Legislature(1995 - 1996)
02/16/1996 01:07 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE February 16, 1996 1:07 p.m. MEMBERS PRESENT Representative Brian Porter, Chairman Representative Joe Green, Vice Chairman Representative Con Bunde Representative Bettye Davis Representative Al Vezey Representative Cynthia Toohey Representative David Finkelstein MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 154 "An Act requiring the Department of Law to provide guidelines regarding unconstitutional state and municipal takings of private real property; relating to the taxation of private real property taken unconstitutionally by state or municipal action; establishing a time limit for bringing an action for an unconstitutional state or municipal taking of private real property; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 316 "An Act relating to civil liability for false claims and improper allegations or defenses in civil practice; and providing for an effective date." - SCHEDULED BUT NOT HEARD PREVIOUS ACTION BILL: HB 154 SHORT TITLE: REGULATORY TAKING OF PRIVATE PROPERTY SPONSOR(S): REPRESENTATIVE(S) KOHRING, Rokeberg, Kott, Kelly, Vezey, Martin, Barnes, Ogan, G.Davis, James, Mulder, Foster JRN-DATE JRN-PG ACTION 02/03/95 237 (H) READ THE FIRST TIME - REFERRAL(S) 02/03/95 237 (H) CRA, JUD, FIN 02/16/95 (H) CRA AT 01:00 PM CAPITOL 124 02/16/95 (H) MINUTE(CRA) 02/21/95 (H) CRA AT 01:00 PM CAPITOL 124 02/21/95 (H) MINUTE(CRA) 03/01/95 550 (H) COSPONSOR(S): ROKEBERG 03/09/95 (H) CRA AT 01:00 PM CAPITOL 124 03/09/95 (H) MINUTE(CRA) 03/16/95 (H) CRA AT 01:00 PM CAPITOL 124 03/16/95 (H) MINUTE(CRA) 03/24/95 919 (H) COSPONSOR(S): KOTT 03/25/95 (H) CRA AT 01:00 PM CAPITOL 124 03/25/95 (H) MINUTE(CRA) 04/20/95 (H) CRA AT 01:00 PM CAPITOL 124 04/20/95 (H) MINUTE(CRA) 04/21/95 1421 (H) CRA RPT CS(CRA) NT 1DP 1DNP 2NR 1AM 04/21/95 1421 (H) DP: VEZEY 04/21/95 1422 (H) DNP: ELTON 04/21/95 1422 (H) NR: AUSTERMAN, IVAN 04/21/95 1422 (H) AM: KOTT 04/21/95 1422 (H) INDETERMINATE FISCAL NOTE (LAW) 04/21/95 1422 (H) 2 FISCAL NOTES (CRA, DNR) 04/21/95 1422 (H) REFERRED TO JUDICIARY 11/21/95 (H) JUD AT 10:00 AM JUNEAU LIO 01/08/96 2382 (H) COSPONSOR(S): KELLY, VEZEY, MARTIN 01/09/96 2396 (H) COSPONSOR(S): BARNES 01/10/96 2404 (H) COSPONSOR(S): OGAN, G.DAVIS 01/11/96 2418 (H) COSPONSOR(S): JAMES, MULDER 01/19/96 (H) JUD AT 01:00 PM CAPITOL 120 01/19/96 (H) MINUTE(JUD) 01/31/96 2586 (H) COSPONSOR(S): FOSTER 02/02/96 (H) JUD AT 01:00 PM CAPITOL 120 02/02/96 (H) MINUTE(JUD) 02/16/96 (H) JUD AT 01:00 PM CAPITOL 120 WITNESS REGISTER REPRESENTATIVE VIC KOHRING Alaska State Legislature State Capitol, Room 428 Juneau, AK 99801 Telephone: (907) 465-2186 POSITION STATEMENT: Sponsor of HB 154 PEGGY LaGRONE, Legislative Staff to Representative Kohring Alaska State Legislature Capitol Building, Room 428 Juneau, AK 99801 Telephone: (907) 465-2186 POSITION STATEMENT: Testified on HB 154 TOM PITMAN, Municipal Assessor Municipality of Anchorage 632 West 6th Avenue Anchorage, Alaska 99501 Telephone: (907) 343-6779 POSITION STATEMENT: Testified on HB 154 STEVE VAN SANT, State Assessor Division of Municipal and Regional Assistance Department of Community and Regional Affairs 333 West 4th Avenue, Suite 319 Anchorage, Alaska 99501 Telephone: (907) 269-4500 POSITION STATEMENT: Testified on HB 154 PAT CARLSON, Assessor City of Kodiak 1417 Ismailov Street Kodiak, Alaska 99615 Telephone: (907) 486-9353 POSITION STATEMENT: Testified on HB 154 SARA HANNAN, Executive Director Alaska Environmental Lobby P.O. Box 22151 Juneau, Alaska 99801 Telephone: (907) 463-3366 POSITION STATEMENT: Testified against HB 154 JIM VOTEBERG, Assistant City Manager City of Ketchikan 334 Tongass Avenue Ketchikan, Alaska 99901 Telephone: (907) 225-3111 POSITION STATEMENT: Testified on HB 154 CHARLES McKEE P.O. Box 24305 Anchorage, Alaska 99524 POSITION STATEMENT: Testified on HB 154 JON ISAACS, Member Alaska Chapter, American Planning Association; Member, Alaska Municipal League 308 G Street, Number 313 Anchorage, Alaska 99501 Telephone: (907) 274-9719 POSITION STATEMENT: Testified on HB 154 PAM LaBOLLE, President Alaska State Chamber of Congress 217 Second Street, Number 201 Juneau, Alaska 99801 Telephone: (907) 586-2323 POSITION STATEMENT: Testified in support of HB 154 ANN RESCH, Departmental Attorney Municipality of Anchorage 632 West Sixth Avenue Anchorage, Alaska 99501 Telephone: (907) 343-4545 POSITION STATEMENT: Testified on HB 154 LISA BLACHER 536 Park Street, Apartment E Juneau, Alaska 99801 Telephone: (907) 463-3715 POSITION STATEMENT: Testified against Hb 154 JANICE ADAIR, Director Division of Environmental Health Department of Environmental Conservation 555 Cordova Street Anchorage, Alaska 99501 Telephone: (907) 269-7644 POSITION STATEMENT: Testified on HB 154 GERON BRUCE, Legislative Liaison Office of the Commissioner Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99811-5526 Telephone: (907) 465-6143 POSITION STATEMENT: Testified on HB 154 TERRY DUSZYNSKI, Member Alaska Homebuilders Association 1464 Birchwood Drive Fairbanks, Alaska 99709 Telephone: (907) 479-3324 POSITION STATEMENT: Testified on HB 154 ACTION NARRATIVE TAPE 96-21, SIDE A Number 000 CHAIRMAN BRIAN PORTER called the House Judiciary committee meeting to order at 1:07 p.m. Members present at the call to order were Representatives Porter, Bunde, Toohey, and Vezey. HB 154 - REGULATORY TAKING OF PRIVATE PROPERTY CHAIRMAN PORTER announced the agenda was a continuation of the hearing on HB 154 "An Act requiring the Department of Law to provide guidelines regarding unconstitutional state and municipal takings of private real property; relating to the taxation of private real property taken unconstitutionally by state or municipal action; establishing a time limit for bringing an action for an unconstitutional state or municipal taking of private real property; and providing for an effective date." He said an additional committee substitute was available, work draft 9- LSO602\H. He added that HB 154 would not be moved from the committee today. He then asked the sponsor of the work draft to come forward and testify on the new committee substitute. Number 199 REPRESENTATIVE VIC KOHRING, sponsor of HB 