Legislature(1993 - 1994)
04/29/1994 04:00 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 217 - INCREASE LAND GRANT TO UNIV. OF ALASKA Number 020 WENDY REDMAN, VICE PRESIDENT FOR UNIVERSITY RELATIONS, UNIVERSITY OF ALASKA, said "This bill started out...as a fairly simple idea and we thought that it would have a tremendous amount of support and frankly, I've been a little bit surprised at how controversial it's become. As you know the University of Alaska is the state's land grant university and that's a concept that we've found is more difficult for people to understand than I would have thought in this state. People in Alaska aren't used to thinking of the University of Alaska as a land grant university... because, first of all, we didn't have access to our lands until 1978. Our original land grant lands , which were approximately 100,000 acres, were given to the state of Alaska to manage and our lands like the mental health lands, were mismanaged, were included with municipal entitlements, were given away in homesteads. The Chilkat Eagle Preserve was university land, much of downtown Anchorage was university land, the Minnesota bypass was all university land. We had to go to court to get our land back too, which we got back in 1978. It then took another decade for us to make land selections to try to get land of equal value so it's a new thing in Alaska to have the University managing its own land. It's only been really in the last five years that we've actually had real control of our lands and begun to try to make the investments necessary to support the university." REPRESENTATIVE BILL WILLIAMS joined the committee at 4:11 p.m. MS. REDMAN continued, "The whole idea of land grant universities was that they be given land to help support the educational research and public service programs at a public university. When the federal government first assigned lands to the University of Alaska, the original bill would have given the university 260,000 acres, I believe. At the time of statehood, the lands had not yet been conveyed and the Statehood Act itself extinguished the transmittance of that land. At the time, the thought was that the feds were giving the state of Alaska so much land that they would be able to make up the difference. Only 100,000 of the total had been conveyed at the time of extinguishment and that never happened. So we came back, and actually this whole thing began with the Governor, who in appointing five of the eleven regents and in his discussion with the new regents, what he has told them is he expects the regents to manage their ranch. They pointed out to the Governor that in fact the university didn't have much of a ranch. So this idea really began with the Governor and the board of regents going back to the history and deciding that we would come back in and try to in fact secure a land base to try and help support the university over the coming years. We originally started out with the idea of five million acres...trying to figure out if we took the average of what all the other state land grant universities got of their federal land grant, it would have been five million acres. We're now down to five hundred thousand acres as a result of action in the Senate. I think the board of regents and the university administration are extremely conservative and sensitive about the future funding that will be available to the university and want very much to try to figure out how to make us less dependent. During the last decade, the university has gone from 60 percent of our total budget being general fund to now 40 percent. We're going in the right direction. We're trying to do everything we can. We've over doubled tuition in the last decade. We're bringing in more and more federal receipts. We're trying to figure out how to leverage what money we have to get more money... This is just another tool for us to try to generate the revenue that we need to support growing student enrollment. During that same decade our student enrollment has gone up over 20 percent...I think that we are being realistic and we would like the legislature to try to work with us in trying to figure out how we can come up with some alternative revenue sources. Land management is one way that we can do it." REPRESENTATIVE JERRY SANDERS joined the committee at 4:15 p.m. MS. REDMAN continued, "The bill has become extremely controversial... There's been a lot of misinformation put out and a lot of information from people who are concerned about things that are not misinformation, they're just differences of opinion. There are many people who feel that there should not be more state land in private development... There are other people who feel that the university's particular kind of selections may not be the selections that they would like to see. We've tried to...respond as much as we could to the concerns that have been brought to us by both state agencies, as well as private groups and individuals, in terms of trying to amend the legislation in a way that we hope will make it more popular. There are some things that we simply can't fix. The legislation does not take effect until after final resolution of all the mental health claims and until after final resolution of all of the municipal entitlements... We've extended the time period for selection