford that home for the first time instead of homes that are much more expensive. I can talk a little bit— to talk a little bit more about that. And I know we have Bill Taylor here who's a homebuilder who's spoken a lot about this before. But home prices are up very significantly.

We all know this. We've all heard the stat about 40% or sometimes, depending on what time period you're talking about. Average single-family home is around $500,000. That's the benchmark that we set for assessed value. New construction in our— property tax base, new constructed homes tend to be about $750,000 on average.

And the age of a first-time home buyer has crept up considerably over the years as that graph shows. So it's now right around age 40 or close to age 40, when about 20 years ago it was closer to 30. So this is obviously a major challenge. So the way it works is that the tax exemption is up to 10 years, newly constructed homes that are bought by first-time home buyers There's a definition that we include in the code of a first-time homebuyer. They have to be priced the same as with the other incentive, at or below the average assessed home value, which is currently that number that's just below $500,000.

And it would abate the taxes on the building itself, on the home building, not on the land. The land would remain taxable. It includes a provisional and a final approval step, just like the other incentive did.

Ms. Parker, is there a size requirement or restriction as to the size of the unit that qualifies for the tax exemption? $200,000. Through the chair to Member Parker, there's no size— you mean in terms of the square footage of the home? That's where that— there's no size restriction, just there is a cost restriction.

So a home could, could still be characterized as a new single-family home if it was 4,000 square feet? If it was under that cost, in theory, yes. It'd be a very unusual circumstance, but yes. Okay, thank you. Okay, next time is Bob Monday.

Yeah, I think I'd love to understand how this incentivizes housing production in an affordable range?

Yes, through the chair to Member Baldwin-Day, the, the idea here is that it makes it easier for people who are shopping for homes in a certain price range to afford them. So, so in other words, I think that there's no— there's not as much of a challenge people who are relatively higher income and have higher net wealth, they, they can afford homes that are, you know, newly built homes that are $750,000 or more, much more easily than someone who has less means. Right. And so people who are looking for homes in that $400,000 range or $500,000 range have a tougher time affording even that level. Right.

If we're talking about first-time homebuyers. So if you have a tax abatement that it's attached to that home, it lowers the monthly payment of the house, makes it easier for someone to afford it. And if it's easier to sell, easier to afford, then it's easier to build as well, more feasible to build. I think I'm good until we get to that last sentence because the— this doesn't— so while I understand that we're trying to make homes more affordable, if affordable homes cannot be produced given our current market conditions, zoning restrictions, et cetera, cost of labor, cost of materials, all of those things, then, like, I mean, the, the total, the total supply of housing, newly constructed housing that is under $496,746 is like, that doesn't exist in the market unless it's a condo at this point. And so I think my, my, my question is how this incentivizes a home builder who is already likely working at 3% margin to shave a whole lot more off of the price of the home just on the off chance that they can sell it.

Like, I— like, to me, that, that doesn't— the— like, this doesn't— this, and if anything, it puts more pressure on demand without actually doing much for supply. So I, from, from like that standpoint, I'm, I'm not sure I'm like connecting the dots on how this functions to increase housing supply? Through the Chair to Member Baldwin-Day, you know, there are not many newly constructed homes that cost under $500,000, but there are some, some of them that are townhomes or attached-style homes.

And in a lot of cases, what I hear anecdotally from developers, and I know we have Bill Taylor here who can shed more light on this, those homes often don't sell even as easily or as as the more expensive homes do because people who are buying at the more expensive price point that are willing to pay more for the features of the house that they want, they don't have a problem buying it. People who might be more strapped for cash that could maybe want to be into that cheaper home have a harder time affording it. And so if you give them a tax abatement, you're increasing their purchasing power to buy that house, making it easier for that house to sell. And if that house is easier to sell, then it's more likely to get built. And so that's the chain of logic that we're trying to follow.

So why, why wouldn't you attach the incentive to the income of the buyer as opposed to the price of the home?

Right through the, through the chair to Member Baldwin-Day, and I know that you and I had talked about that, and that, that is another approach that could be taken. That absolutely is another approach that could be taken. I think that, I think that the approach that we have here is, is trying to get more housing stock that's at a lower price point onto the market rather than increasing demand for more expensive housing. I think it's not— I wouldn't say that one approach is totally right or one approach is totally wrong. I think that that's where we landed with as far as what we thought would work.