154, gave an overview of the bill. He said HB 154 was filed in response to concerns of private property owners who, through regulations, have had their property taken from them or have had restrictions placed on them as to the use of their property reducing its economic value. The intent of HB 154 is to require that the property owner is compensated by the government if government restrictions and regulations diminish the economic value of their property. Representative Bettye Davis and Representative Joe Green arrived at 1:11 p.m. REPRESENTATIVE KOHRING said this is the fourth House Judiciary Committee hearing on HB 154, including two meetings held in the interim. He referred to a letter dated January 26, 1996, available in the committee packet, from Craig Tillery. He said responses to each concern have been incorporated, as much as possible, into CSHB 154. He said these changes include removing the language regarding compensation, as it was viewed to be unconstitutional. Language referring to the economic analysis was also removed, as it was seen to be cost prohibitive and require a fiscal note. REPRESENTATIVE KOHRING said language was included in HB 154 incorporating a threshold amount of 20 percent of economic loss before property owners could file a claim, to avoid proliferation of litigation. Number 430 REPRESENTATIVE KOHRING said HB 154 changed the interest rate from the London Interbank Rate to the Twelfth Federal Reserve District Rate. This rate is used when a claim is awarded as a result of a taking and interest would be compounded from the time the economic loss occurred on top of that award. Number 469 REPRESENTATIVE KOHRING said a correction to avoid double compensation on access was also incorporated. This correction would avoid situations where a plaintiff could receive monetary compensation for loss and also require the government to provide access to their property. Number 508 REPRESENTATIVE KOHRING said wording was added to make it clear that HB 154 is not retroactive, only cases filed after the time that HB 154 became law, if that were to happen, would be applicable. Number 560 REPRESENTATIVE BETTYE DAVIS requested that the Alaska Municipal League letter be addressed. REPRESENTATIVE KOHRING remarked that this letter is dated February 16, 1996, and he had not seen it. He deferred the question to his staff person, Peggy LaGrone. Number 597 PEGGY LaGRONE, Legislative Staff to Representative Kohring, said she had not had time to review this letter. REPRESENTATIVE DAVID FINKELSTEIN referred to the letter from Craig Tillery, and asked for a copy of the verbal responses in regards to Mr. Tillery's concerns, prepared by Representative Kohring. Number 797 TOM PITMAN, Municipal Assessor, Municipality of Anchorage, testified via teleconference from Anchorage. He said he just received a copy of the work draft version of HB 154. He expressed concern over issues concerning evaluation and timing. He said under HB 154, a property owner has up to five years to claim his property has lost value to which a value adjustment must be incorporated within that loss. He listed the difficulties with this time frame such as the fact that in Anchorage they do mass appraisals and those direct records are kept for three years, not five. He said a property owner could claim state property loss, under the current system, to could make a valuation on the loss of that property over the course of five years. He cited an example where a driveway is broken as a result of roadway construction, under HB 154 he might not make that claim for five years and be able to access the property damage over the course of those five years. MR. PITMAN said the evaluation procedure of HB 154 causes additional problems. He said under HB 154, a property owner can chose their appraiser, or even act as their own appraiser. Mr. Pitman said the municipalities and the state must go along with this appraisal, under HB 154, and most likely that appraisal would be done based on the worst case scenario, not to mention the difficulty estimating the value of certain things which have no appreciable value. He said the definition of takings in HB 154 can include anything. Number 830 STEVE VAN SANT, State Assessor, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs, testified via teleconference from Anchorage. He referred to Section 29.45 regarding the appeal process for property owners. He said HB 154 creates a different standard which circumvents the existing appeal process. The current process is that the owner goes before a Board of Equalization and then on to the superior court if they were not satisfied with a decision. He said the provisions of HB 154 create a different category of taxpayers whereby their appraisal is made by an independent appraiser and needs to be taken by the county under an average of value for property taxation. He said this will cause problems for the community accessor due to Section 29.45. Number 920 PAT CARLSON, Assessor, Kodiak Island Borough, and president of the Alaska Association of Accessors, testified via teleconference from Kodiak. He mentioned that Representative Kohring, when discussing the committee substitute, did not refer to the changes in Title 29. This section has nothing to do with takings legislation, it makes the municipal assessment the determination of the average from a private accessors and the court assessment determination. He reiterated the difference in accessing, plus the difficulty of factoring in the five year time period. He said 34.51.98(b) should be deleted. MR. CARLSON said he is in philosophical agreement with reimbursing property owners for delays in the use of their property due to bureaucratic delays or partial takings and said it is good public policy to compensate people for those losses. Number 1058 SARA HANNAN, Executive Director, Alaska Environmental Lobby (AEL), was next to testify. She said AEL was a coalition of 20 Alaskan environmental groups with a collective membership spread throughout the state in virtually every election district. She was advised by lawyers that she works with to support HB 154, as more environmental victories are found in courtrooms than in front of policy making