02/09/1998 03:38 PM House L&C
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 9, 1998
3:38 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Jerry Sanders
Representative Gene Kubina
MEMBERS ABSENT
Representative Bill Hudson
Representative Joe Ryan
Representative Tom Brice
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 110(L&C) am
"An Act relating to licensure of landscape architects; relating to
exemptions from laws regulating the practice of architecture,
engineering, and land surveying; and relating to fees collected by
the Board of Registration for Architects, Engineers, and Land
Surveyors."
- HEARD AND HELD
* HOUSE BILL NO. 324
"An Act relating to liens for municipal assessments for certain
utility improvements."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 110
SHORT TITLE: LICENSING OF LANDSCAPE ARCHITECTS
SPONSOR(S): SENATOR(S) MACKIE, Kelly, Taylor;
REPRESENTATIVE(S) Mulder
Jrn-Date Jrn-Page Action
02/27/97 538 (S) READ THE FIRST TIME - REFERRAL(S)
02/27/97 538 (S) L&C, FIN
04/15/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
04/15/97 (S) MINUTE(L&C)
04/17/97 1236 (S) L&C RPT CS 2DP 1NR NEW TITLE
04/17/97 1236 (S) DP: KELLY, MACKIE; NR: LEMAN
04/17/97 1236 (S) FISCAL NOTE TO SB & CS (DCED)
01/20/98 (S) FIN AT 10:00 AM SENATE FINANCE 532
01/21/98 (S) RLS AT 11:25 AM FAHRENKAMP RM 203
01/21/98 (S) MINUTE(RLS)
01/21/98 2249 (S) FIN RPT (L&C)CS 2DP 2NR
01/21/98 2249 (S) DP: SHARP, DONLEY
01/21/98 2249 (S) NR: PHILLIPS, TORGERSON
01/21/98 2249 (S) FN TO CS (DCED)
01/21/98 2253 (S) COSPONSOR(S): KELLY, TAYLOR
01/22/98 2260 (S) RULES TO CALENDAR 1/22/98
01/22/98 2264 (S) READ THE SECOND TIME
01/22/98 2265 (S) L&C CS ADOPTED UNAN CONSENT
01/22/98 2265 (S) ADVANCED TO THIRD READING UNAN
CONSENT
01/22/98 2265 (S) READ THE THIRD TIME CSSB 110(L&C)
01/22/98 2265 (S) PASSED Y16 N3 A1
01/22/98 2266 (S) TAYLOR NOTICE OF RECONSIDERATION
01/23/98 2281 (S) RECON TAKEN UP - IN THIRD READING
01/23/98 2281 (S) RETURN TO SECOND FOR AM 1 UNAN
CONSENT
01/23/98 2282 (S) AM NO 1 ADOPTED UNAN CONSENT
01/23/98 2282 (S) AUTOMATICALLY IN THIRD READING
01/23/98 2282 (S) PASSED ON RECONSIDERATION Y18 N- E2
01/23/98 2283 (S) TRANSMITTED TO (H)
01/26/98 2131 (H) READ THE FIRST TIME - REFERRAL(S)
01/26/98 2131 (H) LABOR & COMMERCE, FINANCE
01/30/98 2190 (H) CROSS SPONSOR(S): MULDER
02/02/98 (H) L&C AT 3:15 PM CAPITOL 17
02/02/98 (H) MINUTE(L&C)
02/09/98 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 324
SHORT TITLE: MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS
SPONSOR(S): REPRESENTATIVES(S) OGAN, Kohring
Jrn-Date Jrn-Page Action
01/16/98 2061 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/98 2061 (H) L&C, JUDICIARY
02/04/98 2223 (H) COSPONSOR(S): KOHRING
02/09/98 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
LINDA CYRA-KORSGAARD, Landscape Architect
Tryck Nyman Hayes, Incorporated
911 West 8th Avenue, Suite 300
Anchorage, Alaska 99501
Telephone: (907) 343-0235
POSITION STATEMENT: Testified in favor of Dwayne Adams'
proposed amendments to CSSB 110(L&C) am.
BEVERLY WARD, Government Relations Consultant
ARCO Alaska, Incorporated
134 North Franklin Street
Juneau, Alaska 99801
Telephone: (907) 586-3680
POSITION STATEMENT: Testified on behalf of ARCO Alaska,
Incorporated, on CSSB 110(L&C) am.
REPRESENTATIVE SCOTT OGAN
Alaska State Legislature
Capitol Building, Room 128
Juneau, Alaska 99801
Telephone: (907) 465-3878
POSITION STATEMENT: Presented HB 324.
BOB JENSEN, Manager of Branch Operations
ENSTAR Natural Gas Company
a division of Seagull Energy Corporation
P.O. Box 190288
Anchorage, Alaska 99519-0288
Telephone: (907) 264-3758
POSITION STATEMENT: Testified on behalf of ENSTAR Natural Gas
Company on HB 324.
WILL JOSEY
P.O. Box 881
Sterling, Alaska 99672
Telephone: (907) 262-2305
POSITION STATEMENT: Testified against HB 324, suggested
changes.
JAMES GARHART
P.O. Box 872533
Wasilla, Alaska 99687-2533
Telephone: (907) 746-2828
POSITION STATEMENT: Testified in favor of HB 324.
DEAN BEAULIEU
1015 Check Street
Wasilla, Alaska 99654
Telephone: (907) 376-2555
POSITION STATEMENT: Testified against HB 324, suggested amendment.
PHIL LOCKWOOD, general contractor
President, Alaska State Homebuilders' Association
301 West Lakeview Avenue
Wasilla, Alaska 99654
Telephone: (907) 373-2995
POSITION STATEMENT: Testified with concerns regarding HB 324.
MARK SOLLENBERGER, Assessment District Coordinator
Department of Public Works
Municipality of Anchorage
P.O. Box 196650
Anchorage, Alaska 99519
Telephone: (907) 343-8208
POSITION STATEMENT: Testified on HB 324.
TIM ROGERS, Legislative Program Coordinator
Municipal Manager's Office
Municipality of Anchorage
P.O. Box 196650
Anchorage, Alaska 99519
Telephone: (907) 343-4467
POSITION STATEMENT: Testified on HB 324, requested the
Municipality of Anchorage be exempted.
ACTION NARRATIVE
TAPE 98-10, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:38 p.m. Members present
at the call to order were Representatives Rokeberg, Cowdery and
Sanders. Representative Kubina arrived at 3:39 p.m.
CSSB 110(L&C) am - LICENSING OF LANDSCAPE ARCHITECTS
Number 0047
CHAIRMAN ROKEBERG announced the committee would take up CSSB
110(L&C) am, "An Act relating to licensure of landscape architects;
relating to exemptions from laws regulating the practice of
architecture, engineering, and land surveying; and relating to fees
collected by the Board of Registration for Architects, Engineers,
and Land Surveyors." He mentioned CSSB 110(L&C) am had been
previously heard by the committee and suggested amendments had been
provided to the members. Chairman Rokeberg noted it was his wish
to move a committee substitute at the next meeting.
Number 0155
LINDA CYRA-KORSGAARD, Landscape Architect, Tryck Nyman Hayes,
Incorporated, testified via teleconference from Anchorage. She
stated she was a registered landscape architect in the states of
Washington and Maine and noted she had been working with Dwayne
Adams on SB 110. She stated she was testifying in support of the
amendments Mr. Adams had proposed to CSSB 110(L&C) am.
Number 0260
CHAIRMAN ROKEBERG referred to Mr. Adams' letter, noting he would
ask the committee aides to review the proposed changes. He
directed the committee's attention to substitute language
recommended for Section 26 of CSSB 110(L&C) am. Mr. Adams'
substitute language read "(b) The requirement to be registered as
a landscape architect under this chapter applies only to the
definition of landscape architecture as it affects the public
health and safety within public rights-of-way, on school grounds,
on public lands, or on sites that provide for public access except
as otherwise exempted." Chairman Rokeberg commented he would check
with the Senate to make sure the suggested language was in
coordination with theirs.
Number 0367
CHAIRMAN ROKEBERG stated he also liked the substitute language
proposed for Section 25, subsection (6), which read "(6) a person
preparing drawings or specifications for (A) a building for the
person's own use and occupancy as a single family residence and
related site work for that building; (B) farm or ranch buildings
and their grounds, unless public health, safety, or welfare is
involved; (C) a building and its grounds that is intended to be
used only as a residence by not more than four families and that is
not more than two stories high; (D) a garage, workshop, or similar
building and its grounds that contains less than 2,000 square feet
of floor space to be used for a private noncommercial purpose;".
Chairman Rokeberg noted, in addition, Mr. Adams had proposed a
change in the definition of [landscape] architect. Chairman
Rokeberg asked if the committee had any questions about the
proposed amendments.
Number 0412
CHAIRMAN ROKEBERG directed the committee's attention to a
memorandum from Terri Lauterbach, Legislative Counsel, Legal
Services, Division of Legal and Research Services, Legislative
Affairs Agency which read:
Enclosed is an amendment you requested for SB 110. It
addressed items 3 - 5 at the bottom of your memorandum.
