Legislature(1993 - 1994)
02/01/1994 01:00 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 1, 1994
1:00 p.m.
MEMBERS PRESENT
Representative Harley Olberg, Chairman
Representative Con Bunde
Representative John Davies
Representative Cynthia Toohey
Representative Ed Willis
MEMBERS ABSENT
Representative Jerry Sanders, Vice Chairman
Representative Bill Williams
COMMITTEE CALENDAR
*HB 397: "An Act relating to the power to levy
property taxes in second class cities
and to combining a property tax and
incorporation question."
HEARD AND HELD OVER
*HB 398: "An Act relating to rights in certain
tide and submerged land."
HEARD AND HELD OVER
*HB 70: "An Act relating to state impact aid for
municipalities; and providing for
an effective date."
NOT HEARD
(*First Public Hearing)
WITNESS REGISTER
GARY WILLIAMS, City Manager
City of Whittier
P.O. Box 608
Whittier, AK 99693
Phone: 422-2337
Position Statement: Supported HB 397 & HB 398
CHRYSTAL SMITH, Director of Member Services
Alaska Municipal League
217 Second Street, Suite 200
Juneau, AK 99801
Phone: 586-1325
Position Statement: Supported HB 397 & 398
BRUCE GERAGHTY, Deputy Commissioner
Department of Community and Regional Affairs
P.O. Box 112100
Juneau, AK 99811-2100
Phone: 465-4700
Position Statement: Provided information to committee
DAVE GRAY, Legislative Staff
Representative Jerry Mackie
Alaska State Legislature
State Capitol
Juneau, AK 99801-1182
Phone: 465-4925
Position Statement: Staff to Cosponsor of Proposed
SSHB 398
TIM TROLL, City Administrator
City of Sand Point
1600 A Street, #103
Anchorage, AK 99501
Phone: 274-7555
Position Statement: Supported HB 398
RON SWANSON, Director
Division of Lands
Department of Natural Resources
3601 C Street, Suite 814
Frontier Building
Anchorage, AK 99510-7005
Phone: 762-2692
Position Statement: Proposed amendments to HB 398
JAMES FILIP, City Manager
City of Skagway
P.O. Box 415
Skagway, AK 99840
Phone: 983-2297
Position Statement: Supported HB 398
CHARLES MCKEE
1508 W. 43rd #7
Anchorage, AK 99504
Phone: none given
Position Statement: Opposed HB 398
JIM BARNETT, Attorney
City of Whittier
10500 Prospect Drive
Anchorage, AK 99516
Phone: 346-2755
Position Statement: Supported HB 398 and all proposed
amendments except one
PREVIOUS ACTION
BILL: HB 397
SHORT TITLE: TAXING POWER OF SECOND CLASS CITIES
SPONSOR(S): REPRESENTATIVE(S) OLBERG
01/26/94 2153 (H) READ THE FIRST TIME/REFERRAL(S)
01/26/94 2153 (H) COMMUNITY & REGIONAL AFFAIRS,
FINANCE
02/01/94 (H) CRA AT 01:00 PM CAPITOL 124
BILL: HB 398
SHORT TITLE: LAND CONVEYED TO & FROM MUNICIPALITIES
SPONSOR(S): REPRESENTATIVE(S) OLBERG
01/26/94 2153 (H) READ THE FIRST TIME/REFERRAL(S)
01/26/94 2154 (H) COMMUNITY & REGIONAL AFFAIRS,
RESOURCES
02/01/94 (H) CRA AT 01:00 PM CAPITOL 124
BILL: HB 70
SHORT TITLE: STATE IMPACT AID FOR MUNICIPALITIES
SPONSOR(S): REPRESENTATIVE(S) MACLEAN
JRN-DATE JRN-PG ACTION
01/18/93 101 (H) READ THE FIRST TIME/REFERRAL(S)
01/18/93 101 (H) CRA, JUDICIARY, FINANCE
03/25/93 (H) CRA AT 01:00 PM CAPITOL 124
04/01/93 (H) CRA AT 01:00 PM CAPITOL 124
04/06/93 (H) CRA AT 01:00 PM CAPITOL 124
04/13/93 (H) CRA AT 01:30 PM CAPITOL 124
02/01/94 (H) CRA AT 01:00 PM CAPITOL 124
ACTION NARRATIVE
TAPE 94-4, SIDE A
Number 001
CHAIRMAN HARLEY OLBERG called the meeting to order at 1:10
p.m. He noted for the record Representatives Toohey, Bunde
and Davies were present and noted that a quorum was present.