There is an element to this that is somewhat experimental. I think that we don't have a perfect template for programs that do this. In other places. I think that this is something that we think is worth putting out and trying and seeing if it works in order to solve a very pressing challenge of not much housing production that's at price points that people can meet. Sure.

Do we have an idea of how many sales that we would anticipate? I mean, have we crunched any numbers around, you know, how many folks we think based on current supply would be able to take advantage of this exemption?

Through the Chair, Member Baldwin-Date. No, I haven't seen any kind of analysis or done any kind of analysis on exactly how many people are in this segment of the market. I think there is some that I could try to find and reference for, but I don't have an exact answer to that, except that we know that it is a big challenge for people who are trying to buy their first home to afford. Anything. And Mr. Dole, did you have— did you want to add something as well?

Through the Chair, Bob Dole, Director of Community Economic Development. To be sure, this is a more challenging price point than a higher amount. I'd note though, just looking at this, uh, statistics in the last week, uh, we had a 39-plex come in for about $500 a door, which if you think of, we're right in the range of that $496 now. By the time that they come up for sale next year, they'll probably, with increasing assessed values be right in the range. We also had 3 detached single-family homes in the low to mid $500s come in.

So there it is, there are some that are built in that range. It is a small group, but it is not impossible. But what this really does also, it increases the number of folks who can go from being a renter to that entry level, and that's kind of a strength of it without creating inflationary pressure on the top end. We think we increase the pool that can try to get into that housing and also increase the demand at— increase the opportunity at that level.

Yeah, I think my concern is that we're not actually— unless there's an income element here, we're not actually targeting the folks that we want to target. We're creating access for folks who already have means to jump into a market. And I mean, I'm, you know, thinking particularly about You know, folks who are here on a rotating basis, they work in the medical field. They are not our— they are not our lower or, you know, in that workforce sort of income realm. They're not in that 80-120% AMI.

They're far beyond it. They're renting right now because they don't want to drop a ton of money on a single-family home that they're only going to occupy some of the time, but they would jump in and buy a condo. If there was a tax incentive attached to it. And so like that, to me, we're— I'm trying to square sort of the intent language with where I think we're actually driving in terms of outcome. And I think there's— yeah, I think that's where I'm getting stuck with is in that question of like, who are we actually making assistance or support available to, and are those, like, are we actually targeting this towards those folks?

So, um, I have other questions on the commercial, on the mixed-use and the commercial side of the equation, but I will yield the floor because I'm sure other people have questions, not just me. And if I could, Madam Chair, I can, I can address some of that. I think one thing is that income verification is really difficult for us to do administratively, right?, right? So that's— so that— that there is that challenge of, you know, validating and verifying what people's incomes are for an income-based program. Also, we do have a— I don't think I put this in the slides, but a first-time homebuyer, that does mean, you know, a family of which, you know, no member has owned any— has had an ownership interest in a home in the prior 7 years.

And so it is a group of folks that have been renting. Or some other means that haven't owned a home in that time period. So it's not necessarily an income-based approach, but it is something that is aimed at somebody that hasn't yet broken the doors of homeownership. Yes. Are there any carve-outs for folks who are coming here from other military installations?

Through the Chair to Member Baldwin-Day, there's no specific carve-out like that, no. But that is a good example of a use case, I think, for this incentive.

As long as they hadn't previously owned a home, correct? Okay. Okay. Okay, we got a few folks in the queue at this point. So Mr. Handelands, Ms. Silvers, myself, and then Ms.

Scout. Mr. Handelands. Okay, so just kind of, I mean, one of the maybe, I guess, unintended consequences I could potentially see here with having that, I mean, essentially $500,000 kind of as, as the breakpoint there. Um, I see of like, well, you could have developers essentially creating a larger gap there because like, hey, if I'm trying to build a home that's very close to that thing and, oh hey, well hey, I can remove a bedroom, get it just below that thing to now be offering it with this, this tax exemption, you could kind of see properties kind of shrink there and kind of have a little bit of this gap where it's like, hey, we're going to either build homes that kind of are in this one or things that are way larger. And so kind of, I mean, having that, and so I'm not sure if you guys have looked at maybe a staggered approach with this where, hey, things would maybe like phase out of, hey, if it's a standard deviation above instead of a 10-year, you're getting maybe 5 years of property tax exemption and stuff just so that there's not that like hard break on it.

