txt

SB 177: "An Act relating to the mental health trust fund and the Alaska Mental Health Trust Authority; relating to the Alaska Mental Health Trust Authority's authority to acquire, invest in, make capital improvements to, or undertake other activities on real properties; relating to management of mental health trust land; establishing the Alaska Mental Health Trust Authority Development account; relating to public access to information concerning the Alaska Mental Health Trust Authority or mental health trust land; and providing for an effective date."

00                             SENATE BILL NO. 177                                                                         
01 "An Act relating to the mental health trust fund and the Alaska Mental Health Trust                                     
02 Authority; relating to the Alaska Mental Health Trust Authority's authority to acquire,                                 
03 invest in, make capital improvements to, or undertake other activities on real                                          
04 properties; relating to management of mental health trust land; establishing the Alaska                                 
05 Mental Health Trust Authority Development account; relating to public access to                                         
06 information concerning the Alaska Mental Health Trust Authority or mental health                                        
07 trust land; and providing for an effective date."                                                                       
08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
09    * Section 1.   The uncodified law of the State of Alaska is amended by adding a new section                        
10 to read:                                                                                                                
11 PURPOSE.  The purpose of this Act is to ratify the Alaska Mental Health Trust                                           
12 Authority's acquisitions of, investments in, and development of real estate using amounts                               
13 attributable to principal derived from mental health trust land before the effective date of this                       
01 Act.                                                                                                                    
02    * Sec. 2. AS 37.14.009(a) is amended to read:                                                                      
03            (a)  The Alaska Mental Health Trust Authority                                                                
04                 (1)  has a fiduciary obligation to ensure that the assets of the trust are                              
05       managed consistent with the requirements of the Alaska Mental Health Enabling Act,                                
06       P.L. 84-830, 70 Stat. 709 (1956);                                                                                 
07 (2)  shall contract with the Department of Natural Resources to manage                                                  
08 the land assets of the trust; the contract must provide for the recording of at least one                               
09 conveyance to the authority by quitclaim deed of mental health trust land in each                                       
10 recording district in the state in which mental health trust land is located; a                                         
11 conveyance to the authority is exempt from the platting and surveying requirements of                                   
12 AS 38.04.045(b) and municipal ordinances adopted under AS 29.40; when the                                               
13 Department of Natural Resources manages land assets of the trust under a contract                                       
14       entered into under this paragraph, the department shall                                                           
15                      (A)  manage in conformity with AS 38.05.801;                                                       
16 (B)  consult with the authority before adopting regulations                                                             
17            under AS 38.05.801(c);                                                                                       
18 (C)  provide notice to, and consult with, the authority regarding                                                       
19 all proposed actions subject to public notice under AS 38.05.945 before giving                                          
20            that public notice;                                                                                          
21                      (D)  annually provide the authority with a report including                                        
22 (i)  a description of all land management activities                                                                    
23                 undertaken under this section during the prior year;                                                    
24 (ii)  an accounting of all income and proceeds generated                                                                
25                 from mental health trust land;                                                                          
26 (iii)  an explanation of the manner in which the income                                                                 
27 and proceeds were allocated between the mental health trust fund and                                                    
28                 the mental health trust settlement income account; and                                                  
29 (E)  obtain the approval of the authority before exchanging                                                             
30            mental health trust land under AS 38.05.801(b)(2); [AND]                                                     
31 (3)  shall contract with Alaska Permanent Fund Corporation for                                                          
01       management of the mental health trust fund;                                                                   
02                 (4)  shall use any amount attributable to principal and not                                         
03       deposited in the mental health trust fund under AS 37.14.031(b) in accordance                                 
04       with AS 37.14.055; and                                                                                        
05                 (5)  shall manage the trust and make investments in accordance                                      
06       with AS 37.10.071.                                                                                            
07    * Sec. 3. AS 37.14.031(b) is amended to read:                                                                      
08            (b)  The fund consists of the cash assets of the principal of the trust, and                                 
09       includes                                                                                                          
10                 (1)  money appropriated to the fund;                                                                    
11 (2)  to the extent directed by the authority to be deposited in the                                                 
12 fund, the proceeds of sale or other disposals of mental health trust land attributable                          
13 to principal, and the fees, charges, income earned, royalty proceeds, and other money                               
14 received from the management of mental health trust land attributable to principal;                                     
15       [AND]                                                                                                             
16                 (3)  gifts, bequests, and contributions from other sources; and                                     
17 (4)  net income of the fund directed by the authority to be deposited                                               
18       in the principal of the fund to offset the effect of inflation.                                               
19    * Sec. 4. AS 37.14.031(d) is amended to read:                                                                      
20 (d)  The authority shall adopt regulations providing for the determination of                                           
21 amounts attributable to principal derived from mental health trust land, including                                  
22 amounts from revenue, distributions, and gains and losses realized on real estate                                   
23 acquired, invested in, improved, or developed under AS 37.14.055. Amounts                                           
24 derived from mental health trust land that are not attributable to the principal                                    
25 are income. The method and [UNDER (b)(2) OF THIS SECTION. THE                                                       
26 REGULATIONS MUST PROVIDE FOR THE ALLOCATION BETWEEN                                                                     
27 PRINCIPAL AND INCOME OF MONEY RECEIVED FROM THE                                                                         
28 MANAGEMENT OF MENTAL HEALTH TRUST LAND, AND THE] manner of                                                              
29 determining the amounts attributable to principal and income provided for in                                        
30 regulation [ALLOCATION] must be in the long-term best interest of the trust and its                                 
31       beneficiaries.                                                                                                    
01    * Sec. 5. AS 37.14.035(a) is amended to read:                                                                      
02            (a)  The cash principal of the mental health trust fund under AS 37.14.031(b)                            
03       shall be retained perpetually in the fund for investment by the Alaska Permanent Fund                             
04       Corporation, as specified in AS 37.13.300.                                                                        
05    * Sec. 6. AS 37.14.035 is amended by adding a new subsection to read:                                              
06            (d)  The authority shall use any amount attributable to principal and not                                    
07       deposited in the fund under AS 37.14.031(b) in accordance with AS 37.14.055.                                      