CHAIRMAN OLBERG, SPONSOR OF HB 397, then read the Sponsor
Statement aloud. (A copy of the sponsor statement is on
file.) He added, "The legislation is introduced at the
request of the City of Whittier."
REPRESENTATIVE ED WILLIS joined the committee at 1:12.
Number 120
HB 397 - TAXING POWER OF SECOND CLASS CITIES
GARY WILLIAMS, CITY MANAGER, CITY OF WHITTIER, testified in
support of HB 397 and the sponsor substitute draft before
the committee. He stated, "There are 117 second class
cities in Alaska, all of whom depend on various forms of
state assistance which include municipal assistance and
revenue sharing and grants to supplement revenue derived
from their local tax structures. We depend on these outside
sources, not only because we've become accustomed to the
revenues stream, but because small communities like Whittier
have few sources from which to raise the revenues to provide
the local public services that we need. As you know,
economies of scale work against small communities that have
most of the same needs as their larger counterparts but have
much less in taxable base. It's an added burden for a small
community to be saddled with a statutory limitation on a
rate that it may establish as a levy for the provision of
local services. And this is the matter that HB 397
addresses and does it very well."
MR. WILLIAMS continued, "...as you know the Alaska Railroad
is the largest landowner in the Whittier area with some 60
percent ownership of Whittier proper. Some quick math will
show that the property tax that can be raised on $8.3
million in taxable property at five mill is $40,000. For
perspective, that's about half the amount necessary to
employ our nurse practitioner. The city also levies the
five mill tax on personal property including boats,
machinery and recreational equipment. This raises it
another $60,000, an amount equal to about one third of our
public safety budget. Given the past and proposed
reductions in state assistance and a policy which places
more fiscal responsibility on local government, what's
missing in this picture is the transfer of authority to
local governments to tax themselves in order to survive. It
just seems inappropriate to tie a knot in the shared revenue
stream and yet expect second class cities to not only
survive but to be actively involved in developing local
economies..."
Number 202
REPRESENTATIVE JOHN DAVIES asked, "...the conditions under
which the city was incorporated and whether or not this
limitation on property tax was in effect at the time the
voters voted to incorporate. Do you know if that's the
case?"
MR. WILLIAMS said yes.
REPRESENTATIVE DAVIES continued, "I think that the idea here
is fine and to do it prospective basis, I have absolutely no
problem with agreeing 100 percent with the Chair of this
committee that we should maximize self determination. But I
do have a problem with removing retrospectively that without
a vote of the folks that voted to incorporate in the first
place."
Number 225
MR. WILLIAMS responded saying, "City Councils are still
subject to the will of the people and none of those folks
who voted for incorporation at the time are still with us.
I'm quite sure of that fact. Additionally, if people don't
like to see the mill levy that the council says is necessary
in order to provide the services that they deem are
appropriate and important, they can voice their opinion at
public hearings when the budget comes before the people and
it must. They can also vote those councilmen out if they
think the mill levy was raised inappropriately."
REPRESENTATIVE DAVIES asked if the City of Whittier receives
any revenues from the Alaska Railroad Corporation.
MR. WILLIAMS indicated that the City of Whittier is unable
to levy any taxes on the Alaska Railroad Corporation.
Number 249
REPRESENTATIVE CYNTHIA TOOHEY asked, "Does the railroad
furnish any help to the City of Whittier?"
MR. WILLIAMS indicated not and added, "We are in the process
of forming a new relationship (with the railroad)."
Number 271
REPRESENTATIVE CON BUNDE asked if there was any opposition
to HB 397.
