Legislature(1995 - 1996)

03/22/1995 08:08 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE RESOURCES STANDING COMMITTEE                              
                         March 22, 1995                                        
                           8:08 a.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Joe Green, Co-Chairman                                         
 Representative Bill Williams, Co-Chairman                                     
 Representative Scott Ogan, Vice Chairman                                      
 Representative Alan Austerman                                                 
 Representative Ramona Barnes                                                  
 Representative John Davies                                                    
 Representative Pete Kott                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Eileen MacLean                                                 
 Representative Irene Nicholia                                                 
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 *HB 191:   "An Act relating to the management and disposal of state           
            land and resources; relating to certain remote parcel              
            and homestead entry land purchase contracts and patents;           
            and providing for an effective date."                              
                                                                               
            HEARD AND HELD                                                     
                                                                               
 HRES - 03/22/95                                                               
 HB 207:    "An Act relating to adjustments to royalty reserved to             
            the state to encourage otherwise uneconomic production             
            of oil and gas; relating to the depositing of royalties            
            and royalty sale proceeds in the Alaska permanent fund             
            and providing for an effective date."                              
                                                                               
            SCHEDULED BUT NOT HEARD                                            
                                                                               
 HRES - 03/22/95                                                               
 HB 209:    "An Act relating to the authority of the commissioner of           
            natural resources to allow reductions of royalty on oil            
            and gas leases; and providing for an effective date."              
                                                                               
            SCHEDULED BUT NOT HEARD                                            
                                                                               
 HRES - 03/22/95                                                               
 *HB 265:   "An Act relating to the export of live dungeness crab."            
                                                                               
            SCHEDULED BUT NOT HEARD                                            
 (* First public hearing)                                                      
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 REPRESENTATIVE GENE THERRIAULT                                                
 Alaska State Legislature                                                      
 State Capitol, Room 421                                                       
 Juneau, AK   99801                                                            
 Phone:  465-4797                                                              
 POSITION STATEMENT:  Prime Sponsor of HB 191                                  
                                                                               
 RON SWANSON, Director                                                         
 Division of Land                                                              
 Department of Natural Resources                                               
 3601 C Street                                                                 
 Anchorage, AK   99503                                                         
 Phone:  762-2692                                                              
 POSITION STATEMENT:  Answered questions and explained amendments              
                      on HB 191                                                
                                                                               
 NICO BUS, Acting Director                                                     
 Division of Support Services                                                  
 Department of Natural Resources                                               
 400 Willoughby Avenue                                                         
 Juneau, AK   99801                                                            
 Phone:  465-2406                                                              
 POSITION STATEMENT:  Answered questions on HB 191                             
                                                                               
 HUGH MALONE, Representative                                                   
 Kenai Peninsula Fishermen's Association                                       
 119 Seward St.                                                                
 Juneau, AK   99801                                                            
 Phone:  586-3516                                                              
 POSITION STATEMENT:  Expressed a concern regarding HB 191                     
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 191                                                               
 SHORT TITLE: MANAGEMENT OF STATE LAND AND RESOURCES                           
 SPONSOR(S): REPRESENTATIVE(S) THERRIAULT                                      
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/22/95       448    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/22/95       448    (H)   RESOURCES, FINANCE                                
 03/15/95       741    (H)   SPONSOR SUBSTITUTE INTRODUCED-                    
                             REFERRALS                                         
 03/15/95       741    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/15/95       741    (H)   RESOURCES, FINANCE                                
 03/22/95              (H)   RES AT 08:00 AM CAPITOL 124                       
 03/29/95              (H)   RES AT 08:00 AM CAPITOL 124                       
                                                                              
