Legislature(2017 - 2018)BUTROVICH 205

04/06/2018 03:30 PM RESOURCES

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Audio Topic
03:30:25 PM Start
03:30:49 PM Overview: University of Alaska's Land Grant Status and Land Use Update
04:32:03 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: The University of Alaska's Land Grant TELECONFERENCED
Status & Land Use Update
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         April 6, 2018                                                                                          
                           3:30 p.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator John Coghill, Vice Chair                                                                                                
Senator Kevin Meyer                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Natasha von Imhof                                                                                                       
Senator Bert Stedman                                                                                                            
Senator Bill Wielechowski                                                                                                       
Senator Click Bishop                                                                                                            
                                                                                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: UNIVERSITY OF ALASKA'S LAND GRANT STATUS AND LAND USE                                                                 
UPDATE                                                                                                                          
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MILES BAKER, Associate Vice President                                                                                           
Government Relations                                                                                                            
University of Alaska (UA)                                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided overview of the University of                                                                    
Alaska's (UA) land grant status and land use update.                                                                            
                                                                                                                                
CHRISTINE KLEIN, Chief                                                                                                          
Facilities and Land Officer                                                                                                     
University of Alaska (UA)                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Discussed current trust land holdings.                                                                    
                                                                                                                                
WYN MENEFEE, Executive Director                                                                                                 
Land Office                                                                                                                     
Alaska Mental Health Trust                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Reviewed Mental Health Trust land holdings.                                                               
                                                                                                                                
HEIDI HANSEN, Deputy Commissioner                                                                                               
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Would  provide  background  information  on                                                             
presentation.                                                                                                                   
                                                                                                                                
CHRIS MAISCH, State Forester and Director                                                                                       
Division of Forestry                                                                                                            
Department of Natural Resources (DNR)                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT: Provided  update of  Division of  Forestry's                                                             
intermingled-ownership land issues.                                                                                             
                                                                                                                                
ANDY HARRINGTON, Associate General Counsel                                                                                      
University of Alaska                                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Commented on potential land use issues.                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:25 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order were  Senators Meyer, Coghill, and  Chair Giessel. Senators                                                               
Bishop and von Imhof were  engaged in Senate Finance meetings and                                                               
would attend if possible.                                                                                                       
                                                                                                                                
^Overview: University of Alaska's Land  Grant Status and Land Use                                                               
Update                                                                                                                          
                Overview: University of Alaska's                                                                            
             Land Grant Status and Land Use Update                                                                          
                                                                                                                                
3:30:49 PM                                                                                                                    
CHAIR GIESSEL announced the committee  had one item on its agenda                                                               
today,  the update  from  the University  of  Alaska's (UA)  land                                                               
grant status and its upcoming  timber sale in Southeast Alaska in                                                               
conjunction with  the Department of Natural  Resources (DNR). She                                                               
said this committee began this  legislative session hearing about                                                               
the  State  of  Alaska's  timber  opportunities,  and  the  State                                                               
Forester pointed out  the lack of available timber  to make sales                                                               
economic.                                                                                                                       
                                                                                                                                
CHAIR  GIESSEL said  the DNR  is  the state's  land manager,  but                                                               
Alaska  also  has  a  public   land  grant  university  based  in                                                               
Fairbanks.  Land   grant  universities  are  not   dissimilar  to                                                               
Alaska's  Statehood Compact  in  that they  were  given lands  to                                                               
monetize  to sustain  the operations  of  the organization.  Land                                                               
grants  are  not  only  necessary   for  public  universities  to                                                               
function,  but also  to unburden  students from  accessing higher                                                               
education.                                                                                                                      
                                                                                                                                
Last  year, the  committee  heard from  University President  Jim                                                               
Johnson  about the  rock and  a hard  place that  the land  grant                                                               
status finds  itself between. The  university never got  its land                                                               
entitlement   from  the   federal   government   and  our   state                                                               
constitution bars the  state from transferring state  land to the                                                               
university.                                                                                                                     
                                                                                                                                
CHAIR  GIESSEL said  today they  would hear  from the  university                                                               
about a new concept to solve  this problem and hopefully work out                                                               
a solution  to these  lands for  Alaska's students.  She welcomed                                                               
Miles Baker to the committee.                                                                                                   
                                                                                                                                