on oil and gas lands to five years from the effective date of the bill. That was a concern of some people that DNR doesn't really have all of their lands selected right now into the five year oil and gas leasing plan. We're prevented from selecting anything that's in that plan and they wanted to give DNR extra time to get more lands into that. We also added additional language in terms of public processes and notification, trying to make people feel a little more comfortable... There was also an addition in the Senate, in the final version that required consideration of traditional use both prior to conveyance by DNR, as well as prior to implementing any particular development program by the university for plots of land. Number 202 MS. REDMAN concluded, "I have had discussions with...Larry Holmes...represents a group of sports fishermen. I think he's the head of the Anchorage Fish and Game Advisory Committee... He and several members of his group have written many letters. His concerns have to do with possible university selections in prime hunting and fishing habitat. I don't know, after a lengthy discussion with him, exactly how I can fix his problem because he's anticipating something that we have no way of knowing... All I can say is the way the legislation is drafted, the land that's available for conveyance is totally in control of the commissioner of DNR. The commissioner is required to make the best use determination of the land that is made available. There may be a lack of confidence on the part of some constituents in the DNR commissioner's choice on which lands are made available, I don't know how to fix that... I will continue to talk with those groups. We're eager to find ways to try to reach some compromise." REPRESENTATIVE CON BUNDE asked about an amendment proposed by Representative Phillips. (A copy of this amendment is on file.) He said, "She speaks to the university having 200,000 acres of land which in your information doesn't jive. You say you have less than that... Anyway, the indictment is that you have only actively managed 13,000 acres. I guess I'd like you to address that concern..." Number 264 MS. REDMAN responded saying, "Actually we have 140,000 acres. I believe the 200,000 acres includes not just land grant lands but educational lands, which are lands that are attached directly to the campuses... The issue of active management is an issue that is complicated. In terms of generating revenue, we've gone from around $700,000 when we first got control of our lands to generating seven and a half million (dollars) last year. And we expect ten million this year. So from our perspective, we've done phenomenally well in generating revenue. Part of the problem when we got land from the state in our original settlement is we had to take a lot of bad land in order to get some good land... We have a lot of mountain top and a lot of land DNR required us to take along with some good timber and gravel and subdivision land and so on... We have quite a few timber tracts that are currently in litigation. We feel that we've been extremely aggressive in trying to manage the land without being irresponsible. We're trying to do it in a way that is sensitive to the university's needs as well as to the environmental interests." Number 307 REPRESENTATIVE BUNDE said, "I'll grant you that you have been relatively active in your management of lands, but as you point out, your management of the good lands is limited by court action and should you get 500,000 acres more, would you anticipate 500,000 more lawsuits?.. What kind of income stream would you realistically expect, understanding the obstacles..." Number 323 MS. REDMAN replied, "I really couldn't give you a number on that. I would certainly guess that over the next decade from an additional 500,000 acres assuming, you have to remember it will probably be a decade before we even begin making selections based on our placement at the back of the cue in terms of the selection opportunities. But we should certainly be able to generate over ten million dollars from that kind of land plus. But what we're looking for in terms of land at this point...we're a little over-inventoried in timber, so they're really more interested at this point in looking at land that has subdivision potential, some mineral, gravel..., recreational properties." REPRESENTATIVE TOOHEY asked, "If and when the day comes when we can't afford a university in this state...and your land grant becomes the only funding for the university,... what kind of money are you looking at?" Number 357 MS. REDMAN said, "We were not anticipating that 500,000 acres would, in fact, provide the sole support for the university. If the university was to, by some fluke, hit oil on some university land then perhaps, in fact, it would be feasible to think that Alaska like Texas could, in fact, support its public university solely from its land grant trust land income. I, however, do not expect that to happen. More realistically what we would be looking at is that over time the trust funds would be able to provide some measure of support... I'm not looking at 50 percent even of the level of support, with 500,000 acres..." REPRESENTATIVE DAVIES said, "I've been doing some arithmetic calculations based on the data that Vice President Rogers provided in