That's, I guess, something that I was looking at because I mean, for a home about that value, I mean, we're looking at about $80,000 over the course of over 10 years. And so that it, I mean, it's an incentive for people to shift behavior. Through the chair to Member Hanlon, it's the first time anyone's used standard deviation in a work session that I've been to. So, so yeah, phased approach is an interesting, it's an interesting idea. I think I can, there's, there's, I I can see the logic in doing it that way.

Some of it is kind of like designing a program that's relatively simple and straightforward and clear and easy to administer. But, you know, a phased approach, I see where the reasoning for that, you know, where that might be coming from. But we did opt to make something that was a bit simpler, I suppose, in this case. Okay. And then I just had one other question, I guess.

What happens to, I guess, the homeowners there? I guess in year 11, all of a sudden now you're having to pay this property tax. And I guess, I mean, looking at this, I mean, around $8,000, I mean, similar to what we saw in like the housing crisis where those teaser rates were, hey, you're getting people in, and then, hey, now potentially you might not be able to afford it. You've like, I guess, have you guys looked at that or some of the consequences from how a family is supposed to kind of deal with that hard hit year 11? Through the Chair, Member Hanlon.

That is something that we have thought about. You know, you do have a situation where if you go from having your taxes abated to having the full tax bill, that could be, you know, that could be jarring. I think that it's something that comes with the territory of giving a break that has a time-limited duration to it, I think. It does behoove us to have really clear communication about the finite length of the tax abatement and You know, and so it is something that has to be messaged and communicated really clearly to anybody who's taking advantage of it that that would be coming. But it is, you know, I think that the size of the benefit that you're providing, you know, does make it worth it in our view.

If there are ways to smooth out that cliff, I think that that would be something we'd be open to hearing.

Okay, next I have Ms. Silvers.

Yeah, have you looked into ways to encourage or incentivize lower-priced single-family housing that doesn't utilize what is essentially a shift in the tax burden to other taxpayers? Things like permit process, And also, is single-family housing, more single-family housing, is that really where we need to focus our energies on building more of that, or, or would it be better to build more multi-family housing?

Right. Um, So, to your, to your question about— so, so you're— so the second part of your question, I'm sorry, through the chair to Member Silvers, this isn't necessarily about single-family housing only. It doesn't, it doesn't have to be that mode of housing. This could be attached housing, this could be condo housing if it fits the other requirements. So a $500,000 condo, correct, that would get a tax.

If it, if it met the other, which is basically, if it met the other requirements, yes, uh, then it, then it would, um, because that, that would be, in terms of our housing stock, that would be a less expensive new home. That's a pretty nice condo, right? Um, and then, uh, to your other point about what other incentives besides tax breaks could be offered. You know, permit fee reductions, you know, that idea comes up a lot. We do still have to support that department, you know, those departments off of them, and we, you know, we have a challenge with the Building Safety Service Area, and it's not an unlimited thing that we can tap into.

The cost shift that you're talking about, there's, you know, People who live in these homes, of course, do continue to utilize municipal services. There isn't a direct hit in the sense that this is costing the municipality direct funds. There is some indirect absorption of costs that occur. We don't have a number on, but it is true that that does occur to some extent. But I think that sometimes there's a sense that there's like a one-for-one shift where if we give a dollar of tax break to this person over here, then everyone else's taxes go by the same amount.

That's not, it's not quite the case actually. No, I mean, I don't think that at all, but you know, in year 9 you have 9 years worth of tax abatements to what could include $500,000 condos, and that is a tax burden that, that, you know, 9 years worth of people that took advantage of this are not paying and that is being shifted to other taxpayers and not dollar for dollar, but—.

Right, and through the Chair, Member Silvers, I think that there is some absorption of those costs for services. That is true. We think that the need for housing is so pressing that it's important that we do something to get more housing built. And I think that this is what that's for. Um, I'd also add that, you know, a condo, you know, that, that $500,000 new condo, that, that's at the little higher end for condos, but we don't build very many condos in Anchorage at all.

And it's a mode of housing that would provide entry to a lot of people to get into housing that they can buy. And, and if it actually caused more condos to get built, that would be a success, I think.