bodies. She said, in a gesture of good policy making, she was not going to support HB 154 and she was going to address the issue from her former perspective as a high school civics teacher. MS. HANNAN said the United States Constitution as well as the Alaska State Constitution guarantees government responsibilities, one of those responsibilities is that the government cannot take property without compensation. She said 200 years of judicial proceedings leave some confusing outcomes and have left people unhappy with the judicial outcome of their contested claim to government. She said these outcomes do not mean that the law has failed, or that the government is taking property without compensation. She said, every single case of property ownership that has a government takings threat against it, probably has some very specific facts associated with it which need to be considered, especially when you are talking about changing a broad policy. MS. HANNAN said examples that she has followed, that have been given in description of HB 154 in the last year, have included cases that have gone to the Alaska Supreme Court where people have been concerned about the municipal regulations that would require set backs from the river front. She said those are valid concerns, but the state legislature is probably not the place to remedy them. Number 1204 MS. HANNAN said, if the state's administrative procedures act is not efficiently dealing with appeals by citizens who are dealing with government agencies, let's give them more money to do their job and make their job more efficient, to make sure the laws are carried out. She said Alaska is a state that has social conflict. The state has collectively decided that municipal governments probably have the right and should take the responsibility to regulate where liquor stores are located, if and when that liquor should operate. Under HB 154, a municipal government would no longer be able to afford to go dry. Any city, in this state, that wanted to put out of business a liquor store could not afford to do so. She added that if that liquor store wasn't there, but a property owner said he was thinking of getting a permit to start operating next year, then it would be considered a takings under HB 154. She referred to Representative Kohring's memo of April 20, 1995, in response to who determines the highest and best value of the land, Representative Kohring responded, that it should be the property owner. He said the most profitable use of property is the best decided by the person who owns it." Ms. Hannan said if your liquor store was not there and your municipality decided to go dry, she said you still have a right to claim that someday you were going to open up a liquor store and get rich. She said these types of government actions, as dictated by state policy, take away control from local governments. Number 1284 MS. HANNAN discussed the issue of retroactivity by saying that no law is retroactive. She said HB 154 would change municipal and state directions as to what is in the best interest of the state. She said potential situations can not be answered. These situations are complex and probably need a variety of deliberative discussions, some of which need to be done within the legal community, within the judicial branch and with the policy makers. Number 1319 MS. HANNAN said HB 154 is bad policy and added that she didn't think the state of Alaska has a real problem with takings. The state supreme court only had one case brought forth, since statehood, on takings and the person who brought forth the case won. Number 1338 REPRESENTATIVE CON BUNDE wanted clarification that, her testimony said, HB 154 would prohibit any planning and zoning. Number 1347 MS. HANNAN said HB 154 does not prohibit planning and zoning, but requires that the agency demonstrate a high burden of public health and safety. She said, currently, if the municipality of Anchorage decided to regulate health and safety in one way and zone for it, there is no burden to go and prove a legal responsibility. HB 154 establishes a burden higher than the current burden that is imposed now, which also creates additional cost burdens. Number 1383 REPRESENTATIVE BUNDE asked whether she felt a high burden of proof was needed to prevent arbitrary decisions. Number 1390 MS. HANNAN said that if the municipal government is making arbitrary and capricious decisions, then those people should be booted out of office. She said you can't legislate good judgement, but the money used to operate local governments come from the state. She said if the state is squandering this money, by building layer and layer of bureaucracy, then the state is not doing its job to make clear, just and efficient laws. She said, in most cases, what appears to be arbitrary decisions is just a bureaucrat trying to carry out a policy decision that was made by a policy body. She said if the policy is wrong, then the problem should come back to the policy body. Number 1458 REPRESENTATIVE AL VEZEY clarified that Ms. Hannan only knew of one case regarding takings to go before the state supreme court. He said, "I have been at the supreme court twice regarding takings." He said he knew of hundreds of cases. He asked her to identify which case she was referring to. MS. HANNAN said the only case the Department of Law (DOL) could tell her about was State of Alaska versus Steve Noye. REPRESENTATIVE VEZEY said there are several cases per year regarding takings and these cases have a broad scope of what they cover. He cited a case in Fairbanks which has been in court for 15 years regarding the North Star Borough's zoning. Number 1505 MS. HANNAN said it was shameful that a court case could remain unresolved for 15 years and added that there is a big symptom that something is wrong in the judicial branch and suggested that perhaps the state doesn't have the money to deal with the solution. She said she didn't believe HB 154 was a remedy for this problem. Number 1519 CHAIRMAN PORTER clarified that the takings provision of the state constitution has been interpreted to mean 95 percent. He then mentioned that HB 154 changes this amount to 20 percent of the value and asked