his memo and using the $20 per acre number which is derived from taking into account the almost 200,000 acres the university has or has interest in. They would generate about ten million dollars a year if they had 500,000 acres total. And for comparison that represents about six percent of the current GF (general fund) dollars or about two percent of the current total budget of the university... It would represent a relatively small percentage of the total budget of the university. So while it would certainly help, it wouldn't even come close to being a ranch that the university could manage and entirely support themselves." REPRESENTATIVE TOOHEY asked, "Would the fact that you have to come up with 20 or 25 percent... That would obviously change your outlook on how you'd manage the land wouldn't it? What is going to make you aggressively manage those lands so you get the most bang for your buck?" MS. REDMAN replied, "I think the pressures on the university right now are the motivation that we need to try to find additional resources. We're looking at flat to declining budgets with eleven percent enrollment growth statewide..." Number 419 REPRESENTATIVE BUNDE said, "You understand, of course, that the more income you produce, the less GF money you're going to get, even if there's GF money available." MS. REDMAN said, "I've heard that suggested, in fact, I saw that distributed actually by one of the environmental groups, that why would the university want to do this when they're going to lose the general fund. Our intent would be that we would be able to offset general fund. However, if your intention would be to offset every general fund dollar with every dollar we make from the trust fund, I would suggest to you that our motivation for managing the land is now gone." She then added, "We're also doing a tremendous amount of private fund raising. The Fairbanks campus, in the last two years, has raised $12 million in private funds. If we get into a situation where the legislature, instead of trying to encourage us in these ways, is in fact providing a disincentive to raise private money or to manage our lands for income, then it costs us money to do this, we simply won't do it. It doesn't make sense for us to make that investment...a dollar for dollar loss is not going to work." Number 446 REPRESENTATIVE BUNDE said, "I'm not that pessimistic...but I do think that it is possible that the budget will stay flat and that this GF won't change... We hope." REPRESENTATIVE WILLIAMS said, "I think this is a very good way to generate income. I think the university is looking at how to collect more income and if they do take a dollar away to help us put into other areas of the state, I think we would benefit from this... This bill is very good. I would encourage us to move this bill along..." REPRESENTATIVE TOOHEY asked, "Does this...also allow you to sell it as fee simple land?" MS. REDMAN said yes. CHAIRMAN OLBERG asked, "Is there a mineral reservation if you acquire and sell it to a third party, are the minerals reserved?" MS. REDMAN said, "Yes...the university has the subsurface rights based on prior land grant provisions that do not extend. We have made several amendments in here through the bill on the oil and gas and subsurface rights. They were in, out, in, out. They're back in again with certain restrictions on the oil and gas provisions to allow the state more time," and added, "...One of the issues that I've heard most frequently from legislators and from others on this bill is that the university would be taking state revenue, grabbing the land and the revenue. From my perspective...what the university is doing is generating new revenue for the state, that these lands are not currently generating. So it's a net gain for the state..." Number 491 REPRESENTATIVE TOOHEY asked, "The overall feeling at the university is positive for this, for development?" MS. REDMAN nodded. REPRESENTATIVE DAVIES said, "I'm strongly ambivalent. I have concerns, Mr. Chairman and that is I think that all of the arguments that Vice President Redman made are probably true. I think the university would generate more money from the lands than the state will. After all, the lands that they are going to be selecting are going to be after mental health...so they're not necessarily going to be the best lands. The state is probably generating something less than ten cents an acre on those lands right now and if the university were able to manage those lands at the rate that they're managing the approximately 200,000 acres total that they have some interest in now at $20 per acre, clearly the argument that they'd be generating new income would be correct. That's the upside, and the total amount again is maybe around ten million, twenty million dollars a year... So it's not a large amount of money, but it's significant. The downside from my point of view is, it may well embroil the university in a lot of lawsuits and it may affect the university's standing in the community to some extent because of that... With respect to that, the university may have an opportunity to be...a white hat land manager. Maybe they could manage some of these lands for revenue, but in a way that's particularly sensitive to environmental concerns, and maybe demonstrate some ways that we could generate money