Legislature(1995 - 1996)

03/03/1995 01:35 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                          MARCH 3, 1995                                        
                            1:35 P.M.                                          
                                                                               
  TAPE HFC 95 - 39, Side 1, #000 - end.                                        
  TAPE HFC 95 - 39, Side 2, #000 - end.                                        
  TAPE HFC 95 - 40, Side 1, #000 - #540.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House Finance  Committee                 
  meeting to order at 1:35 P.M.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Kohring                         
  Co-Chair Foster               Representative Martin                          
  Representative Mulder         Representative Kelly                           
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
                                                                               
  Representative Navarre was not present for the meeting.                      
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative   Jerry   Mackie;   Mike  Greany,   Director,                 
  Legislative  Finance Division;  Sybil  Davis, Self,  Juneau;                 
  Joan  Jackson,  (Testified   via  teleconference),   Artist,                 
  Cordova; Jenetta Wakefield, (Testified  via teleconference),                 
  Fairbanks; Robert Juettner, (Testified  via teleconference),                 
  Administrator,   Aleutians   East   Borough;   Tim   Wilson,                 
  (Testified via teleconference),  Executive Director,  Alaska                 
  Council on the  Arts, Anchorage; Dale Bondurant,  (Testified                 
  via teleconference),  Kenai; Wells Williams,  (Testified via                 
  teleconference), Planning Director, City and Borough, Sitka;                 
  Jim Barnett, (Testified via teleconference), City  Attorney,                 
  City   of  Whittier;   Nico   Bus,  Director,   Division  of                 
  Administrative  Services,  Department of  Natural Resources;                 
  Nancy Hemenway, Aid, Representative Carl Moses.                              
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 20     An  Act  relating to  rights  in certain  tide and                 
            submerged land.                                                    
                                                                               
            HB  20   was  HELD   in   Committee  for   further                 
            consideration.                                                     
                                                                               
  HB 79     An   Act  allowing   the  Department   of  Natural                 
            Resources to quitclaim land  or interests in land,                 
                                                                               
                                1                                              
                                                                               
                                                                               
            including   submerged   or   shore   land,  to   a                 
            municipality to correct errors or omissions of the                 
            municipality  when  inequitable   detriment  would                 
            result to a  person due to that  person's reliance                 
            upon the errors or omissions of the municipality.                  
                                                                               
            CS HB 79 (FIN) was reported  out of Committee with                 
            "no recommendations"  and  with  two  zero  fiscal                 
            notes by the Department of Community  and Regional                 
            Affairs  dated  2/03/95  and   the  Department  of                 
            Natural Resources dated 2/03/95.                                   
                                                                               
  HB 106    An  Act   relating  to   art   in  public   places                 
            requirements and the art in public places fund.                    
                                                                               
            HB   106  was  HELD   in  Committee   for  further                 
            consideration.                                                     
  HOUSE BILL 106                                                               
                                                                               
       "An Act relating  to art in public  places requirements                 
       and the art in public places fund."                                     
                                                                               
  SYBIL DAVIS, SELF,  JUNEAU, testified in support  of keeping                 
  the  1%  for art.   Representative  Parnell asked  if public                 
  buildings   had  been  funded  for  art   prior  to  the  1%                 
  allocation.  Ms. Davis  responded that the 1% for  art would                 
  insure  that some aspect of  aesthetics would be placed into                 
  each  public  facility  which  did   not  exist  before  the                 
  mandatory allocation.                                                        
                                                                               
  JOAN  JACKSON,  (TESTIFIED   VIA  TELECONFERENCE),   ARTIST,                 
  CORDOVA, urged the Committee not to  pass HB 106 and pleaded                 
  for continued support of art in public places.                               
                                                                               
  JENETTA   WAKEFIELD,    (TESTIFIED   VIA    TELECONFERENCE),                 
  FAIRBANKS, echoed that art daily  enriches peoples lives who                 
  use public buildings.  She urged  the Committee to not adopt                 
  HB 106.                                                                      
                                                                               
