Legislature(2001 - 2002)
04/30/2001 05:35 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 244-RIGHT-OF-WAY TO DENALI BOR. FOR RR/UTIL. CHAIRMAN TORGERSON announced HB 244 to be up for consideration. MR. RICHARD SCHMITZ, staff to Representative Jeannette James, told members their packets contained two maps that accompany his comments. The green map shows the old Stampede Trail, which is an old mining road that goes back into Kantishna. The yellow map shows a piece of state land, four townships wide, extending from Healy into the park boundary, known as the Wolf Townships. A group called Kantishna Holdings, organized by Joe Fields, has been working on putting a railroad through that area for nine years. Two years ago, HB 386 provided an opportunity to do that, but it didn't happen. As a result, Representative James came up with the idea of replacing AIDEA with the Denali Borough; that's what HB 244 is about. MR. SCHMITZ explained that the original idea was to allow the right-of-way for the railroad to be identified. Under HB 244, whatever land is not needed of the four townships to create the right-of-way would remain with the state. Only the actual right-of- way will be transferred to the Denali Borough, or about 3,500 acres maximum. However, Representative James believes the acreage will be closer 1,500 acres. He stated, "For that return, the idea is to get economic development into the Healy area, a hotel possibly on some railroad land has been worked on near the road. Eventually, the long-term goal would be to connect into the Kantishna area where it could meet up with the existing road." MR. SCHMITZ said subsections (a) and (b) of the proposed committee substitute (CS) allows the Denali Borough to work with Kantishna Holdings, Inc. to identify the railroad utility corridor. The rest of subsection (b) is a description of the railroad right-of-way and what it will need to include, such as a turn-around yard or a maintenance shed. New subsection (c) puts in writing where the land will come from and identifies it by township. That was not included in the original bill. Subsection (d) contains a standard clause that prohibits the grant from impairing valid property rights on the land. It sets a date when the Borough will allow the process to go ahead. Subsection (e) mandates that this corridor does not count toward the fulfillment of the Denali Borough's general entitlement, at the request of the borough. Subsection (f) was added to require DNR to designate an employee to be the liaison. REPRESENTATIVE JAMES interjected that the yellow area is not in the bill any more, because originally they had to transfer it to the borough. First, DNR has to identify all of the existing rights that may be in that area and then work with everyone to identify where the corridor would go. Once that is done, they would do the surveying and then the land could be transferred. CHAIRMAN TORGERSON asked if the original bill gave AIDEA the land. REPRESENTATIVE JAMES said that it authorized DNR to transfer the yellow portion of land to AIDEA so it could bond for this project but, "That never did happen." CHAIRMAN TORGERSON asked if that is repealed in Section (2). REPRESENTATIVE JAMES indicated that was correct. Number 1000 CHAIRMAN TORGERSON asked if the capital budget contains any federal money for this project. REPRESENTATIVE JAMES replied that Congress appropriated $1.23 million for the corridor but it has been sitting there because of no matching state funds. She understands that there are now enough funds for the state's share. SENATOR ELTON asked who Kantishna Holdings is. REPRESENTATIVE JAMES replied that it is a holding company that was created nine or 10 years ago with Mr. Joe Fields of Fairbanks leading it. Other people are investors in it for this purpose. SENATOR ELTON said he sold a house and it took a private company four weeks to do a title search. He expressed concern that setting a deadline of September 1, 2001 to identify all valid property rights in the yellow section is very aggressive. He asked Representative James how she came up with that date. REPRESENTATIVE JAMES replied that her daughter works for a title insurance company and said, "I can tell you they weren't working for four weeks to do it. That was the time it took you to get it." She thought that most of the existing rights were pretty well known at this time. She said the fiscal note would help them get it done. CHAIRMAN TORGERSON said he intended to hold the bill in committee until the fiscal note "caught up to us." SENATOR LINCOLN said she didn't know what rights the holding company would have to build a railroad and asked if it was originally given the bonding authority through AIDEA to do this project. REPRESENTATIVE JAMES replied that Kantishna Holdings already has less expensive financing than what AIDEA could offer for the project. This legislation gives this particular land to the Denali Borough, which Kantishna Holdings would have to pay to use. Kantishna Holding Inc. does not want to