 BILL:  HB 207                                                                
 SHORT TITLE: ADJUSTMENTS TO OIL AND GAS ROYALTIES                             
 SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                  
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/27/95       501    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/27/95       501    (H)   OIL & GAS, RESOURCES, FINANCE                     
 02/27/95       501    (H)   FISCAL NOTE (DNR)                                 
 02/27/95       501    (H)   2 ZERO FISCAL NOTES (DNR, REV)                    
 02/27/95       501    (H)   GOVERNOR'S TRANSMITTAL LETTER                     
 03/08/95       665    (H)   CORRECTED FISCAL NOTE (DNR) #3                    
 03/09/95              (H)   O&G AT 12:00 PM CAPITOL 17                        
 03/09/95              (H)   MINUTE(O&G)                                       
 03/14/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
 03/14/95              (H)   MINUTE(O&G)                                       
 03/15/95              (H)   O&G AT 05:00 PM BELTZ ROOM 211                    
 03/15/95              (H)   MINUTE(O&G)                                       
 03/16/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
 03/17/95              (H)   O&G AT 05:00 PM CAPITOL 124                       
 03/20/95              (H)   O&G AT 05:00 PM CAPITOL 106                       
 03/21/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
 03/22/95              (H)   RES AT 08:00 AM CAPITOL 124                       
                                                                              
 BILL:  HB 209                                                                
 SHORT TITLE: OIL & GAS ROYALTY REDUCTION                                      
 SPONSOR(S): REPRESENTATIVE(S) GREEN,Rokeberg                                  
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/27/95       503    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/27/95       503    (H)   OIL & GAS, RESOURCES, FINANCE                     
 03/01/95       551    (H)   COSPONSOR(S): ROKEBERG                            
 03/09/95              (H)   O&G AT 12:00 PM CAPITOL 17                        
 03/09/95              (H)   MINUTE(O&G)                                       
 03/14/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
 03/14/95              (H)   MINUTE(O&G)                                       
 03/15/95              (H)   O&G AT 05:00 PM BELTZ ROOM 211                    
 03/15/95              (H)   MINUTE(O&G)                                       
 03/16/95              (H)   O&G AT 10:00 AM CAPITOL 124                       
 03/17/95              (H)   O&G AT 05:00 PM CAPITOL 124                       
 03/22/95              (H)   RES AT 08:00 AM CAPITOL 124                       
                                                                               
 BILL:  HB 265                                                               
 SHORT TITLE: EXPORT OF DUNGENESS CRAB                                         
 SPONSOR(S): REPRESENTATIVE(S) WILLIAMS                                        
                                                                               
 JRN-DATE     JRN-PG                ACTION                                     
 03/17/95       778    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/17/95       778    (H)   FSH, RESOURCES                                    
 03/22/95              (H)   RES AT 08:00 AM CAPITOL 124                       
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-38, SIDE A                                                            
 Number 000                                                                    
                                                                               
 The House Resources Committee was called to order by Co-Chairman              
 Green at 8:08 a.m.  No roll call was taken.                                   
                                                                               
 C0-CHAIRMAN JOE GREEN announced the committee would only hear HB
 191.  He stated HB 207 will be heard on Friday, March 24, HB 209              
 has been incorporated into HB 207, and HB 265 will be rescheduled             
 for another date.                                                             
                                                                               
 HRES - 03/22/95                                                               
 HB 191 - MANAGEMENT OF STATE LAND AND RESOURCES                             
                                                                               
 REPRESENTATIVE GENE THERRIAULT, PRIME SPONSOR, told committee                 
 members HB 191 is a housekeeping measure intended to clarify                  
 certain Title 38 statutes governing the Department of Natural                 
 Resources (DNR) management of state land and resources.  He said HB
 191 is intended to bring greater efficiency to the management of              
 state lands without sacrificing public involvement in land use                
 decisions.  He stated as the House Finance subcommittee chairman              
 for the DNR budget, he has worked with the department to come up              
 with changes to Title 38 which would simplify programs and reduce             
 costs to the DNR.  He felt the passage of HB 191 would result in a            
 more administratively efficient agency.  He noted although the bill           
 is not intended to be a complete rewrite of Title 38, he believes             
 it is a positive effort, supported by the Administration, to                  
 streamline state government.                                                  
                                                                               
 REPRESENTATIVE THERRIAULT said there was a Title 38 bill last year            
 that worked its way through the process and was not passed in the             
 closing hours of the session.  He stated his staff took a look at             
 that bill, identified those provisions pulled out and put into HB
 121, and picked up the remaining pieces.  He noted since that time,           
 he and his staff have had discussions with the department and a               
 number of additions have been suggested for the bill.  He pointed             
 out HB 191 comes from the budget subcommittee level, where he has             
 worked with the commissioners and different division directors,               
 telling them that because the state does not have enough money to             
 support their agency activities to the point they desire, they need           
 to tell him and the committee what structural changes are needed in           
 the statutes to enable the department to live with the budget                 
 provided this year and future years.                                          
                                                                               
