Legislature(2013 - 2014)BARNES 124

03/04/2014 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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08:05:45 AM Start
08:06:39 AM HB296
08:32:21 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 296 STATE LAND DISP./LEASEHOLDER PREFERENCE TELECONFERENCED
Moved CSHB 296(CRA) Out of Committee
         HB 296-STATE LAND DISP./LEASEHOLDER PREFERENCE                                                                     
                                                                                                                                
8:06:39 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced  that the only order  of business would                                                               
be HOUSE BILL NO. 296,  "An Act providing for certain individuals                                                               
who have  erected a  building on  land leased  from the  state to                                                               
receive  a  preference  right  to  purchase  certain  state  land                                                               
without competitive bid."                                                                                                       
                                                                                                                                
CO-CHAIR LEDOUX passed the gavel to Representative Foster.                                                                      
                                                                                                                                
8:07:50 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX, speaking  as the sponsor of  HB 296, paraphrased                                                               
from  the  following   written  statement  [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     House Bill 296 establishes a new preference right for                                                                      
      people holding a state lease to buy the land before                                                                       
     the  State transfers  the property  to a  municipality.                                                                    
     This  right  is  contingent  upon  certain  conditions,                                                                    
     chief  among  them  that  the  lease-holder  must  have                                                                    
     invested  in  the land,  assembled  a  building on  the                                                                    
     land, and received  at least 25% of  their total income                                                                    
     from  the land  over  the preceding  ten  years.   This                                                                    
     right is  also without a  competitive bid and  the land                                                                    
     would be sold at a fair market price.                                                                                      
     This bill  is necessary  to protect the  livelihoods of                                                                    
     people who  have invested their  time, sweat  and money                                                                    
     into  businesses that  often  serve  our unique  Alaska                                                                    
     lifestyles.  After working the  land for years, perhaps                                                                    
     decades,  a  person  should have  some  assurance  that                                                                    
     their  efforts  would be  protected  and  be given  the                                                                    
     chance to purchase the land  they had labored on for so                                                                    
     long.                                                                                                                      
     I urge  you to support this  bill.  And with  that I'll                                                                    
     turn it  over to my  staff, Thomas Brown, to  give more                                                                    
     details about the bill.                                                                                                    
                                                                                                                                
8:09:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD moved  to adopt  the proposed  committee                                                               
substitute  (CS)  for  HB   296,  Version  28-LS1375\U,  Bullock,                                                               
2/24/14, as the working document.                                                                                               
                                                                                                                                
REPRESENTATIVE KITO III objected for purposes of discussion.                                                                    
                                                                                                                                
8:10:23 AM                                                                                                                    
                                                                                                                                
THOMAS  BROWN,  Staff,  Representative Gabrielle  LeDoux,  Alaska                                                               
State Legislature, informed  the committee the purpose  of HB 296                                                               
is  to  provide that  certain  individuals  receive a  preference                                                               
right to purchase  certain state land without  a competitive bid.                                                               
The proposed legislation would allow  state land leaseholders the                                                               
first  right  of  refusal  on   land  in  which  they  have  made                                                               
investments,  and  on which  they  depend  for their  livelihood.                                                               
Current  state statutes  allow  for an  individual  to receive  a                                                               
preference  right to  purchase up  to  five acres  of state  land                                                               
under certain conditions:                                                                                                       
                                                                                                                                
   a. The individual must have erected a building on the                                                                        
     land.                                                                                                                      
                                                                                                                                
   b. The land must have been used for five or more years                                                                       
     for  bona  fide  business  purposes,  under  a  federal                                                                    
      permit or without the need for a permit, and, after                                                                       
     state selection, under a state permit or lease.                                                                            
                                                                                                                                
   c. The business the land is used for must have produced                                                                      
      at least 25 percent of the individual's total income                                                                      
        for the five years preceding the application for                                                                        
     preference right.                                                                                                          
                                                                                                                                
MR. BROWN explained  that HB 296 would extend the  first right of                                                               
refusal to  individuals who  have a  state-issued lease  for land                                                               
that  is involved  in  a municipal  entitlement  selection.   The                                                               
preference right  to purchase  up to five  acres of  land without                                                               
competitive bid would be granted under the following conditions:                                                                
                                                                                                                                
   1. The individual must have erected a building on the                                                                        
     land.                                                                                                                      
   2. They have used the land for bona fide business                                                                            
       purposes for ten or more years under a state lease                                                                       
     that was issued competitively.                                                                                             
   3. The individual has received at least 25 percent of                                                                        
       their total income for the ten years preceding the                                                                       
     application for the preference right.                                                                                      
                                                                                                                                
MR. BROWN  continued to explain  the specifics of the  program as                                                               
follows:                                                                                                                        
                                                                                                                                