  Representative  Brown referenced the summary of an amendment                 
  to HB  106.   [Attachment #1].   The  amendment provides  an                 
  alternative approach  which would  offer the private  sector                 
  incentives to fund the Percent for Art Program.  She pointed                 
  out her support of  the current program, noting that  it has                 
  been   important   and  valuable.      Representative  Brown                 
  recommended using another approach which  would work the art                 
  percentage  into the bidding process, while emphasizing that                 
  the  amendment  would provide  greater accountability.   All                 
  Percent for Art Funds would be  disbursed through the Art in                 
  Public Places Fund, making it easier  to track and report on                 
  procurement activity.  Because so  many departments now have                 
                                                                               
                                2                                              
                                                                               
                                                                               
  construction authority,  the current  process makes it  very                 
  difficult to track  projects and compliance.   The amendment                 
  would solve that problem.                                                    
                                                                               
                                                                               
  TIM  WILSON,  (TESTIFIED   VIA  TELECONFERENCE),   EXECUTIVE                 
  DIRECTOR, ALASKA COUNCIL  ON THE  ARTS, ANCHORAGE, spoke  to                 
  the bid  preference approach.   He noted that  the amendment                 
  does  have  merit  and warrants  consideration  by  the Arts                 
  Council.   He requested  that the  amendment be referred  to                 
  subcommittee in order  to provide more time  to consider the                 
  effects.  He elaborated that members of the Arts Council are                 
  currently  being  elected  and the  issue  deserves  the new                 
  body's consideration.                                                        
                                                                               
  Mr.  Wilson  commented  that  the  proposed amendment  would                 
  effect  how  the  Percent  for   Art  procurement  would  be                 
  implemented.  He  noted that currently, 75% of  all projects                 
  for public art are done by Alaskan artists and that there is                 
  preference given to  Alaskan artists.  That  percentage rate                 
  was  based on the  actual executions of  commissions and not                 
  the income generated.                                                        
                                                                               
  Representative Martin voiced his  legal concerns in limiting                 
  the program to  only Alaskan artists.   Representative Brown                 
  advised that the  amendment did  not represent any  interest                 
  group and that she provided the  changes as suggested in the                 
  amendment  in  order  to  save   the  program  although  she                 
  supported the current program.                                               
                                                                               
  Mr.  Wilson noted  before the 1%  art allocation  funding in                 
  public   buildings,   there   was   little   activity    and                 
  participation in the  arts.  The  law has provided a  public                 
  art   incentive  and   with  extra  attention   provided  to                 
  participate  by  municipalities  and  corporations  in   the                 
  private sector.                                                              
  HOUSE BILL 79                                                                
                                                                               
       "An Act allowing the Department of Natural Resources to                 
       quitclaim  land   or  interests   in  land,   including                 
       submerged or shore  land, to a municipality  to correct                 
       errors   or   omissions   of   the  municipality   when                 
       inequitable detriment would  result to a person  due to                 
       that person's reliance upon the  errors or omissions of                 
       the municipality."                                                      
                                                                               
  REPRESENTATIVE   JERRY  MACKIE   advised  that  HB   79  was                 
  introduced at the request of the City of Skagway in order to                 
  correct a long  standing land ownership problem  in Skagway.                 
  Fifty years  ago a  dike was  constructed along  the Skagway                 
  River to protect  the town from  flooding.  Over the  years,                 
                                                                               
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  the area between  the original river  bank and the dike  has                 
  been reclaimed and subdivided by the city with lots sold and                 
  built upon.   The  city did not  have a  clear title  to the                 
  land.    Hence, the  title  for subsequent  private property                 
  owners  is  also  clouded.     Not  only  are  the   owners'                 
  investments and improvements at risk, but bank financing for                 
  further improvements or sales are foreclosed.                                
                                                                               