 REPRESENTATIVE THERRIAULT said the discussions held also included             
 comments from the Senate side.  He stated the DNR subcommittee has            
 met a number of times jointly with members of the Senate budget               
 subcommittee for DNR.  He noted that Ron Swanson from the Division            
 of Land, DNR, is present to answer technical questions.  He added             
 there is a packet of proposed changes from the DNR in committee               
 members folders.  He explained the proposed amendments having a               
 period before them have already been included in the bill and the             
 proposed amendments having an asterisk before them are those he               
 hopes the committee will consider for a possible committee substitute.        
                                                                               
 REPRESENTATIVE THERRIAULT noted he was approached by Representative           
 Williams about the possibility of having a timber provision put               
 into HB 191.  He asked Representative Williams, through his staff,            
 not to propose that provision because he would like to keep HB 191            
 strictly land management, aside from timber.                                  
                                                                               
 CO-CHAIRMAN GREEN noted for the record that Representatives Davies,           
 Kott, Austerman, Ogan and Green are present.                                  
                                                                               
 Number 124                                                                    
                                                                               
 REPRESENTATIVE ALAN AUSTERMAN noted on page 1, the bill talks about           
 adopting regional land use plans.  He wondered if those plans have            
 already been done or are they something which need to be done.                
                                                                               
 REPRESENTATIVE THERRIAULT responded the plans have already been               
 done.  He said the desire is to clean up the language in the                  
 statutes which deals with the old land disposal bank.                         
                                                                               
 Number 140                                                                    
                                                                               
 RON SWANSON, DIRECTOR, DIVISION OF LAND, DNR, said in the 1970s,              
 the state had a land disposal bank where the public could nominate            
 land for disposal, which was before the land use planning statutes            
 were on the books.  The land disposal bank is still in the statutes           
 and the department does what is required every year--that is to               
 hold a public hearing annually, where people can nominate land to             
 go into the disposal bank.  He stated for the last three years no             
 one has ever showed up at the public hearing and no one has                   
 proposed land.  Rather, the land use planning process is used.  He            
 told committee members the desire is to eliminate the duplication.            
 He stressed the land use planning process is the process which                
 works.                                                                        
                                                                               
 REPRESENTATIVE AUSTERMAN said on page 4, line 24, the word "should"           
 is being changed to "shall" be at fair market value.  He questioned           
 why the word "shall" is being used.  He stated sometimes the fair             
 market values are high.                                                       
                                                                               
 MR. SWANSON responded all land the state disposes of has to go                
 through an appraisal process.  He stated there still is discretion            
 for the commissioner to lower those values for various reasons--act           
 of God, depressed economies, raised economies, etc.  He said any              
 time there is discretion on what the market value is, it leads to             
 constant appeals.  Therefore, the "shall" is saying appraise the              
 land and whatever the fair market value is, that is what the land             
 will be sold for.                                                             
                                                                               
 MR. SWANSON noted the state also has the discretion to dispose of             
 land either by lottery or auction.  He felt an auction is the                 
 better way to go and that is what the state will be doing this                
 summer.  He stated an auction does establish what the fair market             
 value is.  He said a minimum bid will be set, which will probably             
 be less than the fair market value, and then the auction method               
 will be used, using sealed bids.  He pointed out it is difficult,             
 in some locations, to determine a fair market value because the               
 only other sales are state sales--there is not a mixed private,               
 municipal, state market to pull from.                                         
                                                                               
 Number 213                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN noted that on page 8, line 23, the bill              
 talks about set net fishing and on line 29, the bill repeals and              
 reenacts the next section.  He wondered how the old section                   
 compares with the new section.                                                
                                                                               
 MR. SWANSON said Section 20 addresses shore fishery leases and                
 Section 21 deals with aquatic farming.                                        
                                                                               
 REPRESENTATIVE AUSTERMAN stated he was more concerned with Section            
 21 as to how it compares to the old section.                                  
                                                                               