The language in paragraph (11), added by the amendment,
is problematical. What is "disturbed land?" Without
further definition, it could be argued that any land that
a person digs in or walks on is disturbed. This
exemption seems to vitiate most of the aspects of the
definition of landscape architecture identified in
(17)(A),(C) and (D) on page 12 of the bill.
The language in paragraph (12), added by the amendment,
is also problematical. The definition of landscape
architecture specifically includes
"maintaining...plantings." If you do not wish for this
activity to be covered, why not remove the term from the
definition on page 12?
The language of paragraph (13), added by the amendment,
overlaps with the exemption already provided in paragraph
(6)(A) on page 11 of the bill. Maybe the language in
(6)(A) should be expanded to property owned by a person
rather than occupied by the person, and include more than
single-family residences. Is paragraph (13) supposed to
be limited to landscaping or should it be general (as
is)?
I have not included item 1 from the bottom of your memo
in the enclosed amendment because I do not know how you
wish to clarify section 26. I need further instructions.
I have not included item 2 in the amendment because I
have not found any definition "used by the State of
Alaska" for the term "affects public health or safety."
The phrase "public health or safety" occurs twice in the
Alaska Statutes (AS 27.21240 and AS 39.90.140), in both
places undefined. I also looked for separate definitions
of "public health" and "public safety" and found none.
Please let me know how you wish to proceed on these
matters.
CHAIRMAN ROKEBERG noted this memorandum concerned the additional
amendments (11), (12) and (13) to the exemptions section which he
said went a long ways in meeting some of the objections heard at
the last hearing. He stated these amendments came out of the
unadopted proposed House Labor and Commerce Standing Committee
substitute two years ago. The enclosed amendment from Ms.
Lauterbach read:
Page 12, line 4, following "occupancy":
Insert ";
(11) a person while involved in revegetation,
restoration, reclamation, rehabilitation, or
erosion control for disturbed land;
(12) a person while maintaining or directing
the placement of plant material;
(13) a person designing or preparing
plans and specification for the person's own
use with respect to property owned by the
person"
Number 0500
BEVERLY WARD, Government Relations Consultant, ARCO Alaska,
Incorporated (ARCO), came forward to testify on CSSB 110 (L&C) am.
She stated ARCO has reviewed the bill and feels its concerns have
been addressed. She said the company feels the bill allows ARCO
the flexibility to continue its site restoration work as that work
is currently being done. She noted ARCO has no objections to CSSB
110(L&C) am and supports the proposed Amendment 11 regarding
restoration.
Number 0549
CHAIRMAN ROKEBERG confirmed Ms. Ward had no objections to the bill
with the proposed amendments.
Number 0559
MS. WARD answered in the affirmative.
Number 0564
CHAIRMAN ROKEBERG asked if there was any further discussion on CSSB
110(L&C) am. He concluded public testimony on CSSB 110(L&C) am and
indicated it was his intention to clarify the proposed committee
substitute with the bill's sponsor, bringing the proposed
substitute back to the committee for action at the next meeting.
HB 324 - MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS
Number 0595
CHAIRMAN ROKEBERG stated the committee's next item of business was
HB 324, "An Act relating to liens for municipal assessments for
certain utility improvements." He invited the bill sponsor to come
forward.
HB 324 read:
* Section 1. AS 29.10.200 is amended by adding a new
paragraph to read:
(54) AS 29.46.080(d) (limitation on assessment
liens).
* Sec. 2. AS 29.46.080(c) is amended to read:
(c) Except as provided in (d) of this section,
assessments [ASSESSMENTS] are liens on the property
assessed and are prior and paramount to all liens
except municipal tax liens. They may be enforced
as provided in AS 29.45.320 - 29.45.470 for
enforcement of property tax liens.
* Sec. 3. AS 29.46.080 is amended by adding a new
subsection to read:
(d) A municipality may not, under (c) of this
section, place a lien on the property assessed for
utility improvements unless the utility service is
provided by a municipally owned utility or an
organization, including a cooperative, that
requires membership as a condition of obtaining
utility service from the organization. This
subsection applies to home rule and general law
municipalities.
Number 0621
REPRESENTATIVE SCOTT OGAN presented his sponsor statement for HB
324. He stated, "I've introduced House Bill 324 for two basic
reasons. First, I heard from a number of constituents who stated
they did not feel they could afford the borough assessment on their
property as a result of ENSTAR [ENSTAR Natural Gas Company] running
a gas line they neither wanted or needed across their land. And
second, has to do with a private company directly benefitting from
leverage by public government through a process of attaching liens
to a property when the owner fail to pay assessments - fees
established by the borough."
Number 0664
REPRESENTATIVE OGAN cited Section 3, and stated he thought the
Matanuska-Susitna (Mat-Su) Borough ordinance recording a non-
response to a voting notice for inclusion in a local improvement
district (LID) as a "yea" vote was inherently wrong. He compared
this type of voting process to a non-response counting as a vote
for the incumbent. Representative Ogan noted the ordinance had
been recently changed in the Mat-Su Borough. He commented that
this type of voting process was not addressed in statute, and there
was no attempt to address it in this legislation. He stated he was
concerned some of his constituents would lose their homes,
describing one elderly lady on a fixed income who chopped firewood
to heat her home, and who "has made enough of a ruckus that I
believe that she would be in dire straits if - if, and quite
possibly be out on the street, because she can't afford the
assessment. She doesn't have any intention [of] hooking up to the
gas. She didn't want the gas, she didn't vote for it, yet she has
a - a major assessment on her property that she just simply doesn't
have the money to pay for."
Number 0815
REPRESENTATIVE OGAN indicating addressing this issue was the bill's
intention. He stated he was more than willing to defer to the
committee and work with interested parties "to try to hold harmless
people that, either don't want the gas, or can't afford it." He
commented, "I guess it can be argued that it's an improvement to
their property. If they hook up, it's a major improvement. If
it's - if it goes by their front yard, I suppose that the value of
their property is increased somewhat by the fact that the - there
is natural gas there. So, I guess it just gets down to the kinder,
gentler side of Scott Ogan wants to help out little old ladies and
keep them from being ... thrown out of their homes because they
can't pay - pay for the assessment."
Number 0885
REPRESENTATIVE JOHN COWDERY questioned HB 324's effect in his area,
the Municipality of Anchorage. He stated when an area was being
assessed for sewer, water, whatever, and there was a vote of the
people, the majority vote ruled. He noted he owned a vacant lot in
the Mat-Su Borough and has made five payments for an LID gas
improvement. Representative Cowdery said he wanted to know, if HB
324 was put into law, how other neighborhood improvements, such as
roads, et cetera, would be affected.
Number 0964
REPRESENTATIVE OGAN replied HB 324 only affected LIDs which
benefitted privately-owned companies. He said it did not affect
municipal or publicly-owned utilities where people have a say, and
a vote, in the by-laws; it only affected private entities on whose
behalf a public entity collected.
Number 1005
REPRESENTATIVE GENE KUBINA said he would like to have a better
understanding. He commented it appeared the borough wanted the LID
and sold bonds in order to do this, rather than doing it
themselves, feeling it was better to go through a private company.
He stated it seemed like the private company here was doing a
service for the borough. Representative Kubina asked the amount of
the assessment in question. He commented the question was valid:
What if a borough decides not to put in water and sewer lines
itself? He asked about the case of a private electric company and
stated additional questions: "How else do we modernize our areas
here in Alaska if you don't allow for these things to be paid for
by all the people ... in that area, [does] it have to be 100
percent?" He questioned how the bond would be paid, wondering if
it would be prorated back, and if the people next door would be
charged twice as much because the others did not participate.
Number 1082
REPRESENTATIVE OGAN responded that the Matanuska Electric
Association, for example, running a line through property on an
easement doesn't charge unless the property owner hooks up. He
stated the people who hook up first are charged more, but he
believed the original people received some kind of a rebate as more
people bear the load. He noted if the borough financed the project
itself, the borough could pick and choose those it put liens on.
He commented he thought, however, because it ran through a private
organization, the private financing company required everyone in
the LID area to have a lien in order to secure the loan. He stated
it was problematic and he was willing to work with people with
ideas to make this a little more "user-friendly" for those at a
financial disadvantage. He asked Representative Cowdery if he
would be willing to share the amount of his assessment with the
committee, noting it was public information. Representative Ogan
commented each LID was assessed differently depending on the cost
of the improvements. He stated, "We can't be deprived of our
property without due process of law, and I suppose that, in
principal, due process is met here because your voters -- your
neighbors voted to impoverish you, but somehow I don't think that's
very inherently fair."
Number 1217
BOB JENSEN, Manager of Branch Operations, ENSTAR Natural Gas
Company, a division of Seagull Energy Corporation, came forward to
testify on HB 324. He stated he had worked a little bit with
Representative Ogan on this, and he noted he somewhat "dropped the
ball," and could been a little better about giving Representative
Ogan some suggestions that might have been helpful. Mr. Jensen
stated he was fairly familiar with the special assessment process
and could briefly explain it to the committee. He said the process
was one of the subsections of Title 29 (Municipal Government) and
any kind of special assessment district - roads, natural gas,
sewer, water - could be started either by an act of the assembly or
by petition of the local residents. He stated the natural gas LIDs
have, to the best of his knowledge, all been started by petition.