Ms. Hannan if she had another number or if she felt there should not be any change to current law. Number 1552 MS. HANNAN said she was not an attorney and was hesitant to throw out a number because of the judicial precedent for what kinds of numbers evoke resolution. She suggested that in a system where you are provided a right to have a jury of your peers and you can convince 12 Alaskans that the government has done you wrong and you deserve a monetary compensation, then you are due that compensation. She said the constitutional provision is for the land itself, not the house or your business interest. She added that when you try and legislate for those things that are not the property itself but items on the property, then specifics from each case must be identified. She did not venture to guess what precedents have already been set in Alaska court for when we do or do not compensate. She said Alaskans have demonstrated fairness to the average person and if there have been rulings against citizens in taking cases, then there must have been individual facts per case that have set up the judicial precedents. She said HB 154 does not address the 35 years of judicial precedent. Number 1642 REPRESENTATIVE JOE GREEN asked if the committee is moving in the right direction with the new committee substitute. Number 1671 MS. HANNAN responded that she didn't believe HB 154 could be "tweaked" enough. She said HB 154 adds another pile of red tape, another layer of bureaucracy and 20 years of litigation. She did not see that HB 154 would provide any remedy for someone who has been suing the state of Alaska for 15 years. She said none of the constituents of AEL want to see government capriciously take property. The constituents want efficient government in this state. She said HB 154 offers layers of bureaucracy and delayed resolution to problems. If the problem is that the state is not compensating people who are losing property, the state must make sure that the money is there to pay them through the legislature appropriations of money. Number 1765 REPRESENTATIVE VEZEY asked if Ms. Hannan said the state does not compensate people for improvements to real property. Number 1745 MS. HANNAN said, if she did, she misspoke in the legal context. She cited the classic example of condemning your property to put in a highway, in this case the government must compensate you for the house and the property. She said the government might not compensate you for a rose hedge, which for you was considered a valuable loss. REPRESENTATIVE VEZEY said he hoped Ms. Hannan's testimony would not be taken too seriously because it does not represent the legal case. He then thanked Ms. Hannan for her testimony. Number 1775 JIM VOTEBERG, Assistant City Manager, City of Ketchikan, testified via teleconference from Ketchikan. He said he just received a copy of the work draft for HB 154, and because of this, his comments would be focused on the original draft. He read from a statement, "although the city of Ketchikan has not fully evaluated the effects of HB 154, a preliminary review brings to the attention the following concerns; the proposed legislation would require that all ordinances which impose a restraint on private property have the least possible effect on the property which is necessary to accomplish public ordinance. The term restraint on private property is broadly defined as including any action or restriction that limits the use of the private property. This language would appear to severely limit the ability of government to adopt zoning and building codes without compensating property owners for the proposed diminished value. The ordinance would also limit lease powers to only those situations where action must be taken to respond to real and substantial threat of (indiscernible) to the extent necessary. Any action which would impose a restraint on private property must be accompanied by a full analysis of total of (indiscernible) effect or the ordinance and of the economic effect of all alternatives. Private property is a broadly defined as even motor vehicles (indiscernible) for example, the city of Ketchikan park requirement." He said HB 154 seems to be a reaction to environmental regulation and the effect this regulation has on property owners. He said these are federal regulation that directly or indirectly go through the state agencies that mandate these laws. He added that HB 154 would be ineffectual remedy for these regulations. MR. VOTEBERG said the city of Ketchikan, while understanding the frustrations resulting in the seemingly endless amount of environmental legislation, is not convinced that HB 154 will provide regulatory relief. The city of Ketchikan encourages this committee to make the appropriate changes to meet the goal of HB 154. Number 1915 CHARLES McKEE testified via teleconference from Anchorage. He asked the committee to look on page 3, the provisions regarding health and safety. He said he investigated these provisions in regards to his investigation of the state due to an injury he received from commercial fishing. He said he is still waiting for compensation and he felt he shouldn't have to deal with dubious characters in order to achieve small increments of money in order to continue to prove his case. Number 2095 JON ISAACS, Member, Alaska Chapter, American Planning Association; and member, Alaska Municipal League, testified via teleconference from Anchorage. He said in the past his organization has worked with the legislature to develop legislation. His organization agrees wholeheartedly with the intent of HB 154 in regards to the taking of property by both state and local governments. He said, despite the good intentions of HB 154, it misses the intended target. He said he just received the committee substitute and said that there is a broad based definition of government action under consideration which includes building codes, the statute of limitations to file a claim, (indiscernible) uncertainty to local government, plus additional community concerns about (indiscernible) loss of value. He felt HB 154 will have a great cost to property owners who (indiscernible) more frequently. The municipality will have