 MR. SWANSON responded the real difference is the state will get               
 fair market value for the aquatic farm leases.  He explained                  
 presently an applicant comes in for the first three years just to             
 get a land use permit.  He said on aquatic farming and hatchery               
 site leases, it takes three years to bring something to market.               
 Therefore, the desire is to give a person the chance to do that--             
 not pay fair market up-front for leasing state land when there is             
 no return.  He noted that also in the first three years, it gives             
 the DNR, the Alaska Department of Fish and Game (ADF&G), and the              
 Department of Environmental Conservation (DEC) the opportunity to             
 determine whether or not it is a viable farm.  At that point, the             
 state would convert the farm over to a fair market value lease,               
 instead of just covering the costs of administering the program.              
                                                                               
 REPRESENTATIVE AUSTERMAN asked what does a fair market value lease            
 mean.                                                                         
                                                                               
 MR. SWANSON responded the fair market value lease involves a                  
 regular appraisal and a percentage of that is paid each year.  He             
 said it usually is approximately 5 to 7 percent per year, depending           
 on location.                                                                  
                                                                               
 Number 257                                                                    
                                                                               
 CO-CHAIRMAN GREEN asked if a piece of land is taken to establish an           
 aquatic farm, the farm is successful and then the person purchases            
 the land, does that person purchase the fair market value before              
 anything is started or the fair market value as it is when it is              
 purchased.                                                                    
                                                                               
 MR. SWANSON responded the state identifies a location for an                  
 aquatic farm and the applicant applies for it.  He said at that               
 point, the state gives the person a land use permit.  He stated for           
 the first three years, that person has the opportunity to develop             
 the farm.  Once it is proven the farm will work, the state then               
 converts the farm over to a fair market value lease from year four            
 up to year ten.                                                               
                                                                               
 CO-CHAIRMAN GREEN stated that person then has come in and                     
 established a higher value.                                                   
                                                                               
 MR. SWANSON replied no.  He said the state does not appraise the              
 improvements to the farm--it appraises the value of the land.                 
                                                                               
 Number 278                                                                    
                                                                               
 REPRESENTATIVE PETE KOTT wondered how much revenue is generated               
 through state land sales versus what is spent by the division to              
 operate the program.                                                          
                                                                               
 MR. SWANSON stated he cannot give the exact dollar figures but                
 stressed the department spends a lot more than what it brings in,             
 particularly in home sites and homesteads, as the applicant pays              
 $10 to go out and do something for 10 years and does not pay                  
 anything during the interim period.  The applicant can then prove             
 up that land and get it for nothing or they can purchase it.  He              
 said the current requirements are very heavy on the administrative            
 side, with no return to the state.                                            
                                                                               
 REPRESENTATIVE THERRIAULT added that was one of the frustrations of           
 the DNR budget subcommittee--there are all kinds of things which              
 have been put on the books to keep people from speculating, to make           
 sure a person gets a recreational use permit, etc., and the                   
 department has many requirements to check and double check things.            
 He stressed DNR does not do those checks because the department               
 does not have the budget.  He said the subcommittee discussion was            
 if the state sells, conveys, or leases the land under a fair market           
 value, the state will be done with the land and the administrative            
 costs will decline and hopefully the revenues will increase.  He              
 noted now since there is a concern that someone might make a dollar           
 off of state land, the state spends millions and millions of                  
 dollars to keep that from happening.  He stressed it is a very                
 cumbersome system.                                                            
                                                                               
 REPRESENTATIVE KOTT noted that Section 1 of HB 191 says land must             
 have an adopted regional land use plan before it is eligible for              
 the land disposal program.  He asked how much state land currently            
 has an adopted regional land use plan.                                        
                                                                               
 MR. SWANSON replied the state currently owns about 87 million acres           
 and has land use plans in place for about 65 million acres.  He               
 said the only areas in the rail belt, road belt and ship belt areas           
 not having a plan in place is the Kenai Peninsula and Kodiak which            
 will have plans in place shortly.  He said the only region where a            
 land use plan is not in place is in some of the Yukon River areas             
 where there is no demand for land disposals.  He estimated two-               
 thirds of the state has land use plans.                                       
                                                                               
