Legislature(1995 - 1996)
05/07/1995 02:15 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL 16
"An Act relating to the University of Alaska and
university land, authorizing the University of Alaska
to select additional state public domain land, and
defining net income from the University of Alaska's
endowment trust fund as 'university receipts' subject
to prior legislative appropriation."
JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
spoke against the proposed legislation. He noted that the
Department of Administration also has consistently opposed
the bill. The legislation would allow the University of
Alaska to select certain lands from the State's land
entitlement. He thought that the benefit received by the
State would be minimal and that the legislation would not be
a good use of the State's limited resources. He suggested
an alternative approach would be to investigate federal
lands being used for the University's land base through
direct appropriations.
SENATOR STEVE FRANK testified in support of SB 16. He noted
that the University of Alaska is called a "Land Grant
University" in the tradition of American land grant
universities, providing teaching, research and public
service to the people of Alaska. While the University has
attempted to mold itself in the land grant tradition, one
piece of that tradition is lacking--a sufficient land grant.
Senator Frank continued that Alaskans look to the University
of Alaska to provide for some of its financial needs by
earning income from the federal land grant, yet Alaskans do
not realize the need of lands to be managed by the
university. He added, passage of the legislation would
allow expansion of the University of Alaska land grant, and
would allow the University to generate additional revenue in
support of its programs. The land would need to be
responsibly managed in order to generate income. The
University is currently involved in a wide range of projects
including commercial leasing, development and sale of
residential and remote subdivisions, oil and gas lease
sales, timber and gravel sales and mining leases.
Representative Mulder asked how many acres of land the State
owns. Senator Frank replied currently, there exists
approximately 104 million acres of state property.
Representative Mulder asked if it would be possible for the
University to select land that has oil and gas developments
on it. Senator Frank stated that it was, although, the
Commissioner had been given a very broad power. No land
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could be selected that was on the State's five year oil and
gas leasing program, and the University could not select any
other lands that the Commissioner thought were vital for the
State's best interest.
Representative Brown voiced concern about the treatment of
the oil and gas licensing. She referenced language on Page
7, indicating that the oil and gas license would be
different than the lease. Senator Frank explained that the
intent was more clearly defined on Page 5, Line 4.
Representative Brown commented that information on Page 7,
Subsection (3) would not be in the best interest of the
State. Senator Frank noted that the Commissioner would have
the ultimate authority to consider what would be in the best
interest of the State.
Representative Brown asked if the lands, when under State
ownership, would be exempt from taxation. Senator Frank
understood that they would be, although any lease-hold would
be subject to taxation. Representative Brown thought that
the current language was confusing and that it did not
clarify if the University land would be subject to taxation.
Senator Frank recommended that a lawyer provide that
information, although he thought that land conveyed to a
private entity would carry a tax immunity.
Representative Brown asked why the University should be
managing their own resources and surface real estate.
Senator Frank replied that the University currently has a
specified Lands Management Department to manage their own
acreage. He continued, the Department of Natural Resources
currently manages 1.4 million acres and that the University
currently has a land grant. He believed that the
legislation would allow the University greater economy of
scale in land management, pointing out that the legislation
would provide a net long term economic benefit to the State.
Representative Brown asked if revenues which the University
received from the lands would continue to be appropriated by
the Legislature. Senator Frank stated that they would be
appropriated through the Executive Budget Act.
Representative Brown questioned the potential revenue
stream. Senator Frank replied that information would be
speculative at this time, although he hoped it would be high
so that the University would be able to continue their high
standards with less dependence on the general fund.
Discussion continued between Representative Brown and
Senator Frank regarding the statutory adjustment which the
legislature made for leases made in law after 1980.
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Representative Brown asked what expertise the University had
to manage oil and gas resources. Senator Frank did not know
the extent of their expertise. Representative Brown asked
for an explanation of Section (D), Subsection (2).
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY RELATIONS,
UNIVERSITY OF ALASKA, responded that Section D deals with
"time and space" after the University has selected lands,
but prior to conveyance. She noted that there had been
substantial concern, because that process may take some
time. She added that there should not be a prohibition
against entry into the lands during that period of time.
Subsection (2) deals with what will occur to the proceeds
during the entry prior to conveyance.
Ms. Redman advised that the University could be given leased
land, however, the State will retain the income for that
land for the life of the lease/contract through the
extension period. She pointed out that language was similar
to the language used in the last land settlement ruling in
1986.
(Tape Change, HFC 95-118, Side 1).
Representative Brown asked if the transferred land
properties selected by the University of Alaska would be
subject to taxation by the municipalities.
JACK CHENOWETH, ATTORNEY, LEGISLATIVE LEGAL COUNSEL,
LEGISLATIVE AFFAIRS AGENCY, stated that they would not be
subject to taxation under current law nor would they be by
the amendment made in Section 12 of the Resources' version.
Representative Brown asked if the land would be subject once
transferred to a private owner. Mr. Chenoweth advised that
beyond ownership by the University, the lands would then
become taxable.
SB 16 was HELD in Committee for further consideration.
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