and at the same time be sensitive. So I have some fairly strong feelings on both sides of the issue and I haven't made up my mind how I'm going to vote." Number 529 REPRESENTATIVE TOOHEY said, "I appreciate that because you feel as strongly about nondevelopment as I do about development... Somewhere down the line, I think what's going to have to happen is, we're going to have to force the university into developing lands if Representative Davies' side wins, and it is a side of nondevelopment." REPRESENTATIVE DAVIES interjected, "Mr. Chairman, I object to that characterization." REPRESENTATIVE TOOHEY restated, "Not you, lets put you out of that. Let's say the nondevelopers of the world decide that we're developing too much, somewhere along the line, and this is philosophical, we're going to have to force you into developing the land, otherwise you don't get paid. You don't get any money. And I think that is something we have to keep in mind, that there has to be a little bit of leverage in here that you have to realize that this, because we're giving you this land with this responsibility of aggressive developing." CHAIRMAN OLBERG said, "Well obviously, there's no use having the land if you don't develop it..." Number 543 REPRESENTATIVE BUNDE said, "I think a partial answer to Representative Toohey's question is how does the university feel about this. I'm sure we wouldn't be looking at this bill if the regents hadn't decided that this was something that they really would like to do." REPRESENTATIVE DAVIES added, "Also, I think you have to remember that under the best scenario that I can see, these lands will generate only about ten percent of the general fund budget. That's if they do far and away better than the state is doing right now...and twice as good as the university's been able to do so far on those lands that they are managing well, the easiest to manage...under the best scenario, it would still be a relatively small percentage of the university's total operating general fund dollars and for that reason, the legislature still has an enormous hammer over the university in terms of control. They have to appropriate the other 90 percent of the budget and if the legislature looks at the university and says `you're not managing these things very well,' they could send a message. The other thing I think is to worry that the university's not going to be aggressive enough, is not to understand the university's track record very well." Number 575 BOB WARD, LOBBYIST, ALASKA MINERS ASSOCIATION, said "When this bill was first introduced, the miners had some very mixed emotions about it. The University of Alaska and mining has been practically synonymous through the history of the territory and the state, and there are very, very strong ties between the mining community and the University of Alaska. Also, Senator Frank has been very supportive of the mining industry. So we approached Senator Frank and expressed the fact that we did have some concerns primarily based on divided management...different pieces of state land managed by different people. Anyway, there was some uncertainty there that caused a concern. Senator Frank felt that he was helping the mining industry perhaps by making some more land available for mining that might not have been made available before, and so we're still in the posture of not wanting to oppose this legislation but our comfort level has not reached the point where we can support it yet. And if that sounds like we've been sandbagging up to this point, I guess that will just have to be but we've watched it proceed through the Senate and come over here and it's been improved, in our opinion. Ms. Redman had some suggested amendments that we talked about that would comfort us more. We appreciate the fact that she used our words in that one amendment...but there were more issues that we had raised in a draft of a letter that Ms. Redman is the only one that we showed it to and her people weren't able to get back to all the items that we had. So the only positive direction that I've had from my people to this point now is to not, please, please, don't get in a fight with the university. So I have absolutely no intention of doing that and as far as we're concerned, we would like to be able to work something out with the university that we could go hand in hand on...but we're not at that point today. If the committee feels that they would like to move it out, our position on that is, I guess that's fine and we'll hope that maybe by the next committee we will come to a better agreement with the university." Number 615 CHAIRMAN OLBERG said, "It's not my desire to move this legislation today. We're anticipating the possibility of a teleconference." REPRESENTATIVE TOOHEY pointed out that she may have a conflict of interest. She said, "I have a mining claim. I am a gold miner...and I am a member of the Alaska Mining Association," and, "Is there anything we can do right now...I would like to know some of your concerns without causing undue hardship between you and the university." MR. WARD said, "The biggest underlying concern that the mining community has, that I'm aware of, is uncertainty as to the rules of the game for mining if this bill passes. Would they stay the same or would they change...for royalties and access..." Number 626 