 Number 335                                                                    
                                                                               
 REPRESENTATIVE KOTT noted in Section 15 of HB 191, it appears that            
 the DNR retains itself as the loan servicer.                                  
                                                                               
 MR. SWANSON stated that is correct.  He said most private financial           
 institutions will not loan money on undeveloped land because there            
 is no collateral.                                                             
                                                                               
 REPRESENTATIVE KOTT asked if the state would be in a position to              
 contract the loan provision out to a financial institution.                   
                                                                               
 MR. SWANSON replied the department has found, through the Mental              
 Health process, that banks are willing to buy the loans once they             
 have been made, but basically all the banks do is collect the                 
 money.  He reiterated that financial institutions are not willing             
 to loan the money up-front.                                                   
                                                                               
 REPRESENTATIVE KOTT noted that in Section 17, the interest rate is            
 suggested at 4 percent over the prime rate.  He felt that interest            
 rate is high.                                                                 
                                                                               
 CO-CHAIRMAN GREEN noted for the record that Representative WILLIAMS           
 had joined the committee.                                                     
                                                                               
 NICO BUS, ACTING DIRECTOR, DIVISION OF SUPPORT SERVICES, DNR,                 
 stated this interest rate is suggested for unimproved land.  He               
 noted the prime rate is for the very best lending situations.  He             
 said the department is suggesting 4 percent with a cap so the rate            
 does not go over 13 percent.  He pointed out that most of the                 
 department's rates are 12-13 percent currently.  He added there is            
 no credit check involved for the people who apply.                            
                                                                               
 Number 371                                                                    
                                                                               
 CO-CHAIRMAN GREEN said he shared Representative Kott's concern.  He           
 thought 4 percent over the federal reserve rate and 2 percent over            
 the prime rate were more customary.                                           
                                                                               
 MR. BUS reiterated the department's rates currently are 12-13                 
 percent.  He explained the reason for that rate is the department             
 does not do any credit checks.  He said if people are willing to              
 pay that rate, then after a period of time, people either keep                
 paying or they default.  He noted the default rate currently is 3             
 percent.  He stressed if the 12-13 percent is lowered, the                    
 department might experience more defaults because more people will            
 just give it a go.                                                            
                                                                               
 CO-CHAIRMAN GREEN asked if the higher interest rate precludes some            
 private ownership which otherwise might become private.                       
                                                                               
 MR. BUS said last year when the prime rate was low, the interest              
 rate would have been 7 percent, so the rate is fluctuating.  He               
 stated currently the department has the rate locked in at                     
 approximately 12 percent.  He explained this proposal will make the           
 interest rate more in line with the market.  He felt if the                   
 interest rate is dropped 1 or 2 percent, he is not sure whether or            
 not more people will be interested.  He thought with a lower rate,            
 more people would apply.                                                      
                                                                               
 MR. SWANSON added that the current interest rate is 12.7 percent              
 and if that is lowered, there will be a run on every contract the             
 department has to refinance.  He said the current statute refers to           
 the Federal Land Bank, which no longer exists.  The department is             
 attempting to establish a rate that anyone can look up and figure             
 out what the interest rate is going to be.  He expressed concern              
 also that the state has many contracts, which were sold, that were            
 Mental Health funds and if the interest rate is lowered too much,             
 there will be a run on those contracts also.  That situation would            
 put the department in a position of having to reimburse the bank              
 that purchased all of the contracts.                                          
                                                                               
 Number 421                                                                    
                                                                               
 REPRESENTATIVE THERRIAULT noted the existing statutes talk about              
 the Federal Land Bank which does not exist anymore, so that                   
 mechanism is very confusing as to what the interest rate should be.           
 Therefore, what is proposed is a clarification.                               
                                                                               
 REPRESENTATIVE AUSTERMAN clarified the normal bank rate is                    
 approximately 2 percent above the prime rate.                                 
                                                                               