Thank you. Through the Chair, Bob Dole, Director of Community Economic Development. Two things. First, we continue to work with, uh, Title 21 and Title 23 to find those cost reduction opportunities, such as the suspension of some site access rules and other things. So we are taking it on, on that side too, in terms of lowering that upfront cost going forward.

Also, $500,000 believe it or not, isn't that much. That, um, if I look at some recent projects in Midtown, that is a single bedroom with bathroom and kitchen, uh, being built by one of our most efficient builders in town. Um, it's a different time money-wise.

Thanks. Um, continuing to move through the queue, I have myself in the queue, then Ms. Scout, then Mr. Gerker, then Ms. Baldwin Day. I guess I'll say a couple things. I appreciate the willingness to experiment.

I think you said, you know, kind of looking at different options, so I just want to acknowledge I think that is a good mode to be in generally.

I will also note for folks who take on a mortgage, I know refinancing is always an option, and so that's something to think about is, you know, if you're 9 years in and their interest rate has gone down and maybe you were able to put more equity in your home, you know, that you're 'Cause essentially what you pay every month is your mortgage, your insurance, and your taxes. And so that's where I think that, as I understand it, looking at really what the mortgage payment is, is the key here in terms of what a buyer is considering and what they're able to afford. I think, I guess I wanna put on the table, I think it's a challenging premise, and I think this is maybe what I'm hearing is the accepting the logic of, I think, We agree there's an issue that we want to see more first-time homebuyers, we want to see smaller units, we want to incentivize that. I think tying that to basically the chain of logic being that someone who is buying a home for the first time is buying a brand new unit and they are buying below a certain price point. I think my personal experience, and I know many others, is really purchasing an older unit, you know, which is someone is selling either because they're selling up or down, and because you need,, you know, maybe $100,000 worth of work on it, right?

Or it's just not updated, even if it's in pristine condition, it looks like 1976 in there, right? So, I mean, there's that, there's that kind of— and so I think that has been a very viable path to homeownership for a lot of people. And even that's out of reach, obviously, with the high price point. But I guess, so the question is, have you considered really— and obviously rehabilitation or substantial rehabilitation of an existing unit is a whole challenge for tax incentives, but have you thought about that generally. I think that that's something that I'm not clear if that's in addition to this instead of this, but I think there's that path to homeownership that I think we need to explore.

And then lastly, I'll say it's not a question, but I think as I'm listening to this discussion too, I think we've been talking about housing for so long and we've had turnover on the body that I think maybe we also could have a broader kind of work session on housing, you know, kind of backing up, looking at what we already have And so, and that's way bigger than this conversation, but I just wanna say, I think that might be valuable and to really kind of dig into some of these issues and understanding the mechanics of the housing market. So, but my question is really rehabilitation. And did you consider that? Yes, Madam Chair. So we have considered rehabilitation.

We do have the 1280 tax exemption on the books now, which is admittedly, narrow. It's focused on properties that have been, you know, reached the point of being vacant and abandoned that are getting redeveloped. And that program has had a lot of early success and early interest, being utilized by quite a few folks already. So it addresses part of that, but it doesn't, you know, it's for the most, for the worst-off homes, right, that get that, not a broader group of them. So I think that there is room for other incentives, for additional incentives that address rehabilitation more broadly.

But I would also add, too, to your point about most people who are trying to get into home buying for the first time are probably not buying a new home. And that's true. That's definitely true. And I think that'll remain true, that I own a house built in 1982. I mean, I think a lot of us are going to be in that situation.

This isn't going to change that. We're not trying to make it so that everybody gets a new home for their first home. But I think it is worth thinking about— I used to live in Nunaka Valley. About a 720-square-foot ranch home. Um, grateful that that home existed.

Um, that home wouldn't be built today. Uh, but what if we tried to make it so that we had some smaller, more modest homes that were built, um, that are not being built now? And would that be a good thing for our housing stock? And I think that the answer is yes.

And, uh, Assistant Municipal Attorney Ben Bowman through the chair to the chair, uh, rehabilitation is considered in this. It is, uh, these are newly constructed units, but it could be in a newly constructed building or a rehabilitated building that's in 1200 that it is either newly constructed or rehabilitated mixed-use commercial, but it has to be newly constructed residential units. So a conversion or something like that would qualify under this section as well. But as, as Nolan said, we're trying to build a toolbox of housing incentives.