REPRESENTATIVE TOOHEY asked Ms. Redman, "Are you addressing that concern?" MS. REDMAN replied, "The majority of their concerns are addressed in the amendment that you have, which in fact requires of us a mineral entry location and mineral leasing (indiscernible). However, one of the concerns, I think is the whole issue, is split estate, where there may be two owners over time on the same claim. Frankly, our position has been that that really isn't an unusual situation in the other 49 states. It's something that you just get into when you have public lands where you allow mining. We haven't found a way yet to really resolve that problem. We continue to want to work with the mining group to try to figure out if there's a way that we can accommodate that..." Number 647 REPRESENTATIVE TOOHEY said, "I doesn't seem to me that we're going to have to do something very rapidly with this bill, is that correct? The university isn't going to close tomorrow if we don't pass this bill immediately because I think that the concerns of the mining industry, I'm sure the oil and gas industry, is there a time frame on this and how rapidly do we have to start doing this because I certainly think that we need to get to a more comfortable level with this." CHAIRMAN OLBERG said, "If in fact, we're several years away from actual selection, on one hand you could argue that there's no crashing rush. On the other hand, we are in Juneau, it is the end of April..." RUSSELL HEATH, EXECUTIVE DIRECTOR, ALASKA ENVIRONMENTAL LOBBY, testified in opposition to SB 217. He said, "We oppose SB 217 which would grant the University of Alaska 500,000 acres of state land. Endowing the university with a large amount of revenue producing land may be an extremely appealing idea to those that support the university and who will value higher education, scholarships, and recognize the need for a securely funded institution of higher learning in Alaska. The idea, however, is flawed with many problems. There are serious public policy questions hidden and unexamined costs, and land management problems which all argue against this bill. I'd like to just touch on a few of them... The university will select the best and most valuable state land that it can... In other words, it will be high grading public lands that have already been picked over by the mental health community and by the municipalities. We do not believe it is in the best interests of the state to lose more valuable land, which is currently managed for multiple uses, to a single user. Our second concern, is that the purpose of the university acquiring the land is to generate revenue. This purpose often conflicts with other purposes for uses of state lands and these include public access and recreation, protection of fish and wildlife habitat. Of course, you know that protection of fish and wildlife habitat often is important to the income of other users. University lands are private and thus exempt from land management provisions of Title 38.04 and 38.05. The only nonenvironmental point that I would like to raise is, the environmental community as you know was involved quite heavily in the mental health litigation with many other organizations around the state, including the coal miners, oil and gas, and other resource developers, and one of the lessons that we learned from the mental health dilemma that we've suffered under the last three or four years, is that to select land out of the public domain is a laborious process. Some person, some organization is going to have some kind of claim, common interest or not, in every acre of land that the university selects. They'll probably fight to protect that interest and that can be the person who has fished there since boyhood to the miner that wants to mine it, as well as the environmentalist who's concerned about critical wildlife habitat. And trying to select 500,000 acres of state land is going to lead to a morass of litigation, you should be aware." Number 696 REPRESENTATIVE TOOHEY asked, "Russell, do you have any children? I have three children and I have a grandchild coming." TAPE 94-22, SIDE B Number 000 REPRESENTATIVE TOOHEY continued, "Land money is going to be coming from the land grants. I think it is very critical that we have development in this state. And I think it's very critical that the university develop very aggressively in every way they can; of course, within the confines of healthy proper development, but I think it's very critical. And I think we have to keep in mind what we're doing this for. We're doing this to keep the university healthy. So I'm sorry, but I do disagree with you totally." REPRESENTATIVE WILLIAMS said, "His comments are: The most valuable land from the public domain leaving the poor land to the public. I don't quite understand that when we have so many millions of acres of land that are available to the state of Alaska within the public domain and we're talking about 500,000 of land. How can you say that?" MR. HEATH said, "You're right, the state of Alaska has some hundred million acres, of which three million acres are in parks and areas like that. The point I'm trying to make is that the lands that they will want, and justifiably so if they're going to generate revenue from them, will be valuable land and those lands will be probably used right