He noted it's a "ground-roots" effort, people going door-to-door,
talking to their neighbors, trying to get at least 50 percent. He
added 70 percent is required on the Kenai Peninsula.
Number 1293
MR. JENSEN said the petition comes forward to the borough from the
property owners in a given area with a minimum of 50 percent of the
property owners in an area participating. He stated, from there,
the borough will contact ENSTAR, defining the area the borough
wishes to have served, and ENSTAR will design a project to provide
service to the specified lots, submitting the cost back to the
borough. Once the borough has those costs, it mails out a letter
to each property owner in the area telling the owner the expected
cost and amount of assessment, broken down on an annual basis. He
said the borough then holds public hearings on the LIDs, and the
LIDs pass or fail based on the input in the public hearings. Mr.
Jensen stated Representative Ogan was right, in the Mat-Su Borough,
historically, a non-response has been counted as a "yes" vote.
Realistically, he said he thinks that has been pretty close. Mr.
Jensen commented, according to Don Moore, retired Matanuska-Susitna
Borough manager, protests run about 10 percent in the Mat-Su
Borough, which is pretty low. Mr. Jensen said the Mat-Su Borough
turns down LIDs when the protest level exceeds 20 percent.
Number 1343
CHAIRMAN ROKEBERG asked for a clarification of 10 percent protest.
Number 1349
MR. JENSEN replied that protests on LIDs borough-wide in the Mat-Su
have been somewhere just under 10 percent.
Number 1358
REPRESENTATIVE KUBINA asked if that meant they did not vote at all.
Number 1360
MR. JENSEN indicated that 10 percent of the total property owners
sent back protest letters.
Number 1369
CHAIRMAN ROKEBERG asked if that was before the election.
Number 1372
MR. JENSEN replied that was using the protest mechanism. He noted
the Mat-Su Borough has changed its procedure, and is now using the
Municipality of Anchorage's procedure. He said he thinks the
municipality has always mailed out a ballot, and a failure to
respond is counted as a "no" vote. He stated he thinks ENSTAR has
done 2 or 3 LIDs in the Municipality of Anchorage, 3 Kenai
Peninsula Borough LIDs, 1 City of Soldotna LID, and probably
somewhere over a 100 LIDs in the Mat-Su Borough.
Number 1401
CHAIRMAN ROKEBERG asked if state statute allowed the local
political subdivision to develop its own methodology.
Number 1408
MR. JENSEN replied that was correct. He said Title 29 specifies
that the assembly can start an LID if it chooses, but in the Mat-Su
Borough at least and he believed in Kenai, the assembly does not
start LIDs, it waits for a petition to come forward from the
property owners. He noted he was not as familiar with the
Municipality of Anchorage.
Number 1422
REPRESENTATIVE JERRY SANDERS clarified the Municipality of
Anchorage counted a non-response as a "no" vote and the "Valley"
(Matanuska-Susitna Borough) formerly counted a non-response as a
"yes" vote.
Number 1433
MR. JENSEN responded that was correct. He said the reading of
Title 29 says it is based on protests, and he said he thinks the
interpretation may have been that protests had to be counted, there
had to be protests, if Title 29 was followed strictly. He
commented he was not sure where it came from, bond counsel perhaps,
but he noted the Mat-Su Borough has recently changed their
procedure. He said he thinks the change to the Municipality of
Anchorage's procedure was made during the first or second assembly
meeting in January. Mr. Jensen stated ballots will be mailed, only
positive responses counted, and a minimum of 50 percent positive
responses will have to be received for the LID to go forward.
Number 1473
MR. JENSEN stated that the LID process is a municipal process. He
said ENSTAR does not foreclose on anyone; it is effectively a
contractor, noting, "They pay us and they usually sell special
assessment bonds ...." He said the previously mentioned
foreclosure mechanism is designed so that the municipality is able
to collect the money to pay off its bonds and that process has
nothing to do with ENSTAR. He said the company is like any other
contractor doing a job, it gets paid when it does the job.
Number 1503
CHAIRMAN ROKEBERG asked if the use of the municipal bonding
authority, then, was intended to allow the issuance of tax-exempt
bonds which lowered the cost of the project to the affected
property owners.
Number 1518
MR. JENSEN responded that was correct except the bonds are not tax-
exempt because the utility does business in three "counties." He
stated the Internal Revenue Code does not allow a municipality to
issue a tax-exempt bond. He said the municipality can still get a
much better interest rate than an individual homeowner, if the
homeowner were to try finance the project through the bank.
Number 1535
CHAIRMAN ROKEBERG asked, "Why doesn't ENSTAR finance 'em if you're
gonna go (indisc.) taxable bond then vis- -vis going through the
political subdivision on a taxable bond basis?"
Number 1542
MR. JENSEN responded the reason LIDs come forward is because they
are not economically feasible projects from ENSTAR's perspective.
He asked, "What would happen if we were to go forward and do the
projects -- you have to pay for this somehow, and the way you pay
for it, is you raise your rates." He stated ENSTAR has
approximately 97,000 customers who do not want ENSTAR to raise its
rates. He said the company has somewhat taken the position the
"cost-causer should be the cost-payer." He said this is true of
any project, stating ENSTAR has done approximately 120 projects in
the Mat-Su Borough and 25 were LIDs. He said what happens, is
ENSTAR determines a project is not economically feasible for ENSTAR
to do without raising rates, something the company does not want to
do. He commented the Alaska Public Utilities Commission (APUC)
would also frown if ENSTAR raised its rates, and it would be
difficult for the company to raise its rates. He said he thought
the "cost-causer, cost-payer acronym" came from the commission.
Number 1596
MR. JENSEN said, on any project, ENSTAR contributes approximately
$645, about 85 feet of the project. He stated, "For any given
customer who wants to hook up, we pay the first 85 feet, if the
front of their lot's a 100 feet, then they would pay the additional
15, or pay the cost of putting that in. We treat that money as a
deposit. We pay that back, we pay back as ... -- let me get back
into the LID perspective. When we -- when the borough contacts us
to put in an LID and we give them a price, ... they pay us to do
the job, and then we refund to them, every time somebody hooks up
to - to the system, we refund them $645. And we do that all the
way through, up to and including the tenth year. At the end of the
tenth year, if there're monies left over, we give the whole kit and
caboodle back to the borough. So, basically what's happening is
the borough or any other customer ... whose property exceeds the 85
feet, is financing the project. And that is - is done so that we
don't burden our existing customers."
Number 1663
CHAIRMAN ROKEBERG questioned if the 85 feet referred to 85 linear
feet and the trunk line that came in.
MR. JENSEN responded that was the main line.
CHAIRMAN ROKEBERG asked if it was 85 feet for the service
connection.
Number 1675
MR. JENSEN replied that the service connection was separate.
ENSTAR, he said, paid the first 100 feet of a service connection,
which was somewhere between $550 and $650 dollars. He commented,
to keep in mind, for someone who lived a quarter mile from the
existing main and was the only customer interested in hooking up,
ENSTAR would pay the first 85 feet and the customer would be
responsible for financing the balance. He stated, "If you came to
us and asked us to run gas to your home, we would contact all your
neighbors in trying to put together a - a package with your
neighbors where everybody contributed a little bit and everybody
would hook up." He said it was a cooperative procedure from
ENSTAR's end; ENSTAR has its people out there trying to put
together a package that works for the people involved.
Number 1718
REPRESENTATIVE KUBINA commented one issue was already taken care of
in the Mat-Su Borough since the rule had been changed so that a
non-response counted as a "no" vote, noting the Municipality of
Anchorage already did it that way. He referred to the "cost-causer
pays" and stated, if his understanding was correct, that the bill
said someone who does not hook up does not have to pay anything.
He asked if that "would do away with these projects completely,
unless a higher percentage said they were going to hook up ....
What would be the effect of this?"
Number 1754
MR. JENSEN responded HB 324 would effectively stop all natural gas
related special assessment districts. He repeated that ENSTAR
doesn't place liens on people's property; the borough does, and the
borough places liens in response to a petition of the property
owners. He said placing liens was the last thing that happened;
there was a public hearing prior to setting the assessment roll so
that any inequities could be fixed. He stated if the borough is
not allowed to place a lien on the property, it would not be able
to sell the special assessment bonds, and he commented that a
special assessment bond is not like a general obligation bond. Mr.
Jensen said a general obligation bond pledges the full faith and
credit of the entire borough, but the special assessment bond only
pledges the property of the people benefitted by the improvement -
whether it be a road, natural gas, sewer and water - whatever that
improvement might be.
Number 1801
REPRESENTATIVE KUBINA noted ENSTAR had done more LIDs in the Mat-Su
Borough than any place else in the state by far; yet, he said, if
HB 324 had passed, virtually none of those would have happened.
Number 1810
MR. JENSEN stated that was correct. He said if this bill had been
in existence back in 1985, there would have been no natural gas
special assessment districts in the Mat-Su Borough or anywhere
else. He noted approximately 3,300 individual homeowners who have
natural gas today have benefitted from this process.