more unspecified claims in regards to HB 154. Citizens will have greater concerns of how the community will be developed. He concluded that good legislation can be developed if all parties work in cooperation to develop language. Number 2159 CHAIRMAN PORTER said the information Mr. Isaacs sent is located in the committee packet and said the sponsor is aware of his offer to help. Number 2231 PAM LaBOLLE, President, Alaska State Chamber of Congress (ASCC), was next to testify. She said her organization represents 70,000 employees out of 700 member businesses as well as 6,000 members of business members of local chambers. She said a mission of her organization is to create a climate in Alaska that is conducive to a strong, private sector economy. She read from a statement: "I am here today to speak in support of HB 154. Reform of the present regulatory system is one of the highest priorities of the ASCC. Our resolution on this matter asks the legislature and the administration to create a regulatory and economic environment supportive of business development that encourages businesses to locate and grow in Alaska. "There are now 9,507 pages of regulations in the Alaska Administrative Code book. I noted yesterday, by the way, in Senator Stevens comments that in 1995 alone the federal executive branch issued 67,500 pages of regulations at the federal level. They nearly all restrict, prescribe, dictate, assign, or impose the will of government on the public. I believe we all recognize the need for rules and guidelines to help the public and its government agencies achieve the intended purpose of a law. However, I am not aware of any law that has been passed by this state's legislative body, past or present, that, in its intent, gave the state the right to deprive property owners of their property without just compensation. Can you imagine what the headlines might have been ...`Alaskan's required by law to donate property needed by local or state government,' and I hope we never will see a law passed like that. "However, regulations are more subtle than that, and there aren't enough watchdog groups in existence to have closely monitored the development of the tens of thousands of regulations contained in that 9,507 pages if the Alaska Administrative Code Book. As a result, over the years government has encroached a little bit here, prescribed a little bit there, until the agencies of our government have come to accept it as their established right to take whatever they need from an individual, `for the good of the people'...or the flora, or the fauna, or the fish or fowl. "In all this testimony, I have not heard anyone dispute the fact that this is happening. All I have heard is that the government needs to take or diminish the value of private property from time to time, for any one of a variety of reasons, and if they were required to compensate the owners for their loss, the costs would be astronomical. Doesn't that mean that the costs to the individuals who are not being compensated are also astronomical? "To condone the taking of private property through regulatory action, without compensation for the experienced loss, is to discourage business development and economic growth and will discourage businesses to locate and grow in Alaska. Regulatory restrictions can keep a business from managing the resources they paid good and fair money to acquire. When restrictions are considered to be necessary, the regulators should be required to weigh the loss to the property owners against the need for the restriction, and then be willing to pay for what they are taking. Before the owner acquired the property, he had to consider if it was affordable, and gather the needed money to pay for it. How then, is it fair that government can take part of it, or reduce its value, without considering if they can afford to pay for it . If the owner had to borrow money to purchase the property, his lender still has to be paid. And the owner will be expected to pay taxes on the property he owns, but cannot use. "Faced with government costs we already know we can't afford, it's hard to consider an action that could result in higher costs still. But no one is saying that this law should be retroactive, or that the government must pay for what it has already taken. What we are saying is that the taking of property without compensation goes against our constitutional rights, and it must stop. From this point forward, governments must have this thought as their highest consideration. If they can't afford it, they shouldn't take it." Number 2419 REPRESENTATIVE B. DAVIS asked for a clear cut example of where property was taken, from Ms. LaBolle's representative base of 70,000 people, and where they were not compensated for their loss. Number 2437 MS. LaBOLLE said she did not have any examples with her, but cited examples given during hearings on HB 154 this summer. She said some examples included restrictions on the use of property. She said there are subtle examples of takings and listed an example regarding the inclusion of a buffer zone restricting timber harvest. TAPE 96-21, SIDE B Number 000 REPRESENTATIVE B. DAVIS asked if HB 154 will reduce the amount of regulations and if enforcement and cost would fall back to the municipalities. MS. LaBOLLE didn't think HB 154 would take away regulations, and added that every time laws are passed, more regulations are installed. She said, just because it has been wrong in the past, it doesn't mean that the future should compound those wrongs. REPRESENTATIVE B. DAVIS said she doesn't want any government agency to continue the wrongs, but she didn't want it to impact the municipalities. She advocated for a bill that would be enforceable and not cost the state a lot of money. She asked for some examples to be sent to her in writing regarding those takings. MS. LaBOLLE said no one wants to increase the cost to state government, but the costs to individuals must be addressed. She said HB 154 states that agencies have to work through a process before they take property. She said her organization finds nothing unreasonable about asking the government to proceed in a rational manner and look for other options