Legislature(1997 - 1998)
03/04/1998 03:40 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE March 4, 1998 3:40 P.M. MEMBERS PRESENT Senator Rick Halford, Chairman Senator Lyda Green, Vice Chairman Senator Loren Leman Senator Bert Sharp Senator Robin Taylor Senator Georgianna Lincoln MEMBERS ABSENT Senator John Torgerson COMMITTEE CALENDAR SENATE JOINT RESOLUTION NO. 40 Relating to the fisheries management fee proposed by President Clinton. - PASSED SSSJR 40(L&C) FROM COMMITTEE SENATE BILL NO. 108 "An Act relating to the disposal of state land by lottery." - HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION SJR 40 - No previous action to consider. SB 108 - See Resource Committee minutes dated 3/2/97, 3/24/97, 3/26/97 and 3/2/98. WITNESS REGISTER Mr. Jerry McCune 211 4th Street, Ste. 211 Juneau, AK 99801 POSITION STATEMENT: Supported SJR 40. Mr. Dean Paddock P.O. Box 21951 Juneau, AK 99802 POSITION STATEMENT: Supported SJR 40. Mr. Brett Huber, Staff Senator Halford State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Commented on SB 108. Ms. Mel Krogseng, Staff Senator Taylor State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Commented on SB 108. Ms. Jane Angvik, Director Division of Land Department of Natural Resources 3601 C St., Ste 1122 Anchorage, AK 99503-5947 POSITION STATEMENT: Commented on SB 108. Mr. Dick Mylius Resource Assessment and Development Department Natural Resources 3601 C St., Ste 1130 Anchorage, AK 99503-5947 POSITION STATEMENT: Commented on SB 108. Ms. Carol Caroll, Director Division of Support Services Department of Natural Resources 400 Willoughby Ave., 5th Floor Juneau, AK 99801-1724 POSITION STATEMENT: Commented on SB 108. ACTION NARRATIVE TAPE 98-16, SIDE A Number 001 SJR 40 - FISHERIES MANAGEMENT FEE CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:40 p.m. and announced SJR 40 to be up for consideration. SENATOR LEMAN, sponsor of SJR 40, said this resolution addresses President Clinton's proposed FY 99 budget in which he proposes a $20 million tax on fisheries to fund management enforcement services of National Oceanic and Atmospheric Administration (NOAA) and the National Marine Fisheries Service (NMFS). He is proposing up to one percent of the ex-vessel price of the fish landed. According to figures from Senator Murkowski's office, the total fees to be paid by Alaska fishermen would be between $10 and $12 million. CHAIRMAN HALFORD asked him to make sure the fisheries tax figure already paid is correct. SENATOR LINCOLN noted that the proposed amendment was written wrong, because it's redundant. SENATOR TAYLOR moved to adopt the amendment as corrected. There were no objections and it was so ordered. Number 117 MR. JERRY MCCUNE, United Fishermen of Alaska, supported SJR 40 because fishermen already pay enough taxes. The Clinton proposal would result in Alaskan fishermen paying as much as half the tax. A lot of fishermen don't even fish in federal waters. MR. DEAN PADDOCK, representing himself, supported SJR 40, because he opposes another federal tax. Alaska fishermen are already paying their way. The perception some people have that on-shore fishermen in some way benefit from federal management inside of the three miles is highly debatable. He thought just the opposite was true, that the State benefits the federal programs. Furthermore, on-shore fishermen are on the ropes and most aren't able to stand another one percent tax. He informed the Committee that one of the major recurring problems the North Pacific Fisheries Management Council deals with is how to keep required federal bureaucratic costs within the capabilities of the fleets to pay. Fishermen have already agreed to heavy observer costs and heavy assessments, in addition to taxes. He said there are certain vessel lengths that are being driven out of business because of mandates to retain all by-catch and process them. Number 211 SENATOR TAYLOR moved to pass CSSJR 40(RES) from Committee with individual recommendations. There were no objections and it was so ordered. SB 108 - STATE LAND LOTTERY PROGRAM CHAIRMAN HALFORD announced SB 108 to be up for consideration. SENATOR TAYLOR moved to adopt the committee substitute, 3/4/98Luckhaupt53\t, for purposes of discussion. There were no objections and it was so ordered. MR. BRETT HUBER, Staff to Senator Halford, reviewed the changes in the Committee Substitute. MS. MEL KROGSENG, Staff to Senator Taylor, sponsor of SB 108, joined the discussion. Number 350 SENATOR TAYLOR asked the Department if their definition of a land disposal program included the conveyance or sale by the State of Alaska to either the Exxon Valdez Trustees or the Nature Conservancy. MS. JANE ANGVIK, Director, Division of Land, said it was not their intention that it would apply to the Exxon Valdez Oil Spill (EVOS) land. SENATOR TAYLOR asked if she understood that the amendment would not allow the Department to take credit for State lands conveyed