3:32:14 PM                                                                                                                    
MILES  BAKER,  Associate  Vice President,  Government  Relations,                                                               
University of  Alaska (UA), Juneau,  Alaska, said last  year they                                                               
did some  presentations to  again "socialize  this issue"  in the                                                               
legislature, because  it has been a  while, and he would  give an                                                               
update on recent efforts to resolve the land grant deficit.                                                                     
                                                                                                                                
He related  that UA  is part of  a system of  over 70  land grant                                                               
universities around the country.  These universities were granted                                                               
federal land  to sell  to raise  funds to  establish and  endow a                                                               
college in every  state. Ultimately, most of  these became public                                                               
universities offering a full  range of educational opportunities.                                                               
A  few  are private  schools:  MIT  and Cornell  University,  for                                                               
example.  However,  in this  process,  only  Hawaii and  Delaware                                                               
received  a smaller  land grant,  Hawaii because  it received  an                                                               
appropriation from  Congress in  lieu of  land. UA  only received                                                               
about  110,000 acres  of its  original entitlement,  which leaves                                                               
about 360,000 acres due to it.                                                                                                  
                                                                                                                                
3:35:29 PM                                                                                                                    
Currently, Mr. Baker  said, the University of  Alaska has 150,000                                                               
acres  of   which  12,000  are  used   for  educational  research                                                               
properties. He explained that the  concept of land grant colleges                                                               
started   in  the   mid-late  1800s,   and  three   federal  laws                                                               
established what  the University of Alaska  should have received.                                                               
Of those  three, Alaska ended  up receiving land under  the third                                                               
one, the Sutherland  Act in 1929. The reason for  that is related                                                               
to  the problems  the state  has had  with getting  its statehood                                                               
land,  in general,  due to  surveying and  remoteness and  issues                                                               
like  that.     When  discussions   of  statehood   started,  the                                                               
university had still  not received most of what  should have been                                                               
the entitlement under the original federal law.                                                                                 
                                                                                                                                
Some  of the  statehood  acts  that were  worked  on in  Congress                                                               
conceived of giving  the university as much as  10 million acres.                                                               
Ultimately, the Statehood Act that  passed actually repealed some                                                               
of the early federal laws  that would have ensured the university                                                               
got its land. Congress's view was  that the state was getting 103                                                               
million  acres  and  that  the   state  should,  therefore,  take                                                               
responsibility for fulfilling  the unfulfilled federal obligation                                                               
to the university.                                                                                                              
                                                                                                                                
Since that  time, the legislature has  been extremely supportive;                                                               
even the  very first Alaska state  legislature passed legislation                                                               
to  transfer 1  million acres,  but that  was vetoed  by Governor                                                               
Egan  at the  time, largely  because  of an  early concern  about                                                               
dedicating resources. And for some  of those same reasons we find                                                               
ourselves  in  this  position  today, the  theory  being  if  the                                                               
university needs money  and it needs to be  appropriated, that it                                                               
is a legislative responsibility.                                                                                                
                                                                                                                                
3:38:08 PM                                                                                                                    
MR. BAKER  said moving  forward, complications  with transferring                                                               
land  arose  when  land  freezes  were  imposed  by  Congress  as                                                               
legislation from  the Alaska National Interest  Land Conservation                                                               
Act  (ANILCA) and  Alaska Native  Claims  Settlement Act  (ANCSA)                                                               
went  through.   Post  that  period,   the  Alaska   and  federal                                                               
delegation  worked on  several pieces  of legislation  to resolve                                                               
it. Most  recently, the legislature  took action in 2005  when it                                                               
actually  listed  the pieces  of  land  that  would come  to  the                                                               
university. That  resulted in a  lawsuit by the  Southeast Alaska                                                               
Conservation Council  (SEACC), and  the Supreme  Court ultimately                                                               
ruled that transferring  that land for the  purpose of generating                                                               
revenue would  be a  violation of  the anti-dedication  clause in                                                               
the State Constitution.                                                                                                         
                                                                                                                                
MR.  BAKER said  today  the university  finds  itself with  about                                                               
150,000 acres. It  has received other private  land and municipal                                                               
contributions, but the deficit of  360,000 acres remains. He said                                                               
the  university obviously  feels strongly  and has  gotten strong                                                               
direction from the legislature over  the last few years that they                                                               
need to monetize  the lands they already have and  to lower their                                                               
reliance on  state general funds.  Filling this deficit is  a top                                                               
priority for the university.                                                                                                    
                                                                                                                                