Thanks. And then last shorter question, I think, um, it would just occur to me, um, our residential, uh, tax exemption. So, uh, if you're an owner-occupied unit, you can apply for that. And then let's set aside the question of the senior disabled, like let's say it's course there's, there's a Venn diagram where that could be both. In this situation where they have this tax incentive, are they able to access that?

Would they stack that on to that and therefore get a tax break on the land as well? I think that's— if it's not addressed here, I think it's something we need to address.

Yeah, through the chair to Brawley, this is Jack Adames, Municipal Assessor. From my recollection, and Mr. Bowman can certainly chime in, I don't think there's anything that would preclude an applicant from applying for one of these incentives on top of the residential and/or senior or disabled veteran exemption. And then yes, the way it probably would be calculated is that residential exemption largely probably go towards the land.

And, and This is Mr. Principal. You don't have to say your full name in the record. That's okay. Yeah, go ahead.

Gotcha. Jack's right. It would— the exemptions that are— that, like, the senior exemption and the residential exemption, they come off the top of the valuation tax bill. This would apply at the front end. Okay, thank you.

So next I have in the queue Ms. Scout, then Mr. Gerker, Ms. Baldwin-Day, Mr. Martinez. Thank you.

I have a lot of questions. I'm gonna try to be concise. I guess looking at and hearing the problem statement for this proposal and then what the solution actually is, I guess I'll just share my perspective that I, I don't, as a 32-year-old person who bought my first home when I was $28,500K, $400K was not in my price range. Not even— it's not in my price range currently. And I can maybe name like 1 or 2 people I personally know my age who could do this.

So if this is the problem we're trying to address, I think the solution is missing the mark. It could be a good solution for other issues, but I just, I'm having a hard time making sense of this as the target demographic here.

And with that, my question— I know you talked a little bit about the property tax impacts, Nolan. I am curious about the impact on the rest of the tax base. And so that's maybe my first question. And then the second one is, where do we predict— do we have knowledge of current buildings, current areas of town where we predict that this would actually be put to use in the next, you know, 8, 9 years of our 10,000 homes in 10 years timeline.

Yes, through the chair to Member Scout, the, you know, that, that what your comment about the $500,000 price for someone early in their adulthood looking for housing, this will not be a silver bullet that will solve that problem. And that's a multifaceted problem that we have to tackle in a number of ways. And I think that we don't put this out as a solution for that, that's going to solve everything. But does it create more room, more affordability for more people who are trying to buy a house. And that would be the hope, right?

That would definitely be the hope. And I think it's also important to think about how the role that new housing plays in freeing up the existing housing stock so that people can afford that. And so there's looking at the whole picture. Because I mean, even very expensive homes that get built now, they create some movement in our housing stock that allows older homes to be freed up that other people can afford. And so it's still a good thing for the overall picture.

So I'd make that point. The effects on the tax base, I think, you know, both of these, you can look at both of these two as that, yes, we are giving a tax break, but I think that they are also supporting long-term growth of the tax base, I think, as well. 'Cause I think that they do become taxable, they do get added to our tax rolls. And if we're incentivizing something to get built that wouldn't otherwise get built, you know, then we are, you know, gaining the tax base, right? So I think that there's that piece.

As far as locations where this would get, where this would get used. It's very hard to say. I think if we're talking about the mixed-use one, it's probably more likely to occur in more of the central areas, midtowns, downtowns, I think, is where you'd expect to see. It's got to be in areas that have that kind of commercial zoning or mixed-use zoning where it's allowed. So it's going to be in relatively confined parts of the community.

The first-time homebuyer, it's really wherever homebuilding is taking place. It could be Could be just about, just about anywhere, I think, that's residentially zoned. Thank you. Just a couple more questions. I see in the first-time homebuyer policy there's an exclusion for short-term rentals.

Is there an exclusion for long-term rentals? Is there anything prohibiting a first-time homebuyer from buying this and then just turning it into a long-term rental property? Through the chair, Member Scout, they have to be the The, it has to be owner occupied by the recipient of the tax abatement. So they could theoretically rent out, like if it was a 2-bedroom, they could rent out 1 room or something. Yeah.