to EVOS. MS. ANGVIK answered, "That is correct." CHAIRMAN HALFORD asked if it would include municipal entitlement transfers. MR. DICK MYLIUS, Resource Assessment and Development, said the intent was not to include municipal rights-of-way. It was to include land disposals such as the lottery and auction programs to individuals. SENATOR TAYLOR wanted that to be clearly understood since there were 300,000 acres left to convey to municipalities. MR. HUBER noted that there was a correction needed on page 7, after line 24 of an effective date clause. SENATOR TAYLOR moved to amend the amendment to insert "to private individuals" after "of." SENATOR TAYLOR asked if eliminating the words, "other land disposals" from the amendment met with the Department's approval. MS. ANGVIK answered that it does. SENATOR TAYLOR moved the amendment with changes that included three sections. SENATOR LINCOLN objected to ask the Department's response to the first amendment of 180 days after the effective date. MS. ANGVIK said she couldn't conceive of how they could possibly achieve that goal. SENATOR LINCOLN asked if they could achieve the goal within 180 days after the effective date of the act. MS. ANGVIK replied that she doubted they could get all the staff on line to dispose of 200,000 acres in that amount of time. It would take them a good year to do it. SENATOR LINCOLN noted they didn't have to dispose of it, the Department was only to select. She thought selection of acreage that size by November 1 was a monumental task. MS. ANGVIK said they interpreted the language to mean the Department would offer sales within 180 days or by November 1, 1998. SENATOR LINCOLN asked if Senator Taylor would break the one amendment into three. SENATOR TAYLOR didn't object to that. CHAIRMAN HALFORD stated that they would do that and the first one would change 180 days to the November 1, 1998 deadline. SENATOR TAYLOR asked the Department what volume of acreage they already have identified, surveyed, and have old appraisals on. MS. ANGVIK answered that the Department has approximately 5,000 parcels of land that have been previously surveyed and offered for sale which has been returned to the State and will require an appraisal to prepare them for disposal, again. SENATOR TAYLOR asked how many parcels have also been prepared, but have never been placed up for sale. MS. ANGVIK replied none. SENATOR TAYLOR asked what the total acreage was for the 5,000 parcels. MR. MYLIUS answered that they average around 10 acres; so around 50,000 acres. Number 500 SENATOR TAYLOR asked if they just had to do an appraisal, then, on 5,000 parcels before they would be ready. MR. MYLIUS said that was correct. SENATOR SHARP said he waited two and a half years for an appraisal once and he didn't know if this was doable. MS. ANGVIK said if it was the intent for the Department to take the 5,000 parcels they have today and appraise them for a sale by November 1, 1998, they would not be able to meet that deadline. She has talked to Senator Taylor's staff about the possibility of having the individual purchaser pay for and arrange for an appraisal which would relieve the Department of the money problem, but they would still have the logistics problem of directing traffic. SENATOR TAYLOR asked why they even need an appraisal with an outcry auction. MS. ANGVIK explained that a fair market value has to be set before hand. SENATOR TAYLOR responded that's because this law establishing a $100 minimum hasn't been passed yet. MR. MYLIUS replied that is a minimum; the Department is still required to sell the land at fair market value and so they need to find what that is. The $100 is essentially the minimum for the auction price. They do not want to offer a water front lot in Southeast Alaska for $100. SENATOR TAYLOR said that an appraisal is only someone's theory about what something is worth. It is based on comparable sales of which there are probably none. So they are paying a lot for someone's speculation about what the value may be. This is why they have 50,000 acres no one wants to buy right now. We should go out and sell it for a lesser price. He asked if he comes up to the counter to buy a piece of land, does he have to pay the price that no one bid on. MS. ANGVIK replied yes. SENATOR TAYLOR said with a system like that, they would end up with a whole lot of land around. MS. ANGVIK responded that that figure is set by the market; the Department does not make up that number. SENATOR TAYLOR parried that it is only someone's theory about a value; it may be close to, above, or far below what the true market value is. Market value is determined by a willing buyer and a willing seller. He thought the State might not understand that concept, but it works that way in the rest of the world. CHAIRMAN HALFORD said he didn't know what Senator Taylor wanted to do at this point. SENATOR TAYLOR said he felt like putting it into the PFD distribution, have the