  Representative Mackie  pointed  out that  the Department  of                 
  Natural  Resources  (DNR)   has  unsuccessfully  sought   an                 
  administrative remedy for the problem.   HB 79 would add the                 
  needed provision by allowing the director of the Division of                 
  Lands, the discretion to quitclaim land to a municipality to                 
  correct past  errors and omissions.  The director could also                 
  set any terms or conditions  that deemed appropriate for the                 
  transaction.    Furthermore,  land  title  transferred to  a                 
  municipality in  that manner  would be  counted against  the                 
  municipality's  general  land  grant  entitlement  from  the                 
  State.                                                                       
                                                                               
  Representative  Mackie  distributed  a  map  diagraming  the                 
  referenced dike area.  [Attachment #2].                                      
                                                                               
  Representative Grussendorf advised the Committee that Andrew                 
  Pekovich, Manager, Southeast  Region, Department of  Natural                 
  Resources,  suggested reducing  the sunset  on the  proposed                 
  legislation.  Representative Mackie commented that Amendment                 
                                                                               
  Representative Brown asked how subsurface interests would be                 
  affected by the proposed legislation.                                        
                                                                               
  NICO  BUS, DIRECTOR,  DIVISION  OF ADMINISTRATIVE  SERVICES,                 
  DEPARTMENT  OF   NATURAL  RESOURCES,   commented  that   the                 
  subsurface rights would not be effected or transferred.   He                 
  added, that information  was based on a conversation  he had                 
  with  Ron Swanson,  Director, Division  of Lands.    Mr. Bus                 
  offered to  provide the  Committee a  letter explaining  the                 
  concern.                                                                     
                                                                               
  Co-Chair  Hanley asked if other municipalities would qualify                 
  under   the  dispensation   proposed  in   the  legislation.                 
  Representative  Mackie  stated  that to  date  there  are no                 
  others, although, the  legislation was written such  that if                 
  another  municipality  in  the State  experienced  the  same                 
  problem, and then approached DNR,  meeting the criteria, the                 
  problem could be addressed.                                                  
                                                                               
  Representative  Therriault  MOVED  to  adopt  Amendment  #1.                 
  There  being  NO  OBJECTION,  it  was adopted.    Discussion                 
  followed  among  Committee  members  and  Mr. Bus  regarding                 
  submerged lands classification by the State.                                 
                                                                               
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  Representative Foster MOVED to  adopt CS HB 79 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.                                                   
                                                                               
  CS  HB  79 (FIN)  was  reported  out of  Committee  with "no                 
  recommendations"  and  with   zero  fiscal   notes  by   the                 
  Department of Community and  Regional Affairs dated  2/03/95                 
  and the Department of Natural Resources dated 2/03/95.                       
  HOUSE BILL 20                                                                
                                                                               
       "An  Act  relating  to  rights   in  certain  tide  and                 
       submerged land."                                                        
                                                                               
  NANCY  HEMENWAY,   STAFF  TO   REPRESENTATIVE  CARL   MOSES,                 
  testified in support  of HB 20.  She stated  that leases are                 
  cumbersome, costly  to obtain  and the terms  of the  leases                 
  vary widely, all  of which are onerous to small communities.                 
  She  added  that it  is  difficult  to obtain  G.O.  bonding                 
  without fee simple title  of a minimum of a  fifty-five year                 
  lease  on  the  land.   First  class  and  home rule  cities                 
  incorporated prior to 4/01/64 were given the ability to have                 
  lands conveyed  to them  at the  time that  A.S. 38.320  was                 
  established;  municipalities  incorporated  after that  date                 
  cannot.  The proposed legislation would provide them parity.                 
                                                                               
                                                                               
  Ms.  Hemenway  remarked  that similar  legislation  had been                 
  introduced last year (HB 398) by Representative  Olberg.  HB
  20 would allow the  State to convey tide and  submerged land                 
  to municipalities as  long as  the municipality has  applied                 
  for the conveyance.                                                          
                                                                               
  Ms. Hemenway advised that Representative  Moses had provided                 
  two changes to the proposed  legislation which would tighten                 
  the title and would add an immediate effective date.                         
                                                                               
