Legislature(1993 - 1994)
01/26/1994 01:40 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
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SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE
January 26, 1994
1:40 p.m.
MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Bert Sharp, Vice-Chairman
Senator Loren Leman
Senator Mike Miller
Senator Jim Duncan
Senator Johnny Ellis
Senator Judy Salo
MEMBERS ABSENT
ALL MEMBERS PRESENT
COMMITTEE CALENDAR
SENATE BILL NO. 217
"An Act relating to land of the University of Alaska and
authorizing the University of Alaska to select additional state
public domain land."
SENATE BILL NO. 229
"An Act making an appropriation for the construction of a dormitory
at the University of Alaska Anchorage; and providing for an
effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 217 - No previous action to record.
SB 229 - No previous action to record.
WITNESS REGISTER
Senator Kelly
Prime Sponsor
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Reviewed SB 229.
Sherrie Goll
Alaska Women's Lobby
P.O. Box 22156
Juneau, Alaska 99802
POSITION STATEMENT: Supported SB 229.
Brian Rogers
Vice-President of Finance
University of Alaska
207 D Butrovich Bldg.
University of Alaska
Fairbanks, Alaska 99775
POSITION STATEMENT: Supported SB 229 and reviewed SB 217.
Senator Frank
Prime Sponsor
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Supported SB 217.
Chip Thoma
Juneau, Alaska
POSITION STATEMENT: Reviewed SB 217.
Ron Swanson
Director of the Division of Land
P.O. Box 107005
Anchorage, Alaska 99510-7005
POSITION STATEMENT: Reviewed SB 217.
Jack Chenoweth
Legal Services
Legislative Affairs Agency
130 Seward Street
Juneau, Alaska 99801-2105
POSITION STATEMENT: Reviewed amendments to SB 217.
Gerald Gallagher
Director of the Division of Mining
Department of Natural Resources
P.O. Box 107016
Anchorage, Alaska 99510-7016
POSITION STATEMENT: Offered information.
ACTION NARRATIVE
TAPE 94-3, SIDE A
Number 001
CHAIRMAN RIEGER called the Senate Health, Education and Social
Services (HESS) Committee to order at 1:40 p.m.
Number 011
CHAIRMAN RIEGER introduced SB 229 (APPROP: UAA 600 BED DORMITORY)
as the first order of business before the committee.
SENATOR KELLY, primary sponsor for SB 229, reviewed his sponsor
statement. He emphasized the need to find a method of funding for
additional housing on the Anchorage campus in order to develop the
University of Alaska as a whole. He stated that the housing should
pay for itself. He explained the current attempt to put together
a plan with the Alaska Housing Finance Corporation, the Board of
Regents, and the University trying to incorporate bonding
mechanisms with some cash infusion that would make it all pencil
out.
SHERRIE GOLL, Alaska Women's Lobby, supported the building of a new
dormitory on the Anchorage campus. She addressed the issue of
students' safety in dormitories. She suggested installing peep
holes and dead bolts in the dormitory to increase students' safety.
Number 117
BRIAN ROGERS, Vice-President of Finance for the University of
Alaska System, stated support for SB 229 from the University of
Alaska. The Board of Regents capital request to the legislature
this year does include some student housing in Anchorage, but not
the entire amount of SB 229. He discussed the attempts at
solutions to finance the dormitory. He supported this
appropriation.
SENATOR RIEGER stated that the primary question with SB 229 is the
funding.
Number 184
SENATOR DUNCAN asked if surveys similar to the University of Alaska
Anchorage survey had been done in Fairbanks and Juneau. Dr.
Roger's said that an analysis of student demand in Juneau indicates
that Juneau needs fifty-two more beds, at a cost of $2.5 million.
SENATOR LEMAN requested information regarding the projected $50,000
per student per occupant cost.
BRIAN ROGERS explained that the cost includes common areas such as
food service facilities and study areas. Furthermore, the cost
includes built in features anticipating heavier wear and tear on
the building. He said that they are considering alternative
funding such as private operation with joint use.
SENATOR ELLIS moved that SB 229 be passed out of committee with
individual recommendations. Hearing no objections, it was so
ordered.
Number 278
CHAIRMAN RIEGER introduced SB 217 (INCREASE LAND GRANT TO UNIV. OF F
ALASKA) as the final order of business before the committee.
SENATOR FRANK, primary sponsor for SB 217, reviewed his sponsor
statement. He explained that if some proposed amendments were
adopted to SB 217, the bill would deal with the Mental Health Trust
Issue by delaying the effective date until after the Mental Health
Trust is settled. He stated that the $1 million fiscal note is
substantial. He cited the dedication of funds prohibition in the
constitution as an issue that needs addressing. There are some
proposed amendments addressing this issue.
