Legislature(2005 - 2006)HOUSE FINANCE 519

04/04/2006 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 57(FIN) Out of Committee
Heard & Held
<Bill Hearing Postponed>
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
          SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 57                                                                            
               "An Act relating to the sale of certain state land to                                                            
               adjacent landowners."                                                                                            
          REPRESENTATIVE  WEYHRAUCH, SPONSOR,  spoke to  the bill.   He                                                         
          explained  that the bill was  introduced to induce  the state                                                         
          to purchase federal  lands for sale in January, 2006, as well                                                         
          as to clear the way  for right away disputes over development                                                         
          of  private interests.   He noted  that his own  family often                                                         
          visited wilderness  experiences in Alaska  and commended John                                                         
          Schnable from  Haines who operates a small  tourist gold mine                                                         
          in Haines,  Alaska.  Mr. Schnable is  experiencing difficulty                                                         
          with  state lands adjacent  to his property.   Representative                                                         
          Weyreuch explained  that the bill would  allow the Department                                                         
          of Natural  Resources to negotiate sales  of isolated parcels                                                         
          of  government owned  land at fair  market value  to adjacent                                                         
          land-owners.  The land  must be smaller than twenty acres and                                                         
          completely enclosed.   He expressed that  he did not normally                                                         
          participate in "special  interest bills", but speculated that                                                         
          this  bill  did  not harm,  but  rather  made  a fair  market                                                         
          transaction   possible.    He   also  mentioned   a  proposed                                                         
          amendment by  the Department of Natural  Resources that would                                                         
          further  protect  the State's  interests  by  adding a  "best                                                         
          interest  finding"  in  the event  of  public  easement.   He                                                         
          proposed  that this  added a  level of government  oversight,                                                         
          while allowing an "arms' length" transaction.                                                                         
          1:45:28 PM                                                                                                          
          JOHN   SCHNABEL,   HAINES,   TESTIFIED   VIA   TELECONFERENCE                                                         
          regarding the  bill.  He stated that the  reason he wished to                                                         
          negotiate a  sale as opposed to an outcry  auction was due to                                                         
          the prohibitive upfront  costs involved in such auctions.  He                                                         
          explained  that he  was developing  80 acres  into  a tourist                                                         
          destination,  and  did not  wish this  work  to be  disturbed                                                         
          should  another  party  wish  to purchase  the  small  parcel                                                         
          contained in  his property.  He noted he  had invested over a                                                         
          million dollars  to keep his land in  pristine condition, and                                                         
          wished to  keep it so.   He mentioned he had  no problem with                                                         
          any right  of way through the land, or  any trail designation                                                         
          if that should become applicable.                                                                                     
          1:47:47 PM                                                                                                          
          DICK  MYLIUS, DEPUTY  DIRECTOR, DIVISION  OF MINING  LAND AND                                                         
          WATER,   DEPARTMENT  OF   NATURAL  RESOURCES   testified  via                                                         
          teleconference.  He  explained that in most cases, when state                                                         
          lands  were  sold  it  was  through  a  competitive  process,                                                         
          although  in certain  circumstance state  law  allows dealing                                                         
          with one  individual through "preference rights".   This bill                                                         
          adds to a current preference  right bill.  He noted that this                                                         
          usually took place when  an individual had significant rights                                                         
          or investment  in the property.  He noted  that in this case,                                                         
          the state had acquired  a parcel of land through foreclosure,                                                         
          making it  a self-contained parcel, completely  surrounded by                                                         
          Mr.  Schnable's other  land.   He explained  it could  not be                                                         
          sold  under  existing  preference  right  statutes,  and  the                                                         
          public would  not be interested  since it was  included in an                                                         
          individual's  property.     He  noted  it  had  already  been                                                         
          surveyed,  and a  best  interest finding  would be  completed                                                         
          before the sale.                                                                                                      
          1:50:20 PM                                                                                                          
          Representative Chenault   asked whether  this  was  the  only                                                         
          parcel  in this  circumstance statewide.   Mr.  Mylius stated                                                         
          that  his  Department   was  unaware  of  any  other  similar                                                         
          parcels,  although he  speculated that  there might  be other                                                         
          parcels  in this situation.   He  noted that most  State land                                                         
          was  acquired   in  large  tracts,  and   this  had  been  an                                                         
          exception,  acquired  under  foreclosure  during  the  mining                                                         
          registration law of the early 1960's.                                                                                 
          Responding  to a  follow-up, Mr.  Mylius confirmed  that this                                                         
          bill could be used for such a circumstance in the future.                                                             
          Representative Kelly  observed that the bill permitted rather                                                         
          than instructed the  Director.  He asked what the price for a                                                         
          twenty-acre parcel  might be.  Mr. Mylius  responded that the                                                         
          largest   expense  in  this   case  was  the   public  notice                                                         
          requirement,  which cost roughly $1 thousand,  in addition to                                                         
          a $2  thousand in staff  time.  He  noted that last  year two                                                         
          new  positions were  established to  deal  with a  backlog of                                                         
          preference rights.   He explained that this accounted for the                                                         
          zero fiscal note.                                                                                                     
          1:52:57 PM                                                                                                          
          Responding  to  a  follow-up  by  Representative  Kelly,  Mr.                                                         
          Mylius  noted that the  applicant would  not pay  staff time,                                                         
          but rather the newspaper publication costs.                                                                           
          1:53:30 PM                                                                                                          
          Representative Kerttula   observed that  with  best  interest                                                         
          findings, the Department  could protect against an individual                                                         
          attempting  to  purchase a  parcel  with unique  value.   Mr.                                                         
          Mylius  confirmed that  the  Department could  decide  not to                                                         
          grant the right to purchase.                                                                                          
          1:54:18 PM                                                                                                          
