I would encourage your support for this legislation, which arises from a situation we are facing within the Municipality of Anchorage.

As you know, the construction and operation of low-income housing units is important as such units provide residential space for low-income Alaskans. Certain guidelines have to be met in the construction and operation of these facilities.

While federal law (26 U.S.C. 42) provides for a low-income housing credit as described in the legislation, the Municipality of Anchorage been basing real property taxes due on the full and true value of the property without applying the actual income standard which has been customary. This means that these properties must pay more in real property taxes with revenues that are based on lower rentals than similar units and similar property pay. This is not a way to encourage these projects, which Alaska's banking community and developers have been supporting with the understand that the rental income standard would be used. In fact, financial institutions have been encouraged by local governments to become involved in financing these projects and using the Low Income Housing Tax Credit. The tax credit is the incentive to invest not the rental income stream.

In 1998, low-income housing properties' assessed value for taxation went up as much as 100%. These properties were designed to show little profit and the financial future of some of these projects is at stake. Increase in local taxes cannot be a cause for a rental increase under the program guidelines (which limit the amount of rent charged to 30% of the tenant's income).