Senator Frank pointed out that the university needs to look to non-
General Fund sources of revenue to fulfill its goals. Currently,
the university has attempted to increase private sector grant
funding which would decrease dependence on the General Fund. He
maintained that while SB 217 would exempt the university from
certain elements of the Alaska Public Land Statutes, SB 217 would
still provide notice and access to the public.
Number 358
BRIAN ROGERS reviewed the history of the land grant for the
University of Alaska referring to Terrence M. Cole's A Land Grant t
College Without the Land: A History of the University of Alaska's
Federal Land Grant. He said that the university is now actively
in the land management business. Net income from the land
development is deposited in an Endowment Trust Fund managed by the
Department of Revenue. The university receives that income
annually and uses it to inflation proof the trust fund, pay for the
cost of land management, and for university programs. He pointed
out that the spending of this money is annually part of the budget
request.
Dr. Rogers specified that SB 217 does not allow selection of land
with leases of oil and gas. He concurred with Senator Frank's
suggestion to place an effective date on the bill which
acknowledged the primacy of the Mental Health settlement. He
expressed the desire to change the fiscal note's fund source from
the General Fund to Inter Agency Receipts. In conclusion, he
indicated that Alaska had the largest federal grant of all of the
states, however, Alaska's higher education percentage is the forty-
ninth of the fifty states.
SENATOR SALO asked about potential problems with selection and more
specifically with municipalities that may not have completed their
selection process. Dr. Rogers pointed out that the proposed three
year delay to university selection should give the municipality
time to finish its selection.
Number 443
BRIAN ROGERS, in response to Senator Rieger, clarified that the
Trust Fund was not subject to the Executive Budget Act because it
was in existence at statehood. Dr. Rogers said that he had placed
the income in the Annual Budget Request because he felt it was
appropriate there. He specified that the $21 million is a
financial asset of the Trust Fund not the land value.
CHIP THOMA was concerned with the Gulf of Alaska due to the high
value of these lands for king salmon and wildlife habitat. He
stated that his only concern was with the timberlands. In review
of SB 217, he said he would confine his comments to the Board of
Regents.
Number 474
RON SWANSON, Director of the Division of Land, said that the
Department of Natural Resources does support, in principle, the
university obtaining more land to support its educational program.
He was concerned with the availability of suitable lands and the
timing. He expressed the need to enact a time limit on university
selection. He explained that the land conveyed to the university
in the long term should be developed to generate money into the
university system, however, this would not result in immediate
revenue for the university.
Mr. Swanson mentioned the type of land that can be conveyed. He
pointed out that land sale contracts should be addressed. He
stressed the need to clarify the definition of the word "mineral".
He offered to fax his testimony for the packet on SB 217.
Number 563
CHAIRMAN RIEGER numbered the proposed amendments and introduced
Rogers' Amendment 1 which corresponds to Chenoweth's Amendment 6 as
the first up for discussion. Regarding Rogers' Amendment 1, he
said that "a final court determination which resolves all
outstanding issues" might be unsteady because of issues occurring
after the effective date.
BRIAN ROGERS stated that Chenoweth's Amendment 6 would only hold
hypothecated land out of selection while Rogers' Amendment 1 would
delay the start of the selection process until the final court
determination in Weiss v. State. He agreed that Chenoweth's
Amendment 6 does the better job with this issue.
TAPE 94-3, SIDE B
Number 581
In response to Senator Salo's question about "all outstanding
issues" causing a delay, Dr. Rogers stated that some substantial
non-land related issues may need to be settled in addition to
settling portions of the land. A final resolution in Weiss v.
State may not come until the judge certifies that they have
received all the land. Conveying the land could take four years,
which under Rogers' Amendment 1 would delay the process for four
years as well. Under Chenoweth's Amendment 6, the process could
begin on lands that were not originally Mental Health lands,
hypothecated lands, or Mental Health selected lands.
CHAIRMAN RIEGER requested that Jack Chenoweth address Amendment 6.
He asked when SB 217 would take effect if his amendment was
adopted.
JACK CHENOWETH of Legal Services for the Legislative Affairs
Agency, said that ch. 66 SLA 1991 will not become effective until
the courts have entered a decision on the Weiss litigation, at
which time section 7 of his amendment becomes effective. Since the
effective date of ch. 66 may be later than the effective date of SB
217, section 8 was inserted as a directive to the Commissioner of
Natural Resources. This allows selection under the guidelines of
section 7 during the time between the effective dates of SB 217 and
ch. 66.