08    * Sec. 7. AS 37.14.041(a) is amended to read:                                                                      
09            (a)  Money in the mental health trust settlement income account may only be                                  
10       used for the following purposes:                                                                                  
11 (1)  the awarding of grants and contracts in fulfillment of the authority's                                             
12       purpose to ensure an integrated comprehensive mental health program for the state;                                
13 (2)  obtaining private and federal grants for a purpose described in (1)                                                
14       of this subsection;                                                                                               
15 (3)  soliciting gifts, bequests, and contributions for a purpose described                                              
16       in (1) of this subsection;                                                                                        
17                 (4)  reimbursement to                                                                                   
18 (A)  the Alaska Permanent Fund Corporation for the costs of                                                             
19            managing [THE PRINCIPAL OF] the mental health trust fund; and                                                
20 (B)  the Department of Natural Resources for the cost of                                                                
21            managing mental health trust land;                                                                           
22 (5)  offsetting the effect of inflation on the value of the principal of the                                            
23       mental health trust fund; and                                                                                     
24 (6)  subject to AS 37.07 (Executive Budget Act), meeting the necessary                                                  
25 administrative expenses of the authority that are required for it to properly discharge                                 
26       its responsibilities.                                                                                             
27    * Sec. 8. AS 37.14 is amended by adding new sections to read:                                                      
28 Sec. 37.14.051. Alaska Mental Health Trust Authority development                                                      
29 account established. (a) The Alaska Mental Health Trust Authority development                                         
30 account is established as a separate account of the Alaska Mental Health Trust                                          
31 Authority. The Alaska Mental Health Trust Authority development account consists of                                     
01       amounts attributable to principal under AS 37.14.031(d) that are not deposited in the                             
02       mental health trust fund under AS 37.14.031(b), including principal derived from                                  
03       mental health trust land managed or invested in under AS 37.14.055.                                               
04            (b)  The authority may establish subaccounts within the Alaska Mental Health                                 
05       Trust Authority development account.                                                                              
06 Sec. 37.14.055. Use of principal derived from mental health trust land. (a)                                           
07 The authority shall use the money in the Alaska Mental Health Trust Authority                                           
08 development account established under AS 37.14.051 for one or more of the following                                     
09       purposes:                                                                                                         
10 (1)  to acquire or invest in real property for the authority to use or for                                              
11 the unit of the Department of Natural Resources that manages mental health trust land                                   
12       to use;                                                                                                           
13 (2)  to acquire or invest in real property to use as a component of the                                                 
14       state's mental health trust program;                                                                              
15                 (3)  to acquire or invest in income producing real property;                                            
16 (4)  to acquire or invest in real property that has the potential to                                                    
17       produce income;                                                                                                   
18 (5)  to make capital improvements to mental health trust land or the                                                    
19 trust's real property investments or to undertake other activities that will enhance the                                
20 value, marketability, or profitability of mental health trust land or the trust's real                                  
21       property investments.                                                                                             
22 (b)  The authority may acquire, invest in, make capital improvements to, or                                             
23 undertake other activities on real property as provided under (a) of this section in its                                
24 own name or through a corporation, limited liability company, or other entity wholly                                    
25 or partially owned by the authority. The authority may create subsidiary corporations                                   
26       for the purposes of this subsection.                                                                              
27 (c)  Any real property the authority acquires in its own name in this state under                                       
28 (a)(1), (2), (3), or (4) of this section shall be designated mental health trust land. Any                              
29 capital improvements to or development of mental health trust land that the authority                                   
30 completes in its own name under (a)(5) of this section shall be considered part of the                                  
31 mental health trust land. The authority's interest in any corporation, limited liability                                
01 company, or other entity under (b) of this section shall be considered an investment of                                 
02       the trust.                                                                                                        
03 (d)  The authority may acquire or invest in real property under (a)(1) or (2) of                                        
04 this section if the board makes a finding by resolution that acquisition of or investment                               
05 in the real property is in the best interests of the trust and its beneficiaries and is in                              
06 furtherance of an integrated comprehensive mental health program for the state. Real                                    
07 property acquired or invested in under (a)(1) or (2) of this section must be located in                                 
08       the state.                                                                                                        
09 (e)  The authority may acquire or invest in real property under (a)(3) of this                                          