besides taking property. Number 097 REPRESENTATIVE VEZEY referred to various examples of takings including the Wetlands Act, zoning cases, and he again cited the Fairbanks case. He said the Fairbanks case involved a piece of property that the city was going to condemn, but before they did, they rezoned the area, so the condemned building had minimal value. Number 134 REPRESENTATIVE VEZEY said the essence of HB 154 was that agencies and municipalities would chose to avoid takings so they wouldn't have to pay. He said HB 154 encourages government to conduct themselves in a manner that is less expensive to both government and private individuals. Number 157 MS. LaBOLLE said this issue is critical to the ASCC. Number 164 REPRESENTATIVE GREEN asked if HB 154 would encourage speculation. Number 177 MS. LaBOLLE said she didn't think property owners would seek profit by working against governmental agencies. Number 192 ANN RESCH, Deputy Municipal Attorney, Municipality of Anchorage, testified via teleconference from Anchorage. She said, as opposed to the first draft of HB 154, she does not condemn all sections of the committee substitute. She said she is opposed to the section regarding the law of takings and the too broad reference to government actions. She said she was happy that a threshold was incorporated into HB 154, but felt that 20 percent was too low. She said that among appraisers a 10 percent, of fair market value, fell within the margin of error. Number 265 MS. RESCH said that typical replanning and zoning actions could constitute takings. Number 280 MS. RESCH said she was pleased that HB 154 assessment did not include damage prior to the passing of HB 154. She expressed concern over the taking definition in its inclusion of the word, "temporary" as this might lead to an increase in litigation. She said there might be litigation as a result of every aspect of this bill. She remarked on that a reduction from ten years to five years for statutory limitations was a positive inclusion within HB 154. Number 343 REPRESENTATIVE FINKELSTEIN clarified that Ms. Resch had been working on condemnation cases in Anchorage for eight years. He then asked how many of those cases were dealt with internally and how many of them went through the court process. Number 378 MS. RESCH said these cases are rarely settled out of court and in court a third of the existing cases are settled. She said, settlement in terms of dollar amounts, before they got to her, would be unusual. She added that there might be a settlement provision in the regulatory process where both planners and the applicant work something out. Number 408 REPRESENTATIVE BUNDE referred to her comment that 20 percent would be too low of a threshold and asked if she had a recommended number. Number 423 MS. RESCH suggested a systematic approach to the amount, determined by the different amounts set by appraisals, seen in condemnation cases. She said the Department of Law (DOL) could review their files to see what kind of disparity is seen. She cited the example where the state went to trial and the state offered $11,000, the litigant wanted $1 million, and the result was $15,000. She added that 10 percent is seen to be a natural variation (indiscernible due to overlapping voices) common in appraisers. She asked what this 20 percent variation would mean in practice and said she would have to look more at it to have an idea of a percentage. Number 486 LISA BLACHER was next to testify. She said she was a resident and a property owner in Southeast Alaska. She said that HB 154 could offer her the opportunity to make millions of dollars, but despite that fact, she does not support HB 154. She viewed ownership of property as a right and a responsibility. She said there are safeguards in place that help everyone and she wants to ensure that those are kept in place. She thinks there are provisions in place that protect private property from government suppression. She said if that system is not working properly there are steps that can be implemented to make the system work better. She said if opportunities are given to challenge any government action, there will be a process gridlock, monetary costs to the state and development of problems in areas of health and safety within the communities. Number 560 MS. BLACHER said a similar legislation regarding private property rights initiative was passed in the state of Washington, later repealed by Referendum 48 this past fall. She said the University of Washington Institute for Public Policy made a detailed economic analysis of the costs of this legislation. This study determined that the costs for assessment would be millions of dollars and compensation would result in expenditures of $11 billion per year. MS. BLACHER said HB 154 will bankrupt the state of Alaska and result in litigation. She referred to the original takings case to which the sponsor built HB 154 in response to. She said Steve Noye was not able to build the number of subdivisions he wanted because the sewage disposal was not adequate with the Department of Environmental Conservation (DEC). His subdivision would have discharged untreated sewage into the Katchamak Bay. She questioned a bill which used this example as the reason for its submission. MS. BLACHER said she discussed HB 154 with a lawyer who told her that she and her neighbors could stand to make millions from this legislation. She didn't think HB 154 was wise or prudent and she was against it. Number 654 REPRESENTATIVE BUNDE asked how she felt HB 154 could result in millions of dollars in regards to her property. MS. BLACHER cited examples such as building a hotel or a garbage incinerator where she is prevented from doing so by regulation, HB 154 would allow her to sue. Number 688 REPRESENTATIVE CYNTHIA TOOHEY said that most of the regulations she cited were examples of regulations in place before the property was bought. MS. BLACHER said this was true, but pointed out that if regulations came up for reauthorization they were fair game. REPRESENTATIVE TOOHEY said she was not addressing that, but the use of the property as you buy it. Number 726 REPRESENTATIVE VEZEY said Ms. Blacher is referring to existing