Number 550
CHAIRMAN RIEGER asked if the university could select oil and gas
lands under Chenoweth's Amendment 6. Mr. Chenoweth stated that his
amendment does not change what is in the main bill.
BRIAN ROGERS explained that the university can select the mineral
estate on lands, but not if there is an existing oil and gas lease
upon them.
SENATOR LEMAN moved that Chenoweth's Amendment 6 be adopted:
AMENDMENT 6
Page 1, line 2, following " land ":
Insert " ;and providing for an effective date "
Page 4, line 28, through page 5, line 12:
Delete all material and insert:
"(d) The commissioner may not convey title to any land
selection made by the university under this section if
the commissioner determines that the proposed selection
(1) includes land for which, at the time of its
selection under this section, a municipality has
made a selection under AS 29.65, unless the land
selection is, at a later date, rejected by the
commissioner of natural resources or relinquished by
the municipality;
(2) is not in the best interests of the state; in
making a determination under this paragraph as to
whether a selection by the university is in the best
interests of the state, the commissioner shall
consider
(A) the interest of the general public in
retention of the land in state ownership;
(B) ensuring an appropriate diversity in
the character of land owned by the state
and by the university;
(C) the public benefits achieved by conveyance
of the land to the university;
(D) the probable potential for the development
of the land and its resources and the probable
income to the university from the conveyance of
the land;
(E) benefits to the university from the
conveyance of the land to it; and
(F) the efficiency of the management of the
land resulting from the conveyance of the
land."
Page 7, following line 17:
Insert new bill sections to read:
" * Sec. 7. APPLICABILITY OF UNIVERSITY SELECTION RIGHTS UNDER AS
14.40.365 TO LAND. In addition to the land that, under AS
14.40.365(d), the commissioner of natural resources may not convey
to the University of Alaska, the commissioner of natural resources
may not convey land for which, at the time of its selection by the
university,
(1) is subject to conveyance to the Alaska Mental
Health Trust Authority under sec. 54, ch. 66, SLA
1991;
(2) is land that the commissioner of natural
resources reasonably believes should be conveyed
to the Alaska Mental Health Trust Authority under
sec. 55, ch. 66, SLA 1991, as compensation to that
trust for original mental health trust land not
available for return to the corpus of the trust; or
(3) is land described in sec. 56, ch. 66, SLA 1991,
as listed in "Lands Hypothecated to the Mental
Health Trust, May 1991" located in the office of the
director of the division of lands, Department of
Natural Resources, in Anchorage, Alaska, that has
been hypothecated to secure reconstitution of the
mental health trust; however, as the reconstitution
of the mental health trust is accomplished and the
hypothecated land is release on a pro rata basis,
the University of Alaska may select the land and the
commissioner may convey it.
*Sec. 8. LEGISLATIVE INTENT. It is the intent of the legislature e
that, if sec. 7 of this Act takes effect after the effective date
of secs. 1 - 6 of this Act, the commissioner of natural resources
reject, as inconsistent with the best interests of the state,
selections of land by the University of Alaska under AS 14.40.365,
added by sec. 4 of this Act, of land described in sec. 7 of this
Act.
*Sec. 9. Section 7 of this Act takes effect on the effective date e
of ch. 66, SLA 1991."
SENATOR DUNCAN clarified the effective date issue. He asked if
land could be conveyed to the university with the exception of
possible replacement Mental Health lands. Mental Health
replacement lands cannot be conveyed until the courts sign off on
ch. 66.
JACK CHENOWETH said that Senator Duncan was correct. He informed
the committee that the Mental Health Trust Authority would have
first choice on replacement land, compensation land, and
hypothecated land until it is released.
SENATOR DUNCAN questioned the hypothecated land list and if all
such lands had been identified.
JACK CHENOWETH referred to a previous suggestion that the section
setting out the hypothecated land list should be revised. If this
revision occurs then an amendment to this would follow. He
asserted that the doubt is in the period of time between the taking
effect of SB 217 and the taking effect of ch. 66. The commissioner
could choose to ignore the statement of legislative intent in
section 8 of his amendment. He stated that the hypothecated lands
list should have been completed in May 1991, but he did not know if
DNR could continually upgrade the list.
Number 517
BRIAN ROGERS pointed out that section 7 of Chenoweth's Amendment 6
should cover the issue of the hypothecated lands list. Even if
land was not on the 1991 list, the commissioner can convey land to
the Mental Health Trust which would be on the replacement list. He
said that the Mental Health Authority would be contacted before any
lands are selected in order to avoid litigation.
