Legislature(2003 - 2004)
03/01/2004 01:07 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 319-REMOTE REC.CABIN SITE SALES/LOTTERY SALE CO-CHAIR DAHLSTROM announced that the next order of business would be HOUSE BILL NO. 319, "An Act relating to the disposal of state land by lottery; and relating to the disposal, including sale or lease, of remote recreational cabin sites." Number 2719 REPRESENTATIVE HEINZE moved to adopt the proposed committee substitute (CS), labeled 23-LS0477\S, Bullock, 2/25/04, as the work draft. There being no objection Version S was before the committee. Number 2740 REPRESENTATIVE HUGH FATE, Alaska State Legislature, speaking as sponsor, characterized the bill as another tool for the Department of Natural Resources (DNR) to allow private individuals or other individuals, after nomination and at the discretion of the commissioner, to finally secure private land from public land in Alaska. He said with the hundreds of thousands of acres available in the state, he hopes there will never again be an excuse [for not allowing] this opportunity. He said this bill will provide that opportunity, and noted that the bill has gone through several iterations. Representative Fate said the present iteration of the bill has been received well by the Alaska Miners Association (AMA), although there are still some "hurdles" to go over with respect to the fiscal note. He said there are timeline issues [regarding the fiscal note] that have to be worked out. Representative Fate said it is an important bill that has been needed in Alaska. Number 2839 REPRESENTATIVE KERTTULA noted that the bill is now discretionary and had a lot of work done to it. She turned attention to page 2, lines 27-31, and page 3, lines 1-3, which read: Filing of a claim for relief by an owner against the state or a person entering, opening, developing, drilling, and working mines or wells on these or other lands, not based on physical damage to the owner's land, that hampers these reservations constitutes a breach of this contract and will result in an immediate assessment against the owner for a penalty equal to 150 percent of the current appraised value of the land, including the value of improvements. Failure to pay this assessment will result in foreclosure proceedings by the state. REPRESENTATIVE KERTTULA asked why this was put in this bill. She said it is in the broader section of the Lands Act, so it is going to apply "across the board." She said she has real concerns about it. Number 2888 JIM POUND, Staff to Representative Hugh Fate, Alaska State Legislature, testified. Mr. Pound said this incident deals with contractual law in statute, which this whole section essentially is. He said as far as Section 2 is concerned, this is contractual language that was basically put in the bill to take care of some technical errors. Mr. Pound said one change was made in addition to the contractual language. He said he and Representative Kerttula's staff had discussed Section 3, and he thought that could be fixed. REPRESENTATIVE KERTTULA said she didn't understand because the [bill contains] the reservations section of reserving the mineral rights of the state for subsurface, which is correct after statehood, but this section sounds as if filing a claim alone is the breach of contract. She said she didn't like that and it concerns her. She asked what the justification is. MR. POUND said there have been situations in the news lately about surface and subsurface rights. He said this is basically to assure that that confusion does not take place from the very beginning. Mr. Pound said for some reason people don't tend to read that the State of Alaska maintains subsurface rights. In this particular case, he said if a situation does occur in which a remote recreational cabin site ends up being valuable for subsurface rights, the [cabin owner] is not in a position to immediately start filing a cause of action because the state or government is going drill or mine underneath his or her property. TAPE 04-9, SIDE B REPRESENTATIVE KERTTULA asked if that section would be better left to other pieces of legislation, rather than bringing issues raised in the coal bed methane situation into this bill. MR. POUND said he questions why contractual law is being done in statute. REPRESENTATIVE KERTTULA indicated she would offer a clean up amendment at some point. Number 2958 REPRESENTATIVE GATTO asked if a neighbor would be subject to a penalty for complaining about drilling or mining activities occurring on adjacent property. MR. POUND answered correct. REPRESENTATIVE GATTO said the term "peaceful enjoyment of the owner's property" had been used in a different bill. He said this would certainly violate peaceful enjoyment. MR. POUND suggested that the peaceful enjoyment of one's property is probably unconstitutional. REPRESENTATIVE GATTO said he didn't think that constitutionality question could be addressed in the House Resources Standing Committee. He said the language wasn't invented in Alaska; it comes from other states, and he is suspicious about the constitutionality or the unconstitutionality of it. Representative Gatto mentioned that the issue of coal bed methane has been at the [forefront], and four bills have been introduced to address it. He said residents feel that maybe it shouldn't be done in concentrated areas or in areas where the water could be contaminated, and residents have several justifiable reasons to be concerned. He remarked: We are trying to address those reasons and it looks like this ... just did a reversal on all of that, in this regard, for this land, to bring all of those thoughts and statements and considerations and legislative attempts back to ground zero by saying you don't have any rights. REPRESENTATIVE GATTO asked if that is the intent. He said if he bought five acres of wilderness area, he wouldn't want it to be next to the Red Dog Mine. MR. POUND said he used the example of coal bed methane because it is obviously the one subject that has been on everybody's minds. He said this is basically language that will go into the contractual agreement between DNR and the buyer [of the property], and should eliminate concerns that have been taking place with coal bed methane by addressing it in the contract right up front. Number 2825 REPRESENTATIVE GATTO asked if that is done by the [Alaska] Statehood Act. MR. POUND said if that were the case, he didn't believe [the state] would have the coal bed methane problem it has now. REPRESENTATIVE GATTO said that is