computer do a random selection, and getting rid of every bit of land in one six-month period. CHAIRMAN HALFORD said he thought it was legitimate for the Department to try to get fair market value, but it would require a large appropriation. He thought maybe they could auction the land, but the winner, before he gets the land, has to pay for a fair market appraisal; and if it doesn't come out close to the price, he can match the fair market value. This way the individual drives the process for a particular parcel and they don't spend a lot of time appraising parcels for which there is no interest and holding other parcels for which there is interest out of the package and not letting them get appraised. The individual has a choice of saying they don't want it. CHAIRMAN HALFORD said that's right; if the fair market value is higher than their bid, they can walk away, but what they have invested is the cost of the appraisal. SENATOR TAYLOR asked if they could get credit for the appraisal against the purchase price. CHAIRMAN HALFORD said they could make it that way. TAPE 98-16, SIDE B SENATOR LINCOLN asked if the individual had to pay for the appraisal, whether he bought the land or not. CHAIRMAN HALFORD said that was right; they would only be out a couple hundred dollars. SENATOR LINCOLN said she assumed they were talking about remote parcels and asked if the additional acreage each year was also going to be remote parcels. She asked how much an appraisal costs for a remote parcel. MS. ANGVIK replied that the 400,000 acres she references are scattered all over Alaska. The majority of them are in remote areas and the cost of an appraisal would be high if you send one appraiser out to do one piece of land. If you send one appraiser out to do 1,000 acres of land, you would get a better price per appraisal. The cost could range from $300 - $3,000. It depends on how difficult it is for the person to get to where the land is located. She pointed out that 5,000 parcels have been surveyed and laid out in subdivisions that were created by the State. They are parcels that have been offered some time in the past decade and have been returned to the State because either the person failed to make payments or failed to live up to some other form of agreement. She pointed out that they are scattered all over the State. Under Title 38, the Department is required to establish a fair market price and the methodology they used. It specifically does not want government people to decide what the land is worth. She noted that the suggestion to make those 5,000 parcels available to people to select is their second suggestion in a letter to Senator Taylor. There has historically been a problem with conflicting claims which is why the State wants the land to be surveyed. SENATOR TAYLOR asked of the 5,000 parcels, if they were at a price so high that no one bought them and have they been available for purchase since. MS. ANGVIK answered, "No, sir." She explained the reason some parcels that were returned to the State is because the purchasers failed to live up to their agreements. MR. MYLIUS added that most of the land returned is from auctions in the early 70s and 80s. SENATOR TAYLOR asked why they couldn't do a sealed bid process; and if they get more than two bids, they know what market value is. If they don't get more than two bids, they can have it appraised. MR. MYLIUS responded that for an auction, they have to first establish what the minimum bid has to be which is 50 percent of its appraised fair market value. Number 498 CHAIRMAN HALFORD asked why they couldn't offer these parcels over the counter on an on-going basis, the way the State used to. MR. MYLIUS explained under current statutes, they can only offer land over the counter through a sealed bid or a lottery process. If the parcels come back, they have to actually be reoffered and if they aren't bought then, they are offered over-the-counter. MS. ANGVIK said it would be possible for the legislature to direct them to put all 5,000 parcels back on the block to see if anyone wants to bid on them and pay for an appraisal. In statute the appraisals have to keep being refreshed. CHAIRMAN HALFORD said they could deal with these 5,000 parcels first to get an actual working land disposal program going. SENATOR TAYLOR added that would get them going so they would actually have program receipts to hire the people necessary to begin the process of land disposal. CHAIRMAN HALFORD asked if the 5,000 parcels become available, would it create a flood of applications. MS. ANGVIK said she thought it would cause a considerable flood. Some of the land is great and some of it is not, but there is a rush every time an opportunity presents itself. MR. MYLIUS said offering 5,000 acres would have to be an organized and coordinated effort, because there would be so many interested people. MS. ANGVIK said they could do an offering like that, but they would like to