10 section if the board makes a finding by resolution that the acquisition or investment is                                
11 in the best interests of the trust and its beneficiaries and is expected to yield, within the                           
12 time period estimated by the board in its finding, a return for the trust in excess of the                              
13 investment returns obtained from the trust fund. Real property acquired or invested in                                  
14 under (a)(3) of this section must be located in the state or in another state of the United                             
15       States.                                                                                                           
16 (f)  The authority may acquire or invest in real property under (a)(4) of this                                          
17 section if the board makes a finding by resolution that acquisition of or investment in                                 
18 the real property is in the best interests of the trust and its beneficiaries and is expected                           
19 to yield, within the time period estimated by the board in its finding, a return for the                                
20 trust in excess of the investment returns obtained from the trust fund, after factoring in                              
21 the cost to make the real property produce income. Real property acquired or invested                                   
22 in under (a)(4) of this section must be located in the state or in another state of the                                 
23       United States.                                                                                                    
24 (g)  The authority may direct an expenditure to be made under (a)(5) of this                                            
25 section if the board makes a finding by resolution that the expenditure is in the best                                  
26 interests of the trust and its beneficiaries. If an expenditure under (a)(5) of this section                            
27 is for a capital improvement, the board shall include in its resolution a finding that the                              
28 expenditure is expected to yield, within the time period estimated by the board in its                                  
29 finding, a return for the trust in excess of the investment returns obtained from the                                   
30       trust fund.                                                                                                       
31 (h)  With respect to real property acquired, invested in, improved, or developed                                        
01 under (a) of this section, the authority may, directly or through an entity in which the                                
02 investment is made, borrow money and grant a mortgage against the real property                                         
03 being acquired or invested in if the borrowing and mortgage are nonrecourse to the                                      
04 authority and the trust fund. In making the finding required under (d), (e), (f), or (g) of                             
05       this section, the board shall consider the debt service on the borrowing.                                         
06 (i)  If any cash principal derived from mental health trust land is held for one                                        
07 of the purposes described in (a)(1) - (5) of this section and is not used for that purpose                              
08 for five years from the date of its most recent receipt as cash, the authority shall direct                             
09       the cash principal to be deposited in the trust fund under AS 37.14.031(b).                                       
10 (j)  The board shall annually, and with each acquisition of or investment in real                                       
11 property made under (a) of this section, review the trust's holdings of and investments                                 
12 in income producing real property to determine whether the holdings and investments                                     
13 are consistent with the prudent investor rule and the fulfillment of the authority's                                    
14       duties under AS 37.14.007(b). In making its determination, the board shall consider                               
15 (1)  the need to preserve trust principal in perpetuity while generating                                                
16       income to support an integrated comprehensive mental health program;                                              
17 (2)  the trust's overall mix of assets and investments by type and the                                                  
18 percentage of assets and investments devoted to income-producing real property,                                         
19 including the real estate investments of the trust fund made by the Alaska Permanent                                    
20       Fund Corporation;                                                                                                 
21 (3)  the diversification by geographic location and type of property of                                                 
22 the trust's income-producing real property, including the real estate investments of the                                
23       trust fund made by the Alaska Permanent Fund Corporation;                                                         
24                 (4)  the use of prudent measures to mitigate any risks;                                                 
25 (5)  the transaction and ongoing costs the authority incurs with respect                                                
26       to the holdings and investments;                                                                                  
27 (6)  the use of real estate to further mental health programs in the state                                              
28       that are supported by the authority; and                                                                          
29 (7)  any other investment policy considerations used by mission-driven                                                  
30 nonprofit trusts, foundations, or endowments managing substantial assets that the                                       
31       board considers appropriate.                                                                                      
01    * Sec. 9. AS 37.14.099 is amended by adding new paragraphs to read:                                                
02                 (4)  "mortgage" means a mortgage, deed of trust, conditional sales                                      
03       contract, or other security agreement encumbering real property;                                                  
04                 (5)  "trust fund" means the mental health trust fund established under                                  
05       AS 37.14.031(a).                                                                                                  
06    * Sec. 10. AS 38.05.801(b) is amended to read:                                                                     
07            (b)  Subject to (a) of this section, the department                                                          
08                 (1)  shall manage mental health trust land under those provisions of law                                
09       applicable to other state land;                                                                                   
10 (2)  may exchange other state land for mental health trust land under                                                   