CHRYSTAL SMITH, DIRECTOR OF MEMBER SERVICES, ALASKA
MUNICIPAL LEAGUE, indicated that AML supported HB 397 but
"it was not one of the Municipal League's priorities for the
year... Our members did pass a resolution in support of
this concept at the November conference and it was discussed
by the members at that time and as far as I know there was
no opposition to it..."
CHAIRMAN OLBERG pointed out that the sponsor substitute
needs to be read across the floor or adopted as a committee
substitute before it can be moved out of committee.
REPRESENTATIVE ED WILLIS asked, "What is the difference with
regard to the taxing policy between a second class city and
a first class city?"
Number 330
CHAIRMAN OLBERG referred to the copies of the 93-94 Alaska
Blue Book page 170-171 and AS 29.45.590 included in the
committee's folders. (A copy of the information provided to
committee members is on file.)
BRUCE GERAGHTY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY
AND REGIONAL AFFAIRS, indicated that he was uncertain as to
these specifics.
MS. SMITH indicated that, "Basically, first class cities can
tax up to three percent and second class cities, a half of
percent on property tax."
REPRESENTATIVE WILLIS continued, "And the second class city
as it now stands, must have voter approval..."
REPRESENTATIVE DAVIES asked, "Can second class cities impose
sales taxes?"
MS. SMITH indicated said, "As far as I know they can, yes.
Many of the second class cities do have sales tax..."
Number 361
REPRESENTATIVE DAVIES asked, "Was this limitation on
property tax in place when the original legislation creating
the distinctions between first class and second class cities
was enacted? How long has this been on the books?"
MS. SMITH said she wasn't sure.
REPRESENTATIVE DAVIES said, "This gets to my original
question...how many of them incorporated under that five
mill limitation."
CHAIRMAN OLBERG offered to have committee staff compile a
comparison to address his concerns for the next hearing on
HB 397 and brought forth HB 398.
HB 398 - LAND CONVEYED TO & FROM MUNICIPALITIES
CHAIRMAN OLBERG, PRIME SPONSOR OF HB 398, read his sponsor
statement aloud for the record. (A copy of his sponsor
statement is on file.)
Number 420
DAVE GRAY, STAFF TO REPRESENTATIVE JERRY MACKIE, COSPONSOR
OF PROPOSED SSHB 398, testified in support of HB 398 and the
proposed sponsor substitute. He stated, "Over the last two
or three years, Representative Mackie has been trying to
help out the City of Skagway on a land problem. Basically
the problem was that fifty years ago the Corps of Engineers
came in and built a dike...which over the years has been
filled in, subdivided, some lots sold, the streets put in
and people have a deed to this land, but they don't have
clear title to it because the city didn't have the land.
Meanwhile we've become a state and all kinds of things have
happened. There's been a big effort between the city and
the Division of Lands to see if we could correct this
problem...administratively it could be problematic, so let's
just do it with legislation. That's what a good part of the
sponsor substitute does. Section one addresses this problem
and it allows the Division of Lands to administrator at his
discretion to quitclaim land to the municipality where
there's been mistakes to correct, any mistakes such as this.
It's written in a general way to affect any municipality to
get around the prohibition for special interest, the Skagway
land fix. Also, you should know that section three has a
sunset repealer legislation language that says this
provision lasts for approximately three years, in which all
these corrections can be made... And finally, any land
that's quitclaimed to a municipality will be debited against
the general land grant entitlement municipalities enjoy. In
our particular case, Skagway has about 7000 acres of land
that they may select..."
REPRESENTATIVE DAVIES asked, "This land in Skagway was
originally classified as tidelands?"
MR. GRAY referred to the land as "an old river bed" and
said, "working with the Department of Natural Resources and
their people thought that the language put in here covered
every eventuality."
Number 479
REPRESENTATIVE DAVIES asked, "Is this the same circumstance
as the previous bill: the sponsor substitute hasn't been
read across yet."
CHAIRMAN OLBERG said yes.