  Representative Therriault MOVED that the version before  the                 
  Committee  be the  work  draft  #9-LS0118\G, Cook,  2/23/95.                 
  There being NO OBJECTION, it was adopted.                                    
                                                                               
  Representative Brown asked if the sponsor  of the bill would                 
  object to  a clarification  of "subsurface".   Ms.  Hemenway                 
  stated    Representative    Moses    would    not    object.                 
  Representative  Brown questioned  the  scope of  the  public                 
  trust  doctrine  and  how  it was  defined.    Ms.  Hemenway                 
  clarified that it would  apply to the shoreline as  well and                 
  that all public access would be addressed.                                   
                                                                               
  (Tape Change, HFC 95-39, Side 2).                                            
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  Ms. Hemenway understood that the public trust document would                 
  apply   to  protecting  the   public  access  regardless  of                 
  ownership.   Representative Martin  voiced concern  that the                 
  State's assets  would be  distributed through  DNR with  the                 
  proposed  legislation.   Representative Martin  and Mr.  Bus                 
  discussed the issue of "submerged" lands.                                    
                                                                               
  Ms. Hemenway  explained that prior  to 1964,  the State  had                 
  conveyed  submerged  lands  to  other  municipalities.   She                 
  assumed that the legislation would occur in the same manner.                 
  She referenced the  memo from Legal Counsel  which clarifies                 
  that the  State reserves  mineral rights.   Co-Chair  Hanley                 
  advised that Representative Brown's  amendment would clarify                 
  that mineral rights below  the submerged lands would not  be                 
  transferred through the proposed legislation.                                
                                                                               
  WELLS  WILLIAMS,  (TESTIFIED  VIA TELECONFERENCE),  PLANNING                 
  DIRECTOR,  CITY  AND  BOROUGH OF  SITKA,  spoke  strongly in                 
  support  of the proposed legislation.   The City and Borough                 
  of  Sitka  feels   that  the  legislation  would   be  of  a                 
  significant benefit.  Sitka owns only a  small percentage of                 
  the  land within  the municipal boundaries.   He  added, the                 
  relationship between DNR  and the city is  good, regardless,                 
  the municipality  is in  a better  position to  manage lands                 
  within their municipality.                                                   
                                                                               
  The  municipality has  undertaken  a comprehensive  planning                 
  process over  the past  thirteen months  involving over  two                 
  hundred residents.   That planning process will  lead to the                 
  development  of a more  formalized land  management program.                 
  This will put Sitka  in a better position to  balance public                 
  interests.                                                                   
                                                                               
  Mr. Williams pointed  out, two  specific protections in  the                 
  bill:                                                                        
                                                                               
       1.   The  requirement  that   tidelands  can  only   be                 
       transferred    for a specific purpose; and                              
                                                                               
       2.   The  requirement that  the  use  is consistent  or                 
            compatible  with  the  purpose  of  the  statutory                 
            designation.                                                       
                                                                               
  Representative  Brown  commented  on  her  concern with  the                 
  municipality's  position on the lease versus the sale of the                 
  property and the issue of the protection of public access.                   
                                                                               
  Mr.  Williams  responded   that  the  municipality  strongly                 
  supports  the  ability to  sell  the property.    His office                 
  handles both tideland leases and tideland sales.  There have                 
  been  a  few  instances  in   which  lease  provisions  have                 
  presented  problems  for  land owners  who  wish  to finance                 
                                                                               
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  substantial  infrastructure   improvements.     It  is   the                 
  municipality's experience  that  the public  access  can  be                 
  protected even though tidelands are sold.   The public trust                 
  doctrine further provides protection.                                        
                                                                               
  Representative Martin  voiced concern regarding  the ability                 
  of the municipality to  tax the land.  Mr.  Williams replied                 
  that  the legislation would be in  the financial interest of                 
  the  municipality.  HB  20 would correct  a current inequity                 
  within  the  state  statutes.    Through  historical  events                 
  involving  incorporation  dates,  Sitka  was  able  to  take                 
  ownership of a small percentage of the  tidelands within the                 
  municipality.     The   legislation  would  not   allow  the                 
  municipality to take  ownership of all the  tidelands within                 
  the corporate limits.  There must be a specific purpose such                 
  as a  barge  landing  or  a  dock.   That  purpose  must  be                 
  consistent with local and state plans.                                       
                                                                               
