Legislature(2003 - 2004)
03/06/2003 01:30 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 97-LONG-TERM LEASES OF ALASKA RR LAND CO-CHAIR HOLM announced that the next order of business would be HOUSE BILL NO. 97, "An Act authorizing a long-term lease of certain Alaska Railroad Corporation land at Anchorage; and providing for an effective date." Number 1213 REPRESENTATIVE KOHRING, the bill's sponsor, stated that HB 97 allows the Alaska Railroad Corporation to grant a 55-year lease without a termination clause. This potentially gives organizations like the Alaska Enfranchise Facilities, Inc. (AEF) the opportunity to build a senior housing facility on Government Hill in Anchorage - property that is owned by the Alaska Railroad Corporation. He said the problem is that the [U.S. Department of Housing and Urban Development] HUD 202 grant requires a 75-year lease; however, since current law allows for a 55-year lease, that organization will not qualify to obtain the lease necessary to build the senior housing project. REPRESENTATIVE KOHRING referred to legislation that had passed from the House Transportation Standing Committee during a previous year [HB 298, passed in 2002] that allowed for leases to be extended from 35 years, which was the time that was set in 1984, to 55 years. The intent of that legislation was to encourage economic development in communities along the Railbelt and to facilitate commercial and residential development. He pointed out that if 35 years does not meet the standards of a lending institution, it's difficult to obtain financing to build a facility. He added that there are certain exceptions in which 55 years is not sufficient. One such exception is a senior housing project effort in Anchorage in which there is an attempt to obtain a 75-year lease on a particular site. Number 1188 REPRESENTATIVE KOHRING continued that if the Alaska Railroad Corporation is allowed to grant a 55-year lease without a termination clause, the time period for a lease on a particular site that is owned by the Alaska Railroad Corporation would essentially be extended indefinitely. The result of passing this law would be to pave the way to build much-needed senior housing - housing intended for low-income seniors. Number 1046 CO-CHAIR MASEK referred to the previous legislation that had become law and asked if changes in HUD's requirements had resulted in disqualifying the aforementioned project. Number 1030 REPRESENTATIVE KOHRING stated that the legislation allowed the railroad to extend its leases to 55 years rather than 35 years. He informed the committee that there are new HUD requirements for the HUD 202 grant - a grant used to build low-income senior housing. He explained that after the previous legislation had been passed, HUD regulations then changed to require a 75-year lease on Section 202 grant loans. Number 0973 MARK MARLOW, Alaska Enfranchise Facilities, Inc. (AEF), said the agency seeks to apply for a lease of at least 75 years for land on Government Hill so that the application of a Section 202 grant for that area can be facilitated. He testified in support of HB 97, saying that the legislation that was passed last year had nothing to do with this particular grant program. He stated that it was "just a good idea whose time had come" to extend the railroad's ability to lease ground from 35 years to 55 years. He said that it was a coincidence that HUD changed the terms of the "202 program" last year. The current requirement for Section 202 grant monies being used to build housing on leased land is to have a lease duration of 75 years. He said that previously the duration requirement had been 40 years. MR. MARLOW testified that statute currently reads that the railroad is able to lease ground for longer than 55 years provided that the legislature approves of such a lease. He said the request for the legislature to approve of extending the lease would allow for the Alaska Railroad Corporation to approve of the lease, should AEF be successful in being awarded the grant. Number 0840 REPRESENTATIVE FATE asked if Mr. Marlow had been in negotiations with the railroad. MR. MARLOW confirmed that this was so. REPRESENTATIVE FATE asked if anybody else had been in negotiations with the railroad. Number 0821 MR. MARLOW said he leased the ground last year for 55 years, in anticipation of the application period for this year's Section 202 grant. When the regulation changed to requiring a 75-year lease there was the question of seeking the legislature's approval for a longer lease (indisc.) and the railroad's position, should the grant be awarded. Number 0785 REPRESENTATIVE FATE asked if the intent was to build a senior home. MR. MARLOW confirmed that this was correct. REPRESENTATIVE FATE asked if the project would require a public process due to involving land belonging to the railroad but involving a dispersal clause in state statute indicating a "best interest finding." Number 0758 MR. MARLOW replied that he didn't know the answer to that question. He reported that when he initially leased the land from the railroad his application was advertised and went through the railroad's process, resulting in the lease that currently exists. Number 0737 REPRESENTATIVE FATE said he wondered if the lease would terminate if something to prevent completion of building the senior citizens' home occurred during the public process. Number 0715 MR. MARLOW replied that it would not terminate unless something else was built that was similarly appropriate for the zoning, adding that something would have to be started on the property by September 2004. He said if AEF was not able to get the grant - and grant applications typically have to be in by the end of May - then between now and September of 2004, it would be incumbent upon him to either sell the lease or to build something himself. In any event, he said it would be a housing project, since the property is zoned residential. Number 0666 REPRESENTATIVE FATE offered that a "best interest finding" is usually a required process, noting that he wasn't sure whether this was a HUD requirement. Number 0618 CO-CHAIR MASEK moved to report HB 97 out of committee with individual recommendations and the accompanying fiscal note; she requested unanimous consent. There being no objection, HB 97 was reported from the House Transportation Standing Committee.
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