 MR. SWANSON stated a bank usually has a variable rate, the prime              
 rate plus another percentage, and the rate is based on credit                 
 checks, amount of down payment, and many other factors.  He added             
 that most banks will not say how their interest rate is determined.           
 Most banks gear their interest rates to various markets.  He                  
 explained the department only requires 5 percent down, there are no           
 credit checks involved, and many factors are considered.  He                  
 pointed out that most lending institutions have a AAA to C rating             
 and the interest rate for a AAA or A rating is approximately 2                
 percent.  The department chose a rate in the middle, which they               
 felt was fair.                                                                
                                                                               
 MR. BUS agreed with Mr. Swanson's comments.  He added that the 4              
 percent over prime is an average rate--it is not the best rating,             
 but it is also not the worst rating.                                          
                                                                               
 Number 459                                                                    
                                                                               
 MR. SWANSON noted the committee received a packet of possible                 
 amendments to HB 191.  He said at the DNR subcommittee hearings               
 there were various questions on land disposals and how the state              
 could minimize future impacts to the state.  The proposed                     
 amendments address specific concerns.                                         
                                                                               
 MR. SWANSON stated AS 38.05.069(a) mandates that when DNR sells               
 land at an auction, particularly agricultural land, the adjacent              
 landowner has a preference for purchase.  He noted that the word              
 "adjacent" is defined elsewhere in the bill.  He said the                     
 department would like to make this subsection discretionary in                
 regard to a preference.  He pointed out there are times when the              
 department would definitely want to grant a preference.  For                  
 example, if a farm were to be enlarged, it would become profitable.           
 He explained there have been instances where people use their                 
 preference to suppress the local economy, to take over the land to            
 prevent someone else from coming in.  He noted preference rights              
 suppress the fair market value because no one is going to bid                 
 against people with preference rights.                                        
                                                                               
 MR. SWANSON reviewed the next amendment.  He said in 1988, the                
 homestead law was changed to make it mandatory that the state                 
 survey particular tracts of land and then those be offered as pre-            
 designated homesteads.  Previously, people could go out and stake             
 whatever area they wanted.  He stated since the department has to             
 survey those tracts of land, the department would like to make it             
 mandatory the state recoup the costs of the survey from the                   
 successful applicant.  The department could then reinvest that                
 money to do additional surveys and offer more homesteads in the               
 future.  He stressed the department wants to make the program self-           
 sustaining.                                                                   
                                                                               
 MR. SWANSON stated the next amendment refers to a similar subject.            
 He explained previous to 1988, an applicant could go out and stake            
 a particular tract.  However, when the legislature passed the law             
 making it mandatory for the DNR to survey that tract, the                     
 requirement for the applicant to go out and stake the tract was               
 left in.  He said it was odd the department has survey markers in             
 the ground and then the applicant is required to put a wooden post            
 on top of the department's survey monument.  He felt it was a                 
 useless requirement.                                                          
                                                                               
 Number 511                                                                    
                                                                               
 MR. SWANSON said the next amendment refers to remote cabin permits            
 AS 38.05.079.  He stated this is a program which has never been               
 implemented.  The provision allows an applicant to go out and stake           
 a remote location for recreational use.  The applicant                        
 automatically gets a 25 year lease, pays $100 and never has to                
 survey the land.  He noted the department never implemented the               
 program because of the possible administrative nightmare behind all           
 the overstaking, the non-requirement of survey, and no return of              
 fair market value.  He explained an opportunity is at hand to amend           
 that particular statute to ensure that the land does get surveyed.            
 He thought it was also an excellent opportunity to have these                 
 recreational disposals and require the department to get a fair               
 market value for them.                                                        
                                                                               
 MR. SWANSON noted the next few proposed amendments address concerns           
 about public service costs and expectations, basically disclaiming            
 any future infrastructure costs to the state.  He said the                    
 amendments would put into statutes that the state would not be                
 obligated to provide any services to land which is subject to                 
 homesite entry and patent.  The disclaimer would be made right in             
 the statute.  He explained currently, there are a number of                   
 disclaimers in AS 38.04, the planning statutes, which say when the            
 department does land disposal plans, it should consider things that           
 do not create obligations.  He did not feel the disclaimers                   
 necessarily protect the state from people coming in later and                 
 wanting particular services.  He said if the disclaimer is placed             
 in the particular land disposal statute, people will know when they           
 go out and get one of these things, they cannot come back and                 
 require that to happen.                                                       
                                                                               