conditions that are applicable under HB 154. He asked from her to state, from this day forward, what was she anticipating the government would do for her to make her a millionaire. MS. BLACHER said, it is what she is not allowed to do in existing regulations, that under HB 154, that she will sue. She said Mr. Noye is not allowed to build 15 subdivisions under existing regulations and that is why HB 154 was developed. Number 765 CHAIRMAN PORTER said it is his perceived intent of HB 154 that it would not afford anyone the opportunity to sue in regards to existing regulations. Number 780 MS. BLACHER said HB 154 is complicated and encouraged the committee to look at the University of Washington study to help understand the complexities. Number 799 CHAIRMAN PORTER said the Washington legislation was similar to the first draft of HB 154 and that the bill has been revised and will probably be revised further. Number 827 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, was next to testify. She said the focus of HB 154 is off. She added that the 9,000 plus pages of regulations mentioned are all based in statute and the result of bills passed by the legislature. She said when those bills were submitted they did so to correct a wrong, a perceived wrong or to forestall some wrong from happening. Number 865 MS. ADAIR referred to a statute that requires obtaining a solid waste permit before those wastes are disposed of and said that although HB 154 does not relate to regulations currently on the books it does not restrict questioning the permit actions that are taken, based on regulations. She said if someone wanted to put a solid waste permit in Turnagain, and DEC denied the permit, she asked which property has been devalued. She said these regulations were incorporated to prevent individual action which would harm the public. Number 904 MS. ADAIR said if DEC denied a permit for an incinerator in south Anchorage it might harm the person wishing to develop it, but if a permit was issued then it would harm the other property owners in that area. She said it is difficult to make governmental action decisions with the intention of protecting the health, welfare and property values of adjoining pieces of property. She said the fiscal notes prepared by DEC are not monetary amounts that come to the agency, but money that goes around the economy. She said money is given by those individuals developing property to someone who is developing that plan is an economic circle. Number 965 MS. ADAIR said the inspection and maintenance requirements in Anchorage and Fairbanks do not result in money to the agency, but rather it is money that goes out to the garages and sent to the municipality in order to have those tests done. She said the state regulations help drive an economic circle. Number 980 CHAIRMAN PORTER asked what happens in a situation whereby the interests of two people, or more, are opposed to each other. Number 1005 MS. ADAIR said this situation would result in a court case on a consistent basis. She said, in reality, HB 154 hurts economic development in the state of Alaska because of the difficulties involved in issuing permits. Number 1019 REPRESENTATIVE BUNDE asked about the hesitation to issue a permit. Number 1033 MS. ADAIR said the safe, bureaucratic approach of not issuing a permit would result in a court case, because whoever wanted that permit would feel devalued under HB 154. Number 1044 CHAIRMAN PORTER cited examples where there would be two sides with equal feelings of devaluation. Number 1069 REPRESENTATIVE TOOHEY asked if these situations were in places that were un-zoned. Number 1076 MS. ADAIR said she is not aware of how zoning laws are impacted by HB 154. She said there are not that many communities within the state with good zoning laws. She added that many times DEC is asked to be the zoning entity and although an attempt is made to avoid this, in many cases it is the defacto result. Number 1113 REPRESENTATIVE FINKELSTEIN asked in regards to the regulations that are and are not covered in Section 7 of HB 154, whether some of the regulations are changeable. He added that regulations are modified as technology within the industry changes. Number 1205 MS. ADAIR agreed that the regulations are modified as new information is obtained. Number 1216 REPRESENTATIVE FINKELSTEIN remarked that regulations are going to be applied to people and that Section 7 does not solve the problem. Number 1229 GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game (DF&G), was next to testify. He said his department testified previously on HB 154 and he was going to attempt to avoid repeating what had already been said. He said the state constitution reserves fish and wildlife for the common use of the people whether it occurs on private land, state or federal land. He said it is from that constitutional mandate, that the regulations and statutes were formed, giving the DF&G authority. He said these resources are important in terms of economics as well as in other respects. Number 1297 MR. BRUCE said HB 154 causes concern to DF&G in regards to page four, Section 34.50.160, because it states that DF&G cannot require an owner of private property to provide or pay for studies, maps, et cetera used in the governmental entity's decisions to adopt a regulation or ordinance relating to private property. He mentioned that one of the statutes passed, in Title 16, 16.05.870 requires that anyone conducting an activity in a fish stream to provide plans and work with the department to show that the activity is not detrimental to the fish. He said DF&G undergoes a review and a permitting process under that authority and said that only a fraction of 1 percent are disapproved out of 600 or so permit applications. He said this process is conducted in a satisfactory fashion through the use of maps, proposals, et cetera provided by the permit applicants so that it can be used by DF&G to make the permitting decision. He said under HB 154, DF&G would have to develop their own studies and plans which is not practical. He said HB 154 would create continued friction with applicants with whom the DF&G has had a good, working relation. Number 1481 TERRY