own the land; it wants to lease it from the borough. SENATOR LINCOLN asked if the Kantishna Holding Company has the right-of-way now. REPRESENTATIVE JAMES said it does not; DNR has the entire interest in this land. MR. JOHN NIERENBERG, a Healy resident, said he saw some problems with the bill. He said that no EIS has been completed on the lands in question and the public has not had any chance to comment on proposals. There is strong local opposition to any plan that does not allow public comment on alternatives and other concerns. HB 244 mandates that land be transferred to the borough and then leased to a private company without a competitive bid process. He said the Denali Borough does not have a land use or transportation plan. MS. LINDA PAGANELLI, a Healy resident, opposed HB 244. She said she has driven a bus for 20 years on the Denali Park Road. This bill mandates DNR to transfer of 3,500 acres of state land to the Denali Borough. The land in question, the Wolf Townships, is not available for selection as part of the entitlement. The bill authorizes DNR to disregard this fact. She added, "If this bill passes, there will be no [indisc.] that the transfers will be in the best interests nor will there be opportunity for public comment." She recommended that line 15 be deleted because it says: "However, other provisions of AS 29.65 do not apply to the transfer." Number 1600 MS. PAGANELLI commented: This bill appears to be a state give away of prime wildlife habitat of recreation lands to a private developer. I question where the state's common interest is in bestowing this sweetheart deal… She said, "The Denali Borough and the state legislature hogtied the citizens of the borough to a company that has not demonstrated a need for a railroad, the economic feasibility of a railroad, nor financial backing to support a railroad." She reiterated that the borough has no land use or transportation plan and no infrastructure to absorb the responsibilities inherent in this project. MS. PAGANELLI also expressed concern that the bill does not contain a sunset date to prevent the option of remaining open in perpetuity if the borough does not act on the railroad project within a designated time frame. In addition, the bill contains vague language that alludes to facilities to support economic development in conjunction with the railroad project. She questioned what those facilities would be. She thought some general guidelines need to be included in the bill and said, "One Glitter Gulch in the Denali Borough is more than enough." MR. DAVID BRAUN said he opposes HB 244 because public and private land developers are trying to appropriate state land to Denali Borough and develop it for their own financial gains. It attempts to bypass state government and the public process. He thought keeping the Wolf Townships out of the arch is good for economic development. He said this bill has very little to do with the railroad, since it will probably not be built for economic and political reasons, but the Denali Borough Assembly will still get land in the Wolf Townships that they have coveted for many years. MR. DICK MYLIUS, Division of Mining, Land and Water, Department of Natural Resources (DNR), said: I have four points regarding the proposed bill. The first one is that DNR believes that a lot more acreage is going to be needed to determine the best access route into the north side of Denali National Park. The railroad in the corridor may or may not be the best approach. There are two other planning efforts that the rail project could maybe coordinate with. The State Department of Transportation is poised to receive $1.5 million in federal funding for an EIS for the [indisc.] access and this effort is subject to an appropriation, which is contained in SB 3. In addition, the National Park Service has invited the state to participate in its study up North on access alternatives. Because so much of this route into Kantishna will be across National Park Service lands, the railroad cannot be built without Park Service concurrence. DNR believes it is essential to work with the National Park Service to achieve an agreed upon access plan for the Denali National Park. Our second concern regards what rights the bill grants to Kantishna Holdings. Once the corridor is identified, the implication is that Kantishna Holding would have the exclusive right to build in the railroad corridor. We believe that the land should be conveyed to the borough so that other uses or developers could make use of the land as well. Two additional concerns DNR has is with the committee substitute presented today. The first one is that the land will not be charged to part of the borough's entitlement and we believe it should be. Our concern is that if the legislature starts granting additional lands for specific projects, you're opening the door to requests from municipalities. Right now we are in the process of conveying land at Hatcher Pass to the Mat-Su Borough for the ski area. That land will be charged against their entitlement. The municipal entitlements were based on a formula that was established by the legislature back in 1978 and that formula was established to avoid disagreements over entitlements that had existed prior to that date and actually is involved in litigation. The specific issue of the litigation was how much the entitlement should be for all the municipalities. The legislature established a standard formula that [indisc.]