3:40:22 PM                                                                                                                    
MR. BAKER said  the university has been working  with the federal                                                               
delegation   on  possible   opportunities,   because  the   State                                                               
Constitution  has an  exemption  saying that  dedication of  land                                                               
would  be permissible  if it  is done  to comply  with a  federal                                                               
program's requirement  for state  participation. The  feeling for                                                               
quite some  time has been  that the state  will not get  new land                                                               
from  the federal  government beyond  the 105,000  acres and  the                                                               
federal  government  still  feels that  they  extinguished  their                                                               
responsibility and it's really now  the state's responsibility to                                                               
fulfill  the  remaining  obligation.  But a  federal  program  is                                                               
needed to make this happen.                                                                                                     
                                                                                                                                
3:41:28 PM                                                                                                                    
MR. BAKER  explained they  have proposed  a one-page  concept for                                                               
the  DNR and  the university  to identify  lands that  either are                                                               
existing DNR lands  or that potentially are lands  that the state                                                               
has selected or top-filed that  haven't been transferred from the                                                               
federal government  as part  of the  5 million  outstanding acres                                                               
that  are still  due  to the  state. Many  of  these parcels  are                                                               
inholdings in national parks or  in other conservation units that                                                               
don't  have  a  lot  of  monetary value  but  are  of  tremendous                                                               
potential public  benefit for the  country. So, they  are working                                                               
on a program  that would potentially allow them  to transfer back                                                               
to the  federal government some  of those lands that  would allow                                                               
the parks to be contiguously managed,  a good fit for the federal                                                               
government from that perspective, but  it would obviously have to                                                               
come with some sort of an exchange.                                                                                             
                                                                                                                                
He  said  DNR  is  trying  to  work  out  the  state's  remaining                                                               
selections  on  the  administrative  and  procedural  sides.  The                                                               
thought is  that they would  develop a piece of  legislation that                                                               
would resolve many  of the remaining issues and  it would include                                                               
the university's land grant.                                                                                                    
                                                                                                                                
So,  the  change  from  last year's  presentation  is  that  they                                                               
weren't looking  at the concept of  potentially identifying acres                                                               
within the  yet-to-be-transferred lands. Obviously, both  DNR and                                                               
the  university are  looking for  the most  attractive pieces  of                                                               
land to generate revenue, which is  what they want to do with the                                                               
University Trust.                                                                                                               
                                                                                                                                
3:44:26 PM                                                                                                                    
CHRISTINE KLEIN,  Chief, Facilities and Land  Officer, University                                                               
of  Alaska  (UA),  Anchorage,  Alaska,  discussed  their  current                                                               
limited trust land holdings. There  are two categories of land in                                                               
the  150,000  total   acres;  one  is  educational   and  one  is                                                               
investment. Educational  parcels are what the  campuses reside on                                                               
as well as a few research  sites. The remaining 130,000 acres are                                                               
investment (slide  9), the primary  purpose being to  monetize to                                                               
provide positive revenue to the Trust Endowment.                                                                                
                                                                                                                                
MS.  KLEIN pointed  out  that of  those  holdings, generally  the                                                               
largest  portion are  very remote  and largely  inaccessible. For                                                               
example,  about 10,000  acres are  within the  Wrangell Mountains                                                               
and many  others are on  mountain tops,  and one parcel  is under                                                               
Brady Glacier  and has a mine  claim on it. Other  parcels are on                                                               
the Alaska Peninsula. One of  the largest holdings is in forested                                                               
lands and they also have some  subdivisions. They do not have oil                                                               
and gas  but a few active  mining claims. They have  very few, if                                                               
any, urban parcels of any value to monetize.                                                                                    
                                                                                                                                
She  compared that  to  other land  grant  universities like  the                                                               
University of  Washington (UW)  that has two  blocks of  "some of                                                               
the most  valuable property"  in downtown  Seattle that  they are                                                               
able to monetize for their  endowment and the University of Texas                                                               
that  has  a  percent  of  oil and  gas  revenues  going  to  its                                                               
endowment.                                                                                                                      
                                                                                                                                