Yeah. Okay. That seems like a plus. Um, and then my question around the, is around the price point here.

Um, were there considerations around tying it to average income and what an average income of somebody in this target demographic could afford. I'm curious about that approach on the front end rather than tie it to average home value, but actually like if we're talking, trying to solve an affordability issue, um, and not create a paperwork burden, could we tie it to information we have about how much people actually earn?

Through the chair to Member Scout, I think that the benefit of having— of tying it to an average assessed value is that it's data that we have and we have access to that's got some transparency associated with it. It's easy for us to collect and gather and, you know, know what went into it. So we opted for that. I think that, you know, we had the discussion earlier with Member Baldwin-Day about an income-based approach, and so You know, we opted not to design it that way, I think, for some of those reasons— the difficulty of administering income-based approach, some of those kinds of challenges. But I do understand, you know, where that concern would be coming from.

Okay, thank you. No further questions. Thanks, Mr. Gerker, then Ms. Baldwin-Day, then Mr. Martinez. Awesome, thank you. This might be a really ignorant or maybe even dumb question, but if you spend any time in my comments section, that's surprise you.

This is for first-time homebuyers, and developers won't necessarily know if it's gonna be a first-time homebuyer that's buying the property, right? So developers are being asked to— to remember all the Monday's point— shave costs on a development on the hope that it's a first-time homebuyer. Is that, is that correct? Uh, through the chair to Member Gerker, that the idea would be that this could be something that would make it easier for that home to sell, right? So it could be marketed as that.

If they went through the application process, got provisional approval, and then ended up selling it to someone who's not a first-time home buyer that doesn't qualify, then they could still do that. It's just that person just wouldn't receive the tax break. So, but you're right though, developers have to have confidence in the marketplace and that somebody is going to utilize that in order to buy the home in order to make it worth their building. So there is a confidence game there. They have to have some confidence that the program, you know, is real and that it exists.

So I think we have a track record of having these tax abatement programs in other areas, but, but there is definitely a market confidence aspect to it that has to, you know, take hold. I think that the home builders are good at making that decision and know their customers. Yeah, no, I mean, they're, they're definitely, you know, the best in the game. But, um, just given all that we've seen and we've looked at as far as the trends of who's buying houses in Anchorage right now, I don't know that it's first-time homebuyers. I don't really know there's really that, you know, bigger market.

It's just really incentivize what we think it does. Not, you know, not saying no, just saying I'm not sure that it's going to be as quite as effective as we're hoping. And the second thing is actually more of a comment. While I've got the floor and we're in a publicly noticed meeting, just want to go ahead and drop this in. Mr.

Cloud, I appreciate all the work that, you know, we've had back and forth about excluding service areas and the service areas and the boards and stuff from, from the tax exemptions, from their tax exemption portion of this. The conversation I just had is that there's state statute that would exclude an elected board for a service area. So in my district, that'd be the Chugiak Fire Service Area. They have an elected Board of Supervisors. That would not include the Road Board or the Parks and Rec Board.

And my intent, and Donald and I's intent, is to introduce an amendment to exclude— to give them the option to exempt themselves from the tax abatements for the road and park board. So I just want to familiarize everybody with that, and that is where we'll be coming from on that angle. I suspect also Member McCormick and Johnson probably have some thoughts on that because they also have a lot of service areas in their area. Thank you, sir. Yes, through the Chair, Member Gerker, and we definitely understand that concern about small, especially smaller service areas, and then the abatement being more of a hardship for them than it would be for larger service areas, right?

So certainly understand that. And Ben can weigh in more so on this if you want to hear more of it, but yes, you're correct that there is that state statute that that is, and I think it applies to service areas with an elected board, is that correct, that they can opt out of the program essentially by resolution and within 60 days of the effective date. And so, so that is, so there's that means, but there could be room for additional amendments.

And I'm happy to have the larger discussion to whatever degree we need, but by state statute, the empowering statute that allows the Assembly to to create this tax exemption gives any elected service area board or special tax area the option to, within 60 days of the effective date of the ordinance— we can completely choose when that effective date occurs to give them more time if necessary— they can opt out. They can pass a resolution and say, we're out of this. And it would be opting out only for the portion of the taxes which would go to fund their services. Correct. So it would still provide some measurable benefit to the builders, to the first-time homebuyers, to the mixed-use, but all of these the boards can opt out of if they so choose.