Number 1827
REPRESENTATIVE KUBINA asked if Mr. Jensen had a figure for the
number of people out of that group who had to pay, and could have
natural gas, but don't. He wondered if that number was very high.
Number 1833
MR. JENSEN stated he was not sure. He said that for properties
with homes, within five years approximately 97 percent of those
people hook up. He noted this was an average number and varied
from LID to LID. He stated he was not certain what the total lot
count was; the ones who would be at risk would be the people with
lots without homes on them.
Number 1858
MR. JENSEN stated, personally, he did not see the difference
between a special assessment placed for a private utility such as
ENSTAR, one placed for a cooperative or one placed for a
municipality. He said the property was still at risk if the
assessment was not paid. The Municipality of Anchorage, in
particular, he said, does a lot of sewer LIDs and those people who
pay for the sewer LID have the same lien on their property, and he
stated the benefit is similar. Mr. Jensen mentioned solving the
problems Representative Ogan raised, and he referred to Title 29.
He said the special assessment portion is somewhat liberal in one
place, saying "the borough may set the methodology that they use,
which is why Anchorage does it different than Kenai who does it
different than - than the Mat-Su Borough, but it's very restrictive
in - in other areas." Mr. Jensen said, for example, Title 29 says
that every property which benefits from the LID must be assessed,
and provides no exception.
Number 1914
MR. JENSEN stated he had suggested to Representative Vic Kohring,
but had not had an opportunity to talk in depth with Representative
Ogan, that pehaps the answer would be to provide a senior citizen's
exemption similar to the one in the tax portion of Title 29. Or,
he suggested, possibly a section could be added that allowed a
borough to set up some kind of a hardship committee. Mr. Jensen
commented that could be done with the property owners in the area,
suggesting possibly a peer review committee to find out who has a
hardship, then allowing those properties exemption from assessment.
He referred to the Falk Lake to Plumley Road LID (Falk Lake to
Plumley Road LID 244) public hearing which he thought was the LID
Representative Ogan was responding to. Mr. Jensen said, at that
public hearing, the people who testified in favor said they really
didn't want to do anything that would harm those other people but
they really wanted the natural gas. He said,"The borough had no
mechanism to - to say, okay, well how 'bout if we - we try this,
they were pretty much stuck with the fact that, if you get a
benefit, and you do, your property ... values go up ..."
Number 1958
MR. JENSEN stated the borough cannot do anything for a property
owner, the borough has no relief it can give to anybody. He said
perhaps a better solution than taking the ability to do special
assessment districts for natural gas away from the municipalities,
would be to give them the tools to make the special assessment
districts work a little better. He commented that the Kenai Keys
Utility Special Assessment District (USED) has recently passed on
the Kenai Peninsula, and he noted the term USED was used down
there, but it was the same thing. He said they did that with an in
excess of 70 percent approval rating on the petition before it ever
got to the assembly. Mr. Jensen commented that they were
responding to the flood down there a couple of years ago, which
washed propane and oil tanks down the river and caused some
environmental problems. The municipality, or the borough, wanted
to bring in natural gas to eliminate those fuel tanks in that flood
plain. Mr. Jensen said if that is taken away from them, they
cannot respond to problems that are really municipal problems and
need to be dealt with at that level. He stated he thought some
changes to give the borough a little more latitude would be very
helpful.
Number 2013
CHAIRMAN ROKEBERG stated the committee would take testimony on HB
324 at this meeting, noting he had discussed this with the bill
sponsor. Chairman Rokeberg commented it was not his intention to
move the bill at this time because the committee thinks some
improvements can be made, and, with its responsibility in
utilities, will be taking a very hard look at this legislation. He
noted it was clear from the previous testimony that there was need
for legislation. Chairman Rokeberg commented he had allowed Mr.
Jensen "a little liberality there because of his background
(indisc.) explaining the systems ...." He asked further witnesses
to limit their testimony to approximately three minutes.
Number 2068
WILL JOSEY testified via teleconference from Kenai. He stated he
was the originator of the Kenai Keys gas line (for the Kenai Keys
subdivision) and had identified that need during the flood of 1995.
He said he tried to get some emergency funding and was
unsuccessful, so he went through the USED process. He said he
agreed with Mr. Jensen on many points. Mr. Josey said HB 324, as
written, would eliminate (indisc.) possible development in rural
and unincorporated areas throughout the state, and would eliminate
the possible improvement of environmental protection in high risk
areas such as the Kenai River and, possibly, Kasilof River. He
added HB 324 would "totally eliminate the possibility of a USED, of
improvement, of development of private property." He suggested
language be added, or current language deleted, and a provision
inserted to provide payment of the assessment on sale of the
property benefitted in hardship cases, citing the case
Representative Ogan previously mentioned.
Number 2130
MR. JOSEY continued that these properties and governmental agency
properties should be excluded in voting to establish a USED. He
noted in the Kenai Peninsula Borough, a non-returned vote is
considered a "no" vote in the establishment of a USED, as in
Anchorage. He also noted the Kenai Peninsula Borough requires 70
percent, which he said was difficult to get. He said he'd been
working on this project since the 1995 flood "and now we're almost
at the stage where this spring we will get it." He urged the
committee to examine HB 324 closely because he said it was so
detrimental to anyone trying to get a gas line into certain areas.
Number 2187
CHAIRMAN ROKEBERG referred to Mr. Josey's statement that passing
this bill as currently formed would eliminate the ability to
provide environmental protection. He asked Mr. Josey to explain.
Number 2195
MR. JOSEY replied that the Kenai Keys area is in a flood plain, and
as Mr. Jensen said, the area needed all protection possible. He
added, "And the protection of the environment there, is in the case
of floods, moving the propane, gas tanks, oil drums, et cetera."
Number 2208
CHAIRMAN ROKEBERG clarified, "Because of the - the substitution of
a different type of fuel source, is what you're saying, this is a
cleaner burning fuel, and therefore wouldn't have the environmental
harm, particularly if there was a recurrence of that tragedy down
on the Kenai River, is that correct?"
Number 2219
MR. JOSEY agreed and added that since the gas line would be buried,
it would not be affected 99 percent of the time. He said probably
the worst it could do was break the line, and natural gas does not
hurt the environment like "oil and so on."
Number 2231
CHAIRMAN ROKEBERG mentioned the Kenai Peninsula Borough's 70
percent requirement, and asked Mr. Josey if he thought the
legislature should address that percentage or if each borough
should be able to establish its own.
Number 2242
MR. JOSEY responded he believed the statute required 50 percent
plus one. He stated, "The boroughs -- a lot of 'em have taken this
type of ... hardships ... and said, 'Well, okay, if the people
really want it, let's make sure that we have a majority,' so the
Kenai Peninsula Borough established 70." Mr. Josey stated he
thought 70 percent was too high, and recommended 60 percent,
possibly 66 and 2/3 percent, or something similar.
Number 2266
CHAIRMAN ROKEBERG commented that the legislature normally wants to
give local governments "as much rope as they can to hang
themselves."
Number 2273
MR. JOSEY responded perhaps that one was a little too long.
Number 2286
JAMES GARHART testified next via teleconference from the Matanuska-
Susitna Borough. He stated he was a borough landowner who has been
threatened with foreclosure. He stated he did not want, need, and
was not using the services of ENSTAR. Therefore he did not
consider himself a "cost-causer," but he was a "cost-payer" because
he had to subsidize his neighbors' choice of doing business with a
private corporation, which he stated he resented thoroughly. He
said he had sat in that very room several years ago, right next to
Don Moore, and requested help from Senator Rick Halford on this
issue. Mr. Garhart related that Senator Halford had said it was not
a state issue, and Mr. Garhart agreed. However, he said Mr. Moore
maintained it was a state issue because of AS 29.46.060, assessment
roll, which Mr. Garhart quoted, "At any time after approval of an
improvement plan the governing body shall assess the authorized
percentage of the cost against property in the district included in
the plan in proportion to the benefit received." Mr. Garhart said
he does not see why he should have to pay for a line ENSTAR has
buried in an easement running next to some property on the other
side of a road, not, he indicated, in the easement contiguous to
his property. He stated he doesn't pay if he doesn't hook up to
electrical lines, phone company, cable television, but ENSTAR put
this through and he is forced to pay for it.
Number 2351
MR. GARHART stated he has been fighting this for nine years. In
his opinion, the key part of Title 29 is the language, "in
proportion to the benefit received." He disagrees strongly with
the belief that because there is a line there, whether someone is
hooked up or not, whether there is a house on the property or not,
someone benefits equally. He noted the ballot issue had been
corrected. He stated he had made several suggestions, giving the
example of an area with 100 houses, 95 whose owners want natural
gas; he proposed drawing boundaries around the remaining 5 lots,
and have the 95 in favor make up the LID. He said if the owners of
the remaining 5 properties wanted natural gas later, or if the
properties were sold, they could pay extra to become included just
like with telephones and electric lines.