exactly the point. He said a number of people to file lawsuits, and [the bill would create] a big penalty just for filing the lawsuit. MR. POUND said it is the intent because that question continues without going back to coal bed methane, which is not the impetus for this. He said it is to ensure that ownership of subsurface rights are known up front. Number 2785 REPRESENTATIVE HEINZE said less than one percent of Alaska's land is in "private hands," and [she supports] moving more land into private hands. She asked what dispute resolution the department has if two parties nominate the same land. REPRESENTATIVE FATE said the commissioner has the authority to nominate the land; the nomination isn't automatic. Representative Fate said the commissioner has the final say and there is also a public process. He said constitutionally there has to be a public notice and a process for [providing] public notice. Representative Fate said there is ample opportunity for any withdrawal for that, including the designation as to mineral content. He said even though that possibility may exist, it is very remote by the very nature that this bill embodies, which makes it very difficult for that to happen. Furthermore, he said there are also regulations in place, which were passed last year, that if a permitting process is in place, the likelihood for an injunction, for example, has not been negated. He said there are several things in place that will mitigate the problem, although there is never 100 percent assurance that a property owner won't file a cause of action for some reason. Representative Fate said there are other ways, after nomination, to determine whether land can be disposed of. REPRESENTATIVE HEINZE asked if the commissioner has the right of refusal. REPRESENTATIVE FATE said first rights of refusal are not uncommon and are not prohibited in the constitution, and there is already statute law giving first right of refusal to people who are already leaseholders in Alaska. He said those laws have been on the books for years, and there is nothing that prohibits that first right of refusal, but equal opportunity is something different. Number 2627 REPRESENTATIVE GUTTENBERG expressed concerns, and he said the Bureau of Land Management (BLM) had been talking about surveying the state and the prohibitive costs. He said he is wondering about the actual value of a piece of property or remote parcel, besides the fair market value, and about adding an appraisal and a survey cost to that. Representative Guttenberg asked if an analysis had been done on the costs of an [appraisal and survey] for 10 acres of property. REPRESENTATIVE FATE said his staff, Jim Dieringer, did a lot of the fiscal work, and did an exhausting analysis. He suggested that [the costs are not] prohibitive and most people are willing to pay them if certain they can get fee simple to the property. He suggested that the person purchasing the property would determine what's prohibitive. He added that the cost will not accrue to the State of Alaska. REPRESENTATIVE STEPOVICH said he is under the impression that the commissioner has full discretion over who is nominated, what that person is being nominated for, and whether that person can have the land. REPRESENTATIVE FATE said it is basically correct that [the commissioner makes] the final [determination]. Number 2522 REPRESENTATIVE STEPOVICH said there are some inherent difficulties in the point that people competing for the land are going to be competing for the nomination. He said the constitution calls for the highest yield possible, and talked about destroying the whole concept of Alaskans owning land for recreation as well as for the resource value. REPRESENTATIVE FATE asked for clarification. Number 2485 REPRESENTATIVE STEPOVICH said the commissioner has full power over the nominations, and the people who want the land, Alaskans and businesses working within Alaska, are going to be in competition for the nomination. He said it kind of puts the commissioner in a "sticky" position. REPRESENTATIVE FATE said it may or may not be; it may be a parcel of land that has been used for a single purpose, and there may or may not be competition. He indicated that there is equal opportunity to compete for the land, and said part of equal opportunity is to allow people to do this. The assessed evaluation will be the final judgment in what the state will receive and how much it will cost the person who wins the lottery. He said it is not as though people will be competing or bidding on a price; there would be a determination of the parcel's value, and when the value is fixed, somebody will pay that value. He said unless there is an open bid, which usually isn't done, it is done on a lottery basis or over-the-counter sales "when it's not done in the other direction," REPRESENTATIVE FATE remarked, "When you maximize this opportunity, you maximize the land available, so that you have more money that accrues to the State of Alaska through these sales." He said there has been a determination as to what the lowest value of property is, what a low median is, and what the highest evaluations of property are. He said very little property with high value is sold in the state, either through lottery or anything else. He said much of [the property value] is low and only about 40 percent of it is successful. Noting that the land ends up in over-the-counter sales, he suggested the present lottery system isn't that successful for various reasons. REPRESENTATIVE FATE suggested that privatizing the land will maximize the sales to the benefit of the state, in those instances that don't maximize a sale. REPRESENTATIVE STEPOVICH said Representative Fate's efforts to privatize land are much needed. He said he thinks a land reform is one of the biggest issues that will face the state in the future with the lack of privately owned land. He said he could still see the inherent problems that the state already has in its leasing process with competitive leasing. He remarked, "If you want to call it a true lottery, it has to go all the way to the end; there has to be a lucky break for the Alaskan right up to getting the land itself." Representative Stepovich suggested that the ability of the commissioner to pick who [gets the parcel] ruins the chance for Alaskans heavily. REPRESENTATIVE FATE said he thought the leasing programs the state has come under different statutes, provisions, and are completely different than some of the other leases envisioned. For example, he said private