Legislature(1995 - 1996)
04/03/1996 02:22 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 543 - STATE AIRPORT LAND LEASE PREFERENCE Number 0045 CHAIRMAN GARY DAVIS announced the first item on the agenda was HB 543, an act establishing a preference when entering into state airport land leases and referred to the new committee substitute. REPRESENTATIVE JEANETTE JAMES made a motion to adopt CSHB 543 (TRA), version 9-LS1769\F, dated April 3, 1996. Hearing no objections CSHB 543 (TRA) was now before the House Standing Committee on Transportation. Number 0095 CHAIRMAN GARY DAVIS said CSHB 543 (TRA) was a draft put together in conjunction with involved parties and the Department of Transportation and Public Facilities (DOT/PF). He said the language in the title has been narrowly defined so that it addresses specific concerns and will not leave itself open to revisions. He said the findings section has been left into CSHB 543 (TRA) to protect it from any constitutional question regarding preferential rights on land leases. Number 0192 CHAIRMAN GARY DAVIS said the changes in Section 2 address concerns by involved parties. He said the changes in Section 3 involve the elimination of terms which might have a legal basis, with the insertion of simple language. He said the language now reads, "right and option to make the first offer on a new lease for an extended term within a reasonable period of time". He said there was lengthy discussion to make sure the time frames within that process were delineated and Section 3 (d) does this, "under (c) of this section, the department shall make the offer not less than 180 days before the expiration of the existing lease, and the holder of the existing lease shall respond to the department's offer not less than 90 days before the expiration of the existing lease." In this subsection, lease does not include a holdover lease. He said a holdover lease will probably not have 180 or even 90 days left in the lease. He said the provisions apply in a holdover lease but the timing does not. Holdover leases are available for the lessee to have the right and option to make the first offer on a new lease for that same land. Number 0346 CHAIRMAN GARY DAVIS said Section 3 (e) addresses the improvements made to the land and said there might be some discussion on this section. He said (e) addresses the situation where someone is interested in financing a facility on the land, and said DOT/PF can address this situation by regulation. Number 0389 CHAIRMAN GARY DAVIS said the key thing, in CSHB 342 (TRA), is to make its application constitutional and to make sure that DOT/PF is in agreement to prevent the bill from being vetoed. Number 0426 KURT PARKAN, Deputy Commissioner, Office of the Commissioner, Department of Transportation and Public Facilities, said the DOT/PF supports legislation that will give existing tenants the right and opportunity to get a new lease without going through the anxiety of entering a competitive situation. He said DOT/PF was directed by the Governor to work with the legislature to address this issue and said CSHB 342 (TRA) does a good job in meeting that common goal. He said the DOT/PF has a problem with Section 3 (e), the discussion on the disposition of improvements. He said the DOT/PF cannot say that they support that language and said they have provided some suggested language the DOT/PF could support if the committee feels there needs to be some reference to the improvements in the bill. He said the problem with the current language, in CSHB 543 (TRA), is that it removes flexibility for the state to manage the public land and the DOT/PF feel that it would "tie the hands" of the state in looking at the needs of the community, the needs of the airport users and the need of the state as a whole. Number 0594 CHAIRMAN GARY DAVIS said the submitted language was located in the committee packet. Number 0641 REPRESENTATIVE NORMAN ROKEBERG, "what the provisions of subsection (e) provide for is the disposition of revisionary interests in the leaseholds. There's been a lot of difficulties I understand that in the past about this because they have either been omitted or there hasn't been arms length bargaining in the past about this reversionary interests. So, this section, which I approve of in part, is that it does provide that the disposition of these improvements at the expiration or termination of a lease would remain with the leaseholder except for the limited circumstances found in lines 27 through 30. However, one thing I think that has been omitted, although we have had some testimony in past meetings on this is that if there is a clear, bargained for situation between the state as lessor and the tenants as lessees, that expressly provides for the reversionary interest of the improvement to vest back into the state of