SENATOR DUNCAN asked if there is a cut-off date stating that no
additional lands can be selected or added to the hypothecated list
by the Mental Health community. Dr. Rogers said that in order for
Judge Green to make a final decision the process must be complete.
RON SWANSON clarified that ch. 66 requires the completion of the
reconstitution of the buying process by December 1994. Statute
specifies December 3, 1994 as the cut-off, after which no lands
could be added.
JACK CHENOWETH stated that SB 217 does have a December 1, 1994 cut-
off date, however, that legislation cannot take effect until after
litigation and appeals have ended. That could be fifteen years.
Number 488
SENATOR SALO asked if although land could not be added to that
list, land would be freed up from the list and available for
university selection. Mr. Chenoweth explained that the
hypothecated land list should shorten as land is reconstituted into
the Trust, which would make land available to the university and
others for selection.
SENATOR SALO inquired as to potential litigation with lands that
may come under the proposed exploration licensing legislation.
Number 453
SENATOR LEMAN explained the proposed exploration licensing
legislation, SB 151, with regard to SB 217. Senator Leman and
Senator Salo discussed financial issues regarding who would receive
profits from oil lands under these two bills.
CHAIRMAN RIEGER reiterated Senator Salo's concerns. If both bills
pass, then those exploration companies who want to bid on land for
redevelopment are accepting the risk that the university may select
some of that land subsequent to the exploration companies'
commitment.
BRIAN ROGERS informed the committee that if both bills pass, the
agreement between the department and the oil company would have to
be followed. The exploration agreement and the lease would have to
be under the terms agreed to when the department entered into the
agreement. There is a revenue issue for the state should there be
oil that is profitable and royalties are paid. He stated that
royalties not deposited into the Alaska Permanent Fund would be
available to the university.
SENATOR SALO commented that access by the companies to state land
and to university land did not seem the same. She noted that the
university could have a different plan for use of the land other
than allowing exploration.
Number 409
SENATOR DUNCAN asked if the department had taken a position on
this. He further asked if the amendment did the job.
RON SWANSON voiced the department's support.
There being no further discussion or objections, Amendment 6 was
adopted.
CHAIRMAN RIEGER introduced Chenoweth's Amendment 5 which
corresponds to Rogers' Amendment 2 as the next amendments up for
discussion before the committee.
BRIAN ROGERS stated that the income from the Endowment Trust Fund
is dealt with under the Executive Budget Act, therefore, these
amendments may not be necessary. These amendments were prepared in
case of concern.
JACK CHENOWETH discussed his amendment and his instruction to make
the fund subject to legislation appropriation. He pointed out his
editing of the definition of "University Receipts" which has an
effect in the Fiscal Procedures Act and the Executive Budget Act.
Number 358
CHAIRMAN RIEGER moved to adopt Chenoweth's Amendment 5:
AMENDMENT 5
Page 1, line 1, after " Alas ka ":
Delete " and "
Insert " , "
Page 1, line 2, after " land ":
Insert " , and defining net income from the University of
Alaska's endowment trust fund as 'university receipts'
subject to prior legislative appropriation "
Page 6, following line 10:
Insert new bill sections to read:
" *Sec. 6. AS 14.40.400(e) is amended to read:
(e) Subject to legislative appropriation, the [THE]
Department of Administration shall disburse the net
income from the trust fund upon vouchers approved
by the president and treasurer of the University of
Alaska specifying the purpose for which the money
is to be used and showing it is to be used in conformity
with this section.
*Sec. 7. AS 14.40.491 is amended to read:
Sec. 14.40.491 DEFINITION OF UNIVERSITY RECEIPTS. In AS
14.40.120 - 14.40.491, "university receipts includes
(1) student fees, including tuition;
(2) receipts from university auxiliary services;
(3) recovery of indirect costs of university
activities;
(4) the net income of the trust fund established in
AS 14.40.400 and receipts from sales and rentals of
university property;
(5) federal receipts;
(6) gifts, grants, and contracts; and
(7) receipts from sales, rentals, and the provision
of services of educational activities."
Hearing no objections, Amendment 5 was adopted.
Number 348
CHAIRMAN RIEGER introduced Chenoweth's Amendment 7 and Rogers'
Amendment 3 as the next amendments up for discussion.
BRIAN ROGERS said that both amendments accomplish the same
objective and either would do the job. The purpose of these
amendments is if there is an existing lease when the land is
selected, the revenue from the existing lease would go to the state
for the duration of the lease.
SENATOR DUNCAN asked if the university might select land that is
under a lease. Dr. Rogers said that the university might do this
in order to issue the next lease upon the expiration of the current
lease.