   1. In the case of municipal entitlement selection of state                                                                   
     land,  an individual  who  meets  the conditions  previously                                                               
     outlined and  applies for preference  right within  120 days                                                               
     of  notice of  a  municipal entitlement  selection, will  be                                                               
     granted a preference right to purchase the land.                                                                           
   2. The land will be sold at fair market value of the                                                                         
     unimproved land, as determined by an appraisal and survey                                                                  
     to be paid for by the applicant.                                                                                           
   3. It also provides a mechanism by which a municipality will                                                                 
     be compensated for the land if the leaseholder chooses to                                                                  
     purchase it.                                                                                                               
   4. The remaining amount of land within the overall municipal                                                                 
     entitlement will be reduced by the amount of land the                                                                      
     leaseholder purchases, up to five acres.                                                                                   
   5. The revenue from the purchase of the parcel will be given                                                                 
     to the municipality.                                                                                                       
                                                                                                                                
8:13:10 AM                                                                                                                    
                                                                                                                                
MR.  BROWN  advised  there  is   a  zero  fiscal  note  from  the                                                               
Department of  Natural Resources (DNR)  attached to the bill.   A                                                               
description  of the  differences  between the  original bill  and                                                               
Version  U was  included  in the  committee  packet, and  further                                                               
reviewed by  Mr. Brown, beginning  on page  2, line 9,  where the                                                               
words "an  active" were changed  to "a valid."   On page  2, line                                                               
10, the  words "on which there  is a" were replaced  by "that has                                                               
a."   On page 2,  lines 10 and  11 clarify that  the state-issued                                                               
land lease  had been issued  competitively.   On page 2,  line 12                                                               
clarifies  that the  municipal entitlement  is a  land selection.                                                               
On page  2, line 13,  the word "further"  was added, and  on line                                                               
14,  the word  "lessee"  was removed.   On  page  2, lines  14-17                                                               
clarify  the  conditions  under  which  an  individual  would  be                                                               
granted a preference  right.  On page 2, lines  17-19 provide for                                                               
a time limit  of 120 days within which to  apply for a preference                                                               
right.   On  page 2,  line  19 adds  the words  "if the  director                                                               
grants  the preference  right."    On page  2,  lines  21 and  22                                                               
reference the  appropriate appraisal statutes, AS  38.05.840.  On                                                               
page  2, line  25  references  the statute  that  outlines how  a                                                               
written determination  is administered.   On page 2,  lines 26-30                                                               
insert  a  provision  for compensating  municipalities  for  land                                                               
purchased by a leaseholder with a preference right.                                                                             
                                                                                                                                
8:15:53 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  III inquired  as to  how many  inholdings HB
296 might affect.                                                                                                               
                                                                                                                                
8:16:27 AM                                                                                                                    
                                                                                                                                
WYN  MENEFEE, Chief  of Operations,  Central Office,  Division of                                                               
Mining, Land  and Water, Department  of Natural  Resources (DNR),                                                               
said  DNR  anticipates that  few  leases  would qualify  for  the                                                               
preference by meeting all of  the criteria and having a municipal                                                               
entitlement selection affecting them.   Statewide there are about                                                               
69 competitive  leases, and  the number would  be reduced  by the                                                               
aspects of  the bill.   Mr. Menefee  estimated that less  than 10                                                               
would qualify.                                                                                                                  
                                                                                                                                
REPRESENTATIVE KITO  III asked if  allowing a  private individual                                                               
or organization to  purchase the land creates an  access right to                                                               
an inholding.                                                                                                                   
                                                                                                                                
MR. MENEFEE  replied no,  and explained that  access is  an issue                                                               
that is  not addressed in  the proposed legislation.   Typically,                                                               
access  to parcels  surrounded  by  state land  is  not an  issue                                                               
because  there  are  multiple  ways  to  obtain  access  such  as                                                               
generally allowed usage,  an easement, or by a waterway.   At the                                                               
time  surrounding  land  is  transferred  to  a  municipality  or                                                               
borough, it is  unclear what access the borough will  or will not                                                               
allow.    He  advised  that   municipalities  typically  are  not                                                               
interested in restricting access,  thus this normally hasn't been                                                               
an issue, but  he would not guarantee an issue  related to access                                                               
would not arise.                                                                                                                
                                                                                                                                
8:19:13 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER opened public testimony.                                                                                  
                                                                                                                                
8:19:35 AM                                                                                                                    
                                                                                                                                
MEL GILLIS  related his situation  in which he lost  his business                                                               
after  many  years of  operation  on  state  land.   He  said  he                                                               
understood  that  the  [Alaska] Constitution  directs  that  land                                                               
would be made available for development,  and he tried to buy the                                                               
land he  leased from  the state  in 1984, where  he built  a nice                                                               
place with  permission from  DNR.  However,  15 years  later, the                                                               
municipality  requested  the  land  and  the  state  granted  its                                                               
request.   Mr. Gillis spent $247,000  to save his lodge  and five                                                               
acres  of state  land.   He opined  the bill  would prevent  this                                                               
situation in the  future, and he urged the committee  to create a                                                               
way  that an  individual  can  obtain the  state  land that  they                                                               
choose, without  DNR specifying  what is available  to them.   He                                                               
noted that the  bill is only the first step  to correct a problem                                                               
with DNR.                                                                                                                       
                                                                                                                                