Slide  10 illustrated  the trust's  current land  holdings broken                                                               
down  into  six investment  classes  that  the Board  of  Regents                                                               
approved  a  couple  of  years  ago  in  terms  of  their  value.                                                               
These parcels  are being assessed  to get  the best value  out of                                                               
them, but most are very remote.                                                                                                 
                                                                                                                                
MS. KLEIN  explained that the  lands for land  grant universities                                                               
were  granted  by Congress  for  the  specific purpose  of  being                                                               
monetized to help universities be  a little more self-sustaining.                                                               
They  are  dedicated  exclusively   for  the  benefit  of  public                                                               
education. Three acts of Congress  set up these public university                                                               
trusts and they are further memorialized in AS 14.40.                                                                           
                                                                                                                                
3:49:24 PM                                                                                                                    
MS. KLEIN showed  how the money had been generated  over the past                                                               
years.  Some  lands  were  transferred  to  the  university  pre-                                                               
statehood; however,  the majority of revenue  really didn't start                                                               
to be generated  until 1987/88 and that was from  land sales; the                                                               
most valuable  parcels being sold  off early. The  second revenue                                                               
generator has  come from  forest timber  sales and  gravel, rock,                                                               
and peat extraction  in Fairbanks. They have  some commercial and                                                               
private leases,  and some limited  potential for mining  coal and                                                               
gas. The  land department has  generated over $210  million since                                                               
1987 from trust assets. The trust  balance over the last 30 years                                                               
has fluctuated  based on the market,  but the one thing  that has                                                               
been fairly steady is the revenue generated by real property.                                                                   
                                                                                                                                
CHAIR  GIESSEL  remarked  it's   interesting  that  they  started                                                               
renting land in 1986 when people  were leaving the state during a                                                               
significant recession.                                                                                                          
                                                                                                                                
MS. KLEIN  agreed and said that  is when the department  got very                                                               
active in monetizing  its lands. Slide 13 showed  a comparison of                                                               
land returns  over the  last 30  years. The  university generated                                                               
$116 per acre  overall while the trust timber  harvest, which did                                                               
not occur  every year but  were held continuously,  accounted for                                                               
$2,735 per acre. Now not much land  is left that is of much value                                                               
in terms of monetization.                                                                                                       
                                                                                                                                
3:53:36 PM                                                                                                                    
MS. KLEIN  said she  gets many questions  about just  selling the                                                               
land, but  that is a one-time  benefit and the endowment  is very                                                               
small, a  quarter of what it  was owed. And they  found that many                                                               
of the  granted parcels had  actually been harvested  before they                                                               
were given  to the state and  many of them are  now forested with                                                               
second growth  timber that is  still in their inventory;  so that                                                               
is a  long-term sustainable  program. They  have a  very positive                                                               
forester  stewardship program  that has  provided higher  revenue                                                               
and jobs in  the local communities and a much  greater return for                                                               
the State of Alaska.                                                                                                            
                                                                                                                                
3:54:42 PM                                                                                                                    
SENATOR MEYER asked if they  ran into opposition for their timber                                                               
harvests.                                                                                                                       
                                                                                                                                
MS. KLEIN answered yes, mostly  from communities the parcels were                                                               
close  to. She  explained that  most  of their  parcels are  very                                                               
small  and  isolated,  so  they are  often  combined  with  other                                                               
private lands and lands from  other agencies like the Division of                                                               
Forestry, the Mental  Health Trust, and the  U.S. Forest Service,                                                               
to do collaborative efforts.                                                                                                    
                                                                                                                                
SENATOR MEYER  asked if people  have left land to  the university                                                               
when they have passed.                                                                                                          
                                                                                                                                
MS. KLEIN  answered yes;  they go  through a  process and  can be                                                               
earmarked or  designated for  certain things.  A majority  of the                                                               
ones  she  has  seen  have actually  been  dedicated  to  certain                                                               
schools or programs,  specifically. Very few go  to the endowment                                                               
in general.                                                                                                                     
                                                                                                                                