Number 2392
MR. GARHART stated his opinion that the present system violated
both the state and federal constitutions. In regards to the
federal Constitution, he referred to "Article IV, protection
against unreasonable searches and seizures," and maintained
foreclosure is an unreasonable seizure. Referring to "Article V,
nor shall private property be taken for public use without just
compensation," he said he has asked many times what exactly just
compensation he would receive for being made homeless because he
did not subsidize the cost of his neighbors' utility choice; he
said he has never received an answer. Referring to Article XIV of
the Bill of Rights, he quoted in part, "Nor shall any state deprive
any person of life, liberty or property without due process of
law."
Number 2426
MR. GARHART referred to the Constitution of the State of Alaska,
Article I, stating the very first sentence included "we're entitled
to the enjoyment of the rewards of our own industry," which he felt
his property was. He said Section 15 of Article I said, "No
conviction shall (indisc.) corruption of blood or forfeiture of
estate." Mr. Garhart commented that it was "pretty bad" if his
property could be taken but a killer's could not. He stated
Section 18 said, "Private property shall not be taken or damaged
for public use without just compensation." Mr. Garhart strongly
insisted this was a state issue because the borough had flatly
refused to address it for at least a decade. Referring to the
concept of "the majority rules," he said, "If a few suffer for the
benefit of the majority, that's acceptable. Well, you tell these
same people that for the benefit of the majority, the majority has
decided to put a halfway house in their neighborhood. Then see how
their tune changes, that they want you to protect the individual,
and I guess I'm out of time since I don't get my five minutes, but
you will be hearing from me and I strongly endorse you all to
support this bill. It's absolutely necessary because of the
borough's abysmal failure to protect us."
TAPE 98-10, SIDE B
Number 0007
DEAN BEAULIEU testified next via teleconference from the Matanuska-
Susitna Borough. He stated he was a real estate broker with Best
in the Land Realty and Insurance, and he would like to commend
Representative Ogan for his efforts to protect people like the
previous speaker and the "little old lady in the (indisc.)." Mr.
Beaulieu stated, however, he believed HB 324, as written, would do
more harm than good. He stated the biggest problem is that it does
not allow LIDs to be used to help the thousands of people LIDs were
designed for. Mr. Beaulieu recommended, as a "minimum fix," to
amend HB 324 so that a group of landowners 100 percent in favor
would be able to have an LID. He stated that if there were ten
people living on the Kenai River who wanted to form an LID to put
in rock protection for flooding, they would not be allowed even if
a 100 percent of them wanted it, as HB 324 is written.
Number 0058
MR. BEAULIEU stated he agreed with most of Mr. Josey's comments and
his suggestion of perhaps forming "some kind of a hardship thing"
for the previous speaker or "the little old lady that we keep
referring to," if it was set up so that the LID could be formed
and perhaps the assessment was only paid off when the property was
sold. He said that would possibly be a "compromising fix," and the
"maximum fix" would be not to pass HB 324 and let things continue
as they have been. He stated that he did not see that the LID
process was much different than passing a school bond, where the
majority of the voters vote to have a bond to build more schools,
which causes higher taxes on the "little old lady in the butte,"
and raises her cost of living even if she doesn't have any kids.
He said he does believe a small amount of the "majority rules"
should happen.
Number 0107
MR. BEAULIEU noted Mr. Garhart brought up a good point, perhaps the
LID process could be allowed for those who wanted it on some kind
of percentage basis, going by his property, and if he wanted to
connect into later he would pay a higher cost or penalty for not
paying in the beginning.
Number 0146
PHIL LOCKWOOD, general contractor; President, Alaska State
Homebuilders Association testified next via teleconference from
Wasilla. He commented he was speaking partly as the President of
the Alaska State Homebuilders Association and partly from his own
viewpoint. He said he had received a number of calls recently in
regard to HB 324 and thought a lot of them were "just simply cases
of not understanding what - what this is all about, and they're not
real sure that they agree with the bill as it is written." He
stated, "Some of the previous speakers mentioned things such as
natural gas, sewers, erosion and so on. Whereas, if I understand
the bill the way it's written, that some of these projects in the
future would be just more or less totally impossible just because
you've eliminated the whole LID process."
Number 0180
MR. LOCKWOOD asked, also, what would happen with future development
in some areas, noting the example of an outlying area "off the
beaten path." He said it was going to be very difficult to do some
of these things because of the tremendous amount of cash that would
be forced up front by either the developer or the personal property
owners in the area. He also asked what would happen, in the case
of the Municipality of Anchorage, if communication lines had to be
run and something similar to a LID was required, but it could not
be done because the municipality had sold ATU (Anchorage Telephone
Utility d.b.a. ATU Telecommunications).
Number 0206
MR. LOCKWOOD stated he understood Fairbanks had also sold a number
of their utilities. He said, "So this is my concern, and I think
all us that I've talked to in the last couple of days need to
understand this better and do a little more research on it to find
out just exactly what this is going to do to all of us economically
and in our personal lifestyles."
Number 0226
REPRESENTATIVE COWDERY mentioned the situation in the Municipality
of Anchorage, where certain seniors were exempt from property taxes
on their personal property if they lived there, and he asked Mr.
Lockwood if anything like that could be worked out for seniors in
Mr. Lockwood's area.
Number 0238
MR. LOCKWOOD responded he would not have a problem with that. He
stated he thought something needed to be done because many of those
people are on extremely fixed incomes and any increase in their
income was "out of their control." He said, "In other words, if
they're on social security, it's up to the federal government as to
whether they're going to get an increase or not. And then if
somebody comes along and - and does something like this, it makes
it real difficult for 'em. So I think there are certain groups of
people, such as the senior citizens, that would need some help on
some of this. To see the - the minority of people controlling what
the majority of the people want."
Number 0268
REPRESENTATIVE COWDERY stated some time back in the past, the state
underwrote those exemptions, but presently, as he understands it,
the local government would have to do that. He asked Mr. Lockwood
if he thought that would be acceptable in his area.
Number 0285
MR. LOCKWOOD responded, "Oh, I think so. I think to a limited
degree some of that's already been done on the property taxes."
Number 0289
CHAIRMAN ROKEBERG asked Mr. Lockwood if he had ever developed a
subdivision in the Mat-Su area.
Number 0296
MR. LOCKWOOD replied he did not do developments, he built the
buildings on the developments.
Number 0300
CHAIRMAN ROKEBERG noted Mr. Lockwood worked with developers.
Referring to the nature of the Mat-Su, buyers' desires for larger
lots than in an urban area like Anchorage, and the relatively lower
price of land, compared to Anchorage, Chairman Rokeberg asked if
most of the subdivisions developed Mr. Lockwood's area were of such
lot sizes that it made sense for the developer to have the gas
lines put in, or were they more rural in nature under the Mat-Su
Borough's subdivision rules.
Number 0327
MR. LOCKWOOD replied he could not answer that question, noting
there was a real estate broker present. Mr. Lockwood referred to
something Chairman Rokeberg had alluded to earlier, stating they
had built a number of houses in the early 1980s in a subdivision
near the gas line when it was put in. He said he thought they
built approximately 20 houses in that subdivision and they put in
heating systems which could easily be converted to natural gas "on
the hopes that this would come through, and eventually they did.
They formed an LID and put the gas in there. Had the LID process
gone away, that subdivision to this day would probably sitting
there without gas."
Number 0365
REPRESENTATIVE OGAN stated he welcomed Mr. Lockwood's "help and
input on possibly drafting an alternative that would -- [I] think
there's a consensus of what the object of the bill is (indisc.) to
help some of the people that can't pay for it." He stated it
certainly was not his intention to end the LID process "as we know
it."
Number 0385
MR. LOCKWOOD noted they had talked back and forth quite often, and
he said he was sure they would come up with some suggestions.
Number 0405
CHAIRMAN ROKEBERG directed the question to Mr. Beaulieu, the real
estate broker, "Given the large area of the Mat-Su Valley, do not
most developers up there, when they create subdivisions, either
provide for gas, number one, or are the lots so large that it's too
costly, or I'm sure it depends on where it's located, too, as far
as the main trunk lines and lines -- but do most new subdivision
developments have gas in your area, and what problems do you
envision because of the large lot size up there?"
Number 0429
MR. BEAULIEU responded that he thought if the LID process was
ended, it would definitely cause a hardship for the developer to
try to pay for the gas up front, so development costs would
probably be limited, or perhaps lot prices raised for the consumer.
He said the trend currently appears to be one acre to five acre
lots, noting as Chairman Rokeberg had mentioned, that these are
bigger than 10,000 square foot or 20,000 square foot lots common to
the Municipality of Anchorage or Eagle River. Mr. Beaulieu said if
this bill passed he thinks it would cause a great hardship, and
make it difficult for the developers.
Number 0461
CHAIRMAN ROKEBERG asked, "Do you have any idea in terms of
percentage dollar numbers, like (indisc.) MLS (ph) statistics about
whether, or is there a way that you could break out the level of
business between, like, recreationally-owned second homes in the
Mat-Su vis- -vis the owner-occupied primary residence, do you have
any idea what that is up there?"
Number 0479
MR. BEAULIEU responded that they do not break them out that way.
Number 0480
CHAIRMAN ROKEBERG asked Mr. Beaulieu about his personal experience.
MR. BEAULIEU replied he would say that most of their sales are
definitely owner-occupied.
