Legislature(2001 - 2002)
05/03/2002 01:15 PM House JUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 278 - TAKING PROPERTY BY EMINENT DOMAIN Number 1999 CHAIR ROKEBERG announced that the next order of business would be CS FOR SENATE BILL NO. 278(FIN), "An Act requiring a good faith effort to purchase property before that property is taken through eminent domain; and providing for an effective date." Number 2024 REPRESENTATIVE MEYER moved to adopt the proposed House committee substitute (HCS) for SB 278, version 22-LS1399\S, Kurtz, 5/3/02, as a work draft. There being no objection, Version S was before the committee. Number 2042 HEATHER M. NOBREGA, Staff to Representative Norman Rokeberg, House Judiciary Standing Committee, Alaska State Legislature, explained that Version S contains three changes, two of which are located in Section 2, and the third in Section 4. The first change stipulates that the provisions SB 278 only apply to parcels valued at $15,000 or more. The second change removes language that the department must consider all alternative means of satisfying the public purpose, and stipulates instead that the department can offer to exchange the property for a parcel of comparable value. The third change involves rewriting Section 4 so that it now pertains to the ascertaining and awarding of just compensation - rather than to the process of possession - while still providing "a hammer" to encourage the department to comply with the provisions of Sections 1 and 2. She explained that this encouragement comes in the form of awarding the landowner an extra 10 percent of the value of the property should the department be found to have not acted in a "reasonable and diligent" manner, and offered that this change to Section 4 will ensure that projects won't be delayed. MS. NOBREGA suggested that for consistency's sake, a technical amendment should be made to page 3, line 11, to add a reference to subsection (c). Number 2162 REPRESENTATIVE BERKOWITZ made a motion to adopt Amendment 1, on page 3, line 11, after "AS 09.55.270(b)" insert "and (c)". There being no objection, Amendment 1 was adopted. MS. NOBREGA, in response to questions, reiterated that the new language in Section 4 should ensure that projects are not delayed, and explained that the master, when deciding the awards related to the value of the property, can also assess additional items that would be awarded to the landowner, such as attorney fees, costs, and the aforementioned 10-percent penalty. CHAIR ROKEBERG remarked that in a case involving land valued at $140,000, a 10-percent penalty would involve a substantial amount of money. Number 2293 JON TILLINGHAST, General Counsel, Sealaska Corporation, noted that although the 10-percent penalty for noncompliance is less severe than losing the property altogether, it is still "credible enough to be consistent with the intent" of SB 278. He also noted that under Version S, the state is assured of ultimately getting the property, and, thus, the bill should no longer have a fiscal impact because there won't be any additional attorney fees associated with the eminent domain proceedings. He thanked the committee for its work on SB 278, and said that Sealaska supports reporting the bill from committee. TAPE 02-60, SIDE B Number 2371 DENNIS POSHARD, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation & Public Facilities (DOT&PF), thanked the committee for developing Version S, noting that it is an improvement over the previous version of SB 278 and alleviates the DOT&PF's concerns regarding Sections 2, 3,and 4. He referred to a handout provided to the committee and explained that it lists entities, aside from the DOT&PF, that will affected by the bill, and that it also contains the department's acquisition statistics. CHAIR ROKEBERG asked whether the $15,000 threshold is sufficient. MR. POSHARD said he would research the issue before the bill gets to its next committee of referral to be sure that it is an appropriate threshold. He concurred with Mr. Tillinghast that Version S would engender a much different fiscal note, but noted that the 10-percent penalty might not be covered by federal funds; instead, any penalties awarded the landowner because of the state's noncompliance with Section 2 might have to come from the state's general fund. MR. POSHARD then suggested possible amendments to Version S. One amendment would involve changing page 2, line 2, so that "value" is replaced by "estimated". Another amendment would involve changing Section 4 - page 3, line 12 - so that the 10- percent penalty would be based on the final settlement amount, rather than on the value of the property. He also recommended that Section 2 should be altered so that subsection (c) becomes paragraph (3); if such a change is made, however, the change made via Amendment 1 would have to be altered appropriately [as would all other references to subsection (c)]. He indicated that this latter suggestion results from the fact that "we've had an issue over local concurrence." Number 