REPRESENTATIVE CON BUNDE said, "I would expect that perhaps
you'd want to speak to the fiscal note."
CHAIRMAN OLBERG said, "DNR is saying that if we incorporate
some changes that they would like in this legislation (HB
398) that the fiscal note might change."
REPRESENTATIVE TOOHEY said, "Sounds like blackmail."
Number 502
MR. WILLIAMS testified in support of HB 398 via
teleconference by saying, "This is designed for economic
development and again to help promote self-determination
among communities." He then gave an example of how this
would help the City of Whittier saying, "If we were
permitted to obtain tidelands under state statute, it would
mean we could, through the process of requesting in advance.
The fact that we don't have the right to do that now means
that we are at the whim, I hate to say that, but it seems
very much like we are not at all involved in the process or
at the table when it comes to our ability to develop
tidelands... Last year at this time we had spent a great
deal of time and energy in an attempt to provide a docking
facility for five major day cruise operators to function out
of Whittier...they asked what could we do and we said, `In
the interest of economic development, we will do whatever we
can to try to provide a docking facility for you, provided
that you're able to pay for the cost of doing that' and they
indeed were willing to do that. I spent a great deal of
time planning the dock, getting the financing together,
making arrangements with the railroad to lease a portion of
their land and then we found that about 4000 square feet of
this large docking facility hung over onto DNR (Department
of Natural Resources) tidelands. Obviously, we had to go
and get a permit, a lease, some instrument that allowed us
to occupy a portion of those tidelands. Now realize that
this is a very small part of the total area...Everything was
in place...and they (DNR) determined that the fastest way to
deal with bringing this together was to go for a permit
process. We applied...it was only in the last moment, the
month of May, that we learned from the Department of Natural
Resources that they would need not only the annual fee that
they charge for tidelands, but they wanted a piece of the
action as well which started at 25 cents per passenger the
first year and escalated in four year to a dollar. That
killed the deal. Now I'm finding myself starting all over
again...to find a piece of area that does not involve DNR
tidelands. We are effectively resigning from development on
our waterfront if it involves State of Alaska property and
this is not as it should be."
Number 567
REPRESENTATIVE BUNDE asked, "If the cities are picking up
the property, why is there an expense to the state?"
CHAIRMAN OLBERG said he hadn't been informed by DNR
regarding the specifics of the fiscal note.
REPRESENTATIVE DAVIES requested to have representatives from
DNR present for future meetings on SSHB 298.
Number 581
TIM TROLL, CITY ADMINISTRATOR, CITY OF SAND POINT, testified
via teleconference in support of HB 298, saying, "We were
incorporated as a first class city after the 1964 date, so
we are ineligible to request tidelands from the state. We
currently do lease three tideland tracks totalling about 55
acres in our harbor area. We operate a city dock and a
small boat harbor accommodating about 133 fishing vessels
and also provide a transient moorage. The City of Sand
Point strongly encourages the adoption of this legislation.
Although we do have tideland leases in place with the state,
my observations since working with Sand Point...that we
often enter into these leases and then hope that nobody ever
reads them. One of the stipulations in our current lease
that gives me some concern is the requirement that says the
city may use the rents received from subleasing for
expenditures related to management and improvement of the
tideland lease area, and it goes on to say that over 50
percent of profit and excess of these expenditures must be
returned to the state and the city is required to make an
annual accounting. This paragraph leaves a lot open to
interpretation. It would simply make things much easier for
us in Sand Point to simply have ownership of those tidelands
and be able to go ahead and improve and develop our harbor
area because it is actually the vital economic center of our
community. And I would also think that from the state's
perspective because...I don't know of anybody from DNR who
has ever been out there to monitor the stipulations under
this lease. I would certainly think from the state's
standpoint they would be happy to be relieved of any
potential liability out there. It would really be a win-win
situation for all parties."