11       the procedures set out in AS 38.50; [AND]                                                                         
12 (3)  may correct errors or omissions in the legal descriptions of mental                                                
13       health trust land;                                                                                            
14 (4)  shall provide recommendations to and implement the directives                                                  
15 of the Alaska Mental Health Trust Authority regarding acquisitions of real                                          
16       property and investments or other actions under AS 37.14.055; and                                             
17 (5)  shall maintain records of the department's activities on behalf                                                
18 of the Alaska Mental Health Trust Authority or with respect to mental health                                        
19 trust land. Records maintained under this paragraph must be available for                                           
20 public inspection and copying under AS 40.25.110 - 40.25.220, unless the records                                    
21       are confidential under AS 47.30.058.                                                                        
22    * Sec. 11. AS 47.30.011(c) is amended to read:                                                                     
23            (c)  The authority                                                                                           
24 (1)  shall, as provided in AS 37.14.009, administer the trust established                                               
25       under the Alaska Mental Health Enabling Act of 1956;                                                              
26                 (2)  may sue and be sued;                                                                               
27 (3)  may retain the services of independent counsel when, in the                                                        
28       judgment of the authority's board of trustees, independent counsel is needed;                                     
29 (4)  shall insure or indemnify and protect the board, a member of the                                                   
30 board, or an agent or employee of the authority against financial loss and expense,                                     
31 including reasonable legal fees and costs, arising out of a claim, demand, suit, or                                     
01 judgment by reason of alleged negligence, alleged violation of civil rights, or alleged                                 
02 wrongful act resulting in death or bodily injury to a person or accidental damage to or                                 
03 destruction of property if the board member, agent, or employee, at the time of the                                     
04 occurrence, was acting under the direction of the authority within the course or scope                                  
05       of the duties of the board member, agent, or employee;                                                            
06                 (5)  shall exercise the powers granted to it under AS 37.14.041, subject                                
07       to the limitations imposed by AS 37.14.045; [AND]                                                                 
08                 (6)  shall administer the office of the long term care ombudsman                                        
09       established in AS 47.62.010; and                                                                              
10 (7)  shall use the money deposited in the Alaska Mental Health                                                      
11 Trust Authority development account established under AS 37.14.051 in                                               
12       accordance with AS 37.14.055.                                                                                 
13    * Sec. 12. AS 47.30 is amended by adding a new section to read:                                                    
14 Sec. 47.30.058. Public access to information. (a) Information in the                                                  
15 possession of the authority or the Department of Natural Resources relating to mental                                   
16 health trust land is a public record, except the following information is confidential                                  
17       and not subject to public disclosure:                                                                             
18 (1)  private financial or proprietary business information made                                                         
19 available to the authority by or on behalf of a party who requests that the information                                 
20       be kept confidential;                                                                                             
21 (2)  information the disclosure of which would unfairly prejudice the                                                   
22 ability of the authority or the Department of Natural Resources to invest or manage                                     
23       trust assets in the best interests of the trust and its beneficiaries;                                            
24 (3)  information that constitutes trade secrets or technical data                                                       
25       reasonably held confidential in the finance or investment industry;                                               
26 (4)  information the immediate disclosure of which would clearly have                                                   
27 an adverse effect on the finances of the authority or the trust, including information                                  
28       relating to negotiations, pending transactions, or investments under consideration; and                           
29 (5)  information required to be kept confidential or exempt from public                                                 
30       disclosure under federal or state law.                                                                            
31 (b)  The authority or the Department of Natural Resources may disclose                                                  
01 confidential information under this section only for the purpose of an official law                                     
02 enforcement investigation or when its production is required in a court proceeding.                                     
03 The restrictions in (a) of this section do not prohibit the publication of statistics                                   
04 presented in a manner that prevents the identification of particular reports, items,                                    
05       persons, or enterprises.                                                                                          
06    * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to                         
07 read:                                                                                                                   
08 TRANSITION. Cash principal derived from mental health trust land that the Alaska                                        
09 Mental Health Trust Authority is holding in the Alaska Mental Health Trust Authority                                    
10 development account on the effective date of this Act shall be considered to have been                                  
11 received by the Alaska Mental Health Trust Authority as of the effective date of this Act for                           
12 purposes of applying the period described under AS 37.14.055(i), added by sec. 8 of this Act.                           
13    * Sec. 14. This Act takes effect immediately under AS 01.10.070(c).