CHAIRMAN ROKEBERG stated historically there used to be a lot of
folks with second homes and cabins up there. He indicated he
thought that still existed in the Mat-Su Borough.
Number 0490
MR. BEAULIEU stated, "It does exist, but really not in the natural
gas LID areas that we're - we're speaking of. Those are farther
north in the Willow-Talkeetna area."
Number 0511
MARK SOLLENBERGER, Assessment District Coordinator, Department of
Public Works, Municipality of Anchorage, testified next via
teleconference, from Anchorage. He informed the committee he has
been working in assessment districts for approximately 30 years.
Mr. Sollenberger stated the Municipality of Anchorage has three
staff members dedicated to assessment districts. He said he would
like to address an overall issue which might cover some of the
items previously mentioned.
Number 0531
MR. SOLLENBERGER stated, first of all, an assessment district, as
Mr. Jensen explained, is basically an area of land designated by
law to pay for the cost of a public improvement. He said there are
four basic items in an assessment district: land, improvement,
cost and law. Law, he said, is established by local governments
throughout the United States and in Alaska; it is not established
by state or federal government, and special assessment district
laws themselves are something that are the right, reserve and use
of local governance. He said the special assessment itself is a
pro-rated, limited-life tax lien against a piece of property. He
stated, "Because the local governments are enacting it by laws
similar to taxes, they say that a special assessment will be paid
until the proportion of cost of the improvement is paid off, there
will be no more charges after that. So it has a - a given life and
it's ended."
Number 0580
MR. SOLLENBERGER stated local governments can use special
assessments to designate an area to pay for the improvements and
then collect the cost for the improvements. This is an alternative
to the local government building the improvements and then repaying
them by general taxes. He said, "So you're taking these
improvements and you're designating the land that's involved,
(indisc.) benefitted; the taxpayers are not involved, it's only the
property that's considered benefitted, who's getting the service or
whose value is improving." Mr. Sollenberger referred to the
history of special assessment districts, noting the first special
assessment district of record was from the Earl of Essex in 1375
[stated on tape as "William of Essex," corrected in later
testimony]. He said assessment districts were used in England
after that time; he said they came to the United States on the
Mayflower and have been used ever since. He stated the use of
assessment districts in Alaska basically began in the Municipality
of Anchorage in 1952 with formal assessment districts for street
paving. He said that was adopted from an 1898 law established in
Seattle. Mr. Sollenberger noted assessment districts have a great
foundation in Western culture.
Number 0647
MR. SOLLENBERGER stated, "Right now we are circulating a petition
for gas lines in Eagle River," noting they have a minor assessment
district program for gas lines. He said it is a small project,
$1.2 million project, and there are 270 properties involved. He
said, "The petition has currently passed." Mr. Sollenberger noted
the Municipality of Anchorage requires the property owners
(indisc.) represent over 50 percent of the costs, must petition and
sign in favor of the project, and a "no" vote or a non-response
does not count in favor of the project. He stated, "We need an
affirmative action and it is limited to over 50 percent. Should
the petition pass, we will borrow the money, pay ENSTAR out of it,
and we will recollect the money that was basically used to finance
it through assessment districts, and we will require everybody to
pay an assessment."
Number 0688
CHAIRMAN ROKEBERG asked how many homes were involved in the Eagle
River project.
Number 0695
MR. SOLLENBERGER replied, "There's 270 lots involved, and of the -
the houses -- there's 123 homes that are valued over $10,000. I'm
sorry, there's 108 homes. There's - there's more vacant property
in that particular project than there is constructed property.
CHAIRMAN ROKEBERG stated he had not intended to pursue this, but he
clarified that Mr. Sollenberger had said 270 lots and 108 homes.
MR. SOLLENBERGER stated, "There's 270 total lots and properties,
some of 'em aren't lots, some of 'em are parcels of land. Of that,
there are 123 structures in excess of $10,000 in value. Now, of
those 133 [FROM TAPE], which is less than 50 percent that's
constructed on, 83 have made statements in favor, and 50 have
either not responded or not - or been opposed to it. On the other
side of the coin, owners who represent 56 vacant lots out there
have also signed in favor of it, with 82 - owners that owned 82
lots - opposed. So, total on a per lot basis, over 50 percent are
in favor. Now, for your information the assessments are an average
of approximately ... almost $3,500 a lot."
Number 0782
CHAIRMAN ROKEBERG asked, "So Mr. Sollenberger, this legislation
would restrict the ability of the municipality ..."
MR. SOLLENBERGER responded, "The legislation would null and void
this, and I don't know where it is along the line that if it's
adopted after the project goes to where it would null and void --
if we're gonna encumber (indisc.) the property in the municipality
at one point $2 million, and find out we can't collect for it, we'd
be concerned."
Number 0803
CHAIRMAN ROKEBERG asked Mr. Sollenberger, "Did you hear the
testimony of Mr. Jensen where he was talking about the - the ..."
MR. SOLLENBERGER said he had.
CHAIRMAN ROKEBERG continued, "And is that consistent with what you
do in Anchorage as far as the ..."
MR. SOLLENBERGER said the Municipality of Anchorage was a little
more restrictive in its petition procedures, noting the
municipality's petition procedures and assessment districts were
quite a large part of its infrastructure development. He said at
this point gas lines are the only privately-owned utility the
municipality operates with, stating it is a minor program. He
stated the municipality is contemplating other private utilities in
relationship to assessment districts.
Number 0830
CHAIRMAN ROKEBERG asked what other types of utilities.
Number 0833
MR. SOLLENBERGER responded that the question, again, is what
happens to telecommunications when the municipality starts going to
its more remote areas. He said, "The other thing is we have a
program in which we can retire our overhead communications and
power lines into underground, which there will be cost to those --
which is right now cable, and if there's any future telephone
that's gonna ... come up, we'd have to pay them and we'd do it
under assessment district process."
Number 0875
CHAIRMAN ROKEBERG noted Mr. Garhart's earlier reference to AS
29.46.060, which Chairman Rokeberg quoted, "The government body
shall assess the authorized percentage of the cost against the
property in the district included in the plan in - in proportion to
the benefit received." He noted Mr. Garhart's emphasis on "in
proportion to the benefit received" and asked Mr. Sollenberger if
he knew of any case law on "that type of language." Chairman
Rokeberg asked if there had ever been one in Alaska or was that
typical language in "assessment statutory construction" in the
United States.
Number 0918
MR. SOLLENBERGER responded that was pretty typical language. He
stated, "Authorized cost, it gives the - the local government the
option to share in the cost or to share in no cost. So, (indisc.)
they deem is the authorized cost of a public improvement, they can
have the balance taken out of local taxes; hopefully, they could
receive money from the state under state grants and assess the rest
.... But if they're constrained all the costs involved rather than
use general taxes, that becomes the authorized cost.
Number 0934
CHAIRMAN ROKEBERG asked about the idea of benefits received, "Just
because you own property in ..."
Number 0938
MR. SOLLENBERGER responded that the benefit (indisc.) under the
utility concept is: "If you're served or if your land can be
served, you're benefitted. If you're under a road or a park or
things like that, it becomes a public question as to what area is
particularly benefitted." He said it becomes the right of the
local government to make that determination. He gave the example
of a lot owner with three same-size lots, two vacant and one with
a house. The lots are all the same size, the gas runs down the
front, and the house and one of the vacant lots are for the gas.
Mr. Sollenberger said it would be very difficult to justify whether
the center is not equally benefitted.
Number 0976
REPRESENTATIVE OGAN said it seems someone who is hooked up receives
more benefit and he asked if the local government had the latitude
to assess in accordance with the way the statute was written.
Number 1000
MR. SOLLENBERGER said he assumed it was however the local
government wanted to handle it.
Number 1006
CHAIRMAN ROKEBERG questioned that the Municipality of Anchorage has
assessed the "non-user but approximate property owner ... the
property owner in proximity to the line."
Number 1012
MR. SOLLENBERGER replied that if it is capable to serve a property
owner with water, sanitary sewer, (indisc.) power, even if the
property is vacant and they do not serve, the property owner is
still benefitted.
Number 1023
CHAIRMAN ROKEBERG confirmed that applied to all types of assessment
districts, not just private utility LIDs.
Number 1028
MR. SOLLENBERGER agreed, stating this is more common to utility
districts. He said he would say that the local government could,
at its option, defer any assessment until the owner actually uses
it, however that becomes a taxpayers' expense and the Municipality
of Anchorage has been declining to place that burden on the
taxpayers. He said it is possible for other governments to have
the taxpayers "front" that money.
Number 1051
CHAIRMAN ROKEBERG asked again if Mr. Sollenberger knew if there was
any case law on the benefit received issue.