MS. KLEIN said  slide 14 illustrated some  of their approximately                                                               
17,000  acres  of  forested  parcels  across  Alaska  that  could                                                               
actually be  harvested. Over  $50 million  of their  endowment is                                                               
from timber  receipts over  a 16-year period,  and that  has been                                                               
their  highest-return  investment.  These are  primarily  second-                                                               
growth forests that  are harvested on rotation  cycles. When they                                                               
put a  tract up for sale,  only part of it  is actually harvested                                                               
based on the type of timber,  the species, the age, the number of                                                               
flukes, the  condition, market  rates, and  factors like  that. A                                                               
couple  of  sites  are  Coffman Cove,  Icy  Bay,  Mitkof  Island,                                                               
Whipple Creek, Blank Inlet, Edna Bay,  and Nenana. They try to do                                                               
one  to two  per year,  but that  is highly  dependent on  having                                                               
other collaborators to help with expenses.                                                                                      
                                                                                                                                
4:00:25 PM                                                                                                                    
MS. KLEIN  showed slide  15, a  picture of  one of  their ongoing                                                               
timber harvest  sales in  Edna Bay  in southern  Southeast Alaska                                                               
saying it has been a  highly successful model, especially for the                                                               
community. It's  the first-time  use of  the U.S.  Forest Service                                                               
Federal  Good Neighbor  Authority  in Alaska.  It was  negotiated                                                               
with  site-specifics  in  order   to  give  the  university  more                                                               
flexibility to address  concerns in the area. It  has resulted in                                                               
better use  of the  resource and its  assets. The  university has                                                               
worked  collaboratively  with  five  partners  on  utilizing  one                                                               
another's  infrastructure and  not charging  high rates,  so they                                                               
can all be more effective at what it is they do.                                                                                
                                                                                                                                
Edna Bay is  also an example of a timber  harvest that was highly                                                               
controversial.  The community  was almost  totally opposed  to it                                                               
and  now through  the process,  which  took some  time, they  are                                                               
totally  supportive and  have asked  when there  will be  another                                                               
sale.                                                                                                                           
                                                                                                                                
CHAIR GIESSEL asked if Ms. Klein is from Southeast.                                                                             
                                                                                                                                
MS.  KLEIN  answered yes;  she  is  originally  from one  of  the                                                               
original homesteads in  Alaska near Ketchikan. They  have had two                                                               
sales in the last  years; one sale was of about  400 acres on the                                                               
Chilkat  Peninsula in  Haines. But  the community  was not  super                                                               
thrilled  about  it;  it  was   near  some  properties  they  had                                                               
previously  developed for  a  residential  subdivision. So,  they                                                               
have rethought  that and  are looking  at doing  some residential                                                               
development on that particular parcel,  some of which had already                                                               
been logged.  They didn't get  any bids although they  got "clear                                                               
interest  in  the area,"  which  is  where  the majority  of  the                                                               
remaining forested  trust lands  are located.  It came  with some                                                               
conditions from the buyer.                                                                                                      
                                                                                                                                
4:04:42 PM                                                                                                                    
She reported  that the  sale that  is going on  now is  in public                                                               
notice and  will be a  10-year negotiated timber sale  to provide                                                               
supply to Asia  and domestic markets for timber as  well as a new                                                               
market  that  has  never  occurred in  Alaska  before,  which  is                                                               
cottonwood for furniture.                                                                                                       
                                                                                                                                
Their partners  are the Alaska  Division of Forestry,  the Mental                                                               
Health Trust, and the University  of Alaska, so hopefully it will                                                               
provide a  10-year supply.  Their combined  target volume  is 150                                                               
million board feet.  That particular holding is  13,400 acres; it                                                               
had been  closer to  14,000 acres but  taking the  Chilkat parcel                                                               
off the table reduced it.                                                                                                       
                                                                                                                                
MS.  KLEIN explained  the reason  they partner  with some  of the                                                               
other folks is that they  are adjacent to the university's lands,                                                               
so they can have easier  access. Their partners also have similar                                                               
missions and  fiduciary responsibilities with respect  to being a                                                               
trust or having beneficiaries. This  negotiated sale will have to                                                               
be at  or above  fair market  value and  the project  will comply                                                               
with  all   applicable  local,  state,   and  federal   laws,  in                                                               
particular with the Forest Practices  Act, which crosses multiple                                                               
agencies in Alaska (DEC, ADF&G, and DNR).                                                                                       
                                                                                                                                