  DALE    BONDURANT,    (TESTIFIED     VIA    TELECONFERENCE),                 
  KENAI/SOLDOTNA, commented on  his concern with  the proposed                 
  legislation.  He pointed out  that Cook Inlet is  surrounded                 
  by the borough.  He asserted that lands indicated within the                 
  legislation would be  removed from the state's  public right                 
  and transferred  to private concerns.   He said  that mining                 
  claims  could  create problems  with  local residents.   Mr.                 
  Bondurant voiced his opposition to the legislation.                          
                                                                               
  ROBERT    JUETTNER,    (TESTIFIED    VIA    TELECONFERENCE),                 
  ADMINISTRATOR, ALEUTIANS EAST BOROUGH,  spoke in support  of                 
  HB 20.  He testified  the only tidelands the  municipalities                 
  are   interested   in   are    lands   directly   underneath                 
  infrastructure    such    as   dock    developments,   barge                 
  developments, airport runways, and commercial and waterfront                 
  development.  The  projects seldom  go out more  than a  few                 
  hundred feet into the water.                                                 
                                                                               
  The proposed sale or leases have to be consistent with State                 
  and local plans.  Municipalities are in a better position to                 
  determine  and  broker  local interests  than  the  State of                 
  Alaska.  Communities such  as the City and Borough  of Sitka                 
  take the  protection of  high habitat  areas and  recreation                 
  areas extremely  seriously.   They would  not lease  or sell                 
  lands that  infringe on  those values.   Any  lease or  sale                 
  involves  a  public  hearing  process  and the  municipality                 
  actively  encourages  individuals   with  diverse  views  to                 
  comment during those hearings.                                               
                                                                               
  Representative  Brown asked  the  criteria the  Commissioner                 
  would use to determine the mandated directive.  Mr. Juettner                 
  referenced Section 4,  Page 2, #(c), "....has  been approved                 
  for  lease to the  municipality....".   Representative Brown                 
  felt that the  description could  create a conflict  between                 
                                                                               
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  the community and the  borough and the State which  would be                 
  arguably entitled to the same submerged land.                                
                                                                               
  Representative Brown pointed  out that  in the statute,  the                 
  definition of submerged lands would extend three miles.  Mr.                 
  Juettner  stated  it  was  not the  intention  to  have  the                 
  boundary extend that  far, noting that  the intent was  only                 
  far enough to extend a dock thirty feet and providing enough                 
  space necessary for a rational development.                                  
                                                                               
  JIM BARNETT, (TESTIFIED VIA TELECONFERENCE), CITY  ATTORNEY,                 
  CITY  OF  WHITTIER, testified  in  support  of HB  20.   The                 
  Department of Transportation  and Public Facilities  (DOTPF)                 
  is now conducting the Whittier Access Project which is about                 
  to be released.  The  City of Whittier is trying  to respond                 
  to its future and  the impact of the access.  Entitlement is                 
  limited as  is with all second  class cities.  The  issue at                 
  hand for the city is the  development of the waterfront area                 
  because after access occurs, tidelands could not be conveyed                 
  in  any  second  class city.    The  corps  of engineers  is                 
  actively working on  a harbor extension, which  is important                 
  for the future development of Whittier.   He emphasized that                 
  all of Southcentral  Alaska will  benefit from the  proposed                 
  legislation.                                                                 
                                                                               
  (Tape Change, HFC 95-40, Side 1).                                            
                                                                               
  Representative  Brown  asked if  the  public  trust doctrine                 
  extends to tidelands.   She  requested a change  to Page  2,                 
  Line 27, following "waters" inserting  "and tidelands".  She                 
  felt that language  would allow  continued access to  public                 
  waters.    Mr.  Barnett  stated  that  legislation currently                 
  exists  which protects  the coastal  areas.   Representative                 
  Brown pointed out that the protection  occurs because of the                 
  State ownership.                                                             
                                                                               
