Legislature(2001 - 2002)
04/23/2002 01:11 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 500-ADVANCE ACQUISITION OF REAL PROPERTY Number 1388 CHAIR KOHRING announced that the final matter before the committee would be HOUSE BILL NO. 500, "An Act relating to the advance acquisition of real property for public purposes." [HB 500 was sponsored by the House Transportation Standing Committee. Before the committee was CSHB 500(CRA).] CHAIR KOHRING noted that the bill's purpose is to accomplish having right-of-way property well in advance of construction of a particular project. This would allow the state to buy property when prices are low and thereby save money. Number 1358 MIKE KRIEBER, Staff to Representative Vic Kohring, Alaska State Legislature, presented HB 500 on behalf of the House Transportation Standing Committee, sponsor. He read from the sponsor statement: Infrastructure development is key to economic development throughout Alaska. Right-of-way corridors are required to access resources and markets, enhance interstate commerce, and improve Alaska's quality of life. Economical transportation utilities are vital to developing Alaska's raw resources and value-added products. Lowering the cost of developing these corridors would allow Alaska's resources to compete in national and international markets. Many times, proposed resource extraction projects are hindered due to lack of established right-of-ways to access the sites or to move resources to market. In urbanized areas, the public process to identify new [rights-of-way] for transportation and utility corridors for past-due projects can extend over long periods. This results in bitter battles, pitting neighbor against neighbor, and ending up with many dislocated property owners. Skyrocketing right-of-way costs and more expensive construction costs result in delay of projects and fewer projects statewide. MR. KRIEBER explained that the bill is intended to address the problem of having no statutes to allow for the identification and preservation of corridors for future use. He cited the example of the Parks Highway, a 1.5-mile project for which the right-of-way costs have risen from $4 million to $21 million. There was also an eminent-domain case on the project that was awarded to the department. Mr. Krieber outlined a "snowball effect" of costs triggering higher costs. Number 1213 MR. KRIEBER spoke to the issue of rights-of-way for private- property owners. People purchase property for certain reasons, for example, a retirement home; a major utility corridor or new road could impact the retirement home. Mr. Krieber said a solution to that problem is the development of a process that identifies the corridors, memorializes them, and allows utilities or the department to pre-acquire the right-of-way. This would provide the public with adequate public notice that a project is coming up, and give the public adequate information when there is a purchase of property. MR. KRIEBER said the bill concentrates on eminent domain for advance acquisition, but only when certain prerequisites are met: the proposed future use is not too speculative, the need of the property must be reasonably foreseeable, and it must be in a long-range transportation plan such as found in a municipality or borough. Number 1145 MR. KRIEBER summarized by saying the bill would result in direct benefits: decreased right-of-way acquisition costs and accelerated permitting of future transportation and utility projects. Resource-extraction and value-added industries will be able to capture emerging markets when the conditions are right, by the knowledge that their projects can move forward in a shorter timeframe. He said property owners would be able to make more informed decisions before their purchase. CHAIR KOHRING said he did not intend to move the bill out; he just wanted to inform the committee about the bill. Number 1030 REPRESENTATIVE KOOKESH asked how advance acquisition of property could take place before engineering - the time after which most projects receive their funding. MR. KRIEBER answered by saying it is an issue to be looked at. He said it comes down to federal funding. He referred back to the Parks Highway example and said the federal government would have reimbursed the department if it had advance-purchased the right-of-way; the money saved by taking advantage of the lower price could have gone into other projects. REPRESENTATIVE KOOKESH posited that a special fund might be required to allow the state to make advance purchases in lieu of federal reimbursement. He asked if such a fund was part of the bill. MR. KRIEBER answered that there was no such fund within the bill, but he said the bill would provide the language in statute [that would allow a fund]. He said it would require two separate steps. Number 0987 CHAIR KOHRING mentioned a similar idea voiced in the previous meeting by the department; he said the Department of Transportation & Public Facilities (DOT&PF) was in support of the bill [but see testimony by Mr. Poshard at the current hearing specifying support for the original version]. Number 0980 REPRESENTATIVE SCALZI mentioned that he'd heard the bill in the House Community and Regional Affairs Standing Committee meeting earlier that day, and the committee had passed it out [as a committee substitute (CS), CSHB 500(CRA)]. He stated that it was comforting to know that if DOT&PF purchased property through eminent domain and then later decided the property was not needed, the original owners, or their heirs, had first right of refusal to buy the property back at the original price. Number 0942 REPRESENTATIVE WILSON asked what would happen if, for example, an environmental impact study prevented a project from going through. MR. KRIEBER referred to Section 5 of the bill as an example. He said the same language is used for each entity given eminent domain for advance acquisition. Number 0832 DENNIS POSHARD, Legislative Liaison, Office of the Commissioner, Department of Transportation & Public Facilities, testified before the committee. He told the committee the department supports the concept behind HB 500, but would prefer the original version. Mr. Poshard said a high potential for savings makes it a good opportunity. He made reference to a project for which the construction portion of the project costs $16 million, while the right-of-way portion costs $22 million. Number 0748 MR. POSHARD said the bill would help in a statement that makes a claim for the need of a piece of property. If state funds could be used for advance acquisition, it would be much easier because of the strings attached to federal monies. The difference between the original bill and the CS [CSHB 500(CRA)] is Section 5. The CS would require the state to sell the property to the original property owner at the original cost. He expressed his understanding of the need to give a property owner a benefit that may been received, should that property owner have retained the property, but the state would be investing state funds on a piece of property that the owner could be [using for investment] otherwise. He expressed reservations about giving the entire amount of value gained on the property to the property owner. The state would be losing property over time. Number 0584 REPRESENTATIVE KOOKESH reminded the committee that many times the department takes land by eminent domain. The property owners are not being given a benefit; they are being taken from. He said the department is not in the business of making money; it is in the business of saving money. MR. POSHARD agreed there are times when the department takes property from people who don't want it taken, but they are compensated at least for fair market value, by federal law. Original property owners should get some benefit. He expressed his concern, however, about loss to the state over time. He added that it would only be in a limited number of cases. Number 0489 REPRESENTATIVE KOOKESH recommended that AIDEA [Alaska Industrial Development and Export Authority] be involved in any potential fund developed for the bill's purpose. Number 0418 WENDY LINDSKOOG, Director, External Affairs, Alaska Railroad Corporation (ARRC), testified before the committee. She said all of the time and effort that goes into preparing the land is expensive, whether it is used or not. Some of the value gained when a piece of land is sold back to the original owner at its original price could go towards offsetting those costs. It might be an incentive to see large projects go through. REPRESENTATIVE KOOKESH said the public doesn't care about that. When [the ARRC] thinks about its own interest, that is fine, but [the legislature] must think about the public interest. MS. LINDSKOOG expressed her appreciation of Representative Kookesh's point. She said the federal government allows for the "mitigating risk" concept when looking at property acquisitions. She expressed ARRC's support of the bill in its original form. [HB 500 was held over.]
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