Currently,  the university  has a  development and  disposal plan                                                               
out for  public comment  and that will  also need  approvals from                                                               
the Haines Borough.  A public open house is  scheduled for Haines                                                               
on  April 26th  to help  answer  more questions  and explain  the                                                               
process  in more  detail. This  sale is  anticipated to  generate                                                               
$10-15 million. It  will also infuse the  local community economy                                                               
with $90 million in private  capital and infrastructure. It would                                                               
also  require 40-45  new local  jobs: 20-25  to support  maritime                                                               
activities and 20 in construction.                                                                                              
                                                                                                                                
4:08:36 PM                                                                                                                    
CHAIR  GIESSEL  remarked that  is  amazing  news for  the  Haines                                                               
economy, plus the mining opportunity in that area.                                                                              
                                                                                                                                
MS.  KLEIN  acknowledged  the  Constantine  Mine  that  has  some                                                               
encouraging potential developments.                                                                                             
                                                                                                                                
CHAIR  GIESSEL asked  who the  other entities  are that  they are                                                               
partnering with in this sale.                                                                                                   
                                                                                                                                
MS. KLEIN replied  the other land owners are  the Alaska Division                                                               
of Forestry  and the  Mental Health Trust  Lands Office;  and the                                                               
U.S. Forest Service is helping  them with work force development.                                                               
So, the  university recently obtained  some small grants  to help                                                               
with that.                                                                                                                      
                                                                                                                                
4:09:26 PM                                                                                                                    
CHAIR GIESSEL  asked if she  had seen  local interest in  the job                                                               
preparation area.                                                                                                               
                                                                                                                                
MS.  KLEIN said  they were  just notified  this morning  that the                                                               
grant  was successful,  so  they  were not  at  that point,  yet.                                                               
Private land holders and the buyer's names are confidential.                                                                    
                                                                                                                                
CHAIR GIESSEL  said she was  struck by the cottonwood  market and                                                               
extended  an invitation  to interested  parties to  also come  to                                                               
Southcentral.                                                                                                                   
                                                                                                                                
MS. KLEIN  said they want  to diversify their revenues,  but last                                                               
year the legislature's  intent was that the  University of Alaska                                                               
further develop and  improve upon utilization of  its land grants                                                               
in order to generate additional  revenue, and she takes that very                                                               
seriously.  The  Board of  Regents  wants  to sustain  its  trust                                                               
endowment  and  directed  them  to   do  so  as  their  fiduciary                                                               
responsibility. If that can be  done, it would reduce reliance on                                                               
state general funds.                                                                                                            
                                                                                                                                
4:11:47 PM                                                                                                                    
Timber  resources  are the  largest  remaining  trust assets  and                                                               
several  sales  are  in  progress:  the Edna  Bay  sale  will  be                                                               
completed this  year. The 1,000-acre  Vallenar Bay  Spring timber                                                               
sale  near Ketchikan  has not  started  yet but  will be  another                                                               
joint effort. The Haines 10-year parcel is another one.                                                                         
                                                                                                                                
Mineral  resources  are the  next  valuable  potential that  they                                                               
don't  know much  about yet,  Ms. Klein  said. Those  assessments                                                               
require capital. Right  now, they have primarily  gravel and coal                                                               
resources.                                                                                                                      
                                                                                                                                
The remaining real  estate the trust has is remote  and about 10-                                                               
15,000 acres are  in federal land holdings and they  have two oil                                                               
and  gas leases  on  Kenai  Peninsula, but  they  are very,  very                                                               
small.                                                                                                                          
                                                                                                                                
MS. KLEIN  summarized that she is  trying to do the  best she can                                                               
with  what  she has,  which  is  very  little. She  is  basically                                                               
turning over  every stump and rock  have to see what  can be done                                                               
to create revenue.                                                                                                              
                                                                                                                                
4:13:48 PM                                                                                                                    
SENATOR MEYER  asked how  much revenue  the university  gets from                                                               
its land annually.                                                                                                              
                                                                                                                                
MS. KLEIN replied on average about $6.5 million.                                                                                
                                                                                                                                
SENATOR MEYER said  she made a good case that  the university has                                                               
a grant  deficit of 360,000  acres and asked how  the legislature                                                               
can help.                                                                                                                       
                                                                                                                                