8:22:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD said Mr. Gillis'  story is sad and HB 296                                                               
is  a step  in the  right direction  to help  future Alaskans  in                                                               
their businesses  and to prevent  unfair actions.   She expressed                                                               
her hope  that the  state is  business-friendly and  "things like                                                               
this don't continue to happen."                                                                                                 
                                                                                                                                
MR.  GILLIS  said there  are  no  guarantees  with DNR,  and  the                                                               
American Dream  in Alaska - for  those who are trying  to start a                                                               
business in the Bush - is dead.                                                                                                 
                                                                                                                                
                                                                                                                                
REPRESENTATIVE REINBOLD  agreed that  smaller communities  need a                                                               
business-friendly climate.                                                                                                      
                                                                                                                                
CO-CHAIR LEDOUX expressed  her belief that the bill  may not help                                                               
Mr. Gillis, but will help individuals in the future.                                                                            
                                                                                                                                
8:25:51 AM                                                                                                                    
                                                                                                                                
THOR STACEY,  Lobbyist, Alaska Professional  Hunters Association,                                                               
Inc., informed the committee Mr.  Gillis is a long-time member of                                                               
the  Alaska  Professional  Hunters   Association  and  its  board                                                               
supports the  concept of HB  296.   Although in Mr.  Gillis' case                                                               
the bill  is too late,  there are  other hunting guides  who have                                                               
similar issues.   He advised  that the association has  about 120                                                               
professional members who are registered  guides across the state.                                                               
Alaska's   guiding  industry   garners  about   $80  million   in                                                               
associated economic  impacts to the  state, and brought  in about                                                               
$55 million new  dollars to the state in 2013.   Fifty percent of                                                               
the  association's   economic  impact  in  new   dollars  and  on                                                               
employment  is  to rural  areas  outside  of urban  centers;  for                                                               
example, the  rural economic development that  comes with hunting                                                               
operations  based on  leases for  hunting lodges.   Alaska  has a                                                               
diversity of  hunting services, including those  who obtain state                                                               
land leases and  make improvements to provide shelter  in a harsh                                                               
environment.   Those  service providers  face a  lot of  business                                                               
risk  in terms  of  building in  rural Alaska,  and  they have  a                                                               
general faith  that the  system will  encourage a  legal business                                                               
which provides infrastructure across  remotes areas of the state.                                                               
Mr.  Stacey  pointed out  that  those  who  choose to  make  this                                                               
investment  and take  this  risk know  there  are no  guarantees,                                                               
however, when  a government entity  overlaps another and  makes a                                                               
selection,   the  improvements   can  suddenly   be  bought   out                                                               
underneath them.  The association  board sees this as a potential                                                               
for injustice,  and expects that  the bill gives an  individual a                                                               
chance to fairly purchase the  improvements that they have built.                                                               
From the perspectives of rural  economics, diversity of services,                                                               
safety, and social  benefits, Mr. Stacey said  the association is                                                               
in strong support of the bill.                                                                                                  
                                                                                                                                
8:30:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER,  after  ascertaining  that  no  one  else                                                               
wished to testify, closed public testimony.                                                                                     
                                                                                                                                
CO-CHAIR LEDOUX urged for passage of the bill.                                                                                  
                                                                                                                                
8:30:35 AM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
8:31:13 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  III withdrew  his objection to  the adoption                                                               
of  CSHB 296,  Version  U.   There  being  no further  objection,                                                               
Version U was before the committee.                                                                                             
                                                                                                                                
8:31:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD moved  to report  CSHB 296,  Version 28-                                                               
LS1375\U,  Bullock, 2/24/14,  out  of  committee with  individual                                                               
recommendations and  the accompanying fiscal notes.   There being                                                               
no  objection,   CSHB  296(CRA)  was  reported   from  the  House                                                               
Community and Regional Affairs Standing Committee.                                                                              

Document Name Date/Time Subjects
HB 296 Sponsor Statement.pdf HCRA 3/4/2014 8:00:00 AM
HB 296
HB 296.pdf HCRA 3/4/2014 8:00:00 AM
HB 296
HB 296 Committee Substitute.pdf HCRA 3/4/2014 8:00:00 AM
HB 296
HB 296 Fiscal Note DNR.pdf HCRA 3/4/2014 8:00:00 AM
HB 296
HB 296 Changes.pdf HCRA 3/4/2014 8:00:00 AM
HB 296