have the time to do it right. They have maps where people can see the parcels, but it would take some time to assemble the relationship of all the lots of one to another. SENATOR TAYLOR said he has seen a map done on newspaper material that showed all the lots that were up for sale. We have only done a handful of these sales. MS. ANGVIK responded that 1979 and 1980 were the largest years of disposal in the Department of Natural Resources and at the time, there was a $20 million budget to do those disposals. Those maps took time and money to put together. She wasn't suggesting they need a $20 million budget to do this, but she was suggesting some time is required to prepare the sale. CHAIRMAN HALFORD suggested putting the 50,000 acre block into over- the-counter sales in one month increments over the period of one year. They stay there and anyone can appraise it; if a fee is need to cover the cost of maps, charge $5. They could give the Department program receipt authority to charge for the appraisals and the mechanism necessary for the person who pays for the appraisal to have a certain time-frame to execute the purchase. SENATOR TAYLOR said he liked that idea. MS. ANGVIK responded that she thought they could offer all the land that had previously been sold in a manner like that in a year. CHAIRMAN HALFORD said he thought that would be a good start in getting back to a reasonable land disposal program. He thought that once something is offered, it should stay there. If someone is interested, they should be able to pay for a new appraisal and buy it. He thought some of the lots were lost by people who bought it in the 80's and lost their job. SENATOR TAYLOR said he wanted to see a schedule that is incremental. CHAIRMAN HALFORD said rather than working on the amendment, he thought they should come up with a new amendment that is a schedule. He thought it would become a two tiered approach dealing first with the existing 5,000 parcels and then with the rest of the lands. He suggested a conceptual amendment to that effect. SENATOR GREEN said there needs to be time to prepare for the next steps to offer the remaining acreage. CHAIRMAN HALFORD agreed and added that would cost the State much more up-front money. SENATOR TAYLOR said if they sell off that 50,000 acres of land, they should have all kinds of program receipts to go forward with the next phase. SENATOR LINCOLN noted they received 10 percent of the program receipts and said they should require certified appraisals. SENATOR TAYLOR offered a conceptual amendment that says by November 1 the Department will place back on the counter for sale 15,000 acres of previously sold lands; within the next period, July 1, 1999, the remainder will have been placed for over-the-counter sales. Beginning July 1, 1999 and each year thereafter, they will place 400,000 acres for sale. CHAIRMAN HALFORD asked if he was going to specify which programs to use. SENATOR TAYLOR said to use their list. CHAIRMAN HALFORD asked if he wanted to do anything that would make it sensitive to the market. SENATOR TAYLOR said no, because he thought it would have a major impact on the market. CHAIRMAN HALFORD said he thought they had something that would work now. Too much of a mandate without any sense of what it does to the market will doom what they already have. SENATOR TAYLOR said he assumed they would be working with a different administration which would take care of that. Number 323 CHAIRMAN HALFORD asked Ms. Angvik what tools they would need. She replied they could get those 5,000 parcels back on the market by July 1, 1999 and could find 15,000 to be put back on the market by November 1998, but they need the legislature to write something that will allow individuals to pay for appraisals, so the fair market value can be established by them, as well as the Department, and they also need the authority to charge them for the appraisal that has already been done. The cost of mapping and getting information to the public, even if they do it in waves, is going to cost the Department money that they don't have right now. MS. ANGVIK suggested also that they might think about privatizing land disposals in the future. The Department could make a proposal for developing 1,000 acres of land and in exchange for doing all the work including the marketing and selling, the individual would get paid with a percentage of the land, like 20 percent. Number 120 CHAIRMAN HALFORD said there was a conceptual amendment by Senator Taylor for the short-term disposal package and asked if there was an objection. There were no objections and it was so ordered. CHAIRMAN HALFORD said he wanted to get together with Senator Taylor regarding the wording of the second amendment that would take care of the second phase. He thought the short-term piece would work and he would like to push for the availability of new land coming into the system with program receipts from this program. He didn't