MR. BAKER answered  that legislature has been  very supportive in                                                               
the past and has pushed it  as far as possible. The State Supreme                                                               
Court has  now said  that absent some  sort of  federal construct                                                               
the state  won't be able to  continue doing that. In  short, they                                                               
need the  continued support of  the legislature  recognizing that                                                               
federal government thinks it is  now a state obligation with what                                                               
the  state already  received or  might receive.  That is  the new                                                               
thing from their perspective. They  want whatever this becomes to                                                               
be defensible and a legitimate  federal program that accomplishes                                                               
good things for Alaska, in general.                                                                                             
                                                                                                                                
4:16:11 PM                                                                                                                    
SENATOR MEYER asked  if resolutions urging the  delegation to get                                                               
those lands would help.                                                                                                         
                                                                                                                                
MR.  BAKER  answered  yes.  The   other  body  had  introduced  a                                                               
resolution in that vein.                                                                                                        
                                                                                                                                
SENATOR MEYER  said it  seems like they  have been  fighting this                                                               
battle  for  some time  and  asked  if  the university  gets  any                                                               
feedback from the Washington delegation.                                                                                        
                                                                                                                                
MR. BAKER replied that they  have had many conversations with the                                                               
delegation  who have  asked for  "clear  communication" from  the                                                               
state  that it  is a  priority and  that the  administration, the                                                               
university,  and  the  DNR  are "shoulder  to  shoulder"  on  it.                                                               
Because of  competing priorities  for land,  the lands  that have                                                               
been discussed that  would come to the university  over the years                                                               
have been heavily identified in  the Tongass National Forest, and                                                               
that is a very difficult place to do any sort of land work.                                                                     
                                                                                                                                
SENATOR  MEYER  said  with  Senator Murkowski  as  chair  of  the                                                               
Resources Committee  this is a good  time to show that  the state                                                               
is  shoulder  to shoulder  with  the  university on  making  this                                                               
happen. He  asked how UA  land compares with Mental  Health Trust                                                               
lands in terms of  acres and stated, "If we can  get ANWR, we can                                                               
surely get you 360,000 acres."                                                                                                  
                                                                                                                                
4:19:54 PM                                                                                                                    
WYN  MENEFEE,  Executive  Director, Land  Office,  Alaska  Mental                                                               
Health Trust (AMHT), Anchorage,  Alaska, replied that they manage                                                               
about 1 million  acres, which could be either fee  simple or just                                                               
subsurface.                                                                                                                     
                                                                                                                                
SENATOR MEYER asked where AMHTH got its acreage.                                                                                
                                                                                                                                
MR.  MENEFEE  replied that  the  trust  got its  land  originally                                                               
through  the Alaska  Mental Health  Enabling Act  in 1958.  But a                                                               
lawsuit issue said the state  mismanaged the trust lands in 1984-                                                               
94 and that  resulted in a reconstitution of the  trust. Some was                                                               
original  trust  land,  but  because   some  lands  were  already                                                               
encumbered  and used  for things  that didn't  benefit the  trust                                                               
other parts came  from state lands in  approximately equal parts.                                                               
The reconstitution made  whole the one million-plus  acres and an                                                               
endowment of money in addition.                                                                                                 
                                                                                                                                
4:21:40 PM                                                                                                                    
SENATOR COGHILL said he agreed  with Senator Meyer that they need                                                               
to demonstrate alignment on this issue.                                                                                         
                                                                                                                                
CHAIR  GIESSEL also  agreed and  invited DNR  Deputy Commissioner                                                               
Heidi Hansen  to come to the  table and tell the  committee where                                                               
DNR  is  in   terms  of  supporting  transferring   land  to  the                                                               
university.                                                                                                                     
                                                                                                                                
4:22:31 PM                                                                                                                    
HEIDI   HANSEN,  Deputy   Commissioner,  Department   of  Natural                                                               
Resources (DNR), Anchorage, Alaska,  apologized and said she just                                                               
recently  learned about  this issue,  and would  be happy  to get                                                               
back to her with the information.                                                                                               
                                                                                                                                
CHAIR GIESSEL asked the Division of Forestry the same question.                                                                 
                                                                                                                                
4:23:30 PM                                                                                                                    
CHRIS MAISCH, State Forester and  Director, Division of Forestry,                                                               
Department  of   Natural  Resources  (DNR),   Fairbanks,  Alaska,                                                               
answered that he collaborated with  both organizations around the                                                               
state  on intermingled-ownership  properties. This  concept isn't                                                               
new, but the projects have gotten larger over time.                                                                             
                                                                                                                                
