Legislature(1997 - 1998)

03/04/1998 03:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                 
     - 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               
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            
               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                       
MS. JANE ANGVIK, Director, Division of Land, said it was not their             
intention that it would apply to the Exxon Valdez Oil Spill (EVOS)             
SENATOR TAYLOR asked if she understood that the amendment would not            
allow the Department to take credit for State lands conveyed to                
MS. ANGVIK answered, "That is correct."                                        
CHAIRMAN HALFORD asked if it would include municipal entitlement               
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             
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            
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,                 
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                  
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                   
SENATOR TAYLOR asked why they even need an appraisal with an outcry            
MS. ANGVIK explained that a fair market value has to be set before             
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                 
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                 
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              
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                        
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            
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                
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            
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              
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                    
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               
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.                         

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