Correct. And the amendment we'd be running would be mirroring that language and that process for the Parks and Rec Board and for the, for the Road Board. It seems like a win-win for me. So thank you.

And, um, and Madam Chair, I do have a couple more slides. I think we've largely got the capture the gist of it, but if I could run through those. Yeah, I think that'd be helpful. Thank you.

So we've discussed a lot of these, but how does the tax break help the housing get built? By making it easier to sell or pre-sell the units. And I think that this is especially an issue— the pre-selling is, is often a big issue with condo— with condos getting financing for the developer. They often have to pre-sell a certain percentage of the planned units Some of the condos that have been built in the past, for instance, Downtown Edge, the developer of that property, I've talked to him. He said that it was really critical that— this was under the old 1260 multifamily abatement— that tax abatement basically was a marketing tool that allowed him to pre-sell more of the units that allowed that development to get built that he said really couldn't have happened without that.

So that's an example. Giving the buyer more purchasing power, lower monthly payment. So we're talking about not as many builders wanting to serve the first-time homebuyer. Well, if you give them a little bit more purchasing power by giving them a tax abatement, then you do see some benefit there. And I would add, too, to some of the concerns about an income-based approach, that people who don't own homes are usually lower income on average than people who do own homes.

When you have people who are not homeowners already that are first-time homebuyers, you know, that is going to be a group that has lower income on average. There can always be exceptions. Helps the buyer obtain financing with that lower monthly payment and encourages builders to produce less expensive homes. That's the hope.

So both programs have a provisional and final approval. They both work where the developer applies, exemption goes to the owner-occupant. They're both 10 years. Land and non-residential portions remain taxable. Anywhere in the MOA is eligible with the caveat of the service areas just mentioned.

There is annual reporting to the Assembly, and short-term rentals are— this always comes up— there are provisions to exclude this from being used as a short-term rental, or for that matter, as a long-term rental if it's the whole, you know, of the unit, right? So it's an owner-occupied. These are both owner-occupied programs. So with that, we did talk a little bit about the fiscal impacts as well, so I don't I won't go into more detail there, but the idea here is hopefully to promote long-term growth of the tax base and produce more housing, more modes of housing. So that is it for me, and I think we're probably just about at time.

Yeah, I think we can— so we do have another work session that starts at 2:15. I think we can go till about 2:05. Or yeah, 2:05. So next I have in the queue Ms. Baldwin-Day. Well, no, Mr. Martinez is not asking.

Questions. Yes, I wonder if maybe we can go to Mr. Martinez, then Spaulding Day, then Mr. Handeland if we have time. Thank you. You, uh, thank you, Nolan. You've answered a couple of the questions along the way, but I just wanted to work— and perhaps Mr. Do, you can address this as well— the mechanics of the marketplace.

There's like this difference between the theory, um, and what people hope for, and then the actual mechanics. And some of the mechanical questions kind of been highlighted. For example, Who, who gets—. Who does the tax incentive— who uses this tax incentive to build the units? If one of the, the, the, the intentions is to have homes being built and the other intention is to have folks getting in the door, essentially, who uses the tax benefit to build the actual home?

Through the chair to Member Martinez, you know, the idea here is that the builder applies for the tax abatement, gets it, and it uses it as something that helps them sell that home, which is something that helps them build that home. So that's the idea. The builder isn't the one who pays taxes on the home over the life of the home, it's the owner, right? And so making it tax-exempt is the idea is to make it saleable and thus buildable in a way that it wouldn't be otherwise. That's the logic behind it.

We're gonna have this, I'm gonna continue just a little, Further along the line with the next question, there are some builders in the room, at least one that I know of, and if we're getting something wrong, flag us, grab us out. But just wanted to track that from that vantage point. Then essentially getting in the door is a separate question than the building part. And if we're talking about who we're targeting, I have a challenge with the level of the value versus like attainability to a marketplace of where people find affordability based on their income, not necessarily based on the value of a, of, of a particular thing that they want to buy. So the income important.