          Representative Holm   asked whether  a  sunset provision  was                                                         
          appropriate  since  this was  a unique  parcel.   Mr.  Mylius                                                         
          responded  that it  might be a  helpful tool  to have  in the                                                         
          future for a similar circumstance.                                                                                    
          1:54:50 PM                                                                                                          
          Representative  Hawker referred to  the "sale of  an isolated                                                         
          parcel" as  referred to in the bill and  asked how they would                                                         
          interpret   "isolated".     Mr.  Mylius   stated   that  they                                                         
          interpreted  this as being unattached  to any other  block of                                                         
          state land,  since in this case it was  totally surrounded by                                                         
          private lands.                                                                                                        
          Responding  to another  question, Mr.  Mylius  confirmed that                                                         
          the  current  preference   right  that  deals  with  isolated                                                         
          parcels most  often have pertained to urban  parcels that had                                                         
          no public value and were unattached to other state lands.                                                             
          1:56:40 PM                                                                                                          
          Representative Hawker     asked whether this would apply to a                                                         
          municipality that owned  land that surrounded state property,                                                         
          allowing  them  to petition  for  a  preference  right.   Mr.                                                         
          Mylius noted  that municipalities already  had other statutes                                                         
          that  allow  the State  to  transfer land  to  them, such  as                                                         
          municipal  entitlement.   He noted that  to his  knowledge no                                                         
          municipality  had ever applied  under the  current preference                                                         
          rights statutes.                                                                                                      
          1:57:54 PM                                                                                                          
          Representative Hawker     asked   whether   there   was   any                                                         
          exposure  to  the  state  that should  be  considered  before                                                         
          passing  the  bill.   Mr.  Mylius stated  that  there was  no                                                         
          additional   exposure,  and      referred   to  the  proposed                                                         
    amendment, which ensured the best interest finding.                                                                         
          1:58:26 PM                                                                                                          
          Representative Foster     commented  that he  had  a  10-acre                                                         
          Native  allotment surrounded  by State  Land and  wondered if                                                         
          this provision  would apply.   Mr. Mylius noted  that in this                                                         
          circumstance, if an  allotment were surrounded by state land,                                                         
          it would not apply.   He noted that a sale in this case would                                                         
          be done through a competitive process.                                                                                
          1:59:39 PM                                                                                                          
          Representative Kelly  asked whether,  if several  individuals                                                         
          were  interested  in  the  same parcel,  the  "best  interest                                                         
          finding"  would apply.   Mr.  Mylius confirmed  that  in this                                                         
          case  the  public  process  would  help  determine  the  best                                                         
          2:00:27 PM                                                                                                          
          REPRESENTATIVE  BILL THOMAS, HAINES, testified  in support of                                                         
          the bill.   He expressed  his knowledge of John  Schnabel and                                                         
          applauded his efforts over the years to develop the parcel.                                                           
          Co-Chair Meyer closed public testimony.                                                                               
          2:02:16 PM                                                                                                          
          Representative Weyhrauch  MOVED Amendment  #1, 24-LS0319\Y.1,                                                         
     Bullock, 3/31/06.  Representative Joule OBJECTED.                                                                          
          Representative Weyhrauch   noted  that   the  Department   of                                                         
          Natural Resources had  suggested the amendment after the bill                                                         
          had moved out of the  House Resources Commitee.  He explained                                                         
          that  it was intended  to provide  further protection  to the                                                         
          State's  interests, especially  in providing access  to State                                                         
          SARA GILBERTSON, LEGISLATIVE  LIAISON, DEPARTMENT OF FISH AND                                                         
          GAME, testified about the amendment.                                                                                  
          2:03:45 PM                                                                                                          
          Ms.  Gilbertson noted  that the  Department  of Fish  of Game                                                         
          worked  with  the Department  of  Natural  Resources and  the                                                         
          Department  of Law to  create the  amendment.   She explained                                                         
          that   there  were  instances   of  small  parcels   of  land                                                         
          completely  surrounded  by State  land, when  the State  land                                                         
          contained  a  water  source.   She  stressed  that the  State                                                         
          wished  to ensure access  to water,  and suggested  that they                                                         
          add the proposed language,  demanding a best interest finding                                                         
          to be  made by the Director  before conveying a  parcel.  She                                                         
          concluded that  the finding would not  affect the transaction                                                         
          in question in Haines.                                                                                                
          2:04:13 PM                                                                                                          
          The  OBJECTION was REMOVED.   There  being no  objection, the                                                         
          Amendment PASSED by unanimous consent.                                                                                
          Representative Stoltze    asked about  the  suggestion  of  a                                                         
          sunset provision.  Representative  Weyhrauch  reminded    the                                                         
          Committee that the testimony  referred to the future need for                                                         
          such a tool.                                                                                                          
          Representative Hawker     pointed out  that  that the  fiscal                                                         
          note  was indeterminate,  rather than a  zero fiscal  note as                                                         
          previously referenced.                                                                                                
          Representative Weyhrauch  expressed his  hope that  the state                                                         
     of Alaska would create revenue through this bill.                                                                          
          Representative  Kelly  questioned whether  the  title of  the                                                         
          Bill  should refer to  State land  rather than  Federal Land.                                                         
          Representative Weyrauch  noted that the original title of the                                                         
          bill referred to purchase of Federal Land.                                                                            
          Representative Foster     MOVED  to  REPORT  HB   57  out  of                                                         
          Committee as Amended  with an Indeterminate Fiscal Note (DNR)                                                         
          and  individual recommendations.   There being  NO OBJECTION,                                                         
          the motion PASSED by unanimous consent.                                                                               

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