leases to individuals in which a person can have a leasehold for some kind of a "manufacturing side" or "something like this." He said the oil and gas leases or the mineral leasing, even itself under the mining laws, are far different than the leases being discussed. He remarked, "We're not talking leasing ... here; we're talking outright fee simple ownership." Number 2216 REPRESENTATIVE GUTTENBERG, inquiring about the current land disposal program, asked what is wrong with [the program] and why land is not getting out to the public. Number 2198 NANCY WELCH, Special Assistant, Office of the Commissioner, Department of Natural Resources, testified. She explained that the remote recreation parcel program is offered quite differently; it was redesigned through statutory change from some of the programs that were offered in the early 1980s. Ms. Welch said the department has gained quite a bit of efficiencies in the last few years that it has offered under this new program in which an area is designated and a determination is made of how many people can stake in the area. She said before the sale, the surveyor provides a proposal of the costs to have the survey done. That cost is spread uniformly across all of the numbers that will be offered, so that people know up front what the costs are that are going to be, she explained. MS. WELCH added that the actual survey and appraisal cost is borne by the applicant. The survey cost is a part of the fair market value price. She said it is set in regulation that the state will receive no less than $1,000. In the old program, she said it was found that the state was almost giving the land away and not getting any return to the state at all. She said it was felt that the state should at least receive a minimum price on that. She said she knows that the complaint has been that the state is not offering larger blocks of land. She said [the state] is working with a lot of municipalities, some of which have limitations on what parcel sites [the state] can have without having to do capital improvements such as roads or power. She said the five acre rule, in the municipalities, may be a problem; 20 acres is the current maximum amount that can be staked, and the average staked by individuals is about 13.5 acres. REPRESENTATIVE GUTTENBERG asked if parcels are still available over-the-counter. Number 2020 DICK MYLIUS, Deputy Director, Division of Mining, Land and Water, Department of Natural Resources, testified. He explained that there are parcels for sale over-the-counter, although not in the remote recreation program, which is when parcels are basically awarded through a lottery at an annual offering. He said the parcels available over-the-counter are subdivision lots for the most part. REPRESENTATIVE GUTTENBERG asked if this bill represents a process that is significantly different than what is currently being done. MR. MYLIUS indicated that the most significant difference is that the areas and the amount of that can be staked are identified up front. He said six or seven areas are offered a year. One best interest finding and public notice is done for all of those areas, and one appraiser and surveyor are contracted with to do the appraisal. Under the proposed bill, he said hundreds of individual applications would come in and have to be processed separately. He said the best interest finding, public notice, surveys, and appraisals are all separate. CO-CHAIR MASEK said CSHB 319(STA) is accompanied by a fiscal note. She asked if the current CS is accompanied by a fiscal note. MR. POUND said he believes the fiscal note for $433,000 is really comparable and may go up only slightly. He remarked, "However, we do dispute the source of the revenue; this goes to revenue (indisc.) receipts; not from the general fund." Number 1902 REPRESENTATIVE HEINZE asked Ms. Welch if she is familiar with the Commonwealth North asset study that was just completed. MS. WELCH said she'd heard about it but had not read it. REPRESENTATIVE HEINZE explained that it was a six-month study that recommended increasing the financial portfolio of the state. She said a large amount of that was for doing a better management job with the state's land. Representative Heinze asked Ms. Welch if she thought this bill would aid in increasing that financial portfolio. MS. WELCH said she wasn't sure she could answer that question without reading the study. She said one concern the commissioner had expressed is that the bill would allow random staking without really consolidating the land disposals in a particular area, so it could have an adverse effect on potential development. She remarked, "You have to balance not only what we can ... transfer as part of our responsibility of settlement of our lands for individuals, but also having an economic return to the state on the resources that are available to us, so in that respect it could have a chilling affect." REPRESENTATIVE FATE said the "old thinking" has always been to condense those properties into a subdivision-type setting; however, the [purpose] of the remote recreational cabin site bill is to get remote parcels into private hands. He remarked, "This is not under the concept where you take land under one large setting, have it all surveyed at the same time into one subdivision where you have your neighbor right next door." He noted that buffer zones are embodied in the bill. He said too many people talk about trying [to buy] the place where they've either hunted or fished or just want some quiet recreation, and can't get the piece of property. He said this [bill was intended] to fill those desires. REPRESENTATIVE HEINZE suggested that the bill backs up the Commonwealth North study and provides for better management of the state's financial portfolio. She noted that it also provides Alaskans with remote cabin sites. Number 1720 CO-CHAIR DAHLSTROM said [the committee] was in the process of setting up a briefing to review the study by Commonwealth North to become aware of and educated with the findings of the study and it pertains to the different issues being worked on. She said her intent is to hold the bill in committee for further discussion. She noted her understanding that an amendment would be brought forward, and asked the maker of the amendment to work with Representative Fate's office to see if the amendment is friendly. She said noted that after the amendment is reviewed the committee would move forward. [CSHB 319(RES) was held over.]
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