And I just think back to Mechanics. Wouldn't it make sense that the home builders who want to have the tax incentive available to the people that are otherwise their potential buyers find a price point that would speak to both of those things, that would still find a price point that would be in the range where they could qualify for the tax benefit, available, available tax benefit for the purchaser. But it's also, um, gives them the ability to do that, to kind of build it, not know if they're going to get the benefit, but find a price point that speaks to potential income levels that are something maybe beyond our control. You talk about verifiable information. You can only verify the income of a person at the purchase point.

Um, so you kind of create the environment where that they can potentially meet. Is that the mechanic that I'm understanding you're describing here? Uh, through the chair to Member Martinez, if I, if I'm understanding correct, I think you're, um, are you suggesting maybe it's easier to not set a price cap and allow sort of the builder to set that price that they think is most appropriate based on who the first-time homebuyer might be. Is that correct? No, I'd say that without the price point, without the cap, any price could be set, and that's not where we want to target the marketplace.

But part of the challenge is that income level makes us have a better, accurate level of affordability to the buyer. So they're buyer. And, and so the challenge presented today was, can't we use income verification for the tax benefit? But that's not where the building happens. The building happens prior to the buying even comes into play.

So presumably the marketplace would find the mechanism between the audience and the tax break that you couldn't build something bigger than the tax break, or you were not gonna get the break on that the additional, but you want to find something that the audience, your, your buyers are going to find available. So it's probably not at the tax break level of $500, probably lower than that. Just thinking of mechanisms into a marketplace. There's a home builder in the audience. If we're, if we're missing that, how the marketplace kind of works, because my presumption is the home builders are gonna be excited about this because they want people to get in the door.

They're not going to price them out of getting in the door, and they probably know better than you and I today what that price point is for getting in the door really is to the markets, to the audience that they're targeting. I just wanted to work that mechanics out, because if there's something wrong about that, just flag it, because it seems to me that that's something the way it works. Now, we could put levers on affordability to income levels, but we couldn't know that necessarily at the building level, and it might, it might create some restrictions for what the builders can do in the marketplace. So I just want to make sure that at least the way I'm thinking about that was, was relatively for actual mechanics of the marketplace. Um, and then the last question I had is essentially, does this also follow the first-time homebuyers programs, FHA sort of stuff, uh, where a first-time buyer could also be replicated depending on the process, not actually the lifetime of buying a property?

So you can have multiple of these across your lifetime?

Through the Chair, Member Martinez, to your second question about whether it matches up with, you know, other programs under HUD or FHA, yes, it does. We borrowed that first-time homebuyer definition. We actually made ours, I think, a little bit stricter, but if you qualify for theirs, you would qualify for ours as well. So yes, it would allow that stacking of these different of different benefit types of programs. To your broader point about the mechanics of the market, I think that, you know, we work with a limited, relatively limited toolset, and we also have to think about the simplicity of a program, how easy it is to administer.

I think that in a perfect world there probably is some other way of doing it. We haven't quite identified that. I think we're open to ideas about how to better match what the builder will build and what the buyer will buy. But I think I think we haven't arrived at a better solution to date. Thank you.

I appreciate that. Thank you. Okay. So I do recognize, I know there's probably a lot more discussion we can have on this. We set ourselves 2 minutes maximum.

So I'm going to suggest that, apologies to folks who are still in the queue, but we need to end this. So I wonder in the last 2 minutes if you guys want to kind of have any closing comments and then reiterate it. I will say I know both of these are going to be on the— and they're separate ordinances, of course— they're on the agenda for August 4th, I believe, for the first public hearing, or a public hearing. So beyond that, I don't know if you guys have any closing comments or if you want to state any intention.

Your microphone is off.

Thank you, Madam Chair. Yeah, I think, you know, this is a really good discussion. I appreciate this. I think that, you know, we are trying to to address, develop tools to address kind of sticky, challenging problems that we have with housing. These are not silver bullets.

These are incremental bites at the problem. I think these take meaningful steps toward getting more housing onto the market that meets the needs of more of the buying public and renting public as well. So we're trying things. We are open to ideas for how these can be changed or improved or, you know, made better. Very open on that.

But otherwise, we appreciate the discussion today. And, you know, please feel free to contact me if you have other questions and/or ideas. Thank you.

Thank you. It is 2:05, so we will adjourn this work session, and we'll be back in here at 2:15 on a different topic for our last work session of the day. Thanks, everyone.