  Mr.  Barnett noted that in  Title 38, tidelands are included                 
  in the term "public waters".   Representative Brown asked if                 
  there would be a problem clarifying the  preservation of the                 
  tidelands  as well  as the navigable  waters.   Mr. Juettner                 
  noted that navigational services prevents construction along                 
  those waters.  Discussion continued regarding tidelands.                     
                                                                               
  Mr. Williams stated that within coastal communities, many of                 
  the  important  lands  for development  are  the  tidelands.                 
  Unlike  several  communities in  the  Kenai Borough  and the                 
  Matanuska-Susitna Borough,  peoples lives  in Sitka  revolve                 
  around the  marine  environment.   Many of  the uplands  are                 
  mountainous and the  much of the  selected lands fall  under                 
  the Municipal  Land Entitlement  Process, and include  steep                 
  and  undevelopable terrain.   As  a result,  the ability  to                 
  obtain tidelands was not to the advantage of the communities                 
                                                                               
                                8                                              
                                                                               
                                                                               
  that do not have coast lines.   The legislation would simply                 
  put those communities on equal footing.                                      
                                                                               
  Representative Martin recommended that the leasing of  State                 
  lands  have  a  time  limit  placed  on  it.    Mr.  Barnett                 
  emphasized that  the municipalities  are  extensions of  the                 
  State, although they are a bit  more knowledgeable about the                 
  local  community  needs.    He  stated  that  the  corps  of                 
  engineers are known to be slow.  He did not know  what would                 
  happen  if  the  corps took  longer  than  five  years.   He                 
  concluded that the communities created  before 1964 would be                 
  authorized to keep the allocations that they receive.                        
                                                                               
  Co-Chair  Hanley  noted  that  the  land conveyed  would  be                 
  counted against the  municipalities land  grant.  He  voiced                 
  concern for the equity of those communities who had received                 
  their total entitlement and for those communities who now do                 
  not  have submerged  lands.   He  asked how  the legislation                 
  would  affect  policies  toward  set  net leases  which  are                 
  located on  some of  these lands.   Mr.  Bus responded  that                 
  during the public interest review,  those interests would be                 
  taken  into  consideration.     Representative  Mulder   and                 
  Representative Therriault agreed that a conflict could exist                 
  between the lease holder and property owners.                                
                                                                               
  Representative  Brown   asked  if   the  intention   of  the                 
  legislation would provide  for current construction  under a                 
  State 99-year  lease.  She asked  if that land could  now be                 
  assumed by the municipality.  Mr. Bus stated it would.                       
                                                                               
  Discussion followed  among Committee  members regarding  the                 
  legal  definitions of  submerged  lands in  relationship  to                 
  rivers.     Co-Chair   Hanley  requested   that  information                 
  regarding  the  impact of  encroached  settlement rights  be                 
  provided to the Committee.                                                   
                                                                               
  HB 20 was HELD in Committee for further discussion.                          
                                                                               
  Co-Chair Hanley provided  the Committee  with copies of  two                 
  work drafts, noting that they would be read across the House                 
  floor as House Finance legislation:                                          
                                                                               
       "An  Act  relating  to reductions  in  compensation for                 
       state  officers   and  employees;   and  providing   an                 
       effective date."                                                        
                                                                               
       "An Act relating to endowments  of and donations to the                 
       University of Alaska  and to  the University of  Alaska                 
       endowment trust fund;  and providing  for an  effective                 
       date."                                                                  
                                                                               
  [Attachment #4 and #5].                                                      
                                                                               
                                9                                              
                                                                               
                                                                               
  Representative  Brown  suggested  when offering  legislation                 
  submitted by the  House Finance Committee should  imply that                 
  most of  the members  support  it and  participated in  it's                 
  inception.   She asked  for more  information  and time  for                 
  consideration of the proposed legislation.                                   
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:35 P.M.                                           

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