Number 635
RON SWANSON, DIRECTOR, DIVISION OF LANDS, DEPARTMENT OF
NATURAL RESOURCES, testified via teleconference saying, "HB
398 we support in concept with a couple of amendments. From
what I've heard of the testimony, I partially agree with. I
do not have the legal authority to convey tidelands...to
them. Many municipalities that are waterfront
related...much of their local economy is generated from
activities on those tidelands. I support the concept of
being able to give those tidelands that are being used for
developmental purposes to the local municipality for that
purpose. We could lease them those tidelands. The correct
(indiscernible) is to let for fair market value."
Number 650
REPRESENTATIVE TOOHEY asked, "You said you had the ability
to lease at fair market value, is that for all tidelands?"
MR. SWANSON replied yes, and proposed the following
amendments: "We are required by a long standing law to
manage according to the Public Trust Doctrine. It is a
constantly changing piece of law, it has been expanded in
recent years to include more activities than people thought
of a hundred years ago. The Public Trust Doctrine requires
us to make sure that the land beneath water bodies are
available for public use. That doesn't mean that we can't
create some private rights in those, but even when the
private rights are created, they are subject to the Public
Trust Doctrine. In order to avoid a problem down the road,
I would suggest an amendment that says any conveyance made
under this particular Act is subject to the Public Trust
Doctrine and if the Public Trust Doctrine has been broken,
violated or whatever, title reverts back to the state. It
would make it much easier for us and make it very clear to
the municipalities of what responsibility they have. In the
same line, if a municipality dissolves, normally (uplands
would) come back to the state, that may have been conveyed
to them. We would like to see the same requirement made for
tidelands upon the dissolving of a municipality. Third, we
would like to see any conveyance remain limited to the
existing proposed public or development project. We have no
problem with that. I do have a problem conveying a bunch of
nonused tidelands. It would also be very, very expensive to
survey and to manage and to convey. That is why the fiscal
note in front of you right now is fairly high. It takes
quite a bit of manpower to do what we expect them to do.
But if we pare down to development projects (indiscernible)
we can drop that fiscal note substantially. Last, we'd like
to see an amendment stating that tide and submerged lands
cannot be used to increase a municipal's land entitlement
under AS 29.65. We also feel that any conveyances made
under this particular piece of legislation could be charged
against a municipality's land entitlement. If a
municipality doesn't have land entitlements, that will not
prevent us from conveying it to them. But for a lot of
municipalities...they have a land entitlement, but what they
really want are tidelands, not necessarily the uplands. I
feel an obligation to fulfill those entitlements with land
that could be best used by the municipality."
Number 696
JAMES FILIP, CITY MANAGER, CITY OF SKAGWAY, testified via
teleconference saying, "Our involvement is a little bit
different than the other cities because ours involves some
area that was letted and the dikes were constructed and the
dried out land added to the land banks to the municipality
without benefit of having title transfer from the state. So
we don't fall under the characteristics of a tidelands
situation as I see it, but more or less on the idea of
securing correct title to land that has already been in the
possession of private landholders for quite some time."
TAPE 94-4, SIDE B
Number 000
CHAIRMAN OLBERG asked if HB 398 would enable DNR to convey
the "formerly submerged lands" to Skagway.
MR. SWANSON replied, "That is correct. We were made aware
of the Skagway problem last summer and tried to
administratively find a way to solve the problem. It seems
clear that we need a legislative solution and the solution
that is here is one that we recommend strongly."
CHARLES MCKEE, testified against HB 398 and the proposed
sponsor substitute for reasons unspecified and referred to a
brief he had written. He indicated he would send his brief
to the committee.
Number 078
JIM BARNETT, ATTORNEY, CITY OF WHITTIER, responded to Mr.
Swanson's proposed amendments via teleconference. He said,
"In large measure the City of Whittier would agree with his
suggested amendments and I believe we could probably resolve
much of his concerns. ...he had five proposed changes. The
first being that the conveyance would be subject to the
Public Trust Doctrine. I believe that that's the law
whether or not it's actually stated or not. In fact, in the
legislation as it exists today, there is an obligation to
prevent unreasonable interference with navigation, which I
think is one of the principle concerns that Mr. Swanson had.
