Legislature(2005 - 2006)HOUSE FINANCE 519
04/04/2006 01:30 PM FINANCE
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
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 interest. 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 waters. 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.