Number 1056
MR. SOLLENBERGER replied there was and gave the committee the name
of the municipality's expert on assessment laws, William Greene
(Assistant Municipal Attorney, Municipality of Anchorage), phone
number: (907) 343-4545. Mr. Sollenberger said there have been
challenges during his history concerning the application of water
and sewer, and he said there have been some activities where it was
overturned by the Alaska Public Utilities Commission. However, he
said, it was in relationship to doing assessment districts in the
Municipality of Anchorage, which does not have the authority of
other local governments in Alaska. Mr. Sollenberger stated, "Bob
Jensen did mention the practice how the Mat-Su Borough can go
forward and initiate a district and not move unless they have over
50 percent of the protest. The Anchorage charter, when it was
adopted by the public for the municipality, wrote out the ability
for Anchorage to adopt any assessment district unless owners that
(indisc.) would pay over 50 percent of the cost approved the
petition, so there is -- we (indisc.) have to have an affirmative
petition in Anchorage in order to approve the - in order to form an
assessment district."
Number 1123
REPRESENTATIVE COWDERY asked if situations had occurred during Mr.
Sollenberger's long tenure, where people absolutely could not
afford the assessment because of limited income or similar
circumstances and what the alternative was in Anchorage. He asked
if people appealed assessments through the assembly, or how it was
addressed, if it was addressed.
Number 1148
MR. SOLLENBERGER stated, in his experience, the assembly has tried
to extend the payments "to as long as a reasonable period of time."
He said there used to be a practice in which the state of Alaska,
under the senior citizens' programs, would assist and pay for
assessments similar to paying property taxes for senior citizens.
He commented that the state has ceased doing that and, once again,
the municipality has not picked up a practice of increasing its
general taxes.
Number 1182
CHAIRMAN ROKEBERG asked how the boundaries of a service area or LID
were determined.
Number 1189
MR. SOLLENBERGER responded it is important to understand an LID,
under the definitions of local improvement district, covers 15 to
20 different types of assessment districts. He said, in the gas
line assessment district or GID, the boundary is all the property
that can be served. The lot is identified and the whole lot is
considered benefitted property. In the cases of water and sewer
lines, the land within 150 feet adjacent to the water and sewer
line that can be served is considered benefitted, and he said that
is usually all of the lot in urban areas.
Number 1226
CHAIRMAN ROKEBERG commented that there had to be a defining
boundary in any kind of a district.
Number 1234
MR. SOLLENBERGER replied that the assessment district itself is
land improvement cost in raw and the land is that which the local
government considers benefitted for the improvement. He stated in
the testimony he has heard from both Kenai and the Mat-Su Borough,
there is a small difference in interpretation of which is
benefitted, however that is the municipality's or the local
government's right. He said, in the Municipality of Anchorage, the
municipality designates by law on the special assessment ordinance
which lots are benefitted. He said, "If you want draw (indisc.)
piece of paper, then you just draw the line around the boundary of
the land."
Number 1275
CHAIRMAN ROKEBERG stated HB 324 only says the municipal government
can't put a lien on property. He asked if that was the "death
knell" of a special assessment district.
Number 1290
MR. SOLLENBERGER responded that was one of the reasons the
municipality used an ordinance, or a law, in order to form a
special assessment district; it creates a (indisc.) tax lien that
must be collected and that the municipality has the right to
foreclose on. Mr. Sollenberger stated, "Now, we either go to the
public for other types of public improvements, get general
obligation bonds which would promise to be repaid by the benefitted
owners. In the case of assessment districts we go and we sell
assessment bonds with the understanding that the municipality will
repay the bond from the benefitted owners." He said if the
municipality does not have the right to collect, because an
individual does not want to pay, then it cannot guarantee the bond
or the note.
Number 1330
CHAIRMAN ROKEBERG referred to the bonds and Mr. Jensen's comment
that the Mat-Su Borough has gone on a taxable bond basis.
Number 1339
MR. SOLLENBERGER responded that is "the nature of the beast for gas
lines, and also for our revenue bonds for water and sewer --
they're taxable."
Number 1375
REPRESENTATIVE COWDERY clarified that it had happened "that the
assembly has deferred the taxes downstream but never forgiven, is
that right?"
Number 1387
MR. SOLLENBERGER answered in the affirmative, stating, "But that
was over 15 to 20 years ago and they were assessments to repay
general obligation bonds, which they just held in status, as far as
utility-type bonds for water, sewer, and in this case, gas line,
they have not."
Number 1408
REPRESENTATIVE COWDERY asked what had happened during the downturn
in the late 1980s.
Number 1416
MR. SOLLENBERGER responded that the municipality had collected a
lot of property through assessment and tax lien foreclosures. He
noted, in the cases of property abandoned by owners during the
downturn with assessments against it, the bank would pay the
assessments so the municipality would not foreclose against the
banks.
Number 1437
CHAIRMAN ROKEBERG commented that that is on improved properties
usually, when there is a mortgage. He asked, in the initial set-up
of gas improvement districts or any type of assessment district, if
the Municipality of Anchorage, or to Mr. Sollenberger's knowledge,
anywhere else, have a hardship provision. Chairman Rokeberg noted
Mr. Sollenberger had mentioned extending the pay-off period, but he
was asking about waivers or delays.
Number 1469
MR. SOLLENBERGER replied that, for all local governments under the
assessment district procedure, the board of appeals is the
governing body of the local government involved, and it has the
right to make adjustments and charge those adjustments to the
taxpayers. He said that is an inherent right of the local
government (indisc.) the assessment district, and the answer was
yes, they have done that.
Number 1495
CHAIRMAN ROKEBERG said that, based on the particular request for
hardship exemption, waiver, et cetera, the case law in the statutes
would allow for that type of hardship.
Number 1511
MR. SOLLENBERGER stated, "The municipal assembly, and all of 'em
involved, can make that option, but there is nothing to require
it."
Number 1521
REPRESENTATIVE OGAN asked what would happen if the bill was amended
to say a lien on a property could not be attached unless the
assessed property was hooked up or somehow receiving benefits from
the utility.
Number 1536
MR. SOLLENBERGER responded the municipality couldn't put forth the
assessment district under a basis like that. He said the
municipality has to be able to guarantee to the banks that it is
going to repay their loan. He added, "From our standpoint in
Anchorage, we also have to assure the administration that the
taxpayers aren't gonna have to do it, and that's the case of the
GID. Now, the other thing, too, is (indisc.) I think it's the
folks from Mat Valley [Matanuska-Susitna Borough] have noticed, is
that these assessment districts that have gone to the Mat Valley,
they have fallen out if the local government doesn't feel that
what's being presented is reasonable. They have the right to
reject it, there is no guarantee for the owners. And we're
probably gonna have a very lively public hearing over the Eagle
River one, too, so it - it is just a right of local government and
any restriction on that is basically somewhat of a 'refringement'
of what we can do."
Number 1601
REPRESENTATIVE OGAN corrected, "It's not a right, it's - it's a
privilege that the state grants the local government to do this,"
apologizing for the correction. He commented on previous testimony
stating 97 percent of the people hooked up to the utility
eventually and he asked, "Isn't 97 percent a pretty good risk for
a bank that 97 percent of the - the people in the LID would be able
to have liens and - and then if - you wouldn't have a lien on the
property until somebody hooked up? As a banker, if I was an
investment banker, I would think 97 percent ..."
Number 1647
MR. SOLLENBERGER replied, "Under those circumstances we wouldn't be
able to sell bonds."
CHAIRMAN ROKEBERG added, "There'd be no surety of pay-off 'cause
you wouldn't know when you'd collect."
Number 1650
MR. SOLLENBERGER stated that was correct.
Number 1670
TIM ROGERS, Legislative Program Coordinator, Municipal Manager's
Office, Municipality of Anchorage, testified next via
teleconference from Anchorage. He stated the Municipality of
Anchorage believes the gas improvement districts are a very
important vehicle for developing some of the municipality's areas
that currently aren't being developed. He said that if HB 324 goes
forward, the municipality would appreciate being exempted out of
it. In his second comment, Mr. Rogers referred to Chairman
Rokeberg's inquiry about case law on the benefit received from
LIDs. He stated he would be happy to have the municipality's legal
department look into that and transmit the results in the next day
or two.
Number 1713
CHAIRMAN ROKEBERG asked if the "MOA" (Municipality of Anchorage)
wished to be exempted from HB 324 because it considered itself to
be a non-rural, more urban area.
Number 1724
MR. ROGERS replied, "Because we feel that it's a - a very important
development tool, and, quite frankly, we don't see that there's a
major problem that needs legislative correction."
Number 1740
CHAIRMAN ROKEBERG suggested that was because of the nature of land
development in the municipality and the subdivision requirements
there. He stated the municipality does not have too much of a
"scattered development type thing." Chairman Rokeberg added that
the committee accepted Mr. Rogers' offer providing legal
background. Chairman Rokeberg asked Mr. Jensen to provide a "wrap-
up" from Mr. Jensen's perspective.
Number 1791
MR. JENSEN stated he did not have much in the way of "wrap-up." He
said he perceived the problem to be one that possibly some steps
should be taken to fix and the municipalities given some remedies.
He said he was not suggesting that the assessments for those
experiencing hardships or senior citizens be paid for out of tax
dollars; he was suggesting that perhaps language could be crafted
which would allow those costs to be spread back to the other
participants in the LIDs when true hardships exist. He said he has
little expertise in this area, not being an attorney and not
knowing "land law," but he said he sees that as a potential remedy,
particularly for the problems in the Mat-Su Valley.