Alaska. I don't think we should frustrate that statutorily and hopefully that would overcome any problems that the department would have with this clause." REPRESENTATIVE ROKEBERG proposed an amendment to Section 3 (e), language on page three, line 27, after "lessee" adding, "except when expressly bargained for by agreement." "So, the sentence in essence, by paraphrasing read, that the ownerships of the improvements would be retained by the tenant except or by when they constructed them by successor and interest or other assignees, except when they are expressly bargained for by agreement. You could actually bargain for by agreement. As a matter of construction you can even put it also down, however in limited circumstances clearly defined by regulations, you could add it down there too because these are exceptions that speak to the state's interest." Number 0800 MR. PARKAN said he did not see how that language would change things for the state as it doesn't provide the state with the flexibility in determining the disposition of improvements at the end of a lease. He questioned what the language, "acquire ownership by financing improvements" meant. He said DOT/PF does not really finance improvements. Number 0832 REPRESENTATIVE JAMES asked for clarification on the problem with Section 3 (e). Number 0844 MR. PARKAN said existing regulations, that have been in place for many years, have three options for disposition of improvements at the end of the lease term including the reversion of improvements to the state, improvements may be removed or the improvements may be sold to the subsequent lessee. He said the language, under Section 3 (e), would change that and make it nearly impossible for the improvements to revert to the state. Number 0895 REPRESENTATIVE ROKEBERG said his proposed amendment would give the state the ability to bargain for that right in the lease. He said the use of bargaining means something, and said there is not the right to bargain at the airports because of their semi-monopoly status. Number 0941 REPRESENTATIVE JAMES said the language suggested by the DOT/PF clearly states the intent more clearly than his proposed amendment. Number 0952 REPRESENTATIVE ROKEBERG said the suggested language by the DOT/PF is similar to other language that was included in other drafts of CSHB 543 (TRA) which he had devised. "That language is really duplicative of language I had provided when I had a construct which provided for the reversionary interest in existing leases and then said future leases had to speak to a disposition and that is all that clause does. That clause merely states that any future leases would have a clause or provision for the disposition of any improvements, that is all it means." Number 0990 REPRESENTATIVE JAMES said she understood that, but it seemed to her that the disposition of the improvements at the end of the lease is the issue. Currently, according to regulation, the state has all the options and if the state is to have options it should clearly state what those options are. She said the proposed language offered by the department would provide that information. Number 1025 CHAIRMAN GARY DAVIS said there was some ambiguity in the language provided, "may acquire ownership by financing improvements." Number 1038 REPRESENTATIVE DON LONG said one of the suggested language reads that we need provisions for disposition of improvements and the other suggested language already has provisions lined in the lease. Number 1068 CHAIRMAN GARY DAVIS said in the CSHB 543 (TRA) it is more detailed with the amendment proposed by Representative Rokeberg which adds some of the language by the departments. He said this is currently the only section of contention in CSHB 543 (TRA). He said he wanted to move this bill out today and felt it would have a better position on the floor if the department's suggested language was incorporated into CSHB 543 (TRA). Number 1108 REPRESENTATIVE JAMES made a motion to delete the existing Section 3 (e), lines 24 through 30, and insert the language provided by the DOT/PF as reads, "All leases must include a provision that provides for the disposition of any improvements made to the land, at the expiration, termination or cancellation of the lease." Hearing no objection, Amendment 1 was adopted to CSHB 543 (TRA) by the House Standing Committee on Transportation. CHAIRMAN GARY DAVIS said there would most likely be additional "tweaks" to CSHB 543 (TRA) before it went to the floor with the assistance and cooperation of the DOT/PF. Number 1204 REPRESENTATIVE BILL WILLIAMS made a motion to move CSHB 543 (TRA), as amended, with zero fiscal note, and individual recommendations. Hearing no objections CSHB 543 (TRA) was moved from the House Standing Committee on Transportation.
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