The Edna Bay joint project is  a great example of many landowners                                                               
getting together  to finance the  construction of a  log transfer                                                               
facility (LTF)  with DNR funds  that they  will all use.  And the                                                               
university  is using  that site  to  facilitate the  sale of  its                                                               
timber.                                                                                                                         
                                                                                                                                
He said  the next one will  be the Good Neighbor  Authority (GNA)                                                               
Project, a U.S.  Forest Service-owned timber sale,  but the State                                                               
of Alaska has completed the sale  and will manage it on behalf of                                                               
the Forest Service through the GNA authority.                                                                                   
                                                                                                                                
MR. MAISCH said the  state will follow up with a  sale of its own                                                               
on the state  forest at Edna Bay. SEALASKA may  also use the same                                                               
LTF.  So, it's  a  great example  of  collaboration between  many                                                               
landowners to keep  costs down and be very  efficient in managing                                                               
the resource.                                                                                                                   
                                                                                                                                
The Haines project is the most  recent one and is quite exciting.                                                               
A  fair amount  of investment  will be  required on  some of  the                                                               
infrastructure pieces  and the university  is taking the  lead on                                                               
that. It  has real potential to  duplicate what was done  at Edna                                                               
Bay.                                                                                                                            
                                                                                                                                
CHAIR GIESSEL said last fall  there were some potential buyers of                                                               
timber  in  the  Interior  and  MatSu  Valley,  and  one  of  the                                                               
impediments  had to  do  with our  forests  being certified.  She                                                               
asked  if  any  of  the  university land  is  adjacent  to  those                                                               
properties that the  state has and how this could  go forward for                                                               
both entities.                                                                                                                  
                                                                                                                                
MR. MAISCH replied  that all three, the two trusts  and the State                                                               
of Alaska have  intermingled ownerships in that  location. But he                                                               
would  have  to look  at  ownership  maps  to assess  the  timber                                                               
resources, but that  could be an opportunity  to collaborate. The                                                               
one difference is that area doesn't  have a state forest and that                                                               
puts state  land in  a little different  perspective in  terms of                                                               
potential sales.                                                                                                                
                                                                                                                                
The  certification  question was  more  important  to the  Valley                                                               
proposal,  because much  of that  wood would  have gone  into the                                                               
energy  markets  in Japan  and  the  certification piece  was  an                                                               
energy market requirement  for entry. The projects  in Haines and                                                               
Southeast are not energy projects,  so those don't have a similar                                                               
requirement at this time.                                                                                                       
                                                                                                                                
4:27:42 PM                                                                                                                    
Slide 8                                                                                                                         
CHAIR  GIESSEL  noted  the state  anti-dedication  clause  as  an                                                               
explicit exception when it is  required by the federal government                                                               
to  participate  in federal  programs.  So,  that means  students                                                               
going to the  university are certainly getting  federal loans and                                                               
she  wondered if  there could  be some  kind of  state match  for                                                               
loans that would get past the anti-dedication clause.                                                                           
                                                                                                                                
ANDY  HARRINGTON,   Associate  General  Counsel,   University  of                                                               
Alaska, Fairbanks, Alaska,  replied that is the  type of creative                                                               
thinking he is looking for, and he would look into it.                                                                          
                                                                                                                                
CHAIR GIESSEL  said the legislature  really wants to help  in any                                                               
way it  can. She  offered to  get a  Senate Resolution  passed if                                                               
that would be helpful.                                                                                                          
                                                                                                                                
SENATOR COGHILL  encouraged them  to also think  creatively along                                                               
the lines of using the  federal programs involved with the Arctic                                                               
universities  working with  the National  Oceanic and  Atmosphere                                                               
Administration (NOAA) to their benefit.                                                                                         
                                                                                                                                
MR.  BAKER  responded  that  they  will do  that.  He  noted  the                                                               
resolution introduced in the other body was HJR 39.                                                                             
                                                                                                                                
CHAIR GIESSEL  said they  would look  that up  and spruce  up the                                                               
language  a  bit.  She  thanked them  for  the  presentation  and                                                               
update.                                                                                                                         
                                                                                                                                
4:32:03 PM                                                                                                                    
CHAIR  GIESSEL adjourned  Senate Resources  Committee meeting  at                                                               
4:32 p.m.