want the first program to be so large that it doomed the second one. SENATOR TAYLOR thought they also needed to change the way land is taken off the counter after a sale. CHAIRMAN HALFORD said the changes would have to include the payment to the Department for appraisals and the way we handle land that stays in the over-the-counter status. He asked the Department to work on language to accomplish that. SENATOR TAYLOR said that appraisals should be available to the 20 other people who are interested. Otherwise five different people could bid on a property and have to get five separate appraisals. MS. ANGVIK said she thought there should be one appraisal that should be paid for by the person who won the bid. CHAIRMAN HALFORD said he thought the person who comes in and starts the appraisal process should have the right to match the high bid, if he wants it, because otherwise his personal interest in it might stir up competition. MS. ANGVIK said that was a good idea. Number 100 SENATOR LINCOLN said on page 3, line 22, one of the requirements is that the person will take care of the land environmentally to the best of their ability, and there might be a lot of things like old shacks and buses that the State might have to go in and clean up. She thought that language needed to be tightened up. She asked how much of a security deposit is required. CHAIRMAN HALFORD answered 10 percent of the purchase price and it's non-refundable. SENATOR LINCOLN asked what the limit would be on the amount of land that could be purchased under these programs. SENATOR TAYLOR said he didn't feel comfortable with the 160 acre limit. He thought thousands of acres might be more suitable for some purposes. TAPE 98-17, SIDE A SENATOR LINCOLN asked if it was alright for someone to buy land and turn right around and sell it. SENATOR TAYLOR said he thought that was what people did; some just hold on to the land longer. SENATOR LINCOLN was concerned with land speculation and people buying land for less than fair value in the first place. She was also concerned with how people in rural Alaska would get notified of the land sales, and without access to land offices in the cities, how would rural Alaskans have the same ability to purchase. MS. ANGVIK said public notice is one of the greatest challenges the Department faces. They would have to create a mechanism which they could insert into newspapers, mail to individuals, and put on the Internet. SENATOR TAYLOR said he thought money generated by the first sale should be more than adequate to take care of the aliquot surveys necessary to take care of a 200,000 acre parcel. MS. ANGVIK responded that the reason she is hesitant is that their experience shows if the land isn't surveyed, and a variety of people are in the field claiming certain parcels, they disagree over boundaries. She said it would be very chaotic, unless they can figure out a centralized way for people to survey it. She said the most land they ever disposed of in a year was 70,000 acres. SENATOR LINCOLN said she could already see people reading about these land disposals in the lower 48. On page 3, line 16 it says that the State isn't required to build schools and asked what if the people who bought the land had 12 children. She thought providing schools would be only the beginning of the State's responsibility and didn't think that language was very realistic. She wanted more land to get to Alaskans, but did not want to open up the flood gates to more problems. CHAIRMAN HALFORD said he would like to see that language right on the patent, but he didn't know if it would be enforceable. Number 223 SENATOR GREEN said they had talked about how agricultural lands would be placed on the market and referred the Committee to Section 2, line 8. MS. CAROL CAROLL, DNR, explained that the Department would be getting more agricultural lands on the market and would get money into the revolving loan fund. She thought language put into page 2, Section 2 would make it possible to also put a portion of the receipts from people buying agricultural land back into the program. CHAIRMAN HALFORD asked if they could appropriate the loan portfolios held by DNR directly to Agricultural Revolving Loan Fund (ARLF) to be managed by them, just like AHFC and AIDA does. MS. ANGVIK answered that all they would be doing is moving an income stream from the general fund to the agricultural revolving loan fund, but she didn't know if it would require action by the legislature. CHAIRMAN HALFORD said he thought ARLF owns contracts now and has the ability to own others. If they move the DNR contracts to ARLF, they would have in effect what Senator Green suggested. It would have to be in an appropriation bill, not a substantive bill. MS. ANGVIK said the loan fund would also have to be transferred by the legislature. CHAIRMAN HALFORD thanked everyone and said they would take this up again next week and adjourned the meeting at 5:36 p.m.