2115 MICHAEL L. DOWNING, Director/Chief Engineer, Division of Statewide Design & Engineering Services, Department of Transportation & Public Facilities (DOT&PF), opined that changing subsection (c) into paragraph (3) would make the language cleaner and would help settle a debate that the DOT&PF has had with the Alaska Municipal League (AML). CHAIR ROKEBERG opined that the [the issue of local concurrence] is out of context for the discussion of SB 278. REPRESENTATIVE BERKOWITZ pointed out that if subsection (c) were changed into paragraph (3), then the references to subsection (b) in that new paragraph (3) would have to be altered to read "(b)(1) and (2)". CHAIR ROKEBERG asked for an example of difficulties that might arise by keeping subsection (c) as is. MR. DOWNING said: The issue there is whether the local planning approval ..., which is within the context of a chapter in statute ... titled "Consistency with Local Planning and Zoning Authority - and that's what we believe to be the test - and before and after that sentence, that's the context. But the debate we've been having is, will that sentence - "submit plans and specs for approval" - stand alone. And the municipalities believe that it does, and that approval can mean anything. We think it can only mean what it means within the context of the chapter that it's in. [We] feel pretty clear that we're right about that; nonetheless, we've had a very long debate about it. MR. DOWNING added, however, that Amendment 1, by itself, does satisfy most of the DOT&PF's concerns regarding this issue. REPRESENTATIVE COGHILL opined that as currently drafted, subsection (c) cannot be misconstrued. CHAIR ROKEBERG agreed. Number 1949 JAMES CANTOR, Assistant Attorney General, Transportation Section, Civil Division (Anchorage), Department of Law (DOL), testified via teleconference. He suggested changing the new language beginning on line 10 of Section 4 to read: "If, following the award in the proceedings, the court finds as a matter of law that the". He explained that this change would place the finding by the court within a timeframe; thus the finding would come during the later penalty phase of the proceedings rather than at the beginning of the proceedings. In response to a question, he explained that the master makes recommendations to the courts, and the courts then adopt those recommendations. MR. CANTOR noted that the condemnation cases that he is familiar with are in the $800,000 to $2 million range; in such cases, a 10-percent penalty would constitute a substantial amount of money, which, he surmised, would not be reimbursed by the Federal Highway Administration. He opined that there would be some increase in attorney fees simply because there would be a new issue to litigate. MR. TILLINGHAST posited that none of the suggested changes would cause a problem for Sealaska with the exception of changing subsection (c) into paragraph (3). He opined, however, with regard to the suggestion that the 10-percent penalty be based on the final settlement amount, that it would make more sense to say "10 percent of the final award for the property". He then referred to the fiscal note, and remarked that he has never seen a fiscal note that was based on the assumption that the state would commit a legal wrong, adding that generally such judgments against the state are paid for through a supplemental appropriation. CHAIR ROKEBERG opined that the fiscal note should be indeterminate. REPRESENTATIVE BERKOWITZ, referring to page 3, lines 11 and 12, raised the question of whether the language, "the court may award a sum equal to 10 percent" would strip the court of the flexibility to go up to 10 percent. MR. TILLINGHAST agreed, noting that if the court feels that it is "a 3-percent case," it ought to be able to award a 3-percent penalty, rather than having to award either a 10-percent penalty or nothing. He suggested that the language could be changed to say, "the court may award a sum of up to 10 percent". Number 1583 REPRESENTATIVE BERKOWITZ made a motion to adopt Amendment 2, on page 2, line 2, to delete "valued" and insert "estimated". There being no objection, Amendment 2 was adopted. Number 1566 CHAIR ROKEBERG made a motion to adopt Conceptual Amendment 3, on page 3, line 10, following "If" insert ", following the award in the proceedings," and after "the court finds" insert "as a matter of law". There being no objection, Conceptual Amendment 3 was adopted. Number 1528 CHAIR ROKEBERG made a motion to adopt Conceptual Amendment 4, on page 3, line 12, delete "equal" and insert "up to", and deleting "value" and adding "final award", and delete "of the property". There being no objection, Conceptual Amendment 4 was adopted. Number 1469 REPRESENTATIVE BERKOWITZ moved to report the proposed HCS for SB 278, version 22-LS1399\S, Kurtz, 5/3/02, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HCS CSSB 278(JUD) was reported out of the House Judiciary Standing Committee.
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