now by other people for whatever uses... There's a whole universe of uses that those lands may be put to, some of them may not generate revenue that's true, but they're going to want the most valuable lands they can get and they're going to select those and they will be removed explicitly from the public domain." Number 052 REPRESENTATIVE WILLIAMS said, "We have a hundred million acres of land within the state of Alaska. We have how many other millions of acres in federal land. It seems like every time that we tried to use this land for whatever reason, we end up being objected to by the Alaska Environmental Lobby... How can you say that the university will manage its land for those purposes and why say it's wrong to use it for the purpose of generating revenue and how can you say the lands will not be managed for multiple use and the access may be restricted..." MR. HEATH said, "The university's primary purpose will be to generate revenue. That will be their obligation to their students, the university. That will be the reason why they're selecting this land. The state on the other hand is obligated statutorily to manage for a variety of different uses... The state in managing the land for revenue, at the expense of somebody else's revenue, and the classic example is the conflict between forestry or timber harvest and habitat destruction and fish... The university won't make any money off of fisheries, so they don't have economic interest (to protect the habitat)." Number 110 REPRESENTATIVE WILLIAMS continued, "It's totally untrue that (those) people do not have an interest in either one of the resources. I would like to think that the university of Alaska is very well managed and the people that will be managing this land will be thinking of the multiple use and the fish and wildlife. To come up and say that the university dealing with the timber industry would not want to think about the fish habitat is totally untrue. I'd like to believe in the University of Alaska and the people here and the state of Alaska are going to try to take care of the land. I think that's what we are trying to do all the time, and for you to say that we're not going to do it is...I don't know where you're coming from." REPRESENTATIVE ED WILLIS asked, "Of the land that is in public domain, this hundred million acres, is there any overall plan? If there is, what is that policy?" CHAIRMAN OLBERG said, "I think the answer to that is, yes." REPRESENTATIVE DAVIES said, "Under Title 38, the Department of Natural Resources designates land for certain purposes...and that really represents the state's policy on how those lands should be used, how they're designated. Some are not designated yet and they're just being held for future purposes." CHAIRMAN OLBERG added, "Some of our land has just very recently been selected. As far as an overall plan, one thing I'm certain, there is not a plan. There is a policy. But as far as anybody in a cohesive way sitting down and saying `okay, here's a hundred million acres, the state of Alaska owns it, here's the plan to maximize its enjoyment, its revenues, whatever. I'm sure that does not exist." Number 163 REPRESENTATIVE WILLIS asked, "How is the fish habitat protected now?" CHAIRMAN OLBERG said, "By the Forest Practices Act for one thing. There are a variety of protections built into the existing system. I actually think the university is more apt to do a good job of land managing than the state of Alaska because they've got a stronger vested interest, and they are smaller, and they are driven by poverty which is something we haven't quite grasped yet. Number 177 REPRESENTATIVE DAVIES said, "There are two other protections in the process that need to mentioned. One is that, if this bill were to pass and the lands were to be transferred to the university, the transfer of the land would be subject to Title 38, the public hearing process. The second thing is that explicitly in the bill there's a requirement that, I presume that in that process, the commissioner of the Department of Natural Resources is involved in two ways. One is he has to make a best interest finding with the land to be transferred... and secondly, the commissioner can unilaterally object to any piece of land being transferred. And the university can only appeal that to the Governor and is forbidden from litigating that objection... So the commissioner has a fair amount of power..." REPRESENTATIVE WILLIAMS said, "You mentioned earlier that your plan was not to move this bill today." CHAIRMAN OLBERG confirmed that and said, "My plan, and I don't have a hundred million acres to worry about, is to adopt the two amendments that appear to have consensus and adjourn and resume this discussion on Monday at either 1:00 or immediately after session, whichever is earlier." Number 211 REPRESENTATIVE TOOHEY moved that amendment number one be adopted. CHAIRMAN OLBERG referred to the amendment as Representative Phillips's amendment. REPRESENTATIVES DAVIES and WILLIS objected. CHAIRMAN OLBERG said, "I think if we're going to have a debate about the adoption of these amendments, we're going to do that Monday." Number 227 REPRESENTATIVE TOOHEY withdrew her motion to adopt the amendment. CHAIRMAN OLBERG adjourned the meeting at 5:05 p.m.
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