. Land for development is exactly the type of land that is supposed to be conveyed under the entitlement. The final concern we have would be the question of why DNR was deleted from the consultation upfront. We're concerned because in the end, DNR is going to have to approve the railroad corridor and we think it's essential that DNR be involved in the process from the beginning so we can assure that more statewide and public concerns are addressed upfront rather than having to try to deal with those issues at the end of the process. CHAIRMAN TORGERSON asked how much of the Denali Borough's entitlement is unfulfilled. MR. MYLIUS answered that the borough's entitlement was 49,000 acres and it has received about 20,000 acres. CHAIRMAN TORGERSON said he would look at Mr. Mylius's concerns and see what he could do. MR. LAND COLE opposed HB 244 and said he is a 30-year resident of the Denali Borough. [Indisc.]. MR. JEFF YUNACHI said he and his family run the Stampede Trail Bed and Breakfast and Sled Dog Tours. Their sled dog tour in the winter utilizes areas in the Wolf Townships. He is concerned that a railroad through that area would "virtually kill our business." He said it is an especially critical time for them, because they are in the process of negotiating another sled dog business. He said they don't feel that there has been any public input. They are concerned that language in HB 244 could possibly exclude other business interests from occurring in the 3,500-acre tract. They don't know if they would be able to continue to use their traditional sled dog trails if this bill goes through. MS. JOAN FRANKEVICH, National Park Conservation Association (NPCA), opposed HB 244. The NPCA considers the Denali Borough to have the wrong role in this project. The logical player would be a state/federal partnership. She said there is no public process and the bill does not provide for competition. She said the railroad would not serve visitor needs or demands. She commented, "It is a most unusual way for a land selection to be conducted." She said that Kantishna Holdings has had eight years to establish a right-of-way. There is no demand for a less scenic route to Wonder Lake. She stated, "The better alternative is south Denali." MR. JOE FIELDS, Kantishna Holdings, supported HB 244. TAPE 01-35, SIDE B MR. FIELDS said that all the cities and boroughs along the Railbelt have written letters in support of this project and two legislatures have passed resolutions supporting it. On the positive side of the project, he said it should be noted that the National Park System Advisory Board looked at the Denali Task Force Report and found it extremely wanting because the charter business given to that committee was not fulfilled by it. Their response was to amend the Denali Task Force Report to call for the creation of a new northern railroad right-of-way to Wonder Lake. They included follow-through on the balance of issues of items within the Task Force Report and one of those was the south Denali plan, but no money was forwarded to it and it doesn't access the park. Although, it might provide some good access for short trips out of Anchorage and it might not be a bad idea, he didn't think it would happen. There was just too much opposition. In response to the conflict of interest issue, MR. FIELD said this is not in response to an RFP. An evaluation of the corridor needs to be done and they have been trying for some time to get one established. The result of their first attempt in 1993 was that Commissioner Olds of DNR put forward a proposal to allow an access permit at the edge of park and do that they could move their facilities on to that. They were not able to put the entire right- of-way into action and, therefore, were not able to come up with a study for the entire corridor to the edge of the park. After 1994, the National Park System Advisory Board didn't act on it either. MR. FIELDS stated that there had been a public process. Kantishna Holdings had been before the Denali Borough several times and they were in favor of it. He said the opposition to it is specifically from people in the NPCA. The Secretary of the Board of Trustees is the owner of Camp Denali, Land Cole. These people have a conflict of interest when they don't want to have people come into the backcountry of Denali. CHAIRMAN TORGERSON indicated there were no further questions. He questioned why a sunset date wouldn't work and why this land transfer shouldn't be part of the borough selections. He also wanted to know if it is necessary to mention Kantishna Holdings in the bill.