 Number 546                                                                    
                                                                               
 MR. SWANSON stated a concern was also expressed about the "not in             
 my back yard" syndrome and the fact that once the department                  
 disposes of a particular tract of land, people come in and oppose             
 any future land disposals.  He said the next several suggestions              
 relate to that concern.                                                       
                                                                               
 MR. SWANSON noted the land planning statute directs the department            
 to consider the availability of timber, firewood, and water when              
 doing particular land disposals.  He said many people feel that               
 once they purchase state land, all the state land around them                 
 should be used for that particular purpose.  He explained the                 
 suggested language would eliminate that assumption.  He said in the           
 next suggestion, the department is saying (indiscernible) AS 38.04            
 requirements fit right into the statutes that eliminate the "not in           
 my back yard" attitude, particularly with unforeseen problems of              
 scattered land disposals throughout the state.                                
                                                                               
 CO-CHAIRMAN GREEN clarified the state would make a disclaimer on              
 the conveyance, so a person cannot come back and say they have                
 lived in a certain place for so many years and was not aware of               
 something which happened in 1995, etc.                                        
                                                                               
 MR. SWANSON responded the land disposal brochures the department              
 has issued the past few years do contain a disclaimer, but there is           
 not much to back up that disclaimer.  He said if it is put in                 
 statute, the department can clearly indicate in the conveyance                
 document that a person will get such and such, but will not get               
 these additional things which that person may desire.                         
                                                                               
 Number 571                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN recalled that Mr. Swanson had discussed              
 remote cabin permits, AS 38.05.079.  He wondered if there are any             
 sites out there now which have just been staked, are being used and           
 will have to get a survey done.                                               
                                                                               
 MR. SWANSON replied the department has never offered anything under           
 the remote cabin permit program because of the heavy administrative           
 costs to the agency.                                                          
                                                                               
 Number 585                                                                    
                                                                               
 HUGH MALONE, REPRESENTATIVE, KENAI PENINSULA FISHERMEN'S                      
 ASSOCIATION, stated in Sections 19 and 20 the department deals with           
 an issue which has caused administrative difficulties in regard to            
 the determination of who should get a shore fisheries lease.  He              
 said the proposal in HB 191 would put those leases up for public              
 auction.  He stressed the change from the present system, where the           
 leases are allocated based on a priority of use, is causing a                 
 concern to the present shore fishery lease holders.  He noted he              
 does not have a solution for the concern, but did want to bring the           
 concern to the committee.  He pointed out that last year, this                
 section was taken out of the legislation.                                     
                                                                               
 CO-CHAIRMAN GREEN stated the committee will be looking at a                   
 committee substitute at the next hearing which will incorporate               
 several, if not all of the amendments discussed and any other                 
 issues which may be brought up as committee members address HB 191.           
 He asked Mr. Malone if he would be able to have his position worked           
 out with the sponsor in the next few days.                                    
                                                                               
 MR. MALONE said he certainly will try.                                        
                                                                               
 REPRESENTATIVE AUSTERMAN commented he does want to follow up with             
 his constituents on the fisheries issues contained in HB 191.                 
                                                                               
 CO-CHAIRMAN GREEN wondered if the follow up would take just a few             
 days or is there a need to extend the period of time before hearing           
 HB 191 again.                                                                 
                                                                               
 REPRESENTATIVE AUSTERMAN thought he would be ready early next week.           
                                                                               
 CO-CHAIRMAN GREEN noted that Representative BARNES had joined the             
 committee.                                                                    
                                                                               
 Number 646                                                                    
                                                                               
 REPRESENTATIVE THERRIAULT inquired what the time line will be on HB
 191.                                                                          
                                                                               
 CO-CHAIRMAN GREEN asked Representative Austerman if there will be             
 a need for a teleconference.                                                  
                                                                               
 REPRESENTATIVE AUSTERMAN stated he did not think that was                     
 necessary.                                                                    
                                                                               
 Number 661                                                                    
                                                                               
 REPRESENTATIVE OGAN asked if the disposal of agricultural lands,              
 such as Point McKenzie, will be affected by HB 191.                           
                                                                               