Number 1836
CHAIRMAN ROKEBERG commented that clearly there have been instances
in the Mat-Su Valley where this process has raised obvious
problems, stating, "There's a problem, then we need to find a
solution to remedy the problem." Chairman Rokeberg stated, in
addition to senior citizens and people with hardships, he thinks
there are other people in the Mat-Su area are who might need
further consideration. He commented on the nature of land
development in the Mat-Su Borough, noting a lot of the land in that
area was developed for recreational sites and uses. He indicated
people might want to maintain those (indisc.) sites and uses, but
find themselves being urbanized by the installation of various
utilities, including ENSTAR's gas lines, in areas they want to keep
more rural. Chairman Rokeberg said that maybe they were trying to
hold on to an old idea of what having a second home, cabin, or
something, was. He stated he was not exactly sure what the answer
was.
Number 1917
MR. JENSEN responded he did not know the answer either. He did
know as the natural gas LIDs came forward, they came forward on a
petition requiring signatures by property owners owning 50 percent
of the property by value. He said it starts at the "grassroots"
(indisc.) and there is at least 50 percent of the group interested
in going forward with the LID. Mr. Jensen noted that,
historically, it has been up to the local government to determine
the required percentage, commenting on Kenai's 70 percent and the
Mat-Su Borough's 51 percent. He said he was hesitant to speak too
much because he didn't want to speak for the Mat-Su Borough
government, saying he's contractor, so to speak, ENSTAR. He said
it would probably be worthwhile to consult with Michael Gatti, the
borough attorney, or Desi Mayo, the acting borough manager. Mr.
Jensen told the committee he did not know why the borough did not
have a representative present to speak to the borough's interest,
but he was certainly not qualified to do so.
Number 1996
REPRESENTATIVE OGAN stated he stood ready and willing to work with
interested parties in achieving the goal here. He recited from a
favorite song by Rick Scaggs (ph), "A rich man writes the book of
laws that a poor man must defend. The highest laws are written on
the hearts of honest men," and said his heart told him that the
highest value should be for the private property owner. He stated
that was a more compelling interest to him than a government's
interest in something, commenting, "When we have a government that
is potentially violating ... a person's ability to fufill those -
those dreams of owning a house or owning property and those kinds
of things because maybe they aren't able to keep up with the
circumstance around them -- I think we need to accomodate those
whenever we can. And so, with that ... high, lofty goal stated I'd
like to -- you know, I appreciate you holding this bill over, ...
it needs some more work it's obvious, and again my intention is not
to eliminate the LID process, but make it a little more user
friendly."
Number 2090
CHAIRMAN ROKEBERG referred a question to Mr. Jensen, "Don't you
think that the size of the LIDs can be stacked to include just
enough people who probably do not want the LID, but make it big
enough to defray the cost of the LID? Is there a way to adjust
that or is there ...?"
Number 2129
MR. JENSEN responded that is really under the control of the
borough. He gave as an example, the contentious Falk Lake to
Plumley Road LID. He said it was his understanding that LID
started out as two separate projects which were combined by the
borough. Mr. Jensen stated he doesn't know why the two projects
were put together, although he said it might have been done at the
request of the people involved. Mr. Jensen said, once again, he
thinks the borough has been responsive to the petitioners over the
years, noting sometimes that works well and sometimes not. He
stated that he thinks, had those two projects been separated, the
people in the Plumley Road area would have had a greater voice from
a protest perspective, and the people in Falk Lake, who were
predominately in favor, would have been able to go forward without
a lot of the problems involved. Mr. Jensen noted he attends the
assembly meetings whenever there's an LID on the agenda to answer
questions, and to tell people what is going on and how ENSTAR
operates. He noted he thought the evening the Falk Lake to Plumley
Road LID was up for public hearing, there were three other LIDs up
for hearing as well. He said representatives of those LIDs, which
were small, stood up and commented, "Gee, yeah, you shouldn't do
anything that would harm those people, but by the way, everybody in
my LID wants it, please pass it." He said these were smaller LIDs
and he thinks sometimes size "gets away" and he doesn't know how to
legislatively determine what the size should be.
Number 2240
CHAIRMAN ROKEBERG referred to his previous question to Mr.
Sollenberger about the way boundaries are set for LIDs. Chairman
Rokeberg said that seems to be one of the problems here.
Number 2250
MR. JENSEN explained the boundaries are set mainly by the people
doing the petition. He said often, the person who starts the
petition is person on the far end of what would be the project.
Mr. Jensen said, "And he works backwards getting signatures back
towards where the - the natural gas pipe lien currently is, and
what happens that's how the boundary gets set -- it's the guy down
here who started the petition is the tail end of the - the project
and the boundaries are running up here and down these side streets
'cause these people signed on it. And I think the borough makes an
effort to provide service or have service provided to all of the
signers of the petitiions when they can."
Number 2303
CHAIRMAN ROKEBERG asked Mr. Jensen if the legislature decided to
raise the requirements to something like 60 plus 1 percent, if he
thought ENSTAR could live with something like that.
Number 2327
MR. JENSEN replied he thought ENSTAR could live with almost
anything the legislature decided to do; he said his big concern is
that the legislation somewhat singled ENSTAR out.
Number 2340
CHAIRMAN ROKEBERG commented that testimony showed these situations
were not limited to GIDs, particularly with the changes generated
by the telecommunications Act of 1996, and the committee was very
concerned about all utility issues. Chairman Rokeberg stated,
"We're not picking on you, you guys have generated the publicity,
though."
Number 2375
MR. JENSEN replied he understood. He repeated his statement that
he thought ENSTAR would live with whatever the legislature
determined to be proper, and he said, as he told Representative
Ogan, he was not there to tell them what to do, he was there to
provide some input and possibly offer some workable suggestions.
He said ENSTAR takes its ability to serve the public very
seriously, and he thinks the LID process is a tool, from the
municipal perspective, and it has worked as a tool for ENSTAR to
get service out to people who want that service. He said ENSTAR
would hate to see it go away, but ultimately the debate should be
between the legislature and the local governments, and the
procedures should work for those local governments and their
citizens. He said that if ENSTAR can participate, it would
certainly like to continue.
Number 2451
REPRESENTATIVE COWDERY asked if it would be worth pursuing the
concept that ENSTAR would possibly pick up or defer some of the
costs in hardship cases "downstream."
Number 2478
MR. JENSEN replied, "No, not really, sir. The - the problem you
run into is when - when we pick up the costs those costs ..."
[TESTIMONY INTERRUPTED BY TAPE CHANGE]
TAPE 98-11, SIDE A
Number 0001
MR. JENSEN continued, "... are pretty low, and at the same time go
out and provide service to those people. And, generally speaking,
my recommendation to a potential customer, whether it be LID or
non-LID, is to evaluate the cost of the project, the cost of any
conversion work we'll have to do in their home, and determine if
they can pay it back in energy savings over the next five or six
years. If they can do that, it's probably a worthwhile project.
If it takes longer than that, then they should probably reconsider
the project in its entirety, and perhaps continue using fuel oil or
propane or whatever they're on now."
Number 0056
CHAIRMAN ROKEBERG stated the problem, more so in the rural areas,
is that people are going to have multiple lot ownerships that they
may have taken up as personal investments, or they may have
subdivided land, or they may have a larger parcel, and "when you're
talking about 85 linear feet, ... you're talking about
substantially more that they're going to be liable for."
Number 0097
CHAIRMAN ROKEBERG stated the testimony has clearly indicated there
are some problems which need to be addressed (indisc.) statewide.
He said, "I think the testimony today also has given us the clue of
which direction we can go. ... Number one, we need -- we could
look at the hardship situation and the senior situations, but I
would caution everybody that I recognize and - this committee would
recognize - that when you go into these situations ... there's a
financial cost and there's a bonding situation where you want to be
bondable to make the project go -- so you have to be careful about,
you know, allowing multiple hardship situations. I think you need
to address that issue and how you do that could be a little
ticklish."
Number 0163
CHAIRMAN ROKEBERG noted, "However, I think the boundaries, and
setting the boundaries in these types of things might be, also, a
way -- something that needs to be looked at, and even raising that
percentage up, perhaps, a little more. It seems to me that that's
one of the problems here, there's too large an area that you - you
throw the net out and get too many people in it, and then that's
where you run into the problems, because I think that the hardship
ability exists, as the testimony of Mr. Sollenberger pointed out,
at the local level -- but whatever standards there have to be
pretty, pretty high to be able to qualify for that because
(indisc.) we can only do that initially because you wouldn't be
able to finance the project unless you identify that cost, spread
it back to the other people that signed up for it and then - and
then collected it. Either particularly on the sale of the property
or whatever, the further disposition of that property, then that -
that lien ... would become activated, then perhaps or something.
Like a sleeping lien - I don't know if there is such a thing. ...
Those are the kind of things I think that could be worked on and
this committee looks forward ... to seeing the bill that maybe
touches on those without completely destroying everything else.
And as long as you're at it, you might as well exempt the
Municipality of Anchorage." Chairman Rokeberg previously indicated
HB 324 would be held for further consideration.
ADJOURNMENT
Number 0266
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 5:16 p.m.
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