JUNEAU -- The House on Monday approved a bill requiring municipalities to make property tax assessments of federally supported low-income housing based on their actual rents, not estimates of market-value rents.
Rep. Andrew Halcro, R-Anchorage, said his municipality's decision to assess low income housing based on an estimate of what rents could be charged was threatening the finances of the projects.
Halcro, who sponsored the House Bill 272 with Anchorage Republican Norm Rokeberg, said low-income housing managers are obligated to cap the rents they charge.
''They can't raise rents to pay for property taxes,'' Halcro said.
The federal government provides tax credits for the projects, which have been built in Anchor-age, Fairbanks and Juneau and are valued at about $38 million, Halcro said.
Anchorage in 1998 changed its method of assessing low- and moderate income housing to a market value system, the amount of rent the properties could expect on the open market.
''Banks are now refusing to finance these properties because they are no longer financially viable,'' Halcro said.
The U.S. Department of Housing and Urban and Development last summer warned Anchorage that the assessments were inconsistent with the city's pledge to increase affordable housing.
Kim Davis, acting director of HUD's community planning and development division, said in a letter that the city's tax policy ignoring rent caps on the low income properties was the greatest threat to the preservation of existing projects and future development of affordable housing in Anchorage.
In Oregon, Washington and California, the projects are exempt from property tax, Halcro said.
Rep. Ramona Barnes, R-Anchorage, said the bill was unfair to landlords who sought conventional housing and are taxed on the basis of market value.
''They are at a very bad disadvantage,'' Barnes said.
Rep. Jerry Sanders, R-Anchorage, questioned whether the bill was another unfunded mandate legislators would be requiring of cities.
But Rep. Fred Dyson, R-Eagle River, said municipalities should not be changing the rules for how they tax low income housing projects.
''This just returns us to the basis on which they got started,'' Dyson said.
The House approved the bill 29-5. Barnes, Sanders, and Reps. John Coghill, R-North Pole, Vic Kohring, R-Wasilla, and Scott Ogan, R-Palmer, voted against the measure, which now moves to the Senate for consideration.
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