JACK CHENOWETH pointed out that something other than a lease, a
contract, would be handled by the bill as page 5, line 18 provides.
He stated that his amendment, 7, does not cover something other
than a lease.
RON SWANSON reiterated the scenario Senator Duncan posed.
SENATOR RIEGER asked if a contract or a lease contained a renewal
option, who would receive the benefit if the option was renewed.
Mr. Chenoweth said that he did not address that specifically. Mr.
Chenoweth stated that if the leases' agreement itself provides for
a renewal option, the state being the leaser is in a position to
exercise that. That option should be renewed with the benefits
continuing to go to the state until the completion of the lease.
SENATOR DUNCAN clarified that the department's support is behind
Rogers' Amendment 3.
SENATOR SHARP moved to adopt Rogers' Amendment 3:
AMENDMENT 3
Page 6, after line 3, insert new *Sec. 5 to read:
*Sec. 6. AS 14.40 is amended by adding a new section to read:
Sec. 14.40.366.DISPOSITION OF INCOME FROM EXISTING
ENCUMBRANCES. Income from land selections by the University
of Alaska under AS 14.40.365 which are subject to
encumbrances listed in AS 14.40.365(a)(1)(A)-(E) shall be
transmitted to the State of Alaska during the pendency of the
primary term of the lease, contract, claim, sale or permit.
Equitable title to such selections shall vest with the
University of Alaska only upon fulfillment of the primary term
of said lease, contract, claim, sale or permit.
Number 285
GERALD GALLAGHER, Director of the Division of Mining at DNR,
explained the process of his issuing of leases. Mr. Chenoweth
specified that if the renewal of the lease arises from a provision
in the current lease, then the renewal is part of the original.
The state would continue to receive the benefits of the lease or
any renewal of it until it ends.
SENATOR SALO asked if not allowing the university selection of
lease lands would create hardship for the university. Dr. Rogers
expressed the universities' preference to select land with other
encumbrances which are limited in time duration. He explained that
the university does not want to be precluded from some of the
better land in Alaska. Senator Salo communicated the need to
anticipate the potential conflict between the university and the
interests of the state in selection.
SENATOR SHARP recommended consideration of Rogers' Amendment 3.
SENATOR DUNCAN suggested that Mr. Chenoweth draft some language
that clarifies renewable leases and renewed leases.
GERALD GALLAGHER explained sub-surface leases and the renewal
process. He said that there is a clause in the first lease that
states there will be a subsequent lease as long as there is
production.
RON SWANSON addressed the lease question as well.
SENATOR SHARP moved to redraft Amendment 3. Hearing no objections,
it was so ordered.
CHAIRMAN RIEGER introduced Rogers' Amendment 4 as the final
amendment up for consideration. He clarified that the issue of
this amendment was regarding municipalities that have not made
selection and have unfulfilled entitlements.
Number 198
RON SWANSON pointed out that there are statutes limiting municipal
selection. In response to Chairman Rieger, Mr. Swanson said that
some municipalities have an entitlement which they have not yet
selected and their time limit has not run out. Mr. Swanson
referred to an amendment that froze municipal entitlements until
January of this year.
CHAIRMAN RIEGER requested that the sponsor and Mr. Chenoweth work
together towards an amendment addressing Rogers' Amendment 4 and
the clean up of Amendment 3.
BRIAN ROGERS offered an amendment to the fiscal note. He proposed
changing the fund source of the fiscal note from the General Fund
to the net income from the land.
SENATOR SHARP expressed his doubts regarding the state's ability to
transfer 6(i) mineral lands.
SENATOR FRANK said that the university is a municipality of the
state and that this is not a transfer from the state. By bringing
this issue through the Executive Budget Act there shouldn't be a
violation of 6(i).
SENATOR DUNCAN stated that the 6(i) question involves the Mental
Health lands which could be possible litigation in the U.S. Supreme
Court.
GERALD GALLAGHER clarified that 6(i) refers to Section 6(i) of the
Statehood Act. He discussed the rules regarding 6(i).
BRIAN ROGERS asserted that the university is a constitutional
corporation of the state unlike municipalities. He reiterated that
transfer of ownership to the university is not a transfer out of
state ownership.
CHAIRMAN RIEGER requested that the amendments be done by Monday
when SB 217 will be before the committee again. He stated that the
time limit issue, land sales contracts and co-leases for Amendment
3, and municipal selections should be addressed.
BRIAN ROGERS expressed the need to exclude selection of existing
land sale contracts. He said that a six or seven year limit would
be appropriate to complete selection.
There being no further business before the committee, Chairman
Rieger adjourned the meeting at 3:00 p.m.
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