 MR. SWANSON responded currently there is a concern with Point                 
 McKenzie because it is original mental health land now converted to           
 non-mental health land.  The department is now waiting for the                
 Supreme Court to make a ruling.  He said the department could                 
 technically do a disposal at this time but chooses not to because             
 the department does not want to create another mom and pop                    
 situation, in case the Supreme Court reverses the decision of the             
 lower court.                                                                  
                                                                               
 REPRESENTATIVE OGAN asked if any of the changes represented in HB
 191 affect the disposal of the Point McKenzie land.                           
                                                                               
 MR. SWANSON responded the changes do not.  He said a couple of the            
 changes make the disposal simpler.  He noted agricultural disposals           
 have been excluded from the subdivision definition.                           
                                                                               
 Number 685                                                                    
                                                                               
 CO-CHAIRMAN GREEN said on page 4, open-to-entry is being excluded             
 and on page 16, the bill talks about the holder of a homesite and             
 on page 17, the bill talks about an applicant for a homestead.  He            
 asked Mr. Swanson to clarify the difference.                                  
                                                                               
 TAPE 95-38, SIDE B                                                            
 Number 000                                                                    
                                                                               
 MR. SWANSON stated in regard to the open-to-entry on page 4, the              
 open-to-entry program was repealed in the 1980s, so the department            
 is basically taking that program off the books.  He said homesteads           
 and homesites currently are on the books.  Currently, under the               
 homesite and homestead program, the applicant pays the department             
 $10 for an application, the applicant receives a permit and for 10            
 years, the applicant does not reimburse the state anything.  The              
 applicant can get the land in two ways--they can pay fair market              
 value if they do the prove up or they can live on it and get it for           
 free.  The department is recommending these people pay the state at           
 least $100 for use of the state land for 10 years instead of using            
 the land for free.                                                            
                                                                               
 CO-CHAIRMAN GREEN said he heard that earlier, but wondered what the           
 difference is between homesteads and homesites.                               
                                                                               
 MR. SWANSON replied a homesite is a subdivision lot which a person            
 can get for free if they can prove up on it.  A homestead is a 40             
 acre tract...the bigger ones.  He added that homesites are very               
 popular, particularly in Southeast.                                           
                                                                               
 REPRESENTATIVE RAMONA BARNES clarified that homestead parcels go              
 from 40-160 acres.                                                            
                                                                               
 MR. SWANSON said that is correct.  He said homestead parcels are a            
 minimum of 40 acres.  He noted there are two different types of               
 homestead parcels--agricultural and residential.  He explained                
 agricultural homestead parcels are 40-160 acres and residential               
 homestead parcels are 20-40 acres.                                            
                                                                               
 CO-CHAIRMAN GREEN clarified that Point McKenzie was a special                 
 situation since it was 640 acres.                                             
                                                                               
 MR. SWANSON stated those were not homesteads but rather plain                 
 agricultural disposals.                                                       
                                                                               
 CO-CHAIRMAN GREEN noted HB 191 will be heard again on Wednesday,              
 March 29.                                                                     
                                                                               
 REPRESENTATIVE BARNES clarified that Point McKenzie was a different           
 type of disposal.  She thought there was a lottery involved and               
 then there were specific improvements required which caused the               
 failure of many of those farms.                                               
                                                                               
 MR. SWANSON stated that was correct.  He said the department                  
 required the successful applicant to come in with a development               
 schedule and to then follow the development schedule which caused             
 the failures.                                                                 
                                                                               
 REPRESENTATIVE BARNES stated when the parcels in the Big Delta were           
 developed in the late 1970s, one of the big problems which caused             
 the failure of those parcels was the department only allowed the              
 agricultural rights to those parcels of land.  Therefore, the                 
 people could not go to banks to borrow money, they could not pass             
 the land on to their heirs, and that is how the state got such a              
 large investment into the Delta-Barley project.  She recalled that            
 the state had over $100 million in those parcels up in the Big                
 Delta.                                                                        
                                                                               
 MR. SWANSON agreed there was a substantial investment involved.               
 ADJOURNMENT                                                                   
                                                                               
 There being no further business to come before the House Resources            
 Committee, Co-Chairman Green adjourned the meeting at 9:55 a.m.               
                                                                               
                                                                               

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