So I don't think we have any concern with that...as a
concept. The issue of whether a municipality dissolves and
the land returns to the state, I think that goes without
saying. We would agree with that. The notion of limiting
the tideland conveyance to the existing or proposed
development project, in Whittier's case, that's appropriate.
Whittier has an extensive coastline in western Prince
William Sound... So I don't think we have any concern with
that. I believe Ron's next comment was that this went to
the fiscal note, having been a Deputy Commissioner of DNR
for many years back in the 80's, I'm aware of the fiscal
problems the department has always experienced in making
municipal land conveyance. Since the last time the oil
prices went down, DNR has not been in a position to make
those conveyances without the municipalities producing the
money to hire the employees to do the work and to do the
surveying. In fact, Whittier itself has just conveyed $6500
to Mr. Swanson to do some final adjudication of the lands in
Shotgun Cove so that those can be conveyed to the city. So
I think we recognize the budgetary constraints that the
department operates under, and would agree that the process
that most municipalities recognize when they deal with these
conveyances. That is if we want the land, we'd have to help
the department adjudicate and survey it. The only concern I
have to Mr. Swanson's proposal is that whatever title is
conveyed would be charged against the municipal land
entitlement. Particularly because we are now limiting it to
development projects. Probably in the case of Whittier, the
tidelands we'd be talking about that are related to
development projects would be fifty acres, maybe a hundred.
Not a significant quantity of land, but the City of Whittier
right now is trying very desperately to develop it's
economic future and, of course, the discussing that we
really didn't get into too far about the railroad is very
applicable in the situation of Whittier. The legislature
ten years ago promised the City of Whittier 600 acres,
upland acres, all of it leading out to Shotgun Cove. To the
extent that we'd have to give some of it back, it would take
away from our ability to either build a road or develop
successfully. We would like to have these tidelands in
addition to the 600 acre entitlement..."
CHAIRMAN OLBERG said, "I suspect the subtraction from the
municipal land entitlement is tied to Skagway where we're
actually talking about land. And maybe in the process of
drafting one of the future committee substitutes...we will
be able to satisfy the Skagway problem and the other problem
as well.
REPRESENTATIVE DAVIES asked if the 600 acres was all
Whittier was entitled to.
MR. BARNETT confirmed this and gave some historical
perspective.
MR. GERAGHTY said, "There are provisions already existing in
state statute, specifically AS 44.47.150 (f) which
stipulates that land that was owned by a municipality on the
date of its dissolution and received by the municipality
under the state under a municipal land grant entitlement
program is transferred to the Commissioner of Natural
Resources. So there is a provision already in law to deal
with dissolution. Further, we think that DNR's suggestion
that a provision be put in the bill to protect public rights
in the event of a conveyance so that the public trust is
there and retained...that's an excellent idea. ...Now I
think we're getting into where...further discussions with
Mr. Swanson may clarify this because part of his response
did so in my mind, where he was talking about the aspect of
the conveyed tideland or submerged lands being charged
against the municipal entitlement... because we have
situations where some cities don't qualify for entitlement
under AS 39.65 and the only thing they have available to
them is the tidelands and submerged lands for conveyance.
So, I'm not quite sure how that works with his programs.
The other aspect is where the entitlement to the city, like
in the case of Whittier, where it is restricted, that the
conveyance of tidelands working against the overall
entitlement is going to have detrimental effects. So I
think a little bit of time, we should be able to work out
that..."
Number 291
REPRESENTATIVE DAVIES asked, "Ron, in your proposed
amendment that says, `If conveyance does occur...public
rights must be protected through divisionary interest
retained by the state, if the public trust is breached,' is
that meant to be fairly broad, I mean more broad than just
simply the case of a municipality dissolving itself.
Perhaps I read of this also including the case where
subsequent release interest are given to a private
developer, and in that case the public trust was breached,
then there would be a hammer to get that to protect the
public interest. Is that also included in your intent
here?"
MR. SWANSON replied, "That is correct."
Number 320
CHAIRMAN OLBERG suggested HB 398 and its current draft of
the sponsor substitute be discussed at a later date and
adjourned the meeting at 2:20 p.m.
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