DUSZYNSKI, Member, Alaska Homebuilders Association, testified via teleconference from Fairbanks. He said he supports the concept of HB 154. He said the attitude of his organization is that someone purchases land that afterwards is subject to regulation, causing a devaluation of that land, should certainly be compensated by the government. He said he hoped that HB 154 would protect against this loss. Number 1556 REPRESENTATIVE BUNDE made a hypothetical scenario by which a gold deposit is found and asked that it be viewed it from the side of the owner who might not get to tap this resource and from the point of view of the property owners who complain because of the heavy ore trucks. Number 1616 MR. DUSZYNSKI said when the gold deposit was identified would determine the value of property. If the gold deposit was discovered after the property was bought, then the property might not be devalued if he doesn't get the permit. Number 1694 REPRESENTATIVE GREEN created a different scenario where a gravel quarry is zoned for an area near homes and a motor speedway is then built on top of it, he then asked about the conflict of desires in this situation. Number 1754 MR. DUSZYNSKI said it depends on a variety of factors. Number 1829 REPRESENTATIVE FINKELSTEIN said Mr. Duszynski's response to Representative Bunde's question was reasonable, but added that there is nothing in HB 154 which states whether or not they had a permit issued. He said it can be based on what the owner's intention is in regards to this property. He also raised the issue of zoning, saying that most of the state is not zoned. He said every year, different parts of the state decide that they want to be zoned and find out with all these conflict of interest issues that the municipality cannot zone and effectively address those issues. CHAIRMAN PORTER closed the hearing to testimony from the public. REPRESENTATIVE FINKELSTEIN said he was confused as to what Section 7 applied to, and added that HB 154 revolves around governmental actions as defined on page six. The definition of takings are actions taken by government. He asked how Section 7 ties into that definition. He said there are some separate provisions that relate to considerations taken in principle for government action and other things, he thought that those appear restricted by Section 7, but it didn't appear that Section 7 had any restriction on the compensation required for takings and what governmental action means. Number 2030 REPRESENTATIVE TOOHEY made a motion to adopt CSHB 154, version 9- LS0602\H as the working document. Hearing no objections CSHB 154 was the working document before the House Standing Judiciary Committee. Number 2082 CHAIRMAN PORTER said it would be helpful if the definition, referred to by Representative Finkelstein, reflected more of what his understanding was of the definition. He said he understood that the definition of governmental action is an unanticipated prohibition or limitation implemented. He referred to an example of fisheries. Number 2180 REPRESENTATIVE VEZEY said the hypothetical examples that were raised were extraneous. He said, the property rights raised, cited examples which would cause noise and air pollution and said those are not property rights issues. He said those are permitting issues. Number 2283 REPRESENTATIVE FINKELSTEIN asked if an appraiser were to produce a valuation stating that they have a property loss of 20 percent or more under 109.b, because of an increase in heavy ore trucks, whether or not that loss would be compensated. Number 2340 REPRESENTATIVE VEZEY said there are certain expectations that you should account for in your property if you live near a major thoroughfare and he didn't see how an increase in trucks would be compensated under HB 154. He said if public agencies decide to increase their capacity, they might have to take property to expand which might result in a taking. He said, he didn't understand how the use of the adjacent property would affect your property negatively as it was there previously. Number 2450 REPRESENTATIVE FINKELSTEIN said his example regarded neighborhood streets not major thoroughfares. TAPE 96-22, SIDE A Number 000 REPRESENTATIVE VEZEY said that because you don't own the property, those regulations, if they change, are not a taking of your property. He said the state of Alaska has a history of not denying people access to their property, but added that the state could deny people access to their property for industrial purposes. He said a person wishing to develop their property has to come up with a way of gaining that access through work with a public agency to create a facility or acquiring additional property rights to develop their own facility. He said, in the past, the ability to construct a thoroughfare was easily done. Number 138 REPRESENTATIVE FINKELSTEIN said that someone is going to have a claim if they can show that they moved into a residential street where no industry was going on, find a property appraiser who says that property owner has lost more than 20 percent of property value because of the gravel pit. Number 202 CHAIRMAN PORTER said there didn't appear to be anything in HB 154 which would guarantee compensation. Number 221 REPRESENTATIVE GREEN cited an example where there was as much as a 30 percent difference in appraisals in homes, unaffected by externalties. He said this difference creates an area of concern for him within HB 154. Number 333 CHAIRMAN PORTER asked the sponsor of HB 154 to try and address the issues raised in the meeting today. He said, at some time the issue of the philosophy of HB 154 versus the litigation concern would arise. Number 409 CHAIRMAN PORTER said an issue he wished to address is the competing interest concern. He said if someone wanted to develop a piece of property and there were no regulations prohibiting it, except for neighboring property owner's concerns, you create the potential for litigation. He said HB 154 would be held over and addressed at an upcoming House Judiciary Committee meeting. ADJOURNMENT There being no further business to come before the